~~Use~~As ~~these~~filed ~~links~~with tothe ~~rapidly~~Securities ~~review~~and ~~the~~Exchange ~~document TABLE~~Commission OFon ~~CONTENTS~~August 14, 2003

As filed with the Securities and Exchange Commission on November 20, 2002

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. ~~20549~~

20549

FORM 6-K

~~REPORT~~Report ~~OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16~~ of ~~the~~ ~~Securities~~Foreign ~~Exchange~~Private ~~Act of 1934~~ Issuer

~~For~~Pursuant ~~the~~to ~~period~~Rule 13a-16 ~~ended~~or ~~September 30,~~15d-16 ~~2002~~ of

~~MESSER~~The ~~GRIESHEIM~~Securities ~~HOLDING~~Exchange ~~AG (Exact~~Act ~~name~~ of ~~Registrant as specified in its Charter)~~ 1934

For ~~Koogstraat~~the ~~10 25870~~period ~~Norderfriedrichskoog Germany (Address~~ended ofJune ~~Registrant's~~30, ~~principal executive offices)~~ 2003

~~Indicate by~~MESSER ~~check~~GRIESHEIM ~~mark~~HOLDING ~~whether~~AG ~~the registrant files or will file annual reports under cover Form 20-F or Form 40-F.~~

~~Form 20-F~~Translation ~~ý Form~~of ~~40-F~~registrant’s oname into English

~~Indicate by~~Koogstraat ~~check~~10,25870 ~~mark~~Norderfriedrichskoog,Germany whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

~~Yes o No~~(Address ýof principal executive offices)

~~If "Yes"~~Indicate isby ~~marked,~~check ~~indicate~~mark ~~below~~whether the registrant files or will file ~~number~~annual ~~assigned~~reports tounder ~~the~~cover ~~registrant~~Form in20 ~~connection~~F ~~with~~or ~~Rule~~Form ~~12g3-2(b): N/A.~~40 F:

Form 20-F [x] Form 40-F [ ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3 2(b) under the Securities Exchange Act of 1934

Yes [ ] No [x]

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3 2(b):

N/A

	Three months ended June 30, 2003	Three months ended June 30, 2002
	(in € millions)	%	(in € millions)	%


Net sales	376.9	100.0	377.0	100.0
Cost of sales	(182.9)	(48.5)	(188.8)	(50.1)
Gross profit	194.0	51.5	188.2	49.9

Distribution and selling costs	(120.7)	(32.0)	(117.3)	(31.1)
General and administrative costs	(28.8)	(7.6)	(32.8)	(8.7)
Other, net⁽¹⁾	(10.7)	(2.9)	(6.2)	(1.6)
Operating profit	33.8	9.0	31.9	8.5

Interest expense, net	(33.1)	(8.8)	(41.0)	(10.9)
Profit (loss) before income taxes and minority interests	5.3	1.4	(8.3)	(2.2)
Income taxes	(8.7)	(2.3)	(8.0)	(2.1)
Net loss	(5.5)	(1.5)	(18.9)	(5.0)

									Predecessor
	Successor
									Messer Griesheim GmbH
	Messer Griesheim Holding AG
	Nine Months Ended September 30, 2002				Five Months Ended September 30, 2001				Four Months Ended April 30, 2001
	€ (in millions)		%		€ (in millions)		%		€ (in millions)		%
Net sales	1,143.9		100.0		659.5		100.0		574.5		100.0
Cost of sales	(567.1	)	(49.6	)	(336.2	)	(51.0	)	(293.4	)	(51.1	)
Gross profit	576.8		50.4		323.3		49.0		281.1		48.9
Distribution and selling costs	(355.4	)	(31.1	)	(192.0	)	(29.1	)	(177.2	)	(30.8	)
General and administrative costs	(95.9	)	(8.4	)	(47.5	)	(7.2	)	(45.0	)	(7.8	)
Other, net(1)	(32.4	)	(2.8	)	(33.0	)	(5.0	)	(12.4	)	(2.2	)
Operating profit	93.1		8.1		50.8		7.7		46.5		8.1
Interest expense, net	(108.8	)	(9.5	)	(64.3	)	(9.7	)	(36.4	)	(6.3	)
Loss before income taxes and minority interests	(28.6	)	(2.5	)	(29.9	)	(4.5	)	(6.6	)	(1.1	)
Income taxes	(21.7	)	(1.9	)	(21.8	)	(3.3	)	(4.8	)	(0.8	)
Net loss	(58.0	)	(5.1	)	(56.2	)	(8.5	)	(13.5	)	(2.3	)
Normalized EBITDA	297.0		26.0		171.0		25.9		125.9		21.9

	Three months ended June 30, 2003 (in € millions)	Three months ended June 30, 2002 (in € millions)

Net sales (Business Areas)
Germany	160.9	156.0
Western Europe, excluding Germany	65.1	65.1
Eastern Europe	60.0	54.1
North America	81.1	87.2
Others	9.4	14.0
Reconciliation / Corporate	0.4	0.6
Total	376.9	377.0

	Successor
	Messer Griesheim Holding AG
	Three Months Ended September 30, 2002				Three Months Ended September 30, 2001
	€ (in millions)		%		€ (in millions)		%
Net sales	380.4		100.0		393.6		100.0
Cost of sales	(186.7	)	(49.1	)	(206.1	)	(52.4	)
Gross profit	193.7		50.9		187.5		47.6
Distribution and selling costs	(116.9	)	(30.7	)	(112.4	)	(28.6	)
General and administrative costs	(28.1	)	(7.4	)	(28.7	)	(7.3	)
Other, net(1)	(15.7	)	(4.1	)	(21.4	)	(5.4	)
Operating profit	33.0		8.7		25.0		6.3
Interest expense, net	(32.5	)	(8.5	)	(40.1	)	(10.2	)
Loss before income taxes and minority interests	(12.6	)	(3.3	)	(17.5	)	(4.4	)
Income taxes	(10.5	)	(2.8	)	(20.9	)	(5.3	)
Net loss	(25.8	)	(6.8	)	(41.3	)	(10.5	)
Normalized EBITDA	99.3		26.1		98.1		24.9

	Messer Griesheim Holding AG
	Three Months Ended September 30, 2002		Three Months Ended September 30, 2001
	€ (in millions)		€ (in millions)
Net sales (Business Areas)
Germany	168.8		163.9
Western Europe, excluding Germany	63.6		64.7
Eastern Europe	54.3		54.2
North America	80.0		95.9
Others	13.8		14.7
Reconciliation/Corporate	(0.1	)	0.2
Total	380.4		393.6

	Three months ended June 30, 2003 (in € millions)	Three months ended June 30, 2002 (in € millions)

Operating profit (loss) (Business Areas)
Germany	29.3	26.5
Western Europe, excluding Germany	1.2	2.7
Eastern Europe	8.4	7.1
North America	3.3	6.2
Others	1.4	2.3
Reconciliation / Corporate	(9.8)	(12.9)
Total	33.8	31.9

		Messer Griesheim Holding AG
	Six months endedJune 30, 2003 (in € millions)		Six months endedJune 30, 2002 (in € millions)
		Three Months Ended September 30, 2002		Three Months Ended September 30, 2001
Cash flow from operating activities	174.5		174.2
		€ (in millions)		€ (in millions)
Cash flow used in investing activities	(17.5)		(16.5)
Cash flow from operating activities		100.6		112.8
Cash flow used in financing activities	(151.9)		(212.1)
Cash flow from (used in) investing activities		(9.3	)	3.5
Cash and cash equivalents, end of period	130.2		126.4
Cash flow (used in) from financing activities		(58.2	)	36.0
Cash and cash equivalents, end of period		159.2		258.3

	Contract notional Amount	Contractual rates	Fair value June 30, 2003
	(€ equivalent in thousands, except for contractual rates)

Interest Rate Swap Contracts
Euro	82,556	4.45500%	(2,308)
Euro	180,000	4.69500%	(5,189)
Euro	50,875	4.73000%	(1,908)
U.S. dollar	217,844	5.00000%	(9,141)
Euro	41,625	4.65250%	(1,266)
Interest Rate Forward Swap Contracts
Euro	170,000	4.84500%	(2,123)
Euro	32,625	4.21000%	(278)
U.S. dollar	196,971	5.18500%	(3,455)
Euro	30,000	2.99000%	(41)
Euro	80,000	3.95630%	(167)
Euro	70,000	4.10540%	(162)
Euro	110,000	4.31340%	(512)
		Forward exchange rate
Foreign currency forward contracts:
Euro/U.S. dollar	2,590	1.0669	(164)⁽¹⁾

		Successor
		Messer Griesheim Holding AG
	Note	Three Months Ended September 30, 2002		Three Months Ended September 30, 2001
Net sales		380,397		393,565
Cost of sales		(186,703	)	(206,074	)
Gross profit		193,694		187,491
Distribution and selling costs		(116,913	)	(112,395	)
Research and development costs		(2,753	)	(4,577	)
General and administrative costs		(28,117	)	(28,669	)
Other operating income		5,384		8,685
Other operating expense		(13,966	)	(20,505	)
Impairment of intangible assets and property, plant and equipment		(1,251	)	—
Restructuring and reorganization charges	8	(3,036	)	(4,997	)
Operating profit		33,042		25,033
Equity method investments income, net		1,744		2,676
Other investment (expense) income, net		(420	)	3,088
Interest expense, net	4	(32,530	)	(40,127	)
Changes in fair value of investments in subsidiaries available for sale	9	(242	)	(9,426	)
Other financial income (expense), net		(14,234	)	1,232
Non-operating expense		(45,682	)	(42,557	)
Loss before income taxes and minority interests		(12,640	)	(17,524	)
Income tax expense, net	10	(10,469	)	(20,914	)
Loss before minority interests		(23,109	)	(38,438	)
Minority interests, net of income taxes		(2,670	)	(2,868	)
Net loss		(25,779	)	(41,306	)

	Note	Three months ended June 30, 2003	Three months ended June 30, 2002


Net sales		376,865	377,033
Cost of sales		(182,906)	(188,794)
Gross profit		193,959	188,239
Distribution and selling costs		(120,658)	(117,269)
Research and development costs		(2,381)	(2,698)
General and administrative costs		(28,794)	(32,806)
Other operating income		9,494	8,801
Other operating expense		(12,382)	(8,627)
Impairment of intangible assets and property, plant and equipment	1	(2,948)	—
Restructuring and reorganization charges	4	(2,501)	(3,718)
Operating profit		33,789	31,922
Equity method investment income (expense), net		359	(204)
Other investment (expense) income, net		4,498	(1,003)
Interest expense, net	2	(33,125)	(41,012)
Changes in fair value of investments in subsidiaries available for sale	5	—	186
Other financial (expense) income, net		(271)	1,859
Non-operating expense		(28,539)	(40,174)
Profit (loss) before income taxes and minority interests		5,250	(8,252)
Income tax expense	6	(8,689)	(7,978)
Loss before minority interests		(3,439)	(16,230)
Minority interests, net of income taxes		(2,094)	(2,627)
Net loss		(5,533)	(18,857)

		Successor				Predecessor
		Messer Griesheim Holding AG				Messer Griesheim GmbH
	Note	Nine Months Ended September 30, 2002		Five Months Ended September 30, 2001		Four Months Ended April 30, 2001
Net sales		1,143,850		659,538		574,463
Cost of sales		(567,127	)	(336,171	)	(293,414	)
Gross profit		576,723		323,367		281,049
Distribution and selling costs		(355,436	)	(191,962	)	(177,182	)
Research and development costs		(9,238	)	(6,748	)	(6,599	)
General and administrative costs		(95,895	)	(47,514	)	(45,027	)
Other operating income		20,821		9,498		10,242
Other operating expense		(35,463	)	(26,623	)	(11,133	)
Impairment of intangible assets and property, plant and equipment		(1,251	)	—		(2,356	)
Restructuring and reorganization charges	8	(7,162	)	(9,255	)	(2,540	)
Operating profit		93,099		50,763		46,454
Equity method investments income (expense), net		1,530		(5,302	)	(5,106	)
Other investment expense, net		(1,114	)	(2,199	)	(4,544	)
Interest expense, net	4	(108,776	)	(64,270	)	(36,364	)
Changes in fair value of investments in subsidiaries available for sale	9	(748	)	(8,192	)	—
Other financial expense, net		(12,595	)	(656	)	(6,990	)
Non-operating expense		(121,703	)	(80,619	)	(53,004	)
Loss before income taxes and minority interests		(28,604	)	(29,856	)	(6,550	)
Income tax expense, net	10	(21,693	)	(21,772	)	(4,813	)
Loss before minority interests		(50,297	)	(51,628	)	(11,363	)
Minority interests, net of income taxes		(7,733	)	(4,580	)	(2,135	)
Net loss		(58,030	)	(56,208	)	(13,498	)

	Note	Six months ended June 30, 2003	Six months ended June 30, 2002

Net sales		740,372	763,453
Cost of sales		(358,682)	(380,424)
Gross profit		381,690	383,029
Distribution and selling costs		(234,644)	(238,523)
Research and development costs		(4,746)	(6,485)
General and administrative costs		(58,505)	(67,778)
Other operating income		13,851	15,437
Other operating expense		(22,221)	(21,497)
Impairment of intangible assets and property, plant and equipment	1	(2,948)	—
Restructuring and reorganization charges	4	(6,748)	(4,126)
Operating profit		65,729	60,057
Equity method investment income (expense), net		3,327	(214)
Other investment (expense) income, net		4,091	(694)
Interest expense, net	2	(62,653)	(76,246)
Changes in fair value of investments in subsidiaries available for sale	5	—	(506)
Other financial (expense) income, net		(1,711)	1,639
Non-operating expense		(56,946)	(76,021)
Profit (loss) before income taxes and minority interests		8,783	(15,964)
Income tax expense	6	(13,771)	(11,224)
Loss before minority interests		(4,988)	(27,188)
Minority interests, net of income taxes		(4,065)	(5,063)
Net loss		(9,053)	(32,251)

	Note	As of June 30, 2003	As of December 31, 2002

Assets
Intangible assets		747,747	790,878
Property, plant and equipment		1,405,246	1,516,310
Equity method investments		28,004	13,200
Other investments and long-term loans		28,343	36,861
Deferred tax assets		9,201	3,734
Other long-term receivables, net and other assets		13,081	21,966
Non-current assets		2,231,622	2,382,949
Inventories	7	72,468	72,585
Trade accounts receivable, net		264,590	279,099
Investments in subsidiaries available for sale	5	—	18,078
Other receivables and other assets		64,974	50,879
Cash and cash equivalents	8	130,208	135,218
Current assets		532,240	555,859
Total assets		2,763,862	2,938,808
Stockholders’ equity and liabilities
Issued capital and reserves		967,180	967,180
Accumulated deficit		(168,455)	(159,402)
Cumulative other comprehensive deficit		(121,181)	(72,291)
Stockholders’ equity		677,544	735,487
Minority interests		67,095	84,012
Provisions for pensions and similar obligations		171,352	169,287
Other provisions		74,222	68,529
Corporate debt, less current portion	2	1,194,992	1,327,120
Deferred tax liabilities		105,796	104,523
Other liabilities		23,925	23,723
Non-current liabilities		1,570,287	1,693,182
Other provisions		94,146	106,849
Corporate debt	2	87,128	48,298
Trade accounts payable		114,758	124,697
Miscellaneous liabilities		152,904	146,283
Current liabilities		448,936	426,127
Total stockholders’ equity and liabilities		2,763,862	2,938,808

	Other comprehensive income
	Issued capital	Capital reserves	Accumulated deficit	Hedging reserve	Translation reserve	Cumulative other comprehensive income (deficit)	Total Stockholders’ equity

Balance as of December 31, 2001	90	967,090	(69,531)	(9,199)	14,939	5,740	903,389
Change in fair value of derivatives	—	—	—	607	—	607	607
Net loss	—	—	(32,251)	—	—	—	(32,251)
Cumulative translation adjustment	—	—	—	—	(72,111)	(72,111)	(72,111)
Total comprehensive loss							(103,755)
Balance as of June 30, 2002	90	967,090	(101,782)	(8,592)	(57,172)	(65,764)	799,634

Balance as of December 31, 2002	90	967,090	(159,402)	(16,943)	(55,348)	(72,291)	735,487
Change in fair value of derivatives	—	—	—	(295)	—	(295)	(295)
Net loss	—	—	(9,053)	—	—	—	(9,053)
Cumulative translation adjustment	—	—	—	—	(48,595)	(48,595)	(48,595)
Total comprehensive loss							(57,943)
Balance as of June 30, 2003	90	967,090	(168,455)	(17,238)	(103,943)	(121,181)	677,544

					Other comprehensive income
									Cumulative other comprehensive income
	Subscribed capital	Additional paid-in capital	Accumulated deficit		Hedging reserve		Translation reserve				Total Stockholders' Equity
Balance as of May 1, 2001	90	967,090	—		—		—		—		967,180
Change in fair value of derivatives	—	—	—		(11,180	)	—		(11,180	)	(11,180	)
Net loss	—	—	(56,208	)	—		—		—		(56,208	)
Translation adjustment	—	—	—		—		(23,257	)	(23,257	)	(23,257	)
Balance as of September 30, 2001	90	967,090	(56,208	)	(11,180	)	(23,257	)	(34,437	)	876,535
Balance as of December 31, 2001	90	967,090	(69,531	)	(9,199	)	14,939		5,740		903,389
Change in fair value of derivatives	—	—	—		(8,310	)	—		(8,310	)	(8,310	)
Net loss	—	—	(58,030	)	—		—		—		(58,030	)
Translation adjustment	—	—	—		—		(47,643	)	(47,643	)	(47,643	)
Balance as of September 30, 2002	90	967,090	(127,561	)	(17,509	)	(32,704	)	(50,213	)	789,406

	Six months ended June 30, 2003	Six months ended June 30, 2002

Profit (loss) before income taxes and minority interests	8,783	(15,964)
Income taxes paid	(19,916)	(11,885)
Depreciation, amortization and impairment of property, plant and equipment and intangible assets	119,066	131,914
Changes in fair value of investments in subsidiaries available for sale	—	506
Write-down of investments	—	1,323
(Gains) losses on disposals of property, plant and equipment and investments	(7,584)	1,979
Unrealized exchange gains	—	(14,077)
Non-cash changes in equity method investments	(2,628)	214
Interest expense, net	62,653	76,246
Other financial expense (income), net	1,711	(1,639)
Changes in inventories	(4,469)	(7,351)
Changes in receivables and other assets	4,274	16,555
Changes in provisions	1,446	(17,784)
Changes in accounts payable and other liabilities	11,134	14,132
Cash flow from operating activities	174,470	174,169
Purchases of property plant and equipment and intangible assets	(51,090)	(49,997)
Purchases of investments and loans to related parties	(720)	(3,142)
Investments in subsidiaries available for sale for extinguishment of debt	—	(5,653)
Proceeds from the sales of property plant and equipment and intangible assets	8,219	3,124
Proceeds from the sales of investments	22,637	32,962
Interest received	3,481	6,240
Cash flow used in investing activities	(17,473)	(16,466)
Repayments of non-current corporate debt	(83,244)	(129,339)
Net repayment of current corporate debt	(779)	(2,337)
Dividends paid to minorities	(2,883)	(5,947)
Interest paid	(63,310)	(76,105)
Other financial (expenses) income, net	(1,711)	1,639
Cash flow used in financing activities	(151,927)	(212,089)
Cash flow from (used in) operating, investing and financing activities	5,070	(54,386)
Effect of exchange rate changes on cash and cash equivalents	(6,306)	(7,246)
Changes in cash and cash equivalents	(1,236)	(61,632)
Net effect of changes in consolidation perimeter on cash and cash equivalents	(3,774)	—
Cash and cash equivalents
at beginning of reporting period	135,218	188,018
at end of reporting period	130,208	126,386

Description	Interest rate	Available amount	Amounts outstanding	Maturity date⁽⁶⁾
		(in € millions)	(in € millions)

€300 Million Senior Term A facility^{(4) (5)}	4.47%⁽²⁾	213.5	213.5	April 20, 2008
€170 Million Senior Term B facility⁽⁴⁾	5.47%⁽²⁾	167.6	167.6	April 30, 2009
$124 Million Senior Term B facility⁽⁴⁾	4.10%⁽²⁾	107.5⁽¹⁾	107.5	April 30, 2009
€115 Million Senior Term C facility⁽⁴⁾	5.97%⁽²⁾	12.4	12.4	April 30, 2010
$162 Million Senior Term C facility⁽⁴⁾	4.60%⁽²⁾	110.3⁽¹⁾	110.3	April 30, 2010
€239 Million Senior Revolving facility I	—	239.0	—	March 31, 2008
€50 Million Senior Revolving facility II	—	34.0⁽³⁾	—	March 31, 2008
€10 Million Ancillary Facility	—	10.0	—	April 13, 2004
€11 Million Ancillary Facility	—	11.0	—	June 30, 2005
Senior notes⁽⁷⁾	10.375%	550.0	493.7	June 1, 2011
Other existing debt ⁽⁵⁾	5.13%	233.6	233.6
			1,338.6
Unamortized debt issuance costs			(56.5)
Total		1,688.9	1,282.1

Description	Interest rate		Available amount		Amounts outstanding		Maturity date(8)
			(in € millions)		(in € millions)
€300 Million Senior Term A facility(4)(5)(7)	5.68	%(2)	254.1	(1)	254.1		April 20, 2008
€170 Million Senior Term B facility(4)	6.15	%(2)	167.6		167.6		April 30, 2009
$124 Million Senior Term B facility(4)	4.58	%(2)	124.7	(1)	124.7		April 30, 2009
€115 Million Senior Term C facility(4)	6.65	%(2)	52.4		52.4		April 30, 2010
$162 Million Senior Term C facility(4)(7)	5.08	%(2)	163.6	(1)	163.6		April 30, 2010
€260 Million Senior Revolving facility I	—		255.5	(3)	—		March 31, 2008
€50 Million Senior Revolving facility II	—		30.5	(6)	—		March 31, 2008
Senior Notes	10.375	%	550.0		532.9		June 1, 2011
Other existing debt(7)	5.79	%	172.9		172.9
					1,468.2
Unamortized debt issuance costs					(68.0	)
Total			1,771.3		1,400.2

Three months ended June 30, 2003 Business Areas	Germany	Western Europe	Eastern Europe	North America	Others	Reconciliation/ Corporate	Total


Total sales	177,610	67,971	65,303	81,482	9,361	416	402,143
Inter-segment sales	16,734	2,880	5,303	361	—	—	25,278
Net sales	160,876	65,091	60,000	81,121	9,361	416	376,865
Operating profit (loss)	29,357	1,158	8,361	3,305	1,404	(9,796)	33,789
Depreciation and amortization of intangibles and property, plant and equipment	21,229	10,552	8,447	17,876	1,139	1,721	60,964
Thereof impairment losses	—	—	—	2,948	—	—	2,948
Interest income	246	144	569	43	8	1,048	2,058
Interest expense	(1,593)	(294)	(165)	(4,810)	(162)	(28,159)	(35,183)
Equity method investments income (expense), net	—	—	211	(64)	212	—	359
Income tax benefit (expense)	(11,833)	(787)	(2,148)	(1,306)	(112)	7,497	(8,689)

Business Areas		Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Three months endedJune 30, 2002Business Areas	Germany	WesternEurope	EasternEurope	NorthAmerica	Others	Reconciliation/Corporate	Total
Total sales	170,286	~~185~~71,~~664~~427	58,133	6987,~~026~~458	14,132	602,~~552~~671	404,107	~~79,612~~		~~13,921~~		~~1,122~~		~~409,897~~
Inter-segment sales	14,282	166,~~836~~305	4,032	~~5,376~~265	163	62,~~277~~027	27,074	~~(376~~	)	~~120~~		~~1,267~~		~~29,500~~
Net sales	156,004	~~168~~65,~~828~~122	54,101	6387,~~650~~193	13,969	~~54,275~~644	377,033	~~79,988~~		~~13,801~~		~~(145~~	)	~~380,397~~
Operating profit (loss)	26,461	302,~~836~~744	7,103	~~(219~~6,227	)2,252	9(12,~~663~~865)	31,922	~~2,054~~		~~2,096~~		~~(11,388~~	)	~~33,042~~
Depreciation and amortization of intangibles and property, plant and equipment		20,961		12,609		8,629		17,367		1,982		1,843		63,391
Depreciation, amortization of intangibles and property, plant and equipment	20,598	11,844	8,652	18,420	2,051	1,594	63,159
Thereof impairment losses		—		1,251		—		—		—		—		1,251
Interest income	15	101	902	313	261	1,533	3,125
Interest income		—		92		846		151		245		1,282		2,616
Interest (expense)	(2,585)	(40)	(1,054)	(3,847)	(464)	(36,147)	(44,137)
Interest expense		709		170		171		6,348		440		27,308		35,146
Equity method investments income (expense), net	163	—	—	(367)	—	—	(204)
Equity method investments income (expense), net		2,349		—		—		(690	)	—		85		1,744
Income tax benefit (expense)	(10,566)	(1,139)	(1,177)	(1,983)	(439)	7,326	(7,978)
Income tax benefit (expense)		(18,971	)	197		(2,061	)	(550	)	(370	)	11,286		(10,469	)

Business Areas	Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Total sales	171,738		71,521		57,285		96,115		14,735		1,189		412,583
Inter-segment sales	7,864		6,802		3,133		207		71		941		19,018
Net sales	163,874		64,719		54,152		95,908		14,664		248		393,565
Operating profit (loss)	44,777		5,808		9,867		1,005		942		(37,366	)	25,033
Depreciation and amortization of intangibles and property, plant and equipment	16,544		8,020		6,022		16,019		2,389		19,101		68,095
Interest income	182		43		665		5,850		147		4,113		11,000
Interest expense	4,062		1,228		1,879		10,857		1,030		32,071		51,127
Equity method investments income (expense), net	2,231		—		—		(830	)	1,275		—		2,676
Income tax benefit (expense)	(17,725	)	(1,582	)	(2,594	)	(30	)	(187	)	1,204		(20,914	)

Six months ended June 30, 2003 Business Areas	Germany	Western Europe	Eastern Europe	North America	Others	Reconciliation/ Corporate	Total


Total sales	359,522	133,847	128,303	154,566	17,951	1,542	795,731
Inter-segment sales	38,385	5,657	10,575	742	—	—	55,359
Net sales	321,137	128,190	117,728	153,824	17,951	1,542	740,372
Operating profit (loss)	58,214	(1,750)	17,375	8,787	1,954	(18,851)	65,729
Depreciation, amortization of intangibles and property, plant and equipment	42,310	21,081	16,904	33,007	2,327	3,437	119,066
Thereof impairment losses	—	—	—	2,948	—	—	2,948
Interest income	253	220	1,224	196	19	1,569	3,481
Interest (expense)	(2,928)	(607)	(428)	(9,561)	(336)	(52,274)	(66,134)
Equity method investments income (expense), net	—	—	353	2,257	717	—	3,327
Income tax benefit (expense)	(25,120)	(432)	(3,946)	(2,459)	(178)	18,364	(13,771)

Business Areas		Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Six months endedJune 30, 2002Business Areas	Germany	WesternEurope	EasternEurope	NorthAmerica	Others	Reconciliation/Corporate	Total
Total sales	340,345	~~526~~142,~~009~~116	117,643	~~211~~181,~~142~~380	28,328	~~178~~5,~~195~~602	815,414	~~260,992~~		~~42,249~~		~~6,724~~		~~1,225,311~~
Inter-segment sales	26,894	4310,~~730~~814	9,567	~~16,190~~534	263	153,~~844~~889	51,961	~~158~~		~~383~~		~~5,156~~		~~81,461~~
Net sales	313,451	~~482~~131,~~279~~302	108,076	~~194~~180,~~952~~846	28,065	~~162~~1,~~351~~713	763,453	~~260,834~~		~~41,866~~		~~1,568~~		~~1,143,850~~
Operating profit (loss)	50,775	814,~~611~~871	14,363	410,~~652~~941	4,629	24(25,~~026~~522)	60,057	~~12,995~~		~~6,725~~		~~(36,910~~	)	~~93,099~~
Depreciation and amortization of intangibles and property, plant and equipment		64,489		36,611		26,519		56,191		6,344		5,151		195,305
Depreciation, amortization of intangibles and property, plant and equipment	43,528	24,002	17,890	38,824	4,362	3,308	131,914
Thereof impairment losses		—		1,251		—		—		—		—		1,251
Interest income	15	124	1,933	662	421	3,085	6,240
Interest income		—		216		2,779		813		666		4,367		8,841
Interest (expense)	(3,325)	(604)	(1,436)	(10,702)	(1,046)	(65,373)	(82,486)
Interest expense		1,304		774		1,607		17,050		1,486		95,396		117,617
Equity method investments income (expense), net	465	—	—	(679)	—	—	(214)
Equity method investments income (expense), net		2,814		—		—		(1,369	)	—		85		1,530
Income tax benefit (expense)	(20,075)	(1,612)	(2,764)	(2,066)	(706)	15,999	(11,224)
Income tax benefit (expense)		(39,046	)	(1,415	)	(4,825	)	(2,616	)	(1,076	)	27,285		(21,693	)

Business Areas	Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Total sales	283,093		119,631		97,124		166,602		30,791		1,285		698,526
Inter-segment sales	20,938		7,867		7,211		2,584		163		225		38,988
Net sales	262,155		111,764		89,913		164,018		30,628		1,060		659,538
Operating profit (loss)	62,104		10,453		17,312		5,358		7,232		(51,696	)	50,763
Depreciation, amortization and impairment of intangibles and property, plant and equipment	27,703		13,468		11,220		27,828		4,323		26,469		111,011
Interest income	382		124		973		5,850		324		4,648		12,301
Interest expense	4,341		1,950		2,111		17,276		7,770		43,123		76,571
Equity method investments income (expense), net	2,231		—		—		(818	)	(6,715	)	—		(5,302	)
Income tax benefit (expense)	(11,774	)	(2,834	)	(3,633	)	1,011		(257	)	(4,285	)	(21,772	)

Business Areas	Germany		Western Europe		Eastern Europe		North America	Others*		Reconciliation/ Corporate		Total
Total sales	241,280		91,423		74,802		131,785	62,102		2,003		603,395
Inter-segment sales	16,173		5,813		4,357		125	1,554		910		28,932
Net sales	225,107		85,610		70,445		131,660	60,548		1,093		574,463
Operating profit (loss)	50,314		5,871		9,197		7,446	(5,072	)	(21,302	)	46,454
Depreciation, amortization and impairment of intangibles and property, plant and equipment	16,072		11,119		9,858		22,729	14,336		2,809		76,923
Thereof impairment losses	2,356		—		—		—	—		—		2,356
Interest income	—		75		959		384	613		3,055		5,086
Interest expense	2,558		1,781		1,691		6,891	5,517		23,012		41,450
Equity method investments income (expense), net	—		—		—		—	(5,106	)	—		(5,106	)
Income tax benefit (expense)	(29,398	)	(1,229	)	(1,807	)	3,756	(2,600	)	26,465		(4,813	)

Business Areas	Germany	Western Europe	Eastern Europe	North America	Others	Reconciliation/ Corporate	Total


Operating assets	940,599	426,836	407,728	617,571	103,405	209,182	2,705,321
Operating liabilities	157,574	62,272	39,976	45,755	11,115	196,153	512,845
Capital expenditures	35,864	23,794	29,028	37,531	8,827	857	135,901
Equity method investments	256	—	2,732	—	10,212	—	13,200

Business Areas		Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Operating assets		991,481		441,705		404,181		654,992		105,984		157,392		2,755,735
Operating liabilities		166,342		62,017		36,786		54,111		10,273		176,124		505,653

Business Areas		Germany		Western Europe		Eastern Europe		North America		Others*		Reconciliation/ Corporate		Total
Operating assets		1,226,126		437,976		393,116		785,652		122,540		18,425		2,983,835
Operating liabilities		175,451		64,805		40,651		61,707		12,236		168,054		522,904

		September 30, 2002	December 31, 2001
Current assets		14,177	42,960
Non-current assets		36,725	220,607
	Total assets	50,902	263,567
Current liabilities		8,520	90,486
Non-current liabilities		28,372	131,458
	Total liabilities	36,892	221,944
	Total net assets	14,010	41,623

		Three Months Ended September 30, 2002		Nine Months Ended September 30, 2002		Three Months Ended September 30, 2001		Five Months Ended September 30, 2001
Results of operations, included in consolidated totals:
	Net sales	13,801		41,866		14,664		32,263
	Cost of sales	(8,208	)	(24,369	)	(8,506	)	(18,793	)
	Other expenses (net)	(3,614	)	(11,516	)	(4,456	)	(11,355	)
	Income tax expense	(370	)	(1,076	)	(187	)	(257	)
	Net income	1,609		4,905		1,515		1,858

		Three Months Ended September 30, 2002		Nine Months Ended September 30, 2002		Three Months Ended September 30, 2001		Five Months Ended September 30, 2001
Cash inflows (outflows) from:
	Operating activities	4,155		13,145		2,618		3,079
	Investing activities	(1,268	)	(3,461	)	238		(515	)
	Financing activities	(2,148	)	(9,980	)	(7,456	)	(13,932	)
	Net cash inflow (outflow)	739		(296	)	(4,600	)	(11,368	)

	Four months Ended April 30, 2001
Net sales	84,793
Cost of sales	(64,541	)
Losses of investments accounted for under the equity method of accounting	(499	)
Other expenses, net	(36,824	)
Income tax expense	(440	)
Net loss	(17,511	)

		September 30, 2002	December 31, 2001
	June 30, 2003	December 31, 2002
Raw materials and supplies	21,854	2221,~~091~~721	~~20,657~~
Work in progress	10,883	4212,~~227~~794	~~21,996~~
Finished goods and merchandise	39,731	1738,~~576~~070	~~37,445~~
Total	72,468	8172,~~894~~585	~~80,098~~

	Maximum potential future obligation	Amount recognized as a liability
	June 30, 2003	December 31, 2002	June 30, 2003	December 31, 2002
	(in € millions)	(in € millions)

Guarantees for third party liabilities	43.4	66.4	3.8	3.8
*Guarantees related to sale of investments*	*133.8*	*125.0*	*17.2*	*17.2*

	Note	Three months ended June 30, 2003	Three months ended June 30, 2002

Net loss as reported in the consolidated statements of operations under IFRS		(5,533)	(18,857)
U.S. GAAP adjustments:
Amortization expense	a	6,805	7,356
Assets to be sold	b	—	(62)
Restructuring costs	c	(272)	—
Provisions for pensions and similar obligations	f	207	480
Impairment charge (IFRS)	g	2,948	—
Tax effect of U.S. GAAP adjustments	i	26	(192)
Net income (loss) under U.S. GAAP before extraordinary item		4,181	(11,275)
Extraordinary loss (net of tax of € 0)	g	(2,948)	—
Net income (loss) under U.S. GAAP		1,233	(11,275)

	Note	Six months ended June 30, 2003	Six months⁽¹⁾ended June 30, 2002

Net loss as reported in the consolidated statements of operations under IFRS		(9,053)	(32,251)
U.S. GAAP adjustments:
Amortization expense	a	13,719	14,757
Assets to be sold	b	—	630
Restructuring costs	c	(779)	—
Asset retirement obligations accretion expense	h	591	—
Provisions for pensions and similar obligations	f	788	448
Impairment charge (IFRS)	g	2,948	—
Tax effect of U.S. GAAP adjustments	i	(239)	(179)
Net income (loss) under U.S. GAAP before extraordinary item and cumulative effect of change in accounting principle		7,975	(16,595)
Extraordinary loss (net of tax of € 0)	g	(2,948)	—
Cumulative effect of change in accounting principle (net of taxes of €236 and €0, respectively)	a,g,h	(355)	(27,559)
Net income (loss) under U.S. GAAP		4,672	(44,154)

	Note	June 30, 2003	December 31, 2002

Stockholders' equity as reported in the consolidated balance sheets under IFRS		677,544	735,487
U.S. GAAP adjustments:
Amortization expense	a,b,c,d,e	39,552	25,833
Cumulative effect of change in accounting principle	a,g,h	(27,914)	(27,559)
Assets to be sold	b	6,102	6,102
Restructuring costs	c	(1,419)	(640)
Transaction costs	d	33,200	33,200
Provisions for pensions and similar obligations	f	(10,129)	(10,917)
Equity method investments expenses	g	19,846	19,846
Asset retirement obligations accretion expense	h	591	—
Tax effect of U.S. GAAP adjustments	i	4,041	4,280
Cumulative translation adjustment	j	(1,932)	(1,220)
Stockholders' equity under U.S. GAAP		739,482	784,412

			Successor				Predecessor
		Note	Nine Months Ended September 30, 2002		Five Months Ended September 30, 2001		Four Months Ended April 30, 2001
Net loss as reported in the consolidated statements of operations under IAS			(58,030	)	(56,208	)	(13,498	)
U.S. GAAP adjustments:
	Amortization expense	a	21,632		(1,196	)	—
	Assets to be sold	b	630		8,192		—
	Property, plant and equipment	f	—		—		(74	)
	Provisions for pensions and similar obligations	g	904		(702	)	176
	Tax effect of U.S. GAAP adjustments	h	(361	)	(2,996	)	(41	)
Net loss under U.S. GAAP			(35,225	)	(52,910	)	(13,437	)

TABLE OF CONTENTS
Report for the Nine Month Period Ended September 30, 2002
Business
Management's Discussion and Analysis of Financial Condition and Results of Operations
Messer Griesheim Holding AG
Unaudited Financial Information
Unaudited Interim Condensed Consolidated Statements of Operations
Unaudited Interim Condensed Consolidated Balance Sheets
Unaudited Interim Condensed Consolidated Statements of Changes in Stockholders' Equity
Unaudited Interim Condensed Consolidated Statements of Cash Flows
Notes to Unaudited Interim Condensed Consolidated Financial Statements

Report for the Six Months Ended June 30, 2003

Business

Management's Discussion and Analysis of Financial Condition and Results of Operations

Messer Griesheim Holding AG

Unaudited Financial Information

Unaudited Interim Condensed Consolidated Statements of Operations

Unaudited Interim Condensed Consolidated Balance Sheet

Unaudited Interim Condensed Consolidated Statements of Changes in Stockholders' Equity

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Notes to Unaudited Interim Condensed Consolidated Financial Statements

Signatures

In this document:

“Messer ~~REPORT~~Holding”, ~~FOR~~“the ~~THE~~Company”, ~~NINE~~“the ~~MONTH~~Group”, ~~PERIOD~~“we”, ~~ENDED~~“us” and ~~SEPTEMBER 30~~“our” refers to Messer Griesheim Holding AG and, ~~2002~~ unless the context otherwise requires, its consolidated subsidiaries.

        ~~The~~“Messer ~~accounts~~Griesheim” refers ~~being~~to ~~reported on are~~ the ~~consolidated results of~~ Messer Griesheim Holding AG.’s ~~Our~~subsidiary, ~~obligation~~Messer toGriesheim ~~provide~~GmbH, ~~this~~which ~~report~~is ~~with The Bank of New York (~~the ~~"Trustee"),~~ ~~for~~operating ~~the~~company ~~benefit~~whose ofbusiness ~~our noteholders,~~ and ~~the~~results ~~U.S. Securities~~of ~~and~~operations ~~Exchange~~are ~~Commission~~described ~~arises~~in ~~under~~this ~~the~~Form ~~indenture~~6-K, ~~dated as of May 16~~including, ~~2001,~~unless ~~between~~ the ~~Company~~context ~~and~~otherwise ~~the Trustee~~requires, ~~pursuant~~ ~~to which the Company has issued~~ its ~~10.375%~~consolidated ~~Senior Notes due 2011~~subsidiaries.

“Messer Griesheim Group” refers to the parent of Messer Griesheim Holding AG, Messer Griesheim Group GmbH & Co. KGaA, a German Partnership limited by shares.

“Messer Employee” refers to Messer Employee GmbH & Co. KG, a company through which employees participating on our share purchase and option plan are to hold shares in Messer Griesheim Group.

“Messer Industrie” and “MIG” refers to Messer Industrie GmbH, a holding company for the Messer family’s minority interest in Messer Griesheim Group.

“MGB” refers to Messer Griesheim Beteiligungsverwaltung GmbH, which is the general partner of Messer Griesheim Group.

“MEB” refers to Messer Employee Beteiligungsverwaltungs GmbH, which is the general partner of Messer Employee.

Table of Contents

REPORT FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2003
The accounts being reported on are the consolidated results of Messer Griesheim Holding AG. Our obligation to provide this report with The Bank of New York (the “Trustee”), for the benefit of our note-holders, and the U.S. Securities and Exchange Commission, arises under the indenture, dated as of May 16, 2001, between the Company and the Trustee, pursuant to which the Company has issued its 10.375% senior notes due 2011.

This Form document includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our expectations are based on reasonable assumptions, we cannot assure you that actual results will not be materially different from our expectations. Factors that could cause our actual results to differ materially from our expectations include, among other things:

2the amount of proceeds that we realize from our divestiture program;

        We are under no obligation to update or revise publicly any forward-looking statement. The forward-looking events discussed in this document might not happen. In addition, you should not interpret statements regarding past trends or activities as promises that those trends or activities will continue in the ~~future.~~timing All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement and the more detailed discussion of ~~risks in~~ the ~~section~~receipt ~~entitled "Risk Factors"~~ of ~~the~~proceeds ~~Company's Post-Effective Amendment No. 1 to its Registration Statement on Form F-4 filed with the Securities and Exchange Commission on April 30, 2002. Some numbers~~ that ~~appear~~we inrealize ~~this~~from ~~Form 6-K~~our ~~(including~~divestiture ~~percentage amounts) have been rounded. Numbers in tables may not sum precisely to the totals shown due to rounding.~~ program;

the amount of savings in operational costs that Messer Holding is able to achieve as a result of its cost-savings program;

the costs of implementing Messer Holding’s cost-savings program;

the timing to achieve the benefits of our cost-savings program;

anticipated trends and conditions in our industry, including regulatory developments;

our capital needs; and

our ability to compete.

We are under no obligation to update or revise publicly any forward-looking statement. The forward-looking events discussed in this document might not happen. In addition, you should not interpret statements regarding past trends or activities as promises that those trends or activities will continue in the future. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement and the more detailed discussion of risks in the section entitled “Risk Factors” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2002. Some numbers that appear in this Form 6-K (including percentage amounts) have been rounded. Numbers in tables may not sum precisely to the totals shown due to rounding.

Investors are cautioned that forward-looking statements contained in this section involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management.

This Form 6 K and the financial and other information contained herein are incorporated by reference into our Post-Effective Amendment No. 2 to Form F-4 on Form F-3 registration statement filed on March 27, 2003 and the 424 (b) prospectus relating thereto filed on April 7, 2003.

Table of Contents

BUSINESS
We are a producer and distributor of industrial gases, including oxygen, nitrogen, argon, helium, carbon dioxide, hydrogen, helium, specialty gases and acetylene. The industrial gases we produce are used in a broad range of industries, such as the industrial, chemical and pharmaceutical manufacturers, and the food processing and waste treatment industries.

3Table of Contents

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
        You should read the following discussion in conjunction with the Company's unaudited interim condensed consolidated financial statements included elsewhere herein. The Company's financial statements are prepared in accordance with the International Financial Reporting Standards (“IFRS”) of the International Accounting Standards Board, ~~or IAS~~(“IASB”), which differ in certain significant respects from U.S. GAAP. You can find reconciliations of net income, and shareholders' equity and disclosures regarding differences between ~~IAS~~IFRS and U.S. GAAP in ~~note 19~~Note 14 to the Company's unaudited interim condensed consolidated financial statements.
        The Company calculates normalized EBITDA as operating profit before depreciation and amortization, after adding back charges for impairment of intangible assets and property, plant and equipment, restructuring and reorganization charges and dividends from non-consolidated subsidiaries.
        Normalized EBITDA is not a measure recognized by IAS or U.S. GAAP. This and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the unique situations of those companies. We urge you to be very cautious in comparing our normalized EBITDA data to the EBITDA data of other companies. Normalized EBITDA is not a substitute for operating profit as a measure of operating results. Likewise, normalized EBITDA is not a substitute for cash flow as a measure of liquidity.
Overview
        We operate in 4743 countries through more than ~~417~~395 facilities, including production plants, distribution and filling stations and research centers. We have an estimated global market share of approximately 54% of the total industrial gases market, making us the seventh largest industrial gas producer ~~worldwide,~~world-wide and leading market shares in Germany and certain other countries in central and ~~eastern~~Eastern Europe. We also have strong businesses in selected industrial areas of the United States and in selected niche markets in other Western European countries. In the ~~third~~second quarter ~~2002~~2003, we generated net sales of €~~380~~376.~~4 million~~9 ~~and normalized EBITDA of €99.3~~ million.

        Our primary or core markets are Europe and North America. Our two largest markets, Germany and North America, collectively accounted for ~~65.4~~64% of our net sales ~~and 71.5% of our normalized EBITDA~~ for the ~~third~~second quarter ~~2002~~2003. Within each of our geographic markets, we generally organize our business based upon how we deliver industrial gases to our customers: delivery of large volumes from on-site production facilities or by pipeline, delivery in bulk tanks transported by truck or rail and delivery in gas cylinders. In addition to our core markets of Europe and North America, we also operate in Asia, Africa and Latin America. We have been in the process of divesting substantially all of the assets outside our core markets, along with certain non-strategic assets in our core markets. Other than our joint ventures in Central America and China, weand ~~anticipate~~our ~~completing~~subsidiary ~~these~~in Peru, we completed our divestitures byas ~~year~~at the end ~~2002~~of the second quarter 2003.

The following is an overview of a number of significant factors that affect our results of operations or that may affect our future results of operations.

~~Acquisition~~Ownership ~~Transactions, Refinancing and Divestiture Program~~ Structure

        AsThe ~~discussed~~following ~~elsewhere~~diagram inshows ~~this~~our ~~document,~~ownership ~~the~~structure ~~acquisition~~and ~~transactions~~the ~~have~~structure ~~been~~of ~~accounted~~our ~~for~~principal atindebtedness ~~fair~~as ~~value~~of ~~and,~~June ~~accordingly~~30, ~~our~~2003 ~~assets~~following ~~and~~completion ~~liabilities~~of ~~have~~the ~~been recorded~~change atin ~~their~~ownership ~~estimated~~in ~~fair values as of~~ April ~~30,~~ 2001, reflecting the ~~date~~issuance of the ~~acquisition~~senior ~~transactions.~~notes Asand ~~a result,~~ the ~~financial~~refinancing ~~statements~~or repayment of ~~Messer~~our ~~Griesheim~~indebtedness ~~for~~to ~~periods~~the ~~prior~~extent tocompleted, ~~the acquisition~~including ~~transactions~~repayment ~~are~~in ~~not~~full ~~comparable~~of tothe ~~our~~€400 ~~financial~~million ~~statements~~mezzanine ~~for~~bridge ~~periods~~facility ~~subsequent~~and torepayment ~~the~~of ~~acquisition~~€115 ~~transactions.~~million Toof ~~highlight~~our ~~this~~senior ~~lack~~term offacilities ~~comparability,~~and asubsequent ~~solid~~share ~~vertical~~purchases ~~line~~by ~~has~~our ~~been inserted,~~employees ~~where~~and ~~applicable,~~shareholders’ ~~between~~committee ~~columns~~members inthrough the ~~tables~~share purchase and option plan.

4(1) The holding company for the Messer family's interests in Messer Griesheim.

~~and~~(2) ~~schedules~~Certain ofprivate ~~this~~equity ~~document,~~funds ~~and~~managed inby ~~our~~affiliates ~~unaudited~~of ~~interim~~The ~~condensed~~Goldman ~~consolidated~~Sachs ~~financial~~Group, ~~statements to distinguish information pertaining to the pre-acquisition and post-acquisition periods~~Inc.

(3) The ~~Acquisition~~employees participating in the share purchase and option plan hold their shares through Messer Employee. The participant’s voting rights are exercised by the managing partner of Messer Employee, MEB. The members of the shareholders’ committee of MGB hold their shares directly in Messer Griesheim Group.

        ~~Prior~~(4) toPrincipal ~~the~~operating ~~completion~~company ofin ~~the~~Germany ~~acquisition~~and ~~transactions~~holding ~~described~~company ~~below,~~for ~~Messer~~the ~~Griesheim~~remainder ~~was~~of ~~owned:~~our operations.

        ~~On December 31,~~(5) ~~2000,~~€550.0 ~~Messer~~million ~~Industrie,~~aggregate ~~Hoechst~~principal ~~and~~amount ~~our~~upon ~~parent~~issuance. ~~company~~As ~~Messer~~of ~~Griesheim~~June ~~Group~~30, ~~GmbH~~2003, ~~(formerly~~€493.7 ~~named~~million ~~Cornelia~~aggregate ~~Verwaltungsgesellschaft mbH),~~principle ~~entered~~amount ~~into certain~~remained ~~acquisition transactions~~outstanding.

        As a result of the acquisition transactions, Messer Holding owns 100% of Messer Griesheim and the issuer is directly or indirectly wholly owned by Messer Griesheim Group. Messer Holding and Messer Griesheim Group are both holding companies with no material assets other than their direct or indirect interests in Messer Griesheim (~~and, in Messer Holding's case, the payments under the intercompany loan to Messer Griesheim~~6). ~~During the nine month period ended September 30, 2002, our employees and members of the shareholders' committee purchased shares through the share purchase and option plan~~€550.0 ~~The~~million ~~plan~~aggregate ~~participants~~principal ~~hold their shares through Messer Employee GmbH & Co~~amount. ~~KG.~~ ~~Consequently, Messer Griesheim Group is owned as of September 30, 2002:~~

        ~~In connection~~(7) ~~with~~€1,340 ~~these~~million ~~acquisition~~was ~~transactions,~~ the ~~main~~initial ~~shareholders~~aggregate amount of senior term loan facilities. Messer Griesheim ~~Group~~GmbH ~~entered~~repaid ~~into~~€115 million principal amount of senior term facilities in May 2001 with a ~~shareholders'~~portion ~~agreement~~of ~~governing~~the ~~their~~proceeds ~~respective~~from ~~voting~~the ~~control~~sale ~~and other~~of ~~ownership~~the ~~rights~~senior ~~with~~notes. ~~respect~~As toof June 30, 2003 €611.3 million aggregate principal amount remained outstanding under the ~~issuer~~senior ~~and~~term facilities. The senior term facilities also include committed but undrawn funds totaling €294.0 million under revolving facilities. Certain of Messer Griesheim.'s subsidiaries are also direct borrowers under the senior term facilities.

        Due to certain antitrust related considerations relating to the equity interest of Allianz AG in a competitor of Messer Griesheim, the shareholders’ agreement (as described elsewhere in this Form 6-K) generally allocates the rights of the financial sponsors relating to corporate governance and management to the GS Funds until such time as the antitrust related considerations are no longer relevant. Accordingly, until then, members of the shareholders'’ committee appointed by the GS Funds will represent all votes of the financial sponsors constituting 66.16% of all votes in the shareholders'’ committee. Thereafter, the rights will be shared by Allianz Capital Partners (ACP) and the GS Funds, with ~~Allianz~~ACP ~~Capital Partners~~ having a deciding vote in the event of a lack of consensus between ~~Allianz~~ACP ~~Capital Partners~~ and the GS Funds, subject to certain exceptions.

Transaction Structure
        The following diagram shows our ownership structure and the structure of our principal indebtedness as of September 30, 2002 following completion of the acquisition transactions in April 2001, reflecting the issuance of the senior notes and the refinancing or repayment of our indebtedness to the extent completed, including repayment in full of the €400 million mezzanine bridge facility and repayment of €115 million of our senior term facilities and subsequent share purchases by
5
our employees and shareholder committee members through the share purchase and option plan mentioned above.
6
Refinancing Program

        In connection with the ~~acquisition~~change ~~transactions~~in ~~described above~~ownership, substantially all of Messer Griesheim's existing indebtedness was refinanced through the senior term facilities and the senior notes. Upon the initial closing of the acquisitions, Messer Griesheim entered into a senior term facilities agreement with aggregate available funds of €1,650 million (€1,340 million of term loan facilities and €310 million of revolving facilities) and a mezzanine bridge facility agreement in the aggregate amount of €400 million. In May 2001, the Company issued €550 million principal amount of 10.375% senior notes maturing on June 1, 2011. Upon the closing of the sales of the senior notes, Messer Holding made an intercompany loan to Messer Griesheim with the gross proceeds from the senior notes, and Messer Griesheim used the intercompany loan to repay the mezzanine bridge facility in full and repay €115 million principal amount of the outstanding term borrowings under the facilities.

Business Practices
         We believe the following selected business practices are important for a proper understanding of our financial reporting risks.

Net Sales

We primarily earn revenues from

        ~~Our~~ sales of industrial gases, ~~which amount to greater than 90% of our total revenue, are divided into three business units corresponding to their mode of delivery: on-site~~ and ~~pipeline sales~~, ~~bulk delivery sales and cylinder delivery sales. Contracts in our on-site production and pipeline supply businesses in Europe and the United States typically have terms of 10~~ to ~~15 years~~a ~~and~~lesser ~~usually have "take-or-pay" minimum purchase provisions. In each of the last three years~~extent, the "take-or-pay" minimum purchase requirements in our on-site and pipeline supply contracts accounted for approximately 60% to 70% in Germany and 40% to 45% in the United States of the total amount of net sales that we generated under these contracts.

        Contracts in our bulk business generally have terms of two to three years in Europe and five to seven years in the United States. Customers in our on-site and pipeline and bulk businesses have historically exhibited high renewal rates, with over 90% of customers whose contracts expired in the past five years renewing their contracts with us. Our on-site, pipeline and bulk businesses in Germany and the United States accounted for approximately 44% of our total net sales ~~and approximately 60%~~ of ~~our~~hardware ~~normalized~~related ~~EBITDA in the third quarter 2002. We generally sell our cylinder gases by purchase orders or by contracts with terms ranging between one~~ to ~~two~~industrial ~~years~~gas ~~in Europe and three to five years in the United States~~usage.

Our sales of industrial gases, which amount to greater than 90% of our total revenue, are divided into three business fields corresponding to their mode of delivery: on-site and pipeline sales, bulk delivery sales and cylinder delivery sales. Contracts in our on-site production and pipeline supply businesses in Europe and the United States typically have terms of 10 to 15 years and usually have “take-or-pay” minimum purchase provisions. In each of the last three years, the “take-or-pay” minimum purchase requirements in our on-site and pipeline supply contracts accounted for approximately 60% to 70% in Germany and 40% to 45% in the United States of the total amount of net sales that we generated under these contracts.

Contracts in our bulk business generally have terms of two to three years in Europe and five to seven years in the United States. Customers in our on-site and pipeline and bulk businesses have historically exhibited high renewal rates, with over 90% of customers whose contracts expired in the past five years renewing their contracts with us. Our on-site, pipeline and bulk businesses in Germany and the United States accounted for approximately 39% of our total net sales in the second quarter 2003. We generally sell our cylinder gases by purchase orders or by contracts with terms ranging between one to two years in Europe and two to five years in the United States.

Our net sales are dependent on the economic conditions in the markets in which we operate. However, we believe that we have limited exposure to the cyclical nature in demand of any particular industry because of the wide diversity of industries represented by our customer base.

Although industrial gas prices appear to have stabilized in many of the markets in which we operate, prices have consistently decreased for at least the last 10 years, especially in the bulk and commodity gas cylinder segments, due to aggressive efforts by most producers to increase market share. The profit margin impact of this price erosion has been partially offset by efficiency improvements throughout the supply chain and regional consolidation among large participants in the industry, permitting economies of scale. In addition, new applications for industrial gases have provided opportunities for increased sales volumes and profit margins.

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Cost of Sales

Our principal raw material is air, which is free and which we separate into its component gases. Cost of sales principally consists of:

        ~~Energy costs~~capital ~~consist principally of electrical power~~ costs. ~~Electricity represents approximately 29%~~ of cost of sales in the third quarter of 2002. We are able to pass on a portion of increases in energy costs to many, but not all, of our on-site and pipeline customers with long-term supply contracts, although these adjustments in cost often occur only on an annual basis. The amount and other terms of these energy cost pass-through provisions vary by contract. plants;

costs of energy required for production; and

labor costs relating to production.

Energy costs consist principally of electrical power costs. Electricity represents approximately 30.0% of cost of sales in the second quarter of 2003. We are able to pass on a portion of increases in energy costs to many, but not all, of our on-site and pipeline customers with long-term supply contracts, although these adjustments in cost often occur only on an annual basis. The amount and other terms of these energy cost pass-through provisions vary by contract.

Labor costs relating to production consist principally of wages and salaries, social security contributions and other expenses related to employee benefits. Social security contributions include our portion of social security payments as well as our contributions to workers' insurance associations.

We depreciate fixed assets on a straight-line basis. Our depreciation rates assume useful lives ranging from 10 to 50 years for buildings, 10 to 20 years for plant and machinery and 3 to 20 years for other plant, factory and office equipment.

Divestiture Program

        Our core markets are Europe and North America. In May 2001, immediately following our change of ownership ~~resulting from the acquisition transactions described elsewhere in this Form 6-K~~, we adopted a divestiture program. Pursuant to the divestiture program, we ~~intended~~intend to sell substantially all of our assets and operations in our non-core markets in Asia, Africa and Latin America, as well as certain non-strategic assets and operations in our core markets. The proceeds from this divestiture program have been and will be used to reduce our consolidated debt.

         Pursuant to the divestiture program, as of ~~September~~ June 30, ~~2002~~2003, we have completed disposals of our home care business in Germany, our health care business in Canada and our non-cryogenic plant production operations in Germany, the United States, Italy and China. We also have completed disposals of our operations in Argentina, Brazil, Canada, Egypt, Mexico, South Africa, South Korea, Trinidad & Tobago, Venezuela, Indonesia and ~~Venezuela~~Malaysia, our nitric oxide business in Austria, substantially all our carbon dioxide business in the United States and our nitrogen services business in the United Kingdom. As of ~~September~~ June 30, ~~2002~~2003 we have substantially completed the disposal of our investments included in subsidiaries available for sale. AsWe ~~a result, we~~ completed repayment of our senior term disposal facility in the second quarter of 2002.

        The remaining divestiture of certain of our assets and operations may require additional expenditures prior to their disposal ~~and may not be completed by December 31, 2002~~.

Cost-Savings Plan

        We are implementing a plan to reduce our operating costs, principally in Europe. This plan involves eliminating duplication in support positions for certain process functions, reducing energy costs, centralizing key process functions and simplifying our management structure. We have identified most of the specific cost savings measures that we anticipate to achieve by year- end 2003. We expect that these measures will reduce the cost base of our operations in our core markets relative to its level for the year 2000 by approximately €100 million by year- end 2003. To implement these measures, we expect to spend approximately €64.5 million in total between April 30, 2001 and year end 2003, principally to be applied towards severance payments and efficiency improvements.

For the twelve months ended December 31, 2002, we have reduced the cost base of our operations in our core markets relative to its level for the year 2000 by €71.1 million. As a result of implementation of these measures, we incurred restructuring and reorganization costs of approximately €44.8 million (excluding €12.5 million of costs that were included as part of the purchase price accounting adjustments) for the twenty six month period from May 1, 2001 to June 30, 2003, of which €6.7 million was recorded in the six months ended June 30, 2003. We expect to incur an additional €19.7 million of costs by the end of 2003. These costs relate to divestitures, reduction in work force and various other reductions of operating costs, respectively.

expect to spend approximately €84 million in total between April 30, 2001 and year end 2003, principally to be applied towards severance payments and efficiency improvements.
        For the eight month period ending December 31, 2001, we have reduced the cost base of our operations in our core markets relative to its level for the year 2000 by €27.0 million. As a result of implementation of these measures, we incurred one time costs of approximately €32.4 million (excluding €12.5 million of costs that were included as part of the purchase price accounting adjustments) for the seventeen month period from May 1, 2001 to September 30, 2002, of which €3.0 million was recorded in the third quarter 2002. We expect to incur an additional €39.1 million of one-time costs by the end of 2003. These one-time costs relate to divestitures (€14.0 million) reduction in work force (€7.0 million) and various other reductions of operating costs (€18.1 million).
Critical Accounting Policies

        The results of our operations and financial condition are dependent upon the utilization of accounting methods, assumptions and estimates that are used as a basis for the preparation of the unaudited interim condensed consolidated financial statements. We have identified the following critical accounting policies and ~~related assumptions,~~ estimates ~~and uncertainties, which management believes~~ are ~~essential~~described toin ~~understanding~~Item ~~the~~5 ~~underlying~~“Operating ~~financial~~and ~~reporting~~Financial ~~risks~~Review and ~~the~~Prospects ~~impact~~–Critical ~~that~~Accounting ~~these~~Policies” ~~accounting~~included ~~methods,~~in ~~assumptions,~~our ~~estimates~~Annual ~~and~~Report ~~uncertainties have~~ on ~~our~~Form ~~reported~~20-F ~~financial~~for ~~results. This information should be read in conjunction with~~ the ~~unaudited~~fiscal ~~interim~~year ~~condensed~~ended ~~consolidated~~December ~~financial~~31, ~~statements~~2002.

Purchase Accounting
        We accounted for the acquisition transactions similar to that of an acquisition of Messer Griesheim by Messer Holding. The accounting for this acquisition resulted in significant amounts of long-lived intangible assets. Our accounting policy relating to purchase business combinations requires the use of the purchase method whereby the purchase price is allocated to identifiable tangible and intangible assets based upon their fair value. The allocation of purchase price is judgmental and requires the extensive use of estimates and fair value assumptions, which can have a significant impact on operating results. Changes in the industry conditions, technological advances and other economic factors could result in revisions to the judgments, estimates and valuation techniques utilized in the application of purchase accounting. Such differing allocations could impact future operating results.
Recoverability of Long-Lived Assets
        Our business is capital intensive and, historically, required a significant investment in property, plant and equipment. At September 30, 2002, the carrying value of our property, plant and equipment was €1,518 million. At September 30, 2002 long-lived intangible assets amounted to €811 million. We review long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of an asset to the higher of net selling price and value in use. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, after deducting any direct incremental disposal costs. Value in use is the present value of estimated future cash flows expected to arise from continuing use of an asset and from its disposal at the end of its useful life.
        A continuation of the currently competitive economic conditions in the industrial gas industry could result in an increasingly adverse pricing environment due to significant industry over-capacity. This could result in decreased production and reduced capacity utilization. Such events could result in reductions of future net cash flows expected to be generated to the extent that both long-lived tangible and intangible assets could be considered impaired, negatively impacting future operating results.
9
Recoverability of Investments in Subsidiaries Available for Sale
        We have made a series of investments in, and advances to, companies that are principally engaged in the manufacture, sale and distribution of industrial gases which are located in regional markets which we no longer consider part of our core markets. At September 30, 2002, the carrying amounts of investments in subsidiaries available for sale aggregate approximately €17.5 million. Our accounting policy is to value such investments at estimated net realizable value. In determining estimated net realizable value, we consider the forecasted results of the investee, the economic environment in the regional market and our ability and intent to hold the investment until the estimated sale date.
        A slump in demand for industrial gases could adversely impact the operations of these investments and their capability to generate future net cash flows. Furthermore, since these investments are not publicly traded, further judgments and estimates are required to determine their fair value. As a result, potential impairment charges to write-down such investments to net realizable value could adversely affect future operating results.
Realization of Deferred Tax Assets
        At September 30, 2002, we had total deferred tax assets of approximately €179.7 million. Included in this total are the benefit of net operating loss and tax credit carry forwards of approximately €118.9 million. Such tax loss and credit carry forwards generally do not expire under current law, except certain amounts attributable to operations in the United States that expire in 20 years. Realization of these amounts are dependent upon the generation of future taxable income at a level sufficient to absorb the loss and credit carry forwards. These deferred tax assets were recognized to the extent that it is probable that future taxable profit will be available. The amount of total deferred tax assets considered realizable prospectively could be reduced if our estimates of projected future taxable income are lowered from present levels or changes in current tax regulations are revised which could impose restrictions on the time or extent of our ability to utilize tax loss and credit carry forwards in the future.
        Currently, the German Government is contemplating future new tax legislation which could limit the NOL carry forward to 7 years and which could limit the use of the NOL carry forward to only 50% of the taxable income in any given year. This contemplated new tax legislation could affect the Group's ability to use its NOL. This future new tax legislation might also contain other features which could affect the Group. These changes still have to be properly defined and have to pass through the legislation procedures. Hence, they were not considered in the current interim condensed consolidated financial statements.
Restructuring Charges
        Subsequent to the acquisition transactions, the management approved plans to restructure the Group and reduce costs. These changes were intended to, among other things, improve operational efficiencies and improve profitability. While the management approved a detailed restructuring plan, the calculation of the provision requires the use of estimates and management judgment. Additionally, if industry conditions continue to deteriorate or an economic downturn is experienced in the future, further restructuring charges may be incurred. Resulting variances from estimates previously utilized may adversely impact future financial results.
Reclassifications
        Certain reclassifications have been made to the financial statement presentation of the prior period to conform such presentation to the current period presentation.
10
Results of Operations
        ~~When~~Three ~~comparing~~Months ~~the~~Ended ~~three~~June ~~months ended September~~ 30, ~~2002,~~2003 ~~with~~Compared ~~the three months ended September 30, 2001 as well as when comparing the nine months ended September 30, 2002~~ with ~~the~~Three ~~five~~Months ~~months~~Ended ~~ended~~June ~~September~~ 30, 2001, and the four months ended April 30, 2001, consideration should be given to the impact on comparability arising from the acquisition transaction, the refinancing program, the divestiture program and the other developments described above. As a result of these events, comparability is impacted by a number of factors, the most significant of which are (i) the new cost base of the Company's assets and liabilities as a result of the acquisition transactions, (ii) the refinancing program and the resulting impact on financing costs and (iii) the divestiture program. All of these factors impacted the comparability of the results presented for the nine and the three months ended September 30, 2002~~, to the respective prior year periods.~~

        ~~To highlight~~The ~~this~~following ~~lack~~table ofsets ~~comparability,~~forth a ~~solid~~summary ~~vertical~~of ~~line~~the ~~has~~results ~~been~~of ~~inserted,~~operations ~~where~~for ~~applicable,~~the ~~between~~three ~~columns~~months inended ~~the~~June ~~tables~~30, ~~below~~2003, inand ~~our~~three ~~interim~~months ~~condensed~~ended ~~consolidated~~June ~~financial statements~~30, ~~and~~2002, ~~elsewhere~~ in ~~this~~terms ~~document~~of inamounts ~~order~~as towell ~~distinguish~~as ~~information~~percentages ~~pertaining~~of tonet ~~the pre-acquisition and post-acquisition periods~~sales.

Nine Months Ended September 30, 2002 Compared with Five Months Ended September 30, 2001 and Four Months Ended April 30, 2001

Three months ended
June 30, 2003

Three months ended
June 30, 2002

(in € millions)

%

(in € millions)

%

Net sales

376.9

100.0

377.0

100.0

Cost of sales

(182.9)

(48.5)

(188.8)

(50.1)

Gross profit

194.0

51.5

188.2

49.9

Distribution and selling costs

(120.7)

(32.0)

(117.3)

(31.1)

General and administrative costs

(28.8)

(7.6)

(32.8)

(8.7)

Other, net⁽¹⁾

(10.7)

(2.9)

(6.2)

(1.6)

Operating profit

33.8

9.0

31.9

8.5

Interest expense, net

(33.1)

(8.8)

(41.0)

(10.9)

Profit (loss) before income taxes and minority interests

5.3

1.4

(8.3)

(2.2)

Income taxes

(8.7)

(2.3)

(8.0)

(2.1)

Net loss

(5.5)

(1.5)

(18.9)

(5.0)

        ~~The~~(1) Amounts ~~following~~include ~~table~~total ~~sets~~net ~~forth a summary~~ of ~~the~~research ~~results~~and ofdevelopment ~~operations for the nine months ended September 30~~costs, ~~2002,~~other ~~five~~operating ~~months ended September 30~~income, ~~2001~~ ~~and~~other ~~four~~operating ~~months ended April 30~~expense, ~~2001,~~impairment ~~in terms~~ of ~~amounts~~intangible asassets ~~well~~and asproperty, ~~percentages~~plant ofand ~~net~~equipment ~~sales.~~and ~~Financial~~restructuring ~~information for periods prior to~~ and ~~subsequent~~reorganization ~~to the acquisition transactions have been separated in the following table by inserting a solid vertical line between the columns for such periods~~charges.

Predecessor
Successor
Messer Griesheim GmbH
Messer Griesheim Holding AG
Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
€ (in millions) % € (in millions) % € (in millions) %
Net sales 1,143.9 100.0 659.5 100.0 574.5 100.0
Cost of sales (567.1 ) (49.6 ) (336.2 ) (51.0 ) (293.4 ) (51.1 )
Gross profit 576.8 50.4 323.3 49.0 281.1 48.9
Distribution and selling costs (355.4 ) (31.1 ) (192.0 ) (29.1 ) (177.2 ) (30.8 )
General and administrative costs (95.9 ) (8.4 ) (47.5 ) (7.2 ) (45.0 ) (7.8 )
Other, net(1) (32.4 ) (2.8 ) (33.0 ) (5.0 ) (12.4 ) (2.2 )
Operating profit 93.1 8.1 50.8 7.7 46.5 8.1
Interest expense, net (108.8 ) (9.5 ) (64.3 ) (9.7 ) (36.4 ) (6.3 )
Loss before income taxes and minority interests (28.6 ) (2.5 ) (29.9 ) (4.5 ) (6.6 ) (1.1 )
Income taxes (21.7 ) (1.9 ) (21.8 ) (3.3 ) (4.8 ) (0.8 )
Net loss (58.0 ) (5.1 ) (56.2 ) (8.5 ) (13.5 ) (2.3 )
Normalized EBITDA 297.0 26.0 171.0 25.9 125.9 21.9
Net sales Net sales remained nearly unchanged at €376.9 million in the second quarter 2003 compared to €377.0 million in the second quarter 2002 and are shown by business areas below.

11

Three months ended
June 30, 2003
(in € millions)

Three months ended
June 30, 2002
(in € millions)

Net sales (Business Areas)

Germany

160.9

156.0

Western Europe, excluding Germany

65.1

65.1

Eastern Europe

60.0

54.1

North America

81.1

87.2

Others

9.4

14.0

Reconciliation / Corporate

0.4

0.6

Total

376.9

377.0

        AsNet asales ~~result~~in ofGermany ~~the~~increased ~~acquisition~~by ~~transactions,~~3.1% ~~the~~to ~~refinancing~~€160.9 ~~program~~million ~~and~~in the ~~divestiture~~second ~~program,~~quarter as2003 ~~described~~from ~~above,~~€156.0 amillion ~~comparison~~in of the ~~nine~~second ~~months~~quarter ~~ended September~~ 2002. ~~with~~This ~~the four~~increase ~~months ended April 30, 2001 and the five months ended September 30, 2001~~ is ~~not~~caused ~~meaningful.~~by ~~The~~a ~~acquisition~~strong ~~transactions~~demand ~~were accounted for~~ in ~~a manner similar to a "purchase" business combination and, accordingly,~~ the ~~cost~~pipeline ~~of the acquisition has been allocated to the assets acquired~~ and ~~the~~bulk ~~liabilities assumed based on their fair values~~business. ~~The~~Additionally, ~~accounting treatment impacts~~ our ~~results~~specialty ofgases ~~operations~~business for post acquisition periods primarily by increasing amortization of goodwill, increasing depreciation of property, plant and equipment, reducing losses of disposals of subsidiaries and other assets included in the ~~divestiture~~semiconductor ~~program~~segment ~~and~~reflected ~~correspondingly~~a ~~decreasing~~continued ~~our~~recovery ~~operating~~with ~~profit~~a ~~compared to all periods prior to April 30, 2001~~16.3% ~~The~~sales ~~refinancing program increased our interest expense compared to all periods prior to April 30, 2001~~increase. ~~In addition, certain subsidiaries to be sold as part of our divestiture program have been deconsolidated and thus excluded from the results of operations for all periods after April 30, 2001.~~

~~Three~~Net ~~Months~~sales ~~Ended~~in ~~September 30~~Western Europe (excluding Germany) amounted to €65.1 million in the second quarter 2003 and 2002. Lower sales in the United Kingdom (€2.7 million) due to a general weakness in the beverage business, less engineering equipment sales and a decline in the value of GBP in the second quarter 2003 compared to the second quarter 2002 ~~Compared~~have ~~with~~been ~~Three~~compensated ~~Months~~by ~~Ended~~an ~~September 30~~increase of sales within France, ~~2001~~ Spain and Italy. The sales increases can be explained as follows: in France as a result of higher sales within the carbon dioxide business for the food industry, in Spain due to continued strong demand from the chemical industry and in Italy due to price increases.

        ~~Except~~Net ~~for~~sales ~~the~~in ~~effect~~Eastern ofEurope increased by 10.9% to €60.0 million in the ~~final~~second ~~purchase~~quarter ~~price~~2003 ~~allocation~~from ~~subsequent~~€54.1 tomillion in the ~~acquisition~~second ~~transaction,~~quarter ~~management~~2002. ~~believes~~This ~~that~~increase ~~comparison~~in sales is spread over all of the ~~three~~13 ~~month period~~countries ~~ended~~in ~~September 30,~~our ~~2002~~Eastern ~~and~~European region. The major drivers for the ~~three~~growth ~~month~~are ~~period~~Poland ~~ended~~due ~~September 30,~~a ~~2001~~new iscarbon ~~meaningful~~dioxide plant acquired at year end 2002 as ~~presented~~well ~~below~~as strong continued demand within Austria and Slovakia.

        ~~The following~~Net ~~table~~sales ~~sets~~in ~~forth~~North aAmerica ~~summary~~decreased ofby 7.0% to €81.1 million in the ~~results~~second quarter 2003 from €87.2 million to the second quarter 2002. This decrease is caused primarily by the negative currency impact due to the significant decline in the value of ~~operations~~the ~~for~~US$ against the ~~three~~Euro ~~months~~from ~~ended~~the ~~September 30,~~second quarter 2002, ~~three~~to ~~months~~the ~~ended~~second ~~September 30,~~quarter ~~2001,~~2003. inThe ~~terms~~consolidation of ~~amounts~~ asthe ~~well~~Constar cylinder business could offset the reduction in sales as ~~percentages~~a result of ~~net~~the ~~sales~~disposal of our operations in Canada in the third quarter 2002 pursuant to the divestiture program. The Canadian operations accounted for € 4.1 million in sales in the second quarter 2002.

Successor
Messer Griesheim Holding AG
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
€ (in millions) % € (in millions) %
Net sales 380.4 100.0 393.6 100.0
Cost of sales (186.7 ) (49.1 ) (206.1 ) (52.4 )
Gross profit 193.7 50.9 187.5 47.6
Distribution and selling costs (116.9 ) (30.7 ) (112.4 ) (28.6 )
General and administrative costs (28.1 ) (7.4 ) (28.7 ) (7.3 )
Other, net(1) (15.7 ) (4.1 ) (21.4 ) (5.4 )
Operating profit 33.0 8.7 25.0 6.3
Interest expense, net (32.5 ) (8.5 ) (40.1 ) (10.2 )
Loss before income taxes and minority interests (12.6 ) (3.3 ) (17.5 ) (4.4 )
Income taxes (10.5 ) (2.8 ) (20.9 ) (5.3 )
Net loss (25.8 ) (6.8 ) (41.3 ) (10.5 )
Normalized EBITDA 99.3 26.1 98.1 24.9
Net Sales in Others represent the non core operations in China and Latin America. Net sales in this segment decreased to €9.4 million in the second quarter 2003 from €14.0 million in the second quarter 2002. The major part (€3.9 million) of the decrease is due to changes in the consolidation perimeter. As of 2003, Peru has been consolidated for the first time. On the other hand, our activities in Central America have been changed from full consolidation to “at equity” consolidation due to a change of control. The remaining reduction is the result of the negative currency impact of €1.8 million from the local currency in China which is directly linked to the US$.

12 Cost of sales. Cost of sales decreased by 3.1% to €182.9 million in the second quarter 2003 from €188.8 million in the second quarter 2002. Cost of sales consists primarily of raw material costs (principally energy costs), purchased parts and direct labor, as well as manufacturing overheads and depreciation.

        ~~Net~~ The relative decrease in cost of sales~~.    Net~~ as a percentage of net sales ~~decreased~~resulted ~~3.4%~~from toour ~~€380~~successful cost savings initiatives.~~4 million~~ inAs ~~the third~~a ~~quarter~~result, ~~2002~~our ~~from~~gross ~~€393~~margin increased to 51.~~6 million~~5% in the ~~third~~second quarter ~~2001~~2003 ~~based~~from ~~essentially~~49.9% onin the ~~factors~~second ~~described~~quarter ~~below~~2002.

Messer Griesheim Holding AG
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
€ (in millions) € (in millions)
Net sales (Business Areas)
Germany 168.8 163.9
Western Europe, excluding Germany 63.6 64.7
Eastern Europe 54.3 54.2
North America 80.0 95.9
Others 13.8 14.7
Reconciliation/Corporate (0.1 ) 0.2
Total 380.4 393.6
Distribution and selling costs. Distribution and selling costs increased by 2.9% to €120.7 million in the second quarter 2003 from €117.3 million in the second quarter 2002. Distribution and selling costs consist primarily of sales organization costs, transport of gases and cylinders from the production site or filling station to the customer, depreciation of the cylinders and tanks at the customer site, advertising and sales promotions, commissions and freight.

        ~~Cost~~ The ofrelative ~~sales.    Cost~~increase ~~of sales decreased by 9.4% to €186.7 million~~ in ~~the~~distribution ~~third quarter~~and ~~2002~~selling ~~from~~costs ~~€206.1 million~~resulted ~~in the third quarter 2001. Cost of sales consist~~ primarily offrom ~~raw~~higher ~~material~~fuel costs ~~(principally~~in ~~energy~~Europe ~~costs), purchased parts~~ and ~~direct~~the ~~labor~~United States, as ~~well~~from as31.1% ~~manufacturing~~to ~~overheads~~32.0% ~~and~~of ~~depreciation.~~net sales.

        ~~The change~~ General inand ~~cost~~administrative ofcosts. ~~sales~~General ~~was~~and ~~impacted~~administrative byexpenses andecreased ~~amount~~by of12.2% to €228.4 8 million ~~representing~~in ~~additional~~the ~~depreciation~~second ~~due~~quarter to2003 ~~step~~from ~~ups~~€32.8 ~~related~~million toin the ~~purchase~~second ~~method~~quarter 2002. General and administrative costs consist primarily of ~~accounting~~ ~~which~~personnel ~~was~~costs ~~not~~attributable ~~finalized~~to general management, finance and human resources functions, as well as other corporate overhead charges.

13 These absolute and relative decreases in general and administrative costs resulted from our successful cost saving initiatives as well as lower consultancy costs.

~~until~~ Operating ~~after~~profit. ~~the~~Operating ~~third~~profit ~~quarter~~increased ~~2001~~6.0% ~~Excluding~~to ~~this~~€33.8 ~~effect,~~million ~~cost~~in ofthe ~~sales~~second ~~decreased~~quarter by2003 10from €31.4%9 ~~for~~million in the ~~third~~second quarter 2002 ~~compared~~based toessentially on the ~~third~~factors ~~quarter~~described ~~2001~~below.

        The absolute decrease is caused by lower sales as compared to the third quarter 2001. However, the relative decrease in cost of sales resulted from our successful cost savings initiatives and sales price increases and surcharges primarily in the U.S.

Three months ended
June 30, 2003
(in € millions)

Three months ended
June 30, 2002
(in € millions)

Operating profit (loss) (Business Areas)

Germany

29.3

26.5

Western Europe, excluding Germany

1.2

2.7

Eastern Europe

8.4

7.1

North America

3.3

6.2

Others

1.4

2.3

Reconciliation / Corporate

(9.8)

(12.9)

Total

33.8

31.9

        ~~Distribution~~In ~~and~~Germany, ~~selling~~the ~~costs.    Distribution~~operating ~~and~~profit ~~selling costs~~ increased by 410.06% to €~~116~~29.9 3 million in the ~~third~~second quarter ~~2002~~2003 ~~from~~as compared to an operating profit of €~~112~~26.4 5 million in the ~~third~~second quarter ~~2001~~2002. ~~Distribution~~In ~~and~~addition ~~selling~~to ~~costs~~increased ~~consist primarily of~~ sales ~~organization~~ ~~costs,~~in ~~transport~~the ofsecond ~~gases~~quarter ~~and~~2003, ~~cylinders from~~ the ~~production~~improvement ~~site~~results orprimarily ~~filling~~from ~~station to~~ the ~~customer,~~effectiveness ~~depreciation~~ of the ~~cylinders~~cost ~~and~~savings ~~tanks~~initiatives atimplemented after the ~~customer~~second ~~site,~~quarter ~~advertising~~of ~~and sales promotions, commissions and freight~~2002.

        ~~The change~~ In inWestern ~~distribution~~Europe, ~~and~~excluding ~~selling~~Germany, ~~costs~~the ~~was~~operating ~~impacted~~profit decreased by an55.6% ~~amount~~to of €91.8 2 million ~~representing~~in ~~additional~~the ~~depreciation~~second ~~due~~quarter 2003 compared to ~~step~~an ~~ups~~operating ~~related~~profit toof ~~the~~€2.7 ~~purchase method~~million ofin ~~accounting~~the ~~which~~second ~~was~~quarter ~~not~~2002. ~~finalized~~The ~~until~~operating ~~after~~profit in the ~~third~~second quarter ~~2001.~~2003 ~~Excluding~~includes ~~this~~restructuring ~~effect, distribution~~ and ~~selling~~reorganization ~~costs~~expenses ~~decreased~~of ~~by 4~~€1.3% ~~for~~million which did not occur in the ~~third~~same ~~quarter~~period 2002. ~~compared~~The tomajor ~~the third~~part ~~quarter~~of ~~2001~~this ~~due~~amount relates to ~~the~~an ~~ongoing~~outsourcing ~~decline~~of in the ~~value~~distribution offunction and to the ~~US$~~redundancy ~~against~~of ~~the~~our ~~Euro~~management in the ~~third~~United ~~quarter 2002~~Kingdom. ~~This~~The ~~absolute~~additional ~~decrease~~increase iswas caused by ~~lower~~higher ~~sales~~distribution and selling costs as ~~compared~~a toresult ~~the~~of ~~third~~bad ~~quarter~~debt ~~2001~~provision within Italy (€0.5 million) and in France where a tax audit resulted in prior years costs (€0.6 million).

        ~~General~~In ~~and~~Eastern ~~administrative~~Europe, ~~costs.    General~~the ~~and~~operating ~~administrative~~profit ~~expenses~~increased ~~decreased slightly by 2~~18.13% to €288.1 4 million in the ~~third~~second quarter ~~2002~~2003 ~~from~~compared ~~€28.7 million~~ to ~~the~~an ~~third~~operating ~~quarter~~profit ~~2001~~of €7.1 ~~General~~million ~~and~~in ~~administrative~~the ~~costs~~second ~~consist~~quarter ~~primarily~~2002. ofIn ~~personnel costs~~addition ~~attributable~~ to ~~general~~increased ~~management,~~sales ~~finance~~in ~~and~~2003 ~~human~~the ~~resources~~improvement ~~functions,~~results asprimarily ~~well~~from asthe ~~other~~effectiveness ~~corporate~~of ~~overhead~~the ~~charges.~~cost ~~These~~savings ~~decreases~~initiatives implemented in ~~general and administrative costs resulted from our successful cost saving initiatives~~2003.

        ~~Operating~~In ~~profit.    Operating~~North America, the operating profit ~~increased~~decreased 32by 46.08% to €333.0 3 million in the ~~third~~ second quarter 2003 compared to an operating profit of €6.2 million in the second quarter 2002. ~~from~~The currency decline of the US$ which resulted in an operating profit reduction of €251.0 4 million in the ~~third~~second quarter ~~2001~~of ~~based~~2003 ~~essentially~~has onbeen compensated by the ~~factors~~increase ~~described~~of ~~below~~sales in the second quarter of 2003. The consolidation of Constar and the elimination of the Canadian business led to additional operating profit of €0.3 million. Additionally, a goodwill impairment charge of €2.9 million was recorded during the second quarter 2003.

Messer Griesheim Holding AG
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
€ (in millions) € (in millions)
Operating profit (loss) (Business Areas)
Germany 30.8 44.8
Western Europe, excluding Germany (0.2 ) 5.8
Eastern Europe 9.7 9.9
North America 2.0 1.0
Others 2.1 0.9
Reconciliation/Corporate (11.4 ) (37.4 )
Total 33.0 25.0
Operating profit in Others represents the non core operations in China and Latin America. The operating profit decreased to €1.4 million in the second quarter 2003 as compared to €2.3 million in the second quarter 2002. This decrease resulted from changes in the consolidation perimeter. As of 2003, Peru has been consolidated for the first time. Our activities in Central America have been changed from full consolidation to “at equity” consolidation due to a change of control. Excluding the impact from consolidation perimeter changes the operating profit in the second quarter 2003 decreased slightly compared to second quarter 2002 due to the decline of the Chinese currency, which is linked directly to the US$.

14Operating loss for Reconciliation / Corporate decreased to €9.8 million in the second quarter 2003 from an operating loss of €12.9 million in the second quarter 2002. Reconciliation / Corporate represents the central administrative function of the Group. The decrease in operating loss results primarily from lower consultancy costs.

         Interest expense, net.     Net interest expense decreased by 19.03% to €3233.5 1 million in the ~~third~~second quarter ~~2002~~2003 from €4041.1 0 million in the ~~third~~second quarter ~~2001~~2002. This decrease is due to our successful debt reduction including mandatory, scheduled and voluntary early repayments of the senior facility agreement as well as the partial repurchase of the senior notes. Additionally, the average interest rate has been reduced from 8.27% to 8.01%.

        Income taxes.     In the ~~third~~second quarter ~~2002~~2003, ~~the~~we ~~Company~~ recorded income tax expense of €108.5 7 million, compared to an income tax expense of €208.9 0 million in the ~~third~~second quarter ~~2001~~2002. ~~Despite~~Income ~~our operating loss, income~~ tax ~~expenses~~expense ~~are incurred~~ mainly ~~due~~resulted tofrom non-deductible interest expense and goodwill amortization ~~as well as withholding taxes of approximately €5~~.~~5 million on dividends received.~~

        Net loss.    In ~~addition~~Net loss decreased by 70.9% to €5.5 million in the ~~factors~~second ~~discussed~~quarter ~~above,~~2003 ~~net~~from ~~loss~~€18.9 ismillion ~~also~~in ~~impacted~~the bysecond aquarter ~~release~~2002. ~~of cumulative~~The ~~translation~~decrease ~~adjustment~~was ~~resulting~~mainly ~~from~~due ~~dividend~~to ~~payment~~the increase in operating profit and ~~repurchase~~the reduction of acorporate ~~portion~~debt ofresulting ~~the~~in ~~Senior~~significantly ~~Notes~~lower ~~during~~interest ~~September 2002~~charges in the second quarter 2003.

15Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002

Except for Sales, the management of the Company considers that the trends and the explanations for such trends are similar for the cumulative six month periods as for the three month periods just presented. Therefore, management does not believe that comparing such cumulative periods would bring additional meaningful elements not already mentioned in the above presented comparison for the three month periods.

Total net sales decreased by 3.0% to €740.4 million for the six months ended June 30, 2003 from €763.5 million for the six months ended June 30, 2002. Net sales in Germany increased by 2.4% due to higher demand in the pipeline and bulk business as well as new capacity brought on stream by the Dormagen plant. In Eastern Europe net sales increased by 8.9% due to increasing demand in Slovenia and the start-up of a new CO2-plant in Poland. These increases were offset by lower sales in Western Europe and North America. Western Europe (excluding Germany) shows a 2.4% decrease of net sales, mainly resulting from lower sales in the United Kingdom due to a general weakness in the beverage business and a decline in the value of the GBP compared to 2002. In North America we face a decrease in net sales of 14.9% as a consequence of the decline in the value of the US$ against the Euro which could not be compensated by the recovery of the U.S. business of the second quarter 2003.

Liquidity and Capital Resources
Cash Flows for the ~~Three~~Six Months Ended ~~September~~ June 30, ~~2002~~2003 and the ~~Three~~Six Months Ended ~~September~~ June 30, ~~2001~~ 2002

        The following table summarizes our cash- flow activity during the ~~three~~six months ended ~~September~~ June 30, ~~2002~~2003 and the ~~three~~six months ended ~~September~~ June 30, ~~2001~~2002.

Messer Griesheim Holding AG
Six months endedJune 30, 2003 (in € millions) Six months endedJune 30, 2002 (in € millions)
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
Cash flow from operating activities 174.5 174.2
€ (in millions) € (in millions)
Cash flow used in investing activities (17.5) (16.5)
Cash flow from operating activities 100.6 112.8
Cash flow used in financing activities (151.9) (212.1)
Cash flow from (used in) investing activities (9.3 ) 3.5
Cash and cash equivalents, end of period 130.2 126.4
Cash flow (used in) from financing activities (58.2 ) 36.0
Cash and cash equivalents, end of period 159.2 258.3

        Cash flow from operating activities.     The cash flow from operating activities for the ~~three~~six months ~~ended~~ ~~September 30, 2002 decreased to €100.6 million from €112.8 million for the three months~~ ended ~~September~~ June 30, ~~2001.~~2003 ~~The~~remained ~~decrease~~stable ~~is mainly~~at ~~due to higher tax payments resulting from withholding taxes of~~ €5174.5 ~~million~~ ~~in connection with dividends received. Operating cash flows in the three months period ended September 30, 2002 reflect a net loss of €25.8~~ million, ~~consisting~~as ofcompared ~~EBIT~~to ~~(earnings before interest and taxes) of~~ €17174.2, ~~net~~million offor ~~interest and taxes of €32.5 and €10.5, respectively. Operating cash flow in~~ the ~~third~~six ~~quarter~~months ofended ~~2001~~June ~~reflects a net loss of €41.3 million~~30, ~~consisting of EBIT (earnings before interest and taxes) of €19~~2002.~~7 million,~~ ~~net of interest and taxes of €40.1 million and €20.9 million, respectively.~~

        Cash flow ~~from (~~used in) investing activities.     The cash flow used in investing activities for the ~~three~~ six months ended ~~September~~ June 30, ~~2002~~2003 ~~decreased~~increased to €917.3 5 million from ~~a cash inflow of~~ €316.5 million infor the ~~third~~six ~~quarter~~months ~~2001~~ended June 30, 2002. ~~The~~This ~~decrease~~increase mainly resulted from ~~decreased~~lower proceeds from the ~~sale~~sales of investments toin ~~€1.5 million~~connection ~~from~~with ~~€19.6 million,~~the ~~partly~~divestiture ~~offset~~program ~~by higher capital expenditures~~ in the ~~third~~ second quarter ~~2001~~2003.

        Cash flow (used in) ~~from~~ financing activities.    ~~The~~ ~~company~~We used €58151.2 9 million in cash for financing activities during the ~~three~~six months ended ~~September~~ June 30, ~~2002~~2003. Cash flows for financing activities during the ~~third~~six ~~quarter~~months ofended ~~2002~~June 30, 2003 were mainly applied to pay ~~principal and~~ interest of €63.3 million related to our corporate debt ofand ~~€23.1 million,~~net ~~thereof~~repayments ~~repurchase~~ of ~~Senior~~debt ~~Notes~~amounting ~~(€17.1 million)~~to ~~and~~ €1984.4 0 million~~, respectively~~. Cash flows for financing activities during the ~~third~~six ~~quarter~~months ofended ~~2001~~June 30, 2002 included interest paid of €2176.9 1 million and ~~€57.9 million proceeds from the addition to~~ corporate debt, ~~net~~reduction of ~~the increase in cash collateral~~€131.7 million.

16
Contractual Obligations

        The following table summarizes our contractual obligations as of ~~September~~ June 30, ~~2002~~2003:

Less than 1 year 1-3 years 4-5 years After 5 years Total
Payments Due by Period
€ (in millions) € (in millions) € (in millions) € (in millions) € (in millions)
Less than1 Year 1-3 years 4-5 years After5 years Total
Contractual Obligations
(in € millions)
Long-Term Debt 32.6 88.3 117.2 1,095.9 1,334.0
Contractual Obligations
Capital Lease Obligations(1) 16.9 53.6 59.0 33.0 162.5
Long-Term Debt 76.1 104.1 132.3 892.4 1,204.9
Operating Lease Obligations 8.9 17.5 15.2 50.5 92.1
Capital Lease Obligations(1) 27.3 65.1 64.0 0.8 157.2
Commitments
Operating Lease Obligations 10.4 15.0 7.2 23.3 55.9
Other Long-Term Obligations(2) 24.5
Commitments
ACIC Joint Ventures(3) 32.0
Guarantees – Sales of Investments(2) 116.6
Financial Guarantees(4) 127.8
Other Long-Term Obligations(3) 12.9
Long-Term Purchase Agreements 60.8
ACIC Joint Ventures 32.0
Commitments for capital to be funded to equity and cost method investees 15.9
Financial Guarantees(4) 39.6
Long-Term Purchase Agreements 47.1
Other(5) 4.6

(1) The capital lease obligations include an interest portion of €23.5 million.

(2) Guarantees related to the sale of investments, net of reserved amounts, mainly reflect customary guarantees for representation and warranties provided for in sale agreements.

(3) Other financial obligations not included in the consolidated balance sheet relate to long-term commitments for capital expenditures of €12.9 million at June 30, 2003.

(4) Financial guarantees net of provisions mainly include guarantees for at equity consolidated subsidiaries of €1.9 million and risks related to the divestiture of Singapore operations of €10.2 million.

(5) Commitments for capital to be funded to equity and cost method investees totaled €4.6 million at June 30, 2003.

Anticipated Uses/Expenditures and Sources of Funds

        ~~Capital~~Operational capital expenditures ~~in our core markets~~ as a percentage of net sales were 6.9% and 6.5% in the ~~nine-~~six months ~~period~~ ended ~~September~~ June 30, 2003 and 2002, respectively. A core component of our strategy is to reduce Messer Griesheim's historically high levels of capital expenditures.

        We will require funds to meet scheduled debt repayments and to fund the planned acquisition of the ACIC joint ventures from Aventis as elsewhere stated in this Form 6-K, with a purchase price of €32.0 million plus interest and the assumption of existing debt (approximately 14€9.1 8 million at ~~September~~ June 30, ~~2002~~ 2003). On July 25, 2003, a settlement agreement was reached with Hoechst obligating Messer to purchase the ACIC joint ventures.

        We had total indebtedness (including finance leases) of €1,~~468~~338.2 6 million at ~~September~~ June 30, ~~2002~~2003, of which €1,~~426~~242.3 6 million was long-term indebtedness. The indebtedness was primarily due to banks and our bondholders and had an average weighted interest rate ofon existing corporate debt including interest rate swap agreements but not including amortization of debt issuance costs of approximately 8.101% asper ofannum ~~September~~ at June 30, ~~2002~~2003.

        Messer Griesheim's principal sources of funds have been cash ~~flow~~flows from operations, proceeds from divestitures and borrowings from banks. We expect that, going forward, we will finance ~~on-going~~ ongoing operations and finalize our implementation of our cost-savings measures and information-technology improvements with a combination of existing cash balances and operating cash flows, and available funds from our credit lines. We expect that our other cash requirements will be met through operating cash flows.

        As of ~~September~~ June 30, ~~2002~~2003, we had in place unused revolving credit lines totaling €~~286~~294.0 million. In addition, certain of our subsidiaries have unused available credit lines under local facilities.

        From October 1, 2002 until October 8, 2002 Messer Griesheim has repurchased additional Senior Notes amounting to €39.2 for an average price of 102.9%. In connection with the repurchase, unamortized finance cost of €3.3 million, fees and tender premium of €1.5 million were incurred.
17
Goldman and Sachs was our agent in repurchasing the senior notes and the fees paid for this were €0.4 million.
        In October 2002, Messer Griesheim has received a loan from its shareholder Messer Griesheim Group amounting to €33.0 million. The loan bears a fixed interest rate of 5.0% per annum and has a maturity of five years.
Interest Rate Risk Management

        We are exposed to interest rate risk mainly through our debt instruments. We manage interest rate risk on a group-wide basis with a combination of fixed and floating rate instruments designed to balance the fixed and floating interest rates. We have entered into interest rate swap agreements that effectively convert a major portion of our floating rate indebtedness to a fixed rate basis for the next ~~two and one half~~ years, thus reducing the impact of interest rate changes on future interest expense.

        As of September 30, 2002, approximately 87% of our debt facilities were hedged to comply with the terms of our senior facilities agreement. The remaining 13% of our multicurrency debt facilities have floating rates. With respect to such portion of the debt facilities for each fluctuation in market interest rates of 1%, the interest expense related to such portion of the debt facilities would fluctuate by approximately €1.9 million annually.
Foreign Exchange Risk Management

We also are exposed to foreign currency exchange risk related to foreign currency denominated assets and liabilities and debt service payments denominated in foreign currencies. We manage foreign currency exchange risk on a group-wide basis using exchange forward contracts. Our current policy with respect to limiting foreign currency exposure is to hedge foreign currency exposures.

        For the majority of our operations, we have local production facilities which generate cash flows in local currencies. These cash flows generally match local expenditures and debt service of these operations, resulting in a 95% or greater "“natural hedge"” as of ~~September~~ June 30, ~~2002~~2003.

        The most significant foreign exchange rate risks exist in ~~Central~~Latin America, Eastern Europe and China where we produce locally. A portion of our debt serviced by these facilities is denominated in Euros and U.S. dollars. Accordingly, we depend on the stability of currencies in these countries in order to service these debts. The total Euro and US dollar denominated debt in these countries is €2533.7 0 million. The single largest debt is approximately €713.9 7 million in Poland. An increase or decrease of 10% of the Zloty against the Euro would result in a pretax impact of approximately €01.8 4 million on our annual results of operations. If all the currencies in these countries depreciate against the Euro and the U.S. Dollar, a 10% change would impact our consolidated net results by approximately €23.6 3 million annually on a pretax basis.

        Our ~~reporting~~ functional currency is the Euro. The net assets outside the "“Euro zone"” are subject to currency fluctuations against the Euro. The most volatile currencies are those of Eastern Europe, China, and ~~Central~~Latin America. Normally, we do not hedge the net assets of foreign subsidiaries. ~~Except~~As ~~for~~explained ~~our~~above, ~~subsidiary~~cash ~~located~~flows ingenerally ~~Yugoslavia,~~match local expenditures and debt services of these operations as a ~~hyperinflationary~~result ~~economy,~~of ina “natural hedge”. In the event the Euro significantly increases in value relative to other currencies, the accounting treatment would result in a charge against our equity without any effect on net income.

Derivative Financial Instruments
        The table below provides information about our significant derivative financial instruments that are sensitive to changes in interest and foreign currency exchange rates as of ~~September~~ June 30, ~~2002~~2003. The table presents the notional amounts and the weighted average contractual foreign exchange rates and interest rates. The terms of our cross currency exchange forward contracts generally do not exceed one year. At June 30, 2003, our interest rate swaps had remaining terms of approximately two years.

18

Contract
notional
Amount

Contractual
rates

Fair value
June 30,
2003

(€ equivalent in thousands,
except for contractual rates)

Interest Rate Swap Contracts

Euro

82,556

4.45500%

(2,308)

Euro

180,000

4.69500%

(5,189)

Euro

50,875

4.73000%

(1,908)

U.S. dollar

217,844

5.00000%

(9,141)

Euro

41,625

4.65250%

(1,266)

Interest Rate Forward Swap Contracts

Euro

170,000

4.84500%

(2,123)

Euro

32,625

4.21000%

(278)

U.S. dollar

196,971

5.18500%

(3,455)

Euro

30,000

2.99000%

(41)

Euro

80,000

3.95630%

(167)

Euro

70,000

4.10540%

(162)

Euro

110,000

4.31340%

(512)

Forward
exchange rate

Foreign currency forward contracts:

Euro/U.S. dollar

2,590

1.0669

(164)⁽¹⁾

of(1) ~~our~~Freestanding ~~cross-currency exchange forward contracts generally do not exceed one year. At September 30, 2002, our interest rate swaps had remaining terms of two and one half years.~~ Derivatives

Contract Notional Amount Contractual Rates Fair value September 30, 2002
(€ equivalent in thousands, except for contractual rates)
€'000 % €'000
Interest rate cap contracts(1)
Euro 25,565 5.50000 13
Interest rate swap contracts
Euro 86,573 4.45500 (2,046 )
Euro 220,000 4.69500 (6,094 )
Euro 53,350 4.73000 (1,528 )
U.S. dollar(2) 252,632 5.00000 (13,798 )
Euro 43,650 4.65250 (1,201 )
Forward interest rate swap contracts
Euro 170,000 4.84500 (874 )
U.S. dollar(2) 228,426 5.18500 (2,192 )
Forward exchange rate
Foreign currency forward contracts(1)(2)
Euro/U.S. dollar 25,380 0.87590 (3,087 )
British pounds sterling/U.S. dollar 1,276 1.55896 6
Euro/U.S. dollar 12,690 0.96130 282
Commodity Price Risk

We are exposed to commodity price risks through our dependence on various raw materials, such as chemical and energy prices. We seek to minimize these risks through our sourcing policies, operating procedures and pass through clauses in our product pricing agreements. We currently do not utilize derivative financial instruments to manage any remaining exposure to fluctuations in commodity prices.

Risk Identification and Analysis

The identification and analysis of risks relating to our operations is conducted through the application of an enterprise-wide risk management system, encompassing all of our activities worldwide. The goal of this risk management system is to foster a group-wide culture of risk management using a common set of objectives and standards in the measurement and treatment of risk. As with any risk management system, the results are based on individual assessments that may be subject to error. There is no guarantee that this system will consistently identify all of the important risks or provide an adequate assessment of their potential impact.

        We are exposed to market risk through our commercial and financial operations as described above. We ~~are~~have ~~implementing~~implemented a hedging policy to reduce some of these exposures, but we may still incur losses as a result of changes in currency exchange rates, interest rates and commodity risk. We do not purchase or sell derivative financial instruments for trading purposes.

19
Reconciliation to U.S. GAAP

~~Initial~~Our ~~Adoption~~results as reported under IFRS differ from our results as reconciled to U.S. GAAP, principally as a result of ~~Accounting~~the ~~Policies~~ different treatment under U.S. GAAP of:

        ~~Effective~~allocation ~~July 1, 2001, the Company adopted Statement 141 "Business Combinations" and certain provisions~~ of ~~SFAS 142~~ ~~"Goodwill and Other Intangible Assets". The Company adopted SFAS 142 in its entirety on January 1, 2002. SFAS 141 requires that the~~ purchase method of accounting be used for all business combinations initiated after June 30, 2001, as well as all purchase method business combinations completed after June 30, 2001. SFAS 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported separately from goodwill, and also indicates that any purchase price ~~allocable~~ to ~~an assembled workforce may not be accounted for separately. Additionally, SFAS 141 required, upon adoption of SFAS 142 in its entirety, that the Company evaluate its existing intangible~~ assets ~~and goodwill that were acquired in a prior purchase business combination, and~~ to make any necessary reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be ~~amortized~~sold, but instead will be tested for impairment annually (or more frequently if impairment indicators arise) in accordance with the provisions of SFAS 142. Intangible assets with definite useful lives will be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". By June 30, 2002 the Company had completed the first step of the transitional impairment test. As the result, an indication of impairment exists in reporting units located in North America and Eastern Europe. The second step of the impairment test will be completed by the end of the current fiscal year. Any transitional impairment loss will be recognized as a cumulative effect of a change in accounting principle.

        ~~In August 2001,~~amortization ~~the FASB approved for issuance SFAS 144. This Statement addresses financial accounting and reporting for the impairment or disposal~~ of ~~long-lived~~goodwill assets. This Statement supersedes SFAS 121 and the accounting and reporting provisions of APB Opinion No. 30 "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for ~~the~~periods ~~disposal~~after ofDecember a segment of a business (as previously defined in that Opinion). This Statement also amends ARB No. 51 "Consolidated Financial Statements" to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Company adopted the provisions of this Statement on January 131, 2002. The adoption of the new pronouncement did not have a material effect on the unaudited interim condensed consolidated financial statements. However, the Company has noted that certain provisions of SFAS 144 will potentially impact its accounting and reporting for the remaining subsidiaries to be sold under its divestiture program. The Company has also noted that the provisions of SFAS 144 would supersede certain provisions of EITF 87-11 and EITF 90-6 as they relate to allocation of purchase price in a business combination where the acquirer intends to sell a portion of the operations of the acquired enterprise and, as a result, had SFAS 144 been applied in accounting for the acquisition transactions, certain of the differences between U.S. GAAP and IAS relating to operations and entities included in the divestiture program would not have occurred. 2001

~~Main~~restructuring ~~Differences~~ costs,

        ~~Our~~provisions ~~results~~for aspensions ~~reported~~and ~~under~~similar ~~IAS differ from our results as reconciled to U.S. GAAP~~obligations, ~~principally as a result of the different treatment under U.S. GAAP of:~~

20asset retirement obligation, and

        ~~The significant~~sale ~~differences between IAS~~ and ~~U.S.~~leaseback ~~GAAP applicable to the financial statements presented herein are summarized below and further discussed elsewhere in this document~~accounting.

The ~~Three~~significant ~~Months~~differences ~~Ended~~between ~~September 30,~~IFRS ~~2002~~and U.S. GAAP applicable to the financial statements presented herein are summarized below and ~~Three~~further ~~Months~~discussed ~~Ended~~elsewhere ~~September 30,~~in ~~2001~~ this document.

        ~~Net~~Three ~~loss~~Months asEnded ~~reported~~June ~~under IAS was €(25.8) million in the three month period ended September~~ 30, ~~2002~~2003 and ~~€(18.6)~~Three ~~million as~~Months ~~reconciled~~Ended toJune ~~U.S.~~30, ~~GAAP. The main difference between net loss reported under IAS and net loss reported under U.S. GAAP is due to the discontinuation of goodwill amortization under U.S. GAAP upon adoption of SFAS 142.~~ 2002

        In the three ~~month~~months ~~period~~ ended ~~September~~ June 30, ~~2001~~2003 the net loss as reported under ~~IAS~~IFRS was €~~(41~~5.3)5 million, ~~respectively~~ and a net income of €~~(36~~1.8)2 million as reconciled to U.S. GAAP. The main difference between net loss reported under ~~IAS~~IFRS and net ~~loss~~income reported under U.S. GAAP is ~~primarily~~relates ~~due~~ to ~~amortization expense on intangible assets and assets to be sold within one year of~~ the ~~date~~discontinuation of ~~the~~goodwill ~~acquisition~~amortization ~~transaction and to the tax effect~~ under U.S. GAAP ~~associated~~upon ~~with~~adoption ~~these~~of ~~adjustments.~~SFAS 142.

In ~~Nine~~the ~~Months~~three ~~Ended~~months ~~September~~ ended June 30, 2002, ~~Five~~the ~~Months~~net ~~Ended~~loss ~~September 30,~~reported ~~2001~~under IFRS was €18.9 million and ~~Four~~€11.3 ~~Months~~million ~~Ended~~as ~~April 30,~~reconciled ~~2001~~ to U.S. GAAP. The difference between net loss reported under IFRS and net loss reported under U.S. GAAP was primarily due to amortization expense.

        ~~Net~~Six ~~loss~~Months asEnded ~~reported~~June ~~under IAS was €(58.0) million in the first nine months ended September~~ 30, ~~2002~~2003 and ~~€(35.2)~~Six ~~million~~Months ~~as reconciled~~Ended toJune ~~U.S. GAAP. There were reconciling adjustments of €0.6 million in first nine months ended September~~ 30, 2002 between IAS and U.S. GAAP relating to assets to be sold within one year of the date of the acquisition transaction. The remaining difference between net loss reported under IAS and net loss reported under U.S. GAAP is primarily due to the discontinuation of goodwill amortization under U.S. GAAP upon adoption of SFAS 142, provisions for pension and similar obligations and the tax effect under U.S. GAAP associated with these adjustments.

        In ~~the~~ ~~five month period ended September 30, 2001 and~~ the ~~four~~six ~~month~~months ~~period~~ ended ~~April~~ June 30, ~~2001~~2003 the net loss as reported under ~~IAS~~IFRS was €~~(56~~9.2)1 million and ~~€(13.5)~~ ~~million,~~a ~~respectively~~net ~~and~~income ~~€(52.9)~~of ~~million and~~ €~~(13.~~4).7 million as reconciled to U.S. GAAP. There were no reconciling adjustments in the six months ended June 30, 2003 between IFRS and U.S. GAAP relating to assets to be sold within one year of the date of the acquisition transaction. The remaining difference between net loss reported under ~~IAS~~IFRS and net ~~loss~~income reported under U.S. GAAP is primarily due to ~~amortization~~the ~~expense~~discontinuation ~~and~~of ~~assets~~goodwill toamortization beunder ~~sold~~U.S. ~~within~~GAAP ~~one~~upon ~~year~~adoption of ~~the date~~SFAS of142, ~~the~~provisions ~~acquisition~~for ~~transaction~~pension and tosimilar obligations and the tax effect under U.S. GAAP associated with these adjustments.

21In the six months ended June 30, 2002 the net loss reported under IFRS was €32.3 million and €44.1 million as reconciled to U.S. GAAP. The difference between net loss reported under IFRS and net loss reported under U.S. GAAP was primarily due to amortization expense and to impairment charges relating to goodwill as a result of the adoption of SFAS 142 shown as cumulative effect of change in accounting principle.

~~MESSER~~The ~~GRIESHEIM~~implementation ~~HOLDING~~requirements ~~AG UNAUDITED~~of ~~INTERIM~~SFAS ~~CONDENSED~~142 ~~CONSOLIDATED~~allowed ~~STATEMENTS~~up OFto ~~OPERATIONS (Amounts~~one year from the date of adoption to complete the initial impairment test and any resulting impairment write-down was effective as of the first day of the fiscal year in €which ~~thousands~~the Standard was adopted. As a result, ~~unless~~the ~~otherwise~~U.S. ~~stated)~~ GAAP information which is presented within the U.S. GAAP reconciliation note, required restatement to reflect the cumulative effect of a change in accounting principle as if the change had been initially recorded as of January 1, 2002.

Successor
Messer Griesheim Holding AG
Note Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
Net sales 380,397 393,565
Cost of sales (186,703 ) (206,074 )
Gross profit 193,694 187,491
Distribution and selling costs (116,913 ) (112,395 )
Research and development costs (2,753 ) (4,577 )
General and administrative costs (28,117 ) (28,669 )
Other operating income 5,384 8,685
Other operating expense (13,966 ) (20,505 )
Impairment of intangible assets and property, plant and equipment (1,251 ) —
Restructuring and reorganization charges 8 (3,036 ) (4,997 )
Operating profit 33,042 25,033
Equity method investments income, net 1,744 2,676
Other investment (expense) income, net (420 ) 3,088
Interest expense, net 4 (32,530 ) (40,127 )
Changes in fair value of investments in subsidiaries available for sale 9 (242 ) (9,426 )
Other financial income (expense), net (14,234 ) 1,232
Non-operating expense (45,682 ) (42,557 )
Loss before income taxes and minority interests (12,640 ) (17,524 )
Income tax expense, net 10 (10,469 ) (20,914 )
Loss before minority interests (23,109 ) (38,438 )
Minority interests, net of income taxes (2,670 ) (2,868 )
Net loss (25,779 ) (41,306 )
Table of Contents

MESSER GRIESHEIM HOLDING AG

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in € thousands, unless otherwise stated)

Note

Three months
ended
June 30, 2003

Three months
ended
June 30, 2002

Net sales

376,865

377,033

Cost of sales

(182,906)

(188,794)

Gross profit

193,959

188,239

Distribution and selling costs

(120,658)

(117,269)

Research and development costs

(2,381)

(2,698)

General and administrative costs

(28,794)

(32,806)

Other operating income

9,494

8,801

Other operating expense

(12,382)

(8,627)

Impairment of intangible assets and property, plant and equipment

1

(2,948)

—

Restructuring and reorganization charges

4

(2,501)

(3,718)

Operating profit

33,789

31,922

Equity method investment income (expense), net

359

(204)

Other investment (expense) income, net

4,498

(1,003)

Interest expense, net

2

(33,125)

(41,012)

Changes in fair value of investments in subsidiaries available for sale

5

—

186

Other financial (expense) income, net

(271)

1,859

Non-operating expense

(28,539)

(40,174)

Profit (loss) before income taxes and minority interests

5,250

(8,252)

Income tax expense

6

(8,689)

(7,978)

Loss before minority interests

(3,439)

(16,230)

Minority interests, net of income taxes

(2,094)

(2,627)

Net loss

(5,533)

(18,857)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
22MESSER GRIESHEIM HOLDING AG

~~MESSER GRIESHEIM HOLDING AG~~ UNAUDITED INTERIM CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF OPERATIONS ~~(Amounts in € thousands, unless otherwise stated)~~

Successor Predecessor
Messer Griesheim Holding AG Messer Griesheim GmbH
Note Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
Net sales 1,143,850 659,538 574,463
Cost of sales (567,127 ) (336,171 ) (293,414 )
Gross profit 576,723 323,367 281,049
Distribution and selling costs (355,436 ) (191,962 ) (177,182 )
Research and development costs (9,238 ) (6,748 ) (6,599 )
General and administrative costs (95,895 ) (47,514 ) (45,027 )
Other operating income 20,821 9,498 10,242
Other operating expense (35,463 ) (26,623 ) (11,133 )
Impairment of intangible assets and property, plant and equipment (1,251 ) — (2,356 )
Restructuring and reorganization charges 8 (7,162 ) (9,255 ) (2,540 )
Operating profit 93,099 50,763 46,454
Equity method investments income (expense), net 1,530 (5,302 ) (5,106 )
Other investment expense, net (1,114 ) (2,199 ) (4,544 )
Interest expense, net 4 (108,776 ) (64,270 ) (36,364 )
Changes in fair value of investments in subsidiaries available for sale 9 (748 ) (8,192 ) —
Other financial expense, net (12,595 ) (656 ) (6,990 )
Non-operating expense (121,703 ) (80,619 ) (53,004 )
Loss before income taxes and minority interests (28,604 ) (29,856 ) (6,550 )
Income tax expense, net 10 (21,693 ) (21,772 ) (4,813 )
Loss before minority interests (50,297 ) (51,628 ) (11,363 )
Minority interests, net of income taxes (7,733 ) (4,580 ) (2,135 )
Net loss (58,030 ) (56,208 ) (13,498 )
(Amounts in € thousands, unless otherwise stated)

Note

Six months
ended
June 30, 2003

Six months
ended
June 30, 2002

Net sales

740,372

763,453

Cost of sales

(358,682)

(380,424)

Gross profit

381,690

383,029

Distribution and selling costs

(234,644)

(238,523)

Research and development costs

(4,746)

(6,485)

General and administrative costs

(58,505)

(67,778)

Other operating income

13,851

15,437

Other operating expense

(22,221)

(21,497)

Impairment of intangible assets and property, plant and equipment

1

(2,948)

—

Restructuring and reorganization charges

4

(6,748)

(4,126)

Operating profit

65,729

60,057

Equity method investment income (expense), net

3,327

(214)

Other investment (expense) income, net

4,091

(694)

Interest expense, net

2

(62,653)

(76,246)

Changes in fair value of investments in subsidiaries available for sale

5

—

(506)

Other financial (expense) income, net

(1,711)

1,639

Non-operating expense

(56,946)

(76,021)

Profit (loss) before income taxes and minority interests

8,783

(15,964)

Income tax expense

6

(13,771)

(11,224)

Loss before minority interests

(4,988)

(27,188)

Minority interests, net of income taxes

(4,065)

(5,063)

Net loss

(9,053)

(32,251)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
23Table of Contents

MESSER GRIESHEIM HOLDING AG ~~UNAUDITED~~ ~~INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in € thousands, unless otherwise stated)~~

Note As of September 30, 2002 As of December 31, 2001
Assets
Intangible assets 810,786 852,809
Property, plant and equipment 1,517,810 1,697,679
Equity method investments 17,882 19,186
Cost method and other investments 50,824 59,347
Deferred tax assets 6,309 4,546
Other long-term receivables, net and other assets 11 18,739 43,081
Non-current assets 2,422,350 2,676,648
Inventories 12 81,894 80,098
Trade accounts receivable, net 289,269 290,743
Investments in subsidiaries available for sale 9 17,529 42,183
Other receivables and other assets 61,787 71,796
Cash and cash equivalents 13 159,164 188,018
Current assets 609,643 672,838
Total assets 3,031,993 3,349,486
Stockholders' equity and liabilities
Issued capital and reserves 967,180 967,180
Accumulated deficit (127,561 ) (69,531 )
Cumulative other comprehensive income (loss) (50,213 ) 5,740
Stockholders' equity 789,406 903,389
Minority interests 84,564 88,138
Provisions for pensions and similar obligations 169,008 166,356
Other provisions 65,297 53,344
Corporate debt, less current portion 4 1,368,374 1,540,312
Deferred tax liabilities 127,147 135,933
Other liabilities 28,967 25,353
Non-current liabilities 1,758,793 1,921,298
Other provisions 136,972 159,215
Corporate debt 4 31,845 40,927
Trade accounts payable 102,560 118,344
Miscellaneous liabilities 127,853 118,175
Current liabilities 399,230 436,661
Total stockholders' equity and liabilities 3,031,993 3,349,486
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

(Amounts in € thousands, unless otherwise stated)

Note

As of
June 30,
2003

As of
December 31,
2002

Assets

Intangible assets

747,747

790,878

Property, plant and equipment

1,405,246

1,516,310

Equity method investments

28,004

13,200

Other investments and long-term loans

28,343

36,861

Deferred tax assets

9,201

3,734

Other long-term receivables, net and other assets

13,081

21,966

Non-current assets

2,231,622

2,382,949

Inventories

7

72,468

72,585

Trade accounts receivable, net

264,590

279,099

Investments in subsidiaries available for sale

5

—

18,078

Other receivables and other assets

64,974

50,879

Cash and cash equivalents

8

130,208

135,218

Current assets

532,240

555,859

Total assets

2,763,862

2,938,808

Stockholders’ equity and liabilities

Issued capital and reserves

967,180

967,180

Accumulated deficit

(168,455)

(159,402)

Cumulative other comprehensive deficit

(121,181)

(72,291)

Stockholders’ equity

677,544

735,487

Minority interests

67,095

84,012

Provisions for pensions and similar obligations

171,352

169,287

Other provisions

74,222

68,529

Corporate debt, less current portion

2

1,194,992

1,327,120

Deferred tax liabilities

105,796

104,523

Other liabilities

23,925

23,723

Non-current liabilities

1,570,287

1,693,182

Other provisions

94,146

106,849

Corporate debt

2

87,128

48,298

Trade accounts payable

114,758

124,697

Miscellaneous liabilities

152,904

146,283

Current liabilities

448,936

426,127

Total stockholders’ equity and liabilities

2,763,862

2,938,808

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
24Table of Contents

MESSER GRIESHEIM HOLDING AG ~~UNAUDITED~~ ~~INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Amounts in € thousands, unless otherwise stated)~~

~~Predecessor~~ UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Other comprehensive income
Cumulative other comprehensive income
Subscribed capital Additional paid-in capital Accumulated deficit Hedging reserve Translation reserve Total Stockholders' Equity
Balance as of December 31, 2000 276,098 158,386 (80,164 ) — 84,204 84,204 438,524
IAS 39 transition adjustment — — 335 — — — 335
Net loss — — (13,498 ) — — — (13,498 )
Translation adjustment — — — — 3,522 3,522 3,522
Balance as of April 30, 2001 276,098 158,386 (93,327 ) — 87,726 87,726 428,883
(Amounts in € thousands, unless otherwise stated)

Successor

Other comprehensive income

Issued
capital

Capital
reserves

Accumulated
deficit

Hedging
reserve

Translation
reserve

Cumulative other
comprehensive
income (deficit)

Total
Stockholders’
equity

Balance as of December 31, 2001

90

967,090

(69,531)

(9,199)

14,939

5,740

903,389

Change in fair value of derivatives

—

—

—

607

—

607

607

Net loss

—

—

(32,251)

—

—

—

(32,251)

Cumulative translation adjustment

—

—

—

—

(72,111)

(72,111)

(72,111)

Total comprehensive loss

(103,755)

Balance as of June 30, 2002

90

967,090

(101,782)

(8,592)

(57,172)

(65,764)

799,634

Balance as of December 31, 2002

90

967,090

(159,402)

(16,943)

(55,348)

(72,291)

735,487

Change in fair value of derivatives

—

—

—

(295)

—

(295)

(295)

Net loss

—

—

(9,053)

—

—

—

(9,053)

Cumulative translation adjustment

—

—

—

—

(48,595)

(48,595)

(48,595)

Total comprehensive loss

(57,943)

Balance as of June 30, 2003

90

967,090

(168,455)

(17,238)

(103,943)

(121,181)

677,544

Other comprehensive income
Cumulative other comprehensive income
Subscribed capital Additional paid-in capital Accumulated deficit Hedging reserve Translation reserve Total Stockholders' Equity
Balance as of May 1, 2001 90 967,090 — — — — 967,180
Change in fair value of derivatives — — — (11,180 ) — (11,180 ) (11,180 )
Net loss — — (56,208 ) — — — (56,208 )
Translation adjustment — — — — (23,257 ) (23,257 ) (23,257 )
Balance as of September 30, 2001 90 967,090 (56,208 ) (11,180 ) (23,257 ) (34,437 ) 876,535
Balance as of December 31, 2001 90 967,090 (69,531 ) (9,199 ) 14,939 5,740 903,389
Change in fair value of derivatives — — — (8,310 ) — (8,310 ) (8,310 )
Net loss — — (58,030 ) — — — (58,030 )
Translation adjustment — — — — (47,643 ) (47,643 ) (47,643 )
Balance as of September 30, 2002 90 967,090 (127,561 ) (17,509 ) (32,704 ) (50,213 ) 789,406
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
25Table of Contents

MESSER GRIESHEIM HOLDING AG ~~UNAUDITED~~ ~~INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in € thousands, unless otherwise stated)~~

Successor Predecessor
Messer Griesheim Holding AG Messer Griesheim GmbH
Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
Losses before income taxes and minority interests (28,604 ) (29,856 ) (6,550 )
Income taxes (paid) refunded (28,001 ) (8,147 ) 6,964
Depreciation, amortization and impairment of property, plant and equipment and intangible assets 195,305 111,011 76,923
Changes in fair value of investments in subsidiaries available for sale 748 8,192 —
Write-down of investments 2,242 — —
Losses on disposals of property, plant and equipment and investments 445 — 7,186
Unsettled exchange differences 2,411 — —
Non-cash changes in equity method investments 735 31,396 (5,106 )
Interest expense, net 108,776 64,270 36,364
Other financial expense, net 12,595 656 6,990
Changes in inventories (3,689 ) 8,726 (10,474 )
Changes in receivables and other assets 28,344 20,692 (25,464 )
Changes in provisions (17,720 ) (29,150 ) (68,752 )
Changes in accounts payable and other liabilities 1,145 7,349 (26,991 )
Cash flow from (used in) operating activities 274,732 185,139 (8,910 )
Purchases of property, plant and equipment and intangible assets (76,236 ) (47,979 ) (49,467 )
Purchases of investments and loans to related parties (2,741 ) (60,973 ) (35,429 )
Investments in subsidiaries available for sale for extinguishment of debt (5,976 ) — —
Proceeds from the sales of property, plant and equipment and intangible assets 16,192 30,916 68
Proceeds from the sales of investments 34,467 19,630 13,746
Interest received 8,564 12,293 5,086
Cash flow used in investing activities (25,730 ) (46,113 ) (65,996 )
Capital contribution — 30 66,962
Net proceeds from additions to non-current corporate debt — 553,747 118,656
Repayments of non-current corporate debt (147,808 ) — —
Net (repayment of) proceeds from current corporate debt (7,016 ) (547,277 ) 133,407
Dividends paid to minority interest (7,442 ) — (4,012 )
Interest paid (95,466 ) (47,300 ) (60,469 )
Increase in cash collateral — (47,400 ) —
Other financial expense, net (12,595 ) (656 ) (6,990 )
Cash flow (used in) from financing activities (270,327 ) (88,856 ) 247,554
Cash flow (used in) from operating, investing and financing activities (21,325 ) 50,170 172,648
Effect of exchange rate changes on cash and cash equivalents (7,529 ) (3,601 ) 3,522
Cash from investments in subsidiaries available for sale — (14,812 ) —
Changes in cash and cash equivalents (28,854 ) 31,757 176,170
Cash and cash equivalents
at beginning of reporting period 188,018 226,573 50,403
at end of reporting period 159,164 258,330 226,573
Supplemental cash flow information:
Non-cash financing activities
Fair value of assets acquired in acquisitions, other than cash(1) — 2,732,025 —
Fair value of liabilities assumed — 2,734,628 —
Increase in stockholders' equity — 967,180 —
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in € thousands, unless otherwise stated)

Six months
ended
June 30, 2003

Six months
ended
June 30, 2002

Profit (loss) before income taxes and minority interests

8,783

(15,964)

Income taxes paid

(19,916)

(11,885)

Depreciation, amortization and impairment of property, plant and equipment and intangible assets

119,066

131,914

Changes in fair value of investments in subsidiaries available for sale

—

506

Write-down of investments

—

1,323

(Gains) losses on disposals of property, plant and equipment and investments

(7,584)

1,979

Unrealized exchange gains

—

(14,077)

Non-cash changes in equity method investments

(2,628)

214

Interest expense, net

62,653

76,246

Other financial expense (income), net

1,711

(1,639)

Changes in inventories

(4,469)

(7,351)

Changes in receivables and other assets

4,274

16,555

Changes in provisions

1,446

(17,784)

Changes in accounts payable and other liabilities

11,134

14,132

Cash flow from operating activities

174,470

174,169

Purchases of property plant and equipment and intangible assets

(51,090)

(49,997)

Purchases of investments and loans to related parties

(720)

(3,142)

Investments in subsidiaries available for sale for extinguishment of debt

—

(5,653)

Proceeds from the sales of property plant and equipment and intangible assets

8,219

3,124

Proceeds from the sales of investments

22,637

32,962

Interest received

3,481

6,240

Cash flow used in investing activities

(17,473)

(16,466)

Repayments of non-current corporate debt

(83,244)

(129,339)

Net repayment of current corporate debt

(779)

(2,337)

Dividends paid to minorities

(2,883)

(5,947)

Interest paid

(63,310)

(76,105)

Other financial (expenses) income, net

(1,711)

1,639

Cash flow used in financing activities

(151,927)

(212,089)

Cash flow from (used in) operating, investing and financing activities

5,070

(54,386)

Effect of exchange rate changes on cash and cash equivalents

(6,306)

(7,246)

Changes in cash and cash equivalents

(1,236)

(61,632)

Net effect of changes in consolidation perimeter on cash and cash equivalents

(3,774)

—

Cash and cash equivalents

at beginning of reporting period

135,218

188,018

at end of reporting period

130,208

126,386

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
26
MESSER GRIESHEIM HOLDING AG NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts in € thousands, unlessotherwise stated)
1. Background and basis of presentation
        Messer Griesheim Holding AG ("the Company" ~~or "Successor"~~) is a supplier of industrial gases. The Company produces and markets industrial gases (including oxygen, nitrogen, argon, helium, carbon dioxide, hydrogen and rare ~~and~~& high-purity gases), gas application processes and customer-site gas production systems. The Company's primary customers include major industrial, chemical and pharmaceutical manufacturers, and the food processing and waste treatment industries. ~~Messer~~The ~~Griesheim~~sole ~~Group~~owner ~~GmbH & Co. KGaA owns 100%~~ of the shares of Messer Griesheim Holding AG, ~~33.33% of which~~ is ~~owned~~Messer ~~directly~~Griesheim ~~and~~Group ~~66.67%~~GmbH ~~off~~& ~~which is owned through its wholly owned Diogenes 20~~Co.~~Vermögensverwaltung~~ ~~GmbH (see note 18 "Subsequent events")~~KGaA.

        The ~~unaudited~~ ~~interim~~Company ~~condensed~~is a holding company, whose consolidated financial statements ~~have~~include ~~been~~the ~~prepared~~accounts inof ~~accordance~~Messer ~~with~~Griesheim ~~International~~GmbH ~~Accounting Standards~~ (~~"IAS"~~“Messer Griesheim”) ~~as adopted by the International Accounting Standards Board~~ and ~~include the accounts of~~ all companies which it controls (collectively, "“the Messer Group"”, "“Messer"” or ~~"Messer Griesheim GmbH" or~~ “the "Group"”).

        The ~~Successor,~~ ~~incorporated~~unaudited oninterim ~~November 6,~~condensed ~~1996,~~consolidated ~~was~~financial astatements ~~dormant~~have ~~company~~been ~~until~~prepared ~~April 30,~~in ~~2001,~~accordance ~~when~~with itInternational ~~was~~Financial ~~activated~~Reporting toStandards ~~become the holding company for the shares of Messer Griesheim GmbH~~ (~~"Predecessor"~~“IFRS”). As of December 31, 2000, the Successor had net assets aggregating €44.9, represented by current assets of €50.7 and current liabilities of €5.8. As discussed in note 3, the Predecessor was re-capitalized to effect the acquisition transactions which have been accounted for at fair value. Accordingly, the assets and liabilities of the Group have been recorded at their estimated fair values as of April 30, 2001, the date of the acquisition transactions. As a result, the financial statements of the Group for periods prior to the acquisition are not comparable to the Group's financial statements for periods subsequent to the acquisition. To highlight this lack of comparability, a solid vertical line has been inserted, where applicable, to distinguish information pertaining to the pre-acquisition and post-acquisition periods. The refinancing transactions and the divestiture program adopted by the ~~Group~~International ~~are~~Accounting ~~described~~Standards ~~in notes 4 and 9, respectively~~Board.

        The unaudited interim condensed consolidated financial statements include, in the opinion of management, all adjustments of a normal, recurring nature necessary to present fairly the financial position, results of operations, changes in stockholders' ’equity and cash flows for the periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with ~~IAS~~IFRS have been condensed or omitted. These unaudited interim condensed consolidated financial statements have been prepared using accounting principles consistent with those we apply in the preparation of our annual financial statements and should, therefore, be read in conjunction with the ~~successors's~~ December 31, ~~2001~~2002 consolidated financial statements and notes thereto. The results of operations for the interim ~~2002~~2003 ~~periods~~period presented are not necessarily indicative of the operating results to be expected for the full year.

         The preparation of unaudited interim condensed consolidated financial statements in conformity with ~~IAS~~IFRS requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        ~~Certain reclassifications~~As ~~have~~of ~~been~~January ~~made~~1, to2003 the ~~financial~~Company ~~statement~~consolidated ~~presentation~~its ofoperations ~~prior~~in ~~periods~~Peru, toformally ~~conform~~reflected ~~such~~in ~~presentation~~the tobalance sheet under the ~~current~~caption ~~period~~“Investments ~~presentation~~in Subsidiaries Available for Sale”. From January 1, 2003 the Peruvian operations are reflected in the segment “Others” of the selected segment data.

27Since January 2003 the Group no longer controls its subsidiaries in Central America, but has retained significant influence. As of January 1, 2003 the Group has excluded the assets, liabilities, income and expenses relating to the companies in Central America and commenced accounting for these investments under the equity method.

2During the second quarter 2003 the Group obtained control over its subsidiary Constar LLC in Georgia/USA, formally accounted for under the equity method.    ~~New~~ ~~IAS~~As ~~accounting~~of ~~standards~~ April 1, 2003 the Group has included the assets, liabilities, income and expenses relating to its subsidiary Constar LLC in its consolidated financial statements.

        ~~The~~During ~~Group~~the ~~has~~second ~~adopted~~quarter ~~each~~2003 ofMesser ~~the~~Griesheim ~~following~~Industries ~~standards~~Inc. ~~effective January 1~~(“MGI”), ~~2001.~~a ~~Unless~~wholly ~~otherwise~~owned ~~stated,~~subsidiary ~~adoption~~ of ~~these~~the ~~standards~~Group, ~~did~~has ~~not~~consolidated ~~have~~its ~~a material~~former ~~impact~~equity oninvestment ~~the~~and ~~Group's~~has ~~financial~~recorded ~~position~~an orimpairment ~~results~~ of ~~operations~~€ 2.9 million.

        ~~In 1998~~ For ~~the~~changes ~~IASC~~in ~~issued~~the ~~IAS~~consolidation 39perimeters ~~"Financial~~as ~~Instruments:~~described ~~Recognition~~above, ~~and~~prior ~~Measurement". IAS 39 was effective for fiscal~~ periods ~~beginning after~~including ~~December 31,~~segment ~~2000. The standard significantly increases the use of fair values in accounting for financial instruments. In addition~~information, ithave ~~establishes~~not ~~specific~~been ~~criteria~~restated ~~relating~~due to ~~hedge accounting.~~the Adoption of this standard on January 1, 2001 resulted in a €335 cumulative effect of change in accounting principles, which is net of deferred taxes totaling €223, reported in other comprehensive incomeimmateriality.

        ~~In 2000 the IASC issued IAS 40 "Investment Property"~~2. ~~IAS~~Financing ~~40 was effective for financial statements covering periods beginning on or after~~transactions January 1, 2001. IAS 40 prescribes the accounting treatment for investment property and related disclosure requirements and replaces previous standard set forth in IAS 25 "Accounting for Investments". Under IAS 40, investment property is defined as property held to earn rentals or for capital appreciation or both rather than for use in the production or supply of goods or services or for administrative purposes or for sale in the ordinary course of business. The Group has opted for the cost model under which investment property is measured at depreciated cost less any impairment losses.
        In 2000 the IASC revised IAS 19 "Employee Benefits". IAS 19 (revised 2000) was effective for fiscal periods beginning on or after January 1, 2001. The standard changes the definition of plan assets and introduces recognition, measurement and disclosure requirements for reimbursements. The standard prescribes the accounting and disclosure by employers for employee benefits, post employment benefits, other long-term employee benefits, termination benefits and equity compensation benefits.
3.    Acquisition transactions
        On December 31, 2000, Aventis S.A. (parent company to Hoechst AG ("Hoechst")) entered into an agreement with Allianz Capital Partners ("ACP") and six private equity funds managed by affiliates of The Goldman Sachs Group, Inc. (the "GS Funds"), regarding the purchase of Hoechst's shares in Messer Griesheim. The transaction was consummated on April 30, 2001.
        In order to facilitate the purchase of Hoechst's shares in Messer Griesheim by ACP and the GS Funds, Hoechst transferred its 662/3% share interest in Messer Griesheim to the Company. On April 30, 2001 Messer Industrie GmbH ("MIG") transferred its 331/3% equity interest in Messer Griesheim to the Company for nominal cash and a 331/3% equity interest in the Company. As explained in the following paragraph, the Company was then immediately acquired by Messer Griesheim Group GmbH.
        ACP and the GS Funds formed a new company, Messer Griesheim Group GmbH & Co KGaA. On April 30, 2001, through Messer Griesheim Group GmbH & Co KGaA, ACP and the GS Funds acquired Hoechst's share of the Company for €618 million, payable in cash (€388 million) and deferred notes (€230 million). The €230 million note is due from Messer Griesheim Group GmbH & Co KGaA on November 11, 2011, together with interest which, although not currently payable, will accrue thereon at a rate of 250 basis points above the three month EURIBOR. In certain circumstances, the deferred purchase price may be payable earlier. Further, Hoechst has been issued 300,000 bonds (€300) which are convertible into 3% of the equity shares of Messer Griesheim Group GmbH & Co KGaA upon the occurrence of certain events at a nominal conversion price. In addition, MIG transferred its share in the Company for a 32.67% share in Messer Griesheim Group GmbH & Co KGaA and cash of €33.2 million. MIG is also entitled to receive additional cash consideration of up to €35.8 million upon the occurrence of certain events. As a result of the foregoing transactions, the Company was 100%
28
owned by Messer Griesheim Group GmbH & Co KGaA, which in turn was owned by ACP (33.665%), the GS Funds (collectively 33.665%) and Messer Industrie GmbH (32.67%) at April 30, 2001.
        Also as a result of the foregoing transactions, the Company owns 100% of Messer Griesheim.
        The foregoing transactions have been accounted for in a manner similar to an acquisition of Messer Griesheim. Accordingly, the purchase consideration for the acquisition transaction has been allocated to the assets acquired and liabilities assumed as of April 30, 2001, the date of consummation of the acquisition transactions, based on their estimated fair values.
        As part of the business combination agreement, Hoechst and Messer Griesheim Group GmbH & Co. KGaA received a "call" option and a "counter-call" option, respectively, on 662/3% of the shares of the Company. During January 2002, a subsidiary of Hoechst exercised its "call" option to acquire the 662/3% of the Company for a promissory note in the amount equal to the purchase price paid by Messer Griesheim Group GmbH & Co. KGaA for its interest in the Company. Messer Griesheim Group GmbH & Co. KGaA subsequently exercised its "counter-call" option to acquire the Hoechst subsidiary (and re-acquire indirectly the shares of the Company) for a nominal amount. The "call" and "counter-call" provisions were included as part of the business combination agreement to meet German tax planning requirements of Hoechst.
        The purchase price allocation resulted in goodwill amounting to €581.3 million as of April 30, 2001. Goodwill represents the excess of the cost of the acquisition transactions over the fair value of the assets acquired and liabilities assumed. Goodwill arising from acquisition transactions is being amortized on a straight-line basis over an estimated useful life of twenty years. The cost of acquisition may be adjusted pending resolution of certain contingencies.
4.    Financing transactions
Refinancing transactions

        Pursuant to the debt covenants, a substantial portion of Messer Griesheim's existing debt became due and payable upon the change in control, which occurred on April 30, 2001 ~~(see note 3)~~. As a result, Messer Griesheim entered into refinancing transactions with a consortium of banks during April and May 2001. The refinancing transactions involved borrowings under a senior facilities agreement with aggregate available funds of €1,650 million (€1,340 million of term loan facilities and €310 million under a revolving ~~facilities~~facility), and a mezzanine bridge facility in the aggregate amount of €400 million.

        The amounts borrowed under the “senior facilities agreement” (€1,160.0 million) and under the mezzanine bridge facility (€400.0 million) were used, ~~in part,~~ to repay Messer Griesheim's existing debt obligations of €1,303~~.0 million.~~ ~~As the existing debt was repaid in connection with the acquisition transactions, the prepayment penalties aggregating €19.1~~ million ~~have~~at ~~been reflected as part of~~ the ~~purchase~~date ~~accounting adjustments. No part~~ of ~~the~~change ~~existing~~in ~~debt or the refinanced debt was used to finance the acquisition transactions~~ownership. ~~Refinancing costs of €90.0 million were capitalized, and are being amortized over the period of maturities of the borrowings and principal reductions using the effective interest rate method.~~

        The senior facilities agreement contains certain covenants that require Messer Griesheim, among other things, to maintain certain specified financial ratios, to observe capital expenditure limits, and to ensure that the combination of the repayment of the senior term disposal facility and the assumption of indebtedness by third parties in connection with the divestment of assets will result in the reduction of the aggregate indebtedness of Messer Griesheim and its consolidated subsidiaries ~~by at least €255~~.~~0 million by April 2003.~~

29
Senior Notes

        On May 16, 2001, the Company issued €550.0 million principal amount of 10.375% ~~Senior~~senior ~~Notes~~notes maturing on June 1, 2011. At any time prior to June 1, 2006, the Company may redeem all but not part of the ~~Senior~~senior ~~Notes~~notes at a redemption price equal to 100% of the principal amount thereof, plus a redemption premium and unpaid interest, and special interest, if any, to the redemption date. At any time on or after June 1, 2006, the Company may redeem all or part of the ~~Senior~~senior ~~Notes~~notes at specific redemption prices, expressed as percentages of the principal amount, accrued and unpaid interest, special interest, if any, and additional amounts, if any, to the applicable redemption date on a sliding scale. In addition, prior to June 1, 2004, the Company may redeem up to 35% of the ~~Senior~~senior ~~Notes~~notes with the proceeds of one or more public equity offerings at a redemption price equal to 110.375% of the principal amount of the ~~Senior~~senior ~~Notes~~notes redeemed.

        The ~~proceeds~~ ~~from~~aggregate these Senior Notes have been used by the Company to make an inter-company loan to Messer Griesheim. Messer Griesheim used the inter-company loan to extinguish the mezzanine bridge facility of €400.0 millionfacilities, ~~prepay €115.0 million principal of the~~ outstanding ~~term~~amounts ~~borrowings~~borrowed ~~under~~as ~~the~~of ~~senior~~June ~~facilities agreement~~30, ~~and the~~2003 ~~balance of €35.0 million for general corporate purposes. The issuance cost of the Senior Notes of €14.4 million has been capitalized~~ and ~~is being amortized over~~ the ~~period to~~ maturity ~~and~~profile ~~principal reductions under the effective interest rate method. The Company~~ is ~~dependent~~given ~~upon~~below: the payments it receives under the inter-company loan to make interest and repayments on the Senior Notes. The claims of the Company under the inter-company loan are subordinated to the claims of the lenders under the senior facilities. Payments on the inter-company loan are not permitted in certain cases involving payment and non-payment defaults under the senior facilities.

        During the three months period ended September 30, 2002, Messer Griesheim repurchased nominal €17.1 million Senior Notes for an average price of 102.81%. The repurchased Senior Notes have been deducted from the outstanding amount of €550 million. In connection with the repurchase, unamortized financing costs of €1.4 million, fees and tender premium of €0.6 million were expensed and are classified as other financial expense for the three and nine month period ended September 30, 2002 (see note 16 "Related parties" and note 18 "Subsequent events").

Description

Interest rate

Available amount

Amounts outstanding

Maturity date⁽⁶⁾

(in € millions)

(in € millions)

€300 Million Senior Term A facility^{(4) (5)}

4.47%⁽²⁾

213.5

213.5

April 20, 2008

€170 Million Senior Term B facility⁽⁴⁾

5.47%⁽²⁾

167.6

167.6

April 30, 2009

$124 Million Senior Term B facility⁽⁴⁾

4.10%⁽²⁾

107.5⁽¹⁾

107.5

April 30, 2009

€115 Million Senior Term C facility⁽⁴⁾

5.97%⁽²⁾

12.4

12.4

April 30, 2010

$162 Million Senior Term C facility⁽⁴⁾

4.60%⁽²⁾

110.3⁽¹⁾

110.3

April 30, 2010

€239 Million Senior Revolving facility I

—

239.0

—

March 31, 2008

€50 Million Senior Revolving facility II

—

34.0⁽³⁾

—

March 31, 2008

€10 Million Ancillary Facility

—

10.0

—

April 13, 2004

€11 Million Ancillary Facility

—

11.0

—

June 30, 2005

Senior notes⁽⁷⁾

10.375%

550.0

493.7

June 1, 2011

Other existing debt ⁽⁵⁾

5.13%

233.6

233.6

1,338.6

Unamortized debt issuance costs

(56.5)

Total

1,688.9

1,282.1

(1) U.S. Dollar (US-$) amounts under the facility have been converted into EURO at the rate of €1 = US-$ 1.1423 the exchange rate at June 30, 2003.

        ~~The~~(2) Variable ~~aggregate~~interest ~~facilities,~~rates ~~outstanding amounts borrowed~~ as of ~~September~~ June 30, ~~2002~~2003. ~~and the maturity profile is given below:~~

Description Interest rate Available amount Amounts outstanding Maturity date(8)
(in € millions) (in € millions)
€300 Million Senior Term A facility(4)(5)(7) 5.68 %(2) 254.1 (1) 254.1 April 20, 2008
€170 Million Senior Term B facility(4) 6.15 %(2) 167.6 167.6 April 30, 2009
$124 Million Senior Term B facility(4) 4.58 %(2) 124.7 (1) 124.7 April 30, 2009
€115 Million Senior Term C facility(4) 6.65 %(2) 52.4 52.4 April 30, 2010
$162 Million Senior Term C facility(4)(7) 5.08 %(2) 163.6 (1) 163.6 April 30, 2010
€260 Million Senior Revolving facility I — 255.5 (3) — March 31, 2008
€50 Million Senior Revolving facility II — 30.5 (6) — March 31, 2008
Senior Notes 10.375 % 550.0 532.9 June 1, 2011
Other existing debt(7) 5.79 % 172.9 172.9
1,468.2
Unamortized debt issuance costs (68.0 )
Total 1,771.3 1,400.2
(3) €16.0 million drawn as guarantee.

(4) The Senior Term Facilities (Tranches A, B and C) are non-revolving credit facilities, i.e. the available facilities are reduced by the amount of repayments.

(5) Interest rate is a weighted rate.

(6) The Company is required to use 50% of the excess cash flow, as defined under the senior facilities agreement; in any given year to repay the outstanding loans.

(7) During September 2002 until October 8, 2002, Messer Griesheim made open market purchases in aggregate principal amount of €56.3 million senior notes at an average price of 102.9%. The purchased senior notes have been deducted from the outstanding amount of €550 million.

Interest expense and interest swap agreements

        Interest expense for the three ~~month~~months ~~period~~ ended ~~September~~ June 30, ~~2002~~2003 and ~~the~~2002 ~~three month period ended September 30, 2001~~ was €35.1 2 million and €5144.1 million, respectively. Interest expense for the three ~~month~~months ~~period~~ ended ~~September~~ June 30, ~~2002~~2003 and ~~the three month period ended September 30~~2002, ~~2001,~~ included amortization of capitalized debt issuance costs of €4.0 6 million and €2.7 .5 million, respectively.

        Interest expense for the ~~nine~~six ~~month~~months ~~period~~ ended ~~September 30,~~June ~~2002, the five month period ended September~~ 30, ~~2001~~2003 and ~~the~~2002 ~~four month period ended April 30, 2001~~ was €~~117~~66.~~6 million,~~1 ~~€76.6~~ million and €4182.5 million, respectively. Interest expense for the ~~nine~~six ~~month~~months ~~period~~ ended ~~September 30,~~ ~~2002,~~June ~~the five month period ended September~~ 30, ~~2001~~2003 and ~~the four month period ended April 30~~2002, ~~2001,~~ included amortization of capitalized debt issuance costs of ~~€14.4 million,~~ €4.6 .9 million and €0 10.3 million, respectively.

        The Group has entered into interest rate swaps in order to hedge future interest rate variability for its senior term facilities. Approximately €~~582~~572.0 9 million and €638.7 million of the Group'’s outstanding indebtedness was designated as hedged ~~for~~by ~~more than two years due to~~ interest rate swap agreements as of ~~September~~ June 30, 2003 and December 31, 2002, respectively. Due to the original refinancing agreements, the Group agreed to enter into loan agreements with fixed interest rates, interest swap agreements, caps or other instruments so as to ensure that interest payments on at least 75.0% of the Group’s total debt is hedged. Pursuant to a February 2003 amendment to our senior facilities agreement, this hedging requirement was reduced to a level of 50 %. As of June 30, 2003, the senior facilities agreement does not require a hedge of the interest payments given the Groups’relevant financial ratio is below the level agreed to in the financing agreements. Had the Company not entered into interest rate swap agreements, the interest expense would have been reduced by €7.4 in the six months ended June 30, 2003 and €6.9 in the six months ended June 30, 2002.

31
agreements with fixed interest rates, interest swap agreements, caps or other instruments so as to ensure that interest payments on at least 75.0% of the Group's total debt is hedged. Had the Company not entered into interest swap agreements, the interest expense would have been reduced by €10.1 million (not including penalties for voluntary early repayment of debt €2.0 million) in the nine month period ended September 30, 2002 and €3.2 million in the three month period ended September 30, 2002.
Pledges

In connection with the refinancing program, the Company has given several pledges to the lenders of the senior facilities. Substantially all of the assets of the Group are pledged as collateral.

         In addition, the lenders of the senior facilities have obtained irrevocable and unconditional guarantees from certain subsidiaries of the Company. These guarantees will remain outstanding until the repayment of the ~~Senior~~senior ~~Facilities~~facilities.

        Additionally, in connection with the refinancing program, Messer Griesheim Holding AG has pledged all of its shares in Messer Griesheim to the senior lenders as security for the senior facilities. Moreover, Messer Griesheim Holding AG has agreed that if the senior lenders foreclose on that share pledge following an event of default and seek to sell the Company's shares of Messer Griesheim, the Company will release its claims against Messer Griesheim for payment of the ~~inter-company~~intercompany loan of €550 million. If the Company is ever required to release its claims for repayment of the ~~inter-company~~intercompany loan, its only source of repayment for the notes will be net proceeds, if any, from a foreclosure sale of the Messer Griesheim shares after the senior lenders have been repaid in full. In addition, the ~~inter-company~~intercompany loan is effectively subordinated to all existing and future debt of Messer Griesheim's subsidiaries.

        ~~As a precondition to the acquisition transactions, the Group was required to limit its exposure to its Singapore investments~~3. OnSegment ~~April 30, 2001, the Group transferred its 100%~~information interest in Messer Singapore Pte. Ltd. and its 50% interest in Singapore Syngas Pte. Ltd. ("Syngas") to Messer Singapore Holding GmbH. The Group has a non controlling 39% equity interest in Messer Singapore Holding GmbH. The other shareholders are Aventis Regional Treasury Asia Pacific Pte. Ltd. (39%), Bandinelli GmbH, a special purpose company owned by MIG (11%), and members of the Group's senior management (11%). On June 20, 2001, Texaco Nederland B.V. ("Texaco") transferred half of its 50% interest in Syngas to Messer Singapore Holding GmbH. As a result of these transactions, Messer Griesheim holds an indirect 29.25% interest in Syngas through its equity interest in Messer Singapore Holding GmbH.
        Concurrently with the transfer of the Syngas business, Messer Singapore Holding GmbH indemnified the Group for its outstanding guarantee obligations in connection with the Singapore operations. To finance Messer Singapore Holding GmbH, the Group and Hoechst have made shareholder loans. The loans have been allocated two-thirds to Hoechst and one-third to the Group, as per the shareholders' agreement. Although the transfer to Messer Singapore Holding occurred on April 30, 2001, this funding arrangement takes account of all funding of Messer Griesheim to its Singapore operations since September 1, 2000. Under the shareholders' agreement, the Group's funding obligations (shareholder loans and other financial support including funding provided by the Group to its Singapore operations since September 1, 2000) are limited to €92.0 million. Messer Griesheim received from Hoechst a €26.4 million cash payment representing two-thirds of the funding by the Group for the Singapore operations since September 1, 2000 and has accounted for the receipt as an advance towards a capital contribution in the Predecessor balance sheet at April 30, 2001. This payment excludes amounts funded by Hoechst with respect to payments to Celanese Singapore Pte. Ltd. ("Celanese") and Texaco as described below.
32
        Further, as of May 1, 2001, the Successor's obligations to fund loss commitments of Syngas have been revalued to give effect to the portion which are expected to be funded by Hoechst. Accordingly, Messer Griesheim's remaining funding obligations under this cap, net of 331/3% of various shareholder loans and other financial support already provided by Messer Griesheim to its Singapore operations since September 1, 2000, were €63.2 million as of April 30, 2001 and €9.2 million as of September 30, 2002.
        In March 2001, Texaco and Messer Griesheim entered into settlement arrangements with Celanese which settled the claims of Celanese under the completion guarantee provided by Messer Griesheim, and amended the existing gas supply agreement between Syngas and Celanese. These amendments and modifications involved, among other things, cash payments by Messer Griesheim to Celanese, the liability for which is included in the overall allocation of Syngas exposures of one-third to Messer Griesheim and two-thirds to Hoechst. The settlement amount allocated to and paid by Messer Griesheim was €28.6 million, of which €19.8 million was financed by Hoechst as an advance towards a capital contribution in the Predecessor balance sheet at April 30, 2001. The repayment claim against Messer Griesheim for this financing was waived by Hoechst on April 30, 2001.
        In conjunction with the Celanese settlement Messer Griesheim and Texaco modified their put option. The original put-option agreement gave Texaco an option to sell 25% of the shares in Syngas to Messer Griesheim. Under the modified put-option agreement, Messer Griesheim purchased from Texaco the outstanding shareholder loans made by Texaco to Syngas in excess of Texaco's remaining 25% equity interest in Syngas and related funding obligations. Messer Griesheim paid a purchase price of €17.2 million for the loans. Of that amount, Hoechst loaned €11.3 million to Messer Griesheim as an advance towards a capital contribution in the Predecessor balance sheet at April 30, 2001. In exchange, Texaco agreed that Hoechst can require Texaco to exercise the put option with respect to 25% of the shares in Syngas at any time on or after May 1, 2001 and no later than June 30, 2001 for a consideration of US$1. The put was exercised on June 20, 2001, at which time the Syngas shares acquired from Texaco were transferred directly to Messer Singapore Holding GmbH. As a result of the change in ownership that occurred when the Texaco put option was exercised, Syngas was required to repay its outstanding bank credit facilities, which became due on June 30, 2001. Shareholder loans were extended to Syngas for this purpose. Of these shareholder loans, 75% were funded by Messer Singapore Holding GmbH and 25% were funded by Texaco.
        During December 2001 Messer Griesheim transferred its 39% interest in Messer Singapore Holding to Messer International GmbH, a wholly owned subsidiary of Messer Griesheim GmbH.
        In February 2002, Aventis, Messer Griesheim and Messer Singapore Holding reached an agreement with Celanese and Celanese Singapore Pte. Ltd. in which Messer Singapore Holding agreed to pay US$12.5 million to Celanese Singapore on settlement of a prior agreement requiring Messer Griesheim to pay Celanese certain concession fees. One third of the US$12.5 million was applied towards the €92.0 million funding limit by Messer Griesheim to the Singapore operations.
6.    Divestment of Cuban subsidiaries
        As a precondition to the consummation of the acquisition transactions, on April 24, 2001, the Group sold its interest in a holding company that controls three operating companies in Cuba to an entity which is controlled by Mr. Stefan Messer, a member of the management board of the Group. Mr. Stefan Messer is also a director and minority shareholder in MIG. The total purchase price for the Cuban holding company was €7.8 million, of which €1.3 million was paid in cash and the remainder by an unsecured note in the principal amount of €6.5 million, which matures in 2006 and accrues interest at the rate of 5.5% per year.
33
7.    Segment information
The accounting policies utilized for the reporting of interim segment information are the same as those described in the Group's annual consolidated financial statements.

a.) The following tables present selected segment data for the three months ended June 30, 2003 and 2002.

Profit and loss segment disclosures

Successor Three Months Ended September 30, 2002

Three months ended
June 30, 2003
Business Areas

Germany

Western
Europe

Eastern
Europe

North
America

Others

Reconciliation/
Corporate

Total

Total sales

177,610

67,971

65,303

81,482

9,361

416

402,143

Inter-segment sales

16,734

2,880

5,303

361

—

—

25,278

Net sales

160,876

65,091

60,000

81,121

9,361

416

376,865

Operating profit (loss)

29,357

1,158

8,361

3,305

1,404

(9,796)

33,789

Depreciation and amortization of intangibles and property, plant and equipment

21,229

10,552

8,447

17,876

1,139

1,721

60,964

Thereof impairment losses

—

—

—

2,948

—

—

2,948

Interest income

246

144

569

43

8

1,048

2,058

Interest expense

(1,593)

(294)

(165)

(4,810)

(162)

(28,159)

(35,183)

Equity method investments income (expense), net

—

—

211

(64)

212

—

359

Income tax benefit (expense)

(11,833)

(787)

(2,148)

(1,306)

(112)

7,497

(8,689)

Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Three months endedJune 30, 2002Business Areas Germany WesternEurope EasternEurope NorthAmerica Others Reconciliation/Corporate Total
Total sales 170,286 ~~185~~71,~~664~~427 58,133 6987,~~026~~458 14,132 602,~~552~~671 404,107 ~~79,612~~ ~~13,921~~ ~~1,122~~ ~~409,897~~
Inter-segment sales 14,282 166,~~836~~305 4,032 ~~5,376~~265 163 62,~~277~~027 27,074 ~~(376~~ ) ~~120~~ ~~1,267~~ ~~29,500~~
Net sales 156,004 ~~168~~65,~~828~~122 54,101 6387,~~650~~193 13,969 ~~54,275~~644 377,033 ~~79,988~~ ~~13,801~~ ~~(145~~ ) ~~380,397~~
Operating profit (loss) 26,461 302,~~836~~744 7,103 ~~(219~~6,227 )2,252 9(12,~~663~~865) 31,922 ~~2,054~~ ~~2,096~~ ~~(11,388~~ ) ~~33,042~~
Depreciation and amortization of intangibles and property, plant and equipment 20,961 12,609 8,629 17,367 1,982 1,843 63,391
Depreciation, amortization of intangibles and property, plant and equipment 20,598 11,844 8,652 18,420 2,051 1,594 63,159
Thereof impairment losses — 1,251 — — — — 1,251
Interest income 15 101 902 313 261 1,533 3,125
Interest income — 92 846 151 245 1,282 2,616
Interest (expense) (2,585) (40) (1,054) (3,847) (464) (36,147) (44,137)
Interest expense 709 170 171 6,348 440 27,308 35,146
Equity method investments income (expense), net 163 — — (367) — — (204)
Equity method investments income (expense), net 2,349 — — (690 ) — 85 1,744
Income tax benefit (expense) (10,566) (1,139) (1,177) (1,983) (439) 7,326 (7,978)
Income tax benefit (expense) (18,971 ) 197 (2,061 ) (550 ) (370 ) 11,286 (10,469 )

~~Successor Three~~b.) The ~~Months~~following ~~Ended~~tables ~~September~~present selected segment data for the six months ended June 30, ~~2001~~ 2003 and 2002.

Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Total sales 171,738 71,521 57,285 96,115 14,735 1,189 412,583
Inter-segment sales 7,864 6,802 3,133 207 71 941 19,018
Net sales 163,874 64,719 54,152 95,908 14,664 248 393,565
Operating profit (loss) 44,777 5,808 9,867 1,005 942 (37,366 ) 25,033
Depreciation and amortization of intangibles and property, plant and equipment 16,544 8,020 6,022 16,019 2,389 19,101 68,095
Interest income 182 43 665 5,850 147 4,113 11,000
Interest expense 4,062 1,228 1,879 10,857 1,030 32,071 51,127
Equity method investments income (expense), net 2,231 — — (830 ) 1,275 — 2,676
Income tax benefit (expense) (17,725 ) (1,582 ) (2,594 ) (30 ) (187 ) 1,204 (20,914 )
34
Profit and loss segment disclosures

Successor Nine Months Ended September 30, 2002

Six months ended
June 30, 2003
Business Areas

Germany

Western
Europe

Eastern
Europe

North
America

Others

Reconciliation/
Corporate

Total

Total sales

359,522

133,847

128,303

154,566

17,951

1,542

795,731

Inter-segment sales

38,385

5,657

10,575

742

—

—

55,359

Net sales

321,137

128,190

117,728

153,824

17,951

1,542

740,372

Operating profit (loss)

58,214

(1,750)

17,375

8,787

1,954

(18,851)

65,729

Depreciation, amortization of intangibles and property, plant and equipment

42,310

21,081

16,904

33,007

2,327

3,437

119,066

Thereof impairment losses

—

—

—

2,948

—

—

2,948

Interest income

253

220

1,224

196

19

1,569

3,481

Interest (expense)

(2,928)

(607)

(428)

(9,561)

(336)

(52,274)

(66,134)

Equity method investments income (expense), net

—

—

353

2,257

717

—

3,327

Income tax benefit (expense)

(25,120)

(432)

(3,946)

(2,459)

(178)

18,364

(13,771)

Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Six months endedJune 30, 2002Business Areas Germany WesternEurope EasternEurope NorthAmerica Others Reconciliation/Corporate Total
Total sales 340,345 ~~526~~142,~~009~~116 117,643 ~~211~~181,~~142~~380 28,328 ~~178~~5,~~195~~602 815,414 ~~260,992~~ ~~42,249~~ ~~6,724~~ ~~1,225,311~~
Inter-segment sales 26,894 4310,~~730~~814 9,567 ~~16,190~~534 263 153,~~844~~889 51,961 ~~158~~ ~~383~~ ~~5,156~~ ~~81,461~~
Net sales 313,451 ~~482~~131,~~279~~302 108,076 ~~194~~180,~~952~~846 28,065 ~~162~~1,~~351~~713 763,453 ~~260,834~~ ~~41,866~~ ~~1,568~~ ~~1,143,850~~
Operating profit (loss) 50,775 814,~~611~~871 14,363 410,~~652~~941 4,629 24(25,~~026~~522) 60,057 ~~12,995~~ ~~6,725~~ ~~(36,910~~ ) ~~93,099~~
Depreciation and amortization of intangibles and property, plant and equipment 64,489 36,611 26,519 56,191 6,344 5,151 195,305
Depreciation, amortization of intangibles and property, plant and equipment 43,528 24,002 17,890 38,824 4,362 3,308 131,914
Thereof impairment losses — 1,251 — — — — 1,251
Interest income 15 124 1,933 662 421 3,085 6,240
Interest income — 216 2,779 813 666 4,367 8,841
Interest (expense) (3,325) (604) (1,436) (10,702) (1,046) (65,373) (82,486)
Interest expense 1,304 774 1,607 17,050 1,486 95,396 117,617
Equity method investments income (expense), net 465 — — (679) — — (214)
Equity method investments income (expense), net 2,814 — — (1,369 ) — 85 1,530
Income tax benefit (expense) (20,075) (1,612) (2,764) (2,066) (706) 15,999 (11,224)
Income tax benefit (expense) (39,046 ) (1,415 ) (4,825 ) (2,616 ) (1,076 ) 27,285 (21,693 )

~~Successor Five~~Balance ~~Months~~sheet ~~Ended~~and ~~September~~cash ~~30,~~flow ~~2001~~ segment disclosures

Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Total sales 283,093 119,631 97,124 166,602 30,791 1,285 698,526
Inter-segment sales 20,938 7,867 7,211 2,584 163 225 38,988
Net sales 262,155 111,764 89,913 164,018 30,628 1,060 659,538
Operating profit (loss) 62,104 10,453 17,312 5,358 7,232 (51,696 ) 50,763
Depreciation, amortization and impairment of intangibles and property, plant and equipment 27,703 13,468 11,220 27,828 4,323 26,469 111,011
Interest income 382 124 973 5,850 324 4,648 12,301
Interest expense 4,341 1,950 2,111 17,276 7,770 43,123 76,571
Equity method investments income (expense), net 2,231 — — (818 ) (6,715 ) — (5,302 )
Income tax benefit (expense) (11,774 ) (2,834 ) (3,633 ) 1,011 (257 ) (4,285 ) (21,772 )
June 30, 2003
Business Areas Germany WesternEurope EasternEurope NorthAmerica Others Reconciliation/Corporate Total Operating assets 979,056 403,871 394,977 565,514 67,503 135,970 2,546,891 Operating liabilities 173,431 63,758 35,838 47,803 12,012 177,814 510,656 Capital expenditures 12,281 8,663 12,540 14,883 2,478 245 51,090 Equity method investments 256 — 3,079 — 24,669 — 28,004

~~Predecessor Four~~December ~~Months Ended April 30~~31, ~~2001~~ 2002
Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Total sales 241,280 91,423 74,802 131,785 62,102 2,003 603,395
Inter-segment sales 16,173 5,813 4,357 125 1,554 910 28,932
Net sales 225,107 85,610 70,445 131,660 60,548 1,093 574,463
Operating profit (loss) 50,314 5,871 9,197 7,446 (5,072 ) (21,302 ) 46,454
Depreciation, amortization and impairment of intangibles and property, plant and equipment 16,072 11,119 9,858 22,729 14,336 2,809 76,923
Thereof impairment losses 2,356 — — — — — 2,356
Interest income — 75 959 384 613 3,055 5,086
Interest expense 2,558 1,781 1,691 6,891 5,517 23,012 41,450
Equity method investments income (expense), net — — — — (5,106 ) — (5,106 )
Income tax benefit (expense) (29,398 ) (1,229 ) (1,807 ) 3,756 (2,600 ) 26,465 (4,813 )

Business Areas

Germany

Western
Europe

Eastern
Europe

North
America

Others

Reconciliation/
Corporate

Total

Operating assets

940,599

426,836

407,728

617,571

103,405

209,182

2,705,321

Operating liabilities

157,574

62,272

39,976

45,755

11,115

196,153

512,845

Capital expenditures

35,864

23,794

29,028

37,531

8,827

857

135,901

Equity method investments

256

—

2,732

—

10,212

—

13,200

Balance sheet segment disclosures
Successor September 30, 2002
Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Operating assets 991,481 441,705 404,181 654,992 105,984 157,392 2,755,735
Operating liabilities 166,342 62,017 36,786 54,111 10,273 176,124 505,653
Successor December 31, 2001
Business Areas Germany Western Europe Eastern Europe North America Others* Reconciliation/ Corporate Total
Operating assets 1,226,126 437,976 393,116 785,652 122,540 18,425 2,983,835
Operating liabilities 175,451 64,805 40,651 61,707 12,236 168,054 522,904
The column reconciliation/corporate primarily includes income and expenses as well as assets and liabilities related to corporate items that are included separately within the Group, which are not allocated to the segments.

The column others includes Latin America and Asia.

Segment operating assets are defined as total assets excluding investments, deposits, certain receivables and deferred tax assets. Segment operating liabilities are defined as total liabilities excluding deferred tax liabilities, certain provisions, derivative financial instruments, minority interests, corporate debt and taxes payable.

364. Restructuring and reorganization charges
~~8.    Restructuring~~The Group recorded total restructuring and reorganization charges of €2,501 and €3,718 during the three months ended June 30, 2003 and the three months ended June 30, 2002, respectively. For the six months ended June 30, 2003 and 2002 the Group recorded restructuring charges of €6,748 and €4,126, respectively.

        ~~During~~Restructuring ~~fiscal~~and ~~2000~~reorganization ascharges aduring ~~direct~~the ~~result~~six ofmonths ~~the~~ended ~~anticipated~~June ~~changes~~30, in2003 and the ~~Group's~~six ~~ownership~~months ended June 30, 2002, respectively mainly relate to severance costs for the ~~Group~~operations ~~has~~in ~~realigned~~the ~~itself~~U.K. and ~~was~~to ~~planning~~our Divestiture program. Severance costs in the UK (Western Europe Segment) amounted to ~~exit~~€3.7 ~~from~~million in the ~~Asian, African~~six ~~and~~months ~~Latin~~ended ~~American~~2003 ~~markets~~and €1.0 million in the six months ended June 30, 2002, respectively relate to one-time termination benefits provided to employees that were involuntary terminated as a result of the reorganization of the UK distribution (UK distribution outsourcing).

        ~~As of~~For ~~April 30~~2002, ~~2001, the Company was in the process of developing the main features of a~~ restructuring ~~plan~~and ~~involving,~~reorganization ~~among~~charges ~~other~~mainly ~~things,~~consist ~~providing compensation to employees~~ of ~~Messer~~ ~~Griesheim,~~charges ~~based~~relating ~~in Europe, for involuntarily termination of their employment. The Group announced the main features of the plan~~ to ~~its employees subsequent to March 31, 2001 but prior to~~ the ~~acquisition~~group’s ~~transactions.~~corporate function.

        ~~In May 2001,~~5. ~~the~~Divestiture ~~Company finalized the terms of the restructuring plan and recognized restructuring provisions aggregating €13,562 as part of the purchase price~~program ~~allocation which meets the criteria of IAS 22 "Business Combinations".~~
        The Group recorded total restructuring and reorganization charges of €3,036 and €4,997 during the three month period ended September 30, 2002 and the three month period ended September 30, 2001, respectively. For the nine month period ended September 30, 2002, the five month period ended September 30, 2001 and the four month period ended April 30, 2001 the Group recorded restructuring charges of €7,162, €9,255 and €2,540, respectively.
        Restructuring and reorganization charges in 2002 mainly relate to severance costs for the operations in the U.K. and Germany. For 2001 restructuring and reorganization charges mainly consist of charges relating to the group's corporate function.
9.    Divestiture program
a) Investments in subsidiaries available for sale

        AsThe ~~described~~subsidiaries inand ~~note 3,~~net aassets ~~change~~included in ~~ownership of~~ the ~~Group occurred on April 30, 2001. Following the acquisition, in May 2001, the Group adopted a~~ divestiture program ~~pursuant~~were toaccounted ~~which~~for itin ~~intended to sell substantially all of~~ the ~~assets~~following ~~and operations in its non-core markets, located in Asia, Africa and Latin America, as well as certain non-strategic operations in its core markets.~~ manner:

        ~~As further~~Subsidiaries ~~described~~expected to be sold within twelve months from the date of the change in ~~note 3~~ownership (i.e., ~~the~~by ~~acquisition~~no ~~transaction~~later ~~was~~than ~~accounted~~April ~~for~~30, in2002) awere ~~manner~~not ~~similar~~consolidated, as control was intended to abe ~~"purchase"~~temporary. ~~business~~The ~~combination~~Group’s ~~and,~~interests ~~accordingly,~~in ~~the~~such ~~cost~~subsidiaries ofwere ~~the acquisition~~classified ~~has~~as ~~been~~financial ~~allocated~~instruments toand were reflected in the ~~assets~~Group’s ~~acquired~~balance ~~and~~sheet ~~liabilities~~at ~~assumed,~~their ~~including~~estimated ~~those~~fair tovalue bein ~~disposed~~current ofassets, under the ~~divestiture~~caption ~~program,~~“Investments ~~based~~in onsubsidiaries ~~their~~available for sale”. Current period changes in the estimated fair ~~values~~value as of ~~April 30,~~ ~~2001,~~such subsidiaries resulting from operating results were reflected in the ~~date~~consolidated statements of operations under the ~~acquisition~~caption ~~transaction.~~“Changes in fair value of investments in subsidiaries available for sale”.

        ~~The assets~~In ~~and~~January ~~operations~~2003, ~~included~~the inGroup completed the ~~divestiture~~sale ~~program~~of ~~included~~its ~~certain~~activities ~~subsidiaries,~~in ~~and~~Indonesia ~~net~~to ~~assets~~PT ~~comprising~~Tira ~~other~~Austenite ~~operations~~Tbk. ~~Management~~In ~~expects~~connection towith ~~divest~~this ofdivestiture, ~~all~~claims for damages of ~~these assets~~lost opportunities and ~~operations~~potential byearnings nowere ~~later~~settled. ~~than~~The impact of this transaction on the ~~end~~unaudited ofcondensed ~~calendar~~consolidated ~~year~~financial ~~2002~~statements ~~(except~~was ~~its~~not ~~investments~~significant. inAs ~~China~~a result, ~~Guatemala~~with ~~and~~the Elexception ~~Salvador).~~of ~~The~~the ~~subsidiaries~~subsidiary ~~and~~in ~~net~~Peru ~~assets~~which ~~included~~is now consolidated, all companies reflected in the ~~divestiture~~balance ~~program are~~sheet ~~being~~under ~~accounted~~the ~~for~~caption “Investments in subsidiaries available for sale” were sold by the ~~following~~end ~~manner:~~of March 2003. As of January 1, 2003 the Company consolidated its operations in Peru.

        ~~Subsidiaries expected~~As ~~to be sold within twelve months from the date~~ of ~~the~~June ~~acquisition transactions (i.e., by no later than April~~ 30, ~~2002)~~2003 ~~are~~and ~~not~~December ~~consolidated~~31, ~~as control is intended to be temporary. As of September 30,~~ 2002, the ~~sale~~Group ~~of the remaining subsidiaries in Indonesia and Peru~~ has ~~not~~determined ~~yet been consummated. The Group's interests in such subsidiaries are classified as financial instruments and are reflected in~~ the ~~Group's balance sheet at their estimated~~ fair value inof ~~current assets, under~~ the ~~caption:~~investments ~~"Investments~~ in subsidiaries available for sale~~". Current~~ ~~period~~to ~~changes~~be in€0 ~~the~~and ~~estimated~~€18,078 fair value of such subsidiaries resulting from operating results are reflected in the consolidated statements of operations under the caption: "Changes in fair value of subsidiaries available for sale"respectively.

37b) Change in fair value of investments in subsidiaries available for sale

        ~~Subsidiaries expected~~During tothe bethree ~~sold~~months ~~beyond~~ended ~~April~~ June 30, 2003 and 2002, aschanges ~~well~~in asthe estimated fair value of investments in subsidiaries available for sale amounted to a gain of €0 and €186, respectively. For the ~~net~~six ~~assets~~months ended June 30, 2003 and 2002 changes in the estimated fair value of ~~other~~investments ~~operations~~in ~~held~~subsidiaries available for sale amounted to a loss of €0 and €506, ~~are~~respectively. The results have been reflected as “Changes in fair value of investment in subsidiaries available for sale” in the unaudited interim condensed consolidated. statement of operations.

        ~~As of~~c) ~~September 30,~~Other ~~2002~~subsidiaries ~~and~~included ~~December 31, 2001, the Group has determined the fair value of the investments~~ in ~~subsidiaries available for sale to be approximately €17,529 and €42,183. This amount is comprised of~~ the ~~following:~~divestiture program

September 30, 2002 December 31, 2001
Net assets of investments in subsidiaries available for sale 14,010 41,623
Advances to subsidiaries (net of impairment) 3,519 7,760
Provision for obligations — (7,200 )
Total 17,529 42,183
The Group continues to consolidate in its financial statements the subsidiaries included in the divestiture program which were expected at the time of the change in ownership to be sold subsequent to April 30, 2002 (see Note 14 “Reconciliation to U.S. GAAP” for a discussion of SFAS 144). These operations are reflected in the “Others” segment in the Group’s financial statements.

        ~~Set forth~~ During ~~below~~May is2003, ~~summarized~~the ~~financial~~Company ~~information~~completed ~~relating to~~ the ~~net~~sale ~~assets~~ of ~~the~~its ~~subsidiaries~~activities ~~which~~in ~~are~~Malaysia ~~classified~~to asLLB ~~"investments~~Courts inSdn.Bhd. ~~subsidiaries~~(Lion ~~available~~Group). ~~for~~The ~~sale"~~impact as of ~~September 30,~~ ~~2002~~this ~~and~~transaction ~~December 31,~~results ~~2001:~~in a minor gain.

September 30, 2002 December 31, 2001
Current assets 14,177 42,960
Non-current assets 36,725 220,607
Total assets 50,902 263,567
Current liabilities 8,520 90,486
Non-current liabilities 28,372 131,458
Total liabilities 36,892 221,944
Total net assets 14,010 41,623
6. Income taxes
        ~~In connection~~For ~~with~~2003 ~~the funding of the working capital of non-consolidated subsidiaries available for sale, Messer Griesheim has entered into credit agreements with several of these subsidiaries, with a total of €5,477~~ and ~~€7,760 outstanding as of September 30,~~ 2002 ~~and~~the ~~December 31,~~combined ~~2001,~~federal ~~respectively.~~corporation ~~The~~income ~~interest~~tax rate ~~on these credit agreements~~ is 727.6796% and 526.7738% ~~respectively~~, ~~excluding those facilities that are interest free~~respectively. InIncluding ~~addition~~German totrade ~~the~~tax ~~credit~~of ~~agreements~~approximately ~~provided~~13% ~~to several subsidiaries for working capital~~(net), ~~Messer Griesheim~~the ~~made~~total ~~cash~~income ~~investments~~tax inrate ~~subsidiaries available~~ for ~~sale for~~ the ~~purpose~~German ofcompanies ~~extinguishing~~is ~~the~~41% ~~subsidiary's~~and ~~debt~~40% asfor ~~part~~2003 ofand ~~the~~2002, ~~divestiture program~~respectively.

        ~~During~~ For the ~~nine~~three ~~month~~months ~~period~~ ended ~~September~~ June 30, 2003 and 2002, ~~pursuant~~the toGroup ~~its~~recorded ~~divestiture~~income ~~program~~tax expense of €8,689 ~~the~~and ~~group~~€7,978, ~~completed~~compared with an expected (expense) benefit based on the ~~following~~combined ~~disposals~~federal corporation income tax rate of ~~its~~€(1,468) ~~business~~and ~~activities:~~€2,177, respectively. The difference is mainly due to nondeductible goodwill amortization and other nondeductible expenses for tax purposes.

bFor the six months ended June 30, 2003 and 2002, the Group recorded income tax expense of €13,771 and €11,224, compared with an expected (expense)    ~~Recent~~ ~~Divestitures~~ benefit based on the combined federal corporation income tax rate of €(2,456) and €4,211, respectively. The difference is mainly due to nondeductible goodwill amortization and other nondeductible expenses for tax purposes.

~~Divestiture of Messer Gases S~~7.A. ~~in Venezuela~~ Inventories
        In February, 2002 the Group sold all of the outstanding shares of Messer Gases S.A. in Venezuela to Air Liquide. The impact of this transaction on the unaudited interim condensed consolidated financial statements was not significant.
Divestiture of Nitrogen services business in the U.K.
        In March 2002 the Group sold all assets as well as the existing customer contracts and contacts of the Nitrogen service business in the U.K. to Weatherford U.K. Ltd. The impact of this transaction on the unaudited interim condensed consolidated financial statements was not significant.
38
Divestiture of the Company's activities in Egypt
        In April 2002 the Group sold all shares of Messer Egypt S.A.E, Messer Gases Suez S.A.E and Messer Gases Dekheila S.A.E in Egypt to Air Liquide. The impact of this transaction on the unaudited interim condensed consolidated financial statements was not significant.
Divestiture of the Company's activities in Trinidad & Tobago
        In May 2002 the Group sold all shares of Messer Trinidad & Tobago Ltd. and Neal and Massy Gas Products, Ltd. in Trinidad & Tobago to Air Liquide. The impact of this transaction on the unaudited interim condensed consolidated financial statements was not significant.
Divestiture of Canada
        During August 2002 the company sold the assets of Messer Griesheim Industries of Canada Inc., Canada to Air Liquide. The impact of this transaction on the unaudited interim condensed consolidated financial statements was not significant.
c)    Change in fair value of investments in subsidiaries available for sale
        During the nine month period ended September 30, 2002, the three month period ended September 30, 2002 and the five month period ended September 30, 2001 changes in the estimated fair value of investments in subsidiaries available for sale amounted to a loss of €748, €242 and €8,192, respectively, which have been reflected as "changes in fair value of subsidiaries available for sale" in the unaudited interim condensed consolidated statement of operations.
        The Group continues to consolidate in its financial statements the subsidiaries included in the divestiture program which are expected to be sold subsequent to April 30, 2002 (see note 19 "Reconciliation to U.S. GAAP" for a discussion of SFAS 144). These operations are reflected in the "Others" segment in the Successor's financial statements. Summarized condensed financial information related to these subsidiaries and net assets at September 30, 2002 and December 31, 2001 is set forth below:
September 30, 2002 December 31, 2001
Balance Sheet:
Current assets of other operations held for sale 29,228 38,091
Non-current assets of other operations held for sale 89,196 100,686
Total assets 118,424 138,777
Current liabilities of other operations held for sale 21,329 30,946
Non-current liabilities of other operations held for sale 11,869 13,221
Total liabilities 33,198 44,167
39
Three Months Ended September 30, 2002 Nine Months Ended September 30, 2002 Three Months Ended September 30, 2001 Five Months Ended September 30, 2001
Results of operations, included in consolidated totals:
Net sales 13,801 41,866 14,664 32,263
Cost of sales (8,208 ) (24,369 ) (8,506 ) (18,793 )
Other expenses (net) (3,614 ) (11,516 ) (4,456 ) (11,355 )
Income tax expense (370 ) (1,076 ) (187 ) (257 )
Net income 1,609 4,905 1,515 1,858
Three Months Ended September 30, 2002 Nine Months Ended September 30, 2002 Three Months Ended September 30, 2001 Five Months Ended September 30, 2001
Cash inflows (outflows) from:
Operating activities 4,155 13,145 2,618 3,079
Investing activities (1,268 ) (3,461 ) 238 (515 )
Financing activities (2,148 ) (9,980 ) (7,456 ) (13,932 )
Net cash inflow (outflow) 739 (296 ) (4,600 ) (11,368 )
        Results of operations of the Predecessor for all subsidiaries and net assets included in the divestiture program for all periods prior to the acquisition transactions are included in the consolidated totals in the Company's consolidated financial statements. Summarized condensed results of operations related to such subsidiaries and net assets are set forth below:
Four months Ended April 30, 2001
Net sales 84,793
Cost of sales (64,541 )
Losses of investments accounted for under the equity method of accounting (499 )
Other expenses, net (36,824 )
Income tax expense (440 )
Net loss (17,511 )
10.  Income taxes
        For 2002 and 2001 the combined federal corporation income tax rate is 26.38%. Including German trade tax of approximately 13% (net), the total income tax rate for the German companies is 40% for 2002 and 2001.
        In September 2002, the German government enacted new tax legislation effective for the Group on January 2003 which will increase the federal corporation income tax rate by 1.5% only for 2003. The effect of this change is considered immaterial to the Group financial statements.
        For the three month period ended September 30, 2002 and the three month period ended September 30, 2001 the Group recorded income tax expense of €10,469 and €20,914, compared with an expected benefit based on the combined income tax rate of €5,056, and €7,010, respectively. The
40
difference is mainly due to nondeductible goodwill amortization, other nondeductible expenses for tax purposes and withholding tax on dividends received.
        For the nine month period ended September 30, 2002, the Group recorded income tax expense totaling €21,693 compared with an expected tax benefit based on the combined income tax rate of €11,442. For the five month period ended September 30, 2001 and the four month period ended April 30, 2001 the Group recorded income tax expense of €21,772 and €4,813, compared with an income tax benefit based on the combined income tax rate totaling €11,942 and €2,620 respectively. The difference is mainly due to nondeductible goodwill amortization, nondeductible interest and other nondeductible expenses for tax purposes.
11.  Other long-term receivables, net and other assets
        The Company provided cash collateral for long term loan facilities which were not refinanced on certain of its foreign subsidiaries. As the cash collateral is not available to the Company while the facilities remain outstanding, the cash collateral has been classified within non current other assets. As of September 30, 2002 and December 31, 2001, the cash collateral balances were approximately €6.3 million and €28.3 million, respectively.
12.  Inventories
Inventories consist of the following:

September 30, 2002 December 31, 2001
June 30, 2003 December 31, 2002
Raw materials and supplies 21,854 2221,~~091~~721 ~~20,657~~
Work in progress 10,883 4212,~~227~~794 ~~21,996~~
Finished goods and merchandise 39,731 1738,~~576~~070 ~~37,445~~
Total 72,468 8172,~~894~~585 ~~80,098~~

138.   Cash and cash equivalents
        The Company defines cash and cash equivalents as cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value in the future. In addition, cash and cash equivalents include unrestricted cash balances at subsidiaries in foreign jurisdictions where those amounts cannot easily be transferred. These unrestricted cash balances amounted to approximately €6061.4 7 million and €5662.5 2 million, as of ~~September~~ June 30, ~~2002~~2003 and December 31, ~~2001~~2002, respectively.

14The Company provided cash collateral for bank guarantees relating to the operating business and for long- term loan facilities which were not refinanced on certain of its foreign subsidiaries.  ~~Commitments~~ As the cash collateral is not available to the Company while the facilities remain outstanding, the cash collateral has been classified within non-current “other assets”. As of June 30, 2003, and ~~contingencies~~ December 31, 2002, the cash collateral balances were approximately €2.8 million and €6.3 million, respectively.

9. Commitments and contingencies
Financial guarantees

        ~~The~~Obligations Group has provided financial guarantees totaling €127.8 million at September 30, 2002 and €206.7 million at December 31, 2001, respectively. These guarantees include guarantees for third party debt of deconsolidated subsidiaries formerly included in assets available for sale from ~~the~~issuing divestiture program of €7.8 million and €149.6 million for the respective period and other at equity consolidated subsidiaries of €27.5 million and €28.4 million at September 30, 2002 and December 31, 2001, respectively. In addition, financial guarantees ~~include guarantees~~as ~~for~~a ~~financing~~guarantor ~~machinery~~(excluding ~~and~~product ~~equipment~~warranties) atare ~~various~~as ~~subsidiaries~~follows: ~~of €72.5 million.~~

41

Maximum potential future obligation

Amount recognized as a liability

June 30, 2003

December 31, 2002

June 30, 2003

December 31, 2002

(in € millions)

(in € millions)

Guarantees for third party liabilities

43.4

66.4

3.8

3.8

Guarantees related to sale of investments

133.8

125.0

17.2

17.2

Guarantees for third party liabilities principally represent guarantees of indebtedness of deconsolidated and at equity consolidated subsidiaries and third parties. The term under these arrangements generally cover the range of the related indebtedness of the deconsolidated and at equity consolidated subsidiaries and third parties. Messer Griesheim also provides guarantees to third parties of certain obligations of its consolidated subsidiaries. As of June 30, 2003 and December 31, 2002, these guarantees amounted to €19.5 and €25.8 million, respectively. To a lesser extent, consolidated subsidiaries provide guarantees to third parties of obligations of other consolidated and at equity consolidated subsidiaries. All intercompany guarantees are eliminated in consolidation and therefore, are not reflected in the above table.

The Group is subject to potential liability under certain government regulations and various claims and legal actions that are pending or may be asserted against the Group concerning environmental matters. The maximum potential future obligation related to certain environmental guarantees cannot be estimated due to numerous uncertainties including the enactment of new laws and regulations, the development and application of new technologies, the identification of new sites, for which the Group may have remediation responsibility, including the apportionment and collection of remediation costs when other parties are involved.

In connection with its divestiture program, Messer Griesheim has provided to the purchasers normal and common guarantees for representations and warranties. These guarantees have expiration dates ranging from twelve to sixty months.

When circumstances indicate that payment is probable and estimable, guarantees made by the Group are recognized as a liability in the consolidated balance sheet with an offsetting amount recorded as an expense.

Other financial obligations

         Substantially all of the assets of the Group are pledged as security for the Group's senior facilities at ~~September~~ June 30, ~~2002~~2003 and December 31, ~~2001~~2002.

        Other financial obligations not included in the consolidated balance sheet relate to long-term commitments for capital expenditures of €2412.5 9 million and €3211.0 8 million at ~~September~~ June 30, ~~2002~~2003 and December 31, ~~2001~~2002, respectively. Commitments under long-term purchase agreements amounted to €6047.8 1 million and €6855.6 million at ~~September~~ June 30, ~~2002~~2003 and at December 31, ~~2001~~2002, respectively. Commitments for capital to be funded to equity and cost method investees totaled €154.9 6 million and €224.8 7 million at ~~September~~ June 30, ~~2002~~2003 and at December 31, ~~2001,~~2002 respectively.

        Pursuant to the acquisition transactions and the related China sale and purchase agreement, Messer Griesheim has agreed to purchase ACIC's [Aventis (China) Investment Co. Ltd.] interests in the six ACIC joint ventures, subject to certain conditions. The committed purchase price for the ACIC joint ventures is €32.0 million, plus interest from April 30, 2001 until the completion of the purchase of the ACIC joint ventures. ~~Management~~The ~~believes~~purchase agreement requires that the purchase ~~will~~closes ~~be consummated~~ no later than April 30, 2003. Upon acquiring the ACIC interests, Messer Griesheim ~~will~~has agreed to assume the debt of the ACIC joint ventures upon the date of completion of the transaction. As of ~~September~~ June 30, ~~2002~~2003, such debt amounted to approximately €149.8 million and as of December 31, 2002 such debt amounted to approximately €12.1 million, respectively. Payment of the purchase price ~~consideration~~ is guaranteed by Messer Griesheim Group, the Company's parent. On July 25, 2003, a settlement agreement was reached with Hoechst obligating Messer to purchase the ACIC joint ventures (see Note 13 “Subsequent Events”).

~~Legal~~The ~~contingencies~~ Group also enters into operating leases for equipment.

Litigation

Messer is involved from time to time in various claims and lawsuits incidental to the ordinary course of the business.

        ~~Messer acquired~~ Management its interest in Bombay Oxygen Corporation Limited (Bombay Oxygen), a publicly traded company in India, in 1997 for a total of €12.2 million. It acquired this interest through the purchase of shares from Bombay Oxygen's major shareholder, and purchased additional shares by way of a public offer. The shares in Bombay Oxygen held by Messer were transferred in 2000 to a company jointly owned by Messer and Goyal MG Gases. The Securities and Exchange Board of India is ~~investigating whether some~~ of the ~~purchases~~opinion ofthat ~~Bombay Oxygen shares by Messer or~~ the ~~subsequent~~risks ~~transfer~~connected ofwith ~~such shares to~~ the ~~jointly~~pending ~~owned~~or ~~company~~threatened ~~involved~~litigations indescribed abelow ~~violation~~are ~~with~~adequately ~~respect~~provided ~~to a change of control under Indian takeover regulations~~for. ~~In addition, Messer is involved in litigation with respect to this investment with the major shareholder of Bombay Oxygen.~~

        Various law suits are pending or threatened by Goyal MG and/or its major shareholders. Messer has received a notice from Goyal MG ~~Gases~~ alleging that Messer has breached a confidentiality clause contained in a shareholders' agreement among Messer, Goyal MG ~~Gases~~ and certain other shareholders. The notice requests payment of Rupees 5.0 billion (approximately €~~103~~ 94.1 million) for damages allegedly suffered on account of lost business due to certain press announcements by Messer which allegedly prejudicially affected the business of Goyal MG ~~Gases~~. ~~Management is in the process of investigating this matter and is of the view that the allegations have no merit.~~

        During 2001, Goyal MG ~~Gases~~ defaulted on a bank loan. As a result, the Group, as guarantor, was required to repay the US$4.7 million (approximately €54.1 million) loan in full. The Group is currently seeking reimbursement from Goyal MG ~~Gases~~ for this amount.

        In 1999, the Company's Brazilian subsidiary, Messer Griesheim do Brazil Ltda., entered into a letter of agreement to pursue research into a new technique for the production of ethanol with an individual, who in April 2001, following a termination of the agreement, filed a suit against Messer Griesheim do Brazil Ltda. and certain other affiliates. The claim, mainly for damages for lost opportunities and potential earnings as a result of the subsidiary's alleged breach of the agreement, is for an amount of Reals 593 million (approximately €~~212~~ 163.0 million). In addition, in August 2001 a former employee filed a lawsuit against the Group's Brazilian subsidiary for an amount of €4.3 million. In connection with the disposal of this Brazilian subsidiary, management agreed to indemnify the buyer for any loss relating to ~~this~~these ~~claim~~claims.

42 In August 1999, Messer Griesheim GmbH discovered that one of its executives, who then had senior management responsibility in Central and South America, had misappropriated corporate funds, which he represented to others within Messer Griesheim had been paid to third parties in connection with our business. This executive is no longer an employee. In June 2000, Messer Griesheim was informed that the U.S. Attorney's Office for the Eastern District of Pennsylvania was conducting an investigation relating to the conduct of this former executive. In April 2001, this former executive was arrested on a criminal complaint charging him with three counts of fraud against Messer Griesheim Industries, our principal subsidiary in the United States. Thereafter, the employee pled guilty to wire fraud in connection with a scheme to defraud Messer Griesheim Industries of US$ 550,000 and was sentenced to a prison term of 15 months. In April 2002, the Assistant U.S. Attorney handling the matter notified attorneys for the Company that the investigation was being dropped by their office and referred to the U.S. Customs Agency for possible civil enforcement action. The Company is not aware of any action being pursued by the Customs Agency, and recently was informed by the customs Agency that documents produced in the investigation were no longer needed and would be returned to the Company. The Company therefore believes that this matter is closed.

In Messer ~~addition,~~Griesheim inhas ~~August 2001~~received a ~~former~~notice ~~employee~~from ~~filed~~NLP, a ~~lawsuit~~South ~~against~~American ~~the~~agent/service ~~Group's~~provider ~~Brazilian subsidiary~~ for anMerger ~~amount~~& ~~of €6.5 million. Based on the advice of its Brazilian counsel~~Acquisitions, ~~management~~alleging isthat ofMesser ~~the~~Griesheim ~~view~~has ~~that~~yet ~~both~~not ~~allegations~~paid ~~have~~a nofee ~~merit.~~for ~~Following~~ the ~~disposal~~procurement of ~~the~~potential ~~Brazilian~~investors ~~subsidiary~~for ~~during~~two ~~October 2001,~~subsidiaries ~~the~~of ~~Company~~Messer ~~has retained responsibility for this litigation~~Griesheim.

        In ~~August 1999,~~ ~~Messer~~January ~~Griesheim GmbH discovered that one of it's executives~~2003, ~~who then had senior management responsibility in Central and South America, had misappropriated corporate funds, which he represented to others within~~ Messer Griesheim ~~had~~received ~~been~~a ~~paid~~claim ~~to third parties in connection with our business. This executive is no longer an employee. In June 2000, Messer Griesheim was informed that the U.S. Attorney's Office~~ for ~~the~~alleged ~~Eastern~~breach ~~District~~ of ~~Pennsylvania~~contract ~~was~~concerning ~~conducting an investigation relating to~~ the ~~conduct~~sale of ~~this~~Messer ~~former~~Medical ~~executive. In April 2001~~GmbH, ~~this~~claiming ~~former~~approximately ~~executive~~€4.1 ~~was~~million. ~~arrested~~Based on athe ~~criminal~~advice ~~complaint charging him with three counts~~ of ~~fraud~~its ~~against Messer Griesheim Industries~~counsel, ~~our~~management ~~principal~~is ~~subsidiary in the United States. Thereafter, the employee pled guilty to wire fraud in connection with a scheme to defraud Messer Griesheim Industries~~ of ~~$550 thousand and was sentenced to a prison term of 15 months. In April 2002,~~ the ~~Assistant~~opinion ~~U.S. Attorney handling the matter notified attorneys for the Company~~ that the ~~investigation~~allegations ~~was~~have being dropped by their office and referred to the U.S. Customs Agency for possible civil enforcement action. The Company is not aware of any action being pursued by the Customs Agency. The Company can give no ~~assurance as to the ultimate scope or outcome of the overall investigation~~merit. Under the business combination agreement entered into in connection with the acquisitions described above, Hoechst has agreed to indemnify the Company with respect to any losses arising out of such investigation of any related proceedings, although this indemnity is generally limited to two-thirds of the loss incurred.

        Messer Griesheim has received a notice from NLP, a South American agent/service provider for Merger & Acquisitions, alleging that Messer Griesheim has yet not paid a fee for the procurement of potential investors for two subsidiaries of Messer Griesheim. Management believes that the allegations have no merit.
        In 2001, the Group's subsidiary PT Aneka in Indonesia entered into an agreement for the purchase of machinery and equipment. In November 2001, the agreement partner filed suit against the subsidiary due to the alleged unlawful termination of the contract by PT Aneka. The claim, mainly for damages for lost opportunities and potential earnings, is for an amount of US$1.5.
While there can be no assurance as to the ultimate outcome of these matters due to the uncertainties involved in matters of litigation, management believes that the outcome of all pending legal proceedings, either individually or in the aggregate, will not have a material effect on the Company's consolidated financial position, results of operations, or cash flows.

1510.   Derivative financial instruments
        IAS 39 ~~"Financial Instruments: Recognition~~ and ~~Measurement"~~FASB ~~sets~~133 ~~standards~~“Accounting for ~~recognition,~~Derivative ~~measurement~~Instruments and ~~reporting~~ ofHedging ~~information~~Activities” ~~relating~~require companies to ~~financial~~recognize ~~instruments~~all ofderivative aninstruments ~~enterprise~~ as aneither ~~asset~~assets or ~~liability,~~liabilities ~~including~~in the ~~reporting~~statement of ~~hedging~~financial ~~instruments~~position at fair value. ~~Under~~The ~~this~~accounting ~~Standard,~~for ~~all~~changes ~~financial~~in ~~assets~~the ~~and liabilities~~fair ~~are~~value ~~recognized~~(i.e. ongains ~~the~~or ~~balance~~losses) ~~sheet,~~of ~~including~~a ~~all~~derivative ~~derivatives.~~instrument ~~They~~depends ~~are~~on ~~initially~~whether ~~measured~~it athas ~~cost.~~been ~~Subsequent~~designated toand ~~initial~~qualifies ~~recognition,~~as ~~all~~part ~~financial~~of ~~assets~~a ~~are~~hedging ~~re-measured~~relationship ~~at fair~~and ~~value~~further, ~~with~~on the ~~exception~~type of ~~certain~~hedging ~~assets~~relationship. For those derivative instruments that are designated and ~~liabilities~~qualify ~~listed~~as inhedging ~~the~~instruments, ~~standard.~~a ~~Adoption~~company ofmust ~~this~~designate ~~standard~~the onhedging ~~January 1~~instrument, ~~2001~~based ~~resulted~~upon inthe aexposure ~~€335~~being ~~cumulative~~hedged, ~~effect~~as ~~of change~~a infair ~~accounting~~value ~~principles~~hedge, ~~net~~cash offlow ~~deferred~~hedge ~~taxes~~or ~~totaling~~a ~~€223,~~hedge ~~and~~of isa ~~reflected~~net investment in ~~equity~~a foreign operation.

        ~~IAS 39~~The ~~and~~Group ~~FASB~~has ~~133~~entered ~~"Accounting~~into ~~for~~interest ~~Derivative~~rate ~~Instruments~~swap ~~and~~agreements ~~Hedging~~that ~~Activities"~~effectively ~~require~~convert ~~companies~~a toportion ~~recognize~~of ~~all~~its ~~derivative instruments~~floating-rate asindebtedness ~~either~~to ~~assets~~a orfixed ~~liabilities~~rate inbasis for approximately the ~~statement~~next oftwo ~~financial~~years, ~~position~~thus atreducing ~~fair~~the ~~value.~~impact ~~The~~of ~~accounting~~interest ~~for~~rate changes inon ~~the~~future ~~fair~~interest ~~value (i~~expense.e. ~~gains~~Approximately or43% ~~losses~~(€572.9 million) of athe ~~derivative~~Group's ~~instrument~~outstanding ~~depends on~~indebtedness ~~whether~~was itdesignated ~~has~~as ~~been~~hedged ~~designated~~due ~~and~~to ~~qualifies~~interest asrate ~~part~~swap agreements as of aJune ~~hedging~~30, ~~relationship~~2003. ~~and~~The ~~further,~~fair onvalues of the ~~type~~interest ofrate ~~hedging~~swaps ~~relationship~~designated for cash flow hedges were €(26.6) ~~For~~million ~~those~~as ~~derivative~~of ~~instruments~~June ~~that~~30, ~~are~~2003 and €(28.3) million as of December 31, 2002.

43Interest expense for the six months ended June 30, 2003 includes net losses resulting from hedging activities of €1.2 million and €2.0 million for the six months ended June 30, 2002. For the three months ended June 30, 2003 and 2002 the losses amounted to €1.2 and €2.0 million, respectively. There was no ineffectiveness in the cash flow hedges as the critical terms of the interest rate swaps (e.g. basis, re-pricing dates etc), matched the critical terms of the hedged loans. Unless otherwise noted, all components of the interest rate swap gains or losses are included in the assessment of hedge effectiveness.

~~designated~~Changes ~~and~~in ~~qualify~~the fair value of interest rate swaps designated as hedging instruments of the variability of cash flow associated with floating rate loans are reported in equity. The amount recorded in the other comprehensive income related to the cash flow hedges was €(295) (net of deferred tax effect of €1,841) aand ~~company~~€607 ~~must~~(net ~~designate~~of deferred tax effect of €182) for the ~~hedging~~six ~~instrument~~months ended June 30, ~~based~~2003 ~~upon~~and the ~~exposure~~six ~~being~~months ~~hedged~~ended June 30, as2002 arespectively. ~~fair~~As ~~value~~the hedge is deemed completely effective and held to the full term, ~~cash~~the ~~flow~~swap ~~hedge~~market orvalue achanges ~~hedge~~are ofrecorded aas ~~net investment~~adjustments into athe ~~foreign~~swap ~~operation.~~asset or liability and an increase or decrease in equity.

        ~~The Group~~A ~~has~~part ~~entered~~of ~~into~~the foreign exchange forwards and the interest rate ~~swap~~caps ~~agreements~~provide ~~that~~effective ~~effectively~~economic ~~convert~~hedges aunder ~~portion~~the ofGroup's ~~its~~risk ~~floating-rate~~management ~~indebtedness~~policies, tobut ado ~~fixed~~not ~~rate~~qualify ~~basis~~ for ~~approximately~~hedge ~~the~~accounting ~~next two~~under ~~and~~the aspecific ~~half~~rules ~~years,~~in ~~thus~~IAS ~~reducing~~39. ~~the~~The ~~impact~~fair values of these foreign exchange forwards and the interest rate ~~changes~~caps onwere ~~future~~€(164) ~~interest~~and ~~expense.~~€0 as of June 30, 2003, €~~582~~8 and €3 as of December 31, 2002.~~0 million~~ Changes in the fair value of these derivative instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately in the ~~Group's~~statement ~~outstanding~~of ~~indebtedness~~operations. ~~was~~The ~~designated~~Group ~~as hedged~~recorded ~~due~~a toloss ~~interest~~from ~~rate~~changes ~~swap~~in ~~agreements~~the asfair value of ~~September~~ €175 and €70 for the six months ended June 30, 2003 and June 30, 2002, respectively. For the three months ended June 30, 2003 and 2002 losses from changes in the fair value amounted to €141 and €57, respectively.

        ~~Interest expense for the nine months period ended September 30, 2002 include net losses resulting from hedging activities of €2~~11.~~0 million.~~ ~~Due~~Related ~~to mandatory~~parties and voluntary loan prepayments in June 2002 amounting to €99.5 million, parts of the existing swaps have been terminated at the end of June 2002. The termination payments of €0 million and €2.0 million of these swaps are shown as interest expense in the three and nine month periods ended September 30, 2002. For the other existing swaps, there was no ineffectiveness in the cash flow hedges as the critical terms of the interest rate swaps (e.g. basis, re-pricing dates etc), matched the critical terms of the hedged loans. Unless otherwise noted, all components of the interest rate swap gains or losses are included in the assessment of hedge effectiveness.
        ~~Changes in~~Allianz the fair value of interest rate swaps designated as hedging instruments of the variability of cash flow associated with floating-rate loans are reported in equity. As the hedge is deemed completely effective and held to the full term, the swap market value changes are recorded as adjustments to the swap asset or liability and equity. (ACP)

        ~~Freestanding derivative~~ ACP, ~~instruments~~directly ~~maintained~~or ~~by the Messer Group as of September 30~~indirectly, ~~2002~~owns ~~included~~or ~~interest~~controls ~~rate caps intended to hedge interest expense on floating rate loans~~33. ~~The~~08% ~~interest~~of ~~rate~~Messer ~~caps~~Griesheim doGroup ~~not~~GmbH ~~qualify~~& ~~as hedges and, consequently, have been market-to-market through earnings for changes in their fair value beginning January 1, 2001~~Co. KGaA.

16 ACP is a 20% shareholder in Mahler Italfilo Holding GmbH, which is currently in liquidation.  ~~Related~~ ~~parties~~ During April 2001, Mahler Italfilo Holding GmbH acquired the shares of Mahler AGS GmbH and Italfilo Engineering S.r.l. from Messer Griesheim prior to the consummation of the acquisition transactions.

~~Hoechst~~ ACP provided certain financial advisory services to the Company and Messer Griesheim, for which it has been paid in aggregate approximately €3.0 million in advisory fees by Messer Griesheim during the eight months ended December 31, 2001. No transactions between the Group and ACP took place since January 1, 2002.

        ~~Prior~~Goldman toSachs ~~the~~(GS acquisition transactions at April 30, 2001, Hoechst was the majority stockholder of Messer Griesheim. Messer Griesheim has entered into certain transactions relating to sale and service contracts with companies within the Hoechst group which are not material. The transactions are settled at terms substantially equivalent to similar transactions negotiated at an arm's length basis. Funds)

        ~~Related party~~Six ~~transactions~~private ~~with~~equity ~~respect~~funds tomanaged ~~the~~by ~~Group's~~affiliates ~~Singapore~~of ~~operations~~The ~~are~~Goldman ~~described~~Sachs inGroup, ~~note 5~~Inc. ~~Hoechst~~hold ~~has~~33.08% ~~indemnified~~of ~~the~~Messer Griesheim Group ~~for~~GmbH €9& Co.~~4 million~~ ~~in bank~~KGaA. ~~guarantees~~Goldman ~~provided~~Sachs toInternational ~~Bombay~~also ~~Oxygen~~is an affiliate of The Goldman Sachs Group, ~~which~~Inc. ~~has~~Goldman ~~been~~Sachs ~~reflected~~and asits anaffiliates, ~~advance~~in ~~towards~~the ~~capital~~ordinary ~~contribution~~course atof ~~April 30~~business, ~~2001~~engage in commercial banking, investment banking and asfinancial ~~equity~~advisory attransactions ~~September 30,~~with ~~2002~~Messer Griesheim Group GmbH & Co. KGaA and the Group.

Allianz
        As a result of the acquisition transactions, Allianz Capital Partners owns 33.08% of Messer Griesheim Group GmbH & Co. KGaA at September 30, 2002.
        Allianz Capital Partners is a 20% shareholder in Mahler Italfilo Holding GmbH. During April, 2001, Mahler Italfilo Holding GmbH acquired the shares of Mahler AGS GmbH and Italfilo Engineering S.r.l. from Messer Griesheim prior the consummation of the acquisition transactions.
44
Goldman Sachs
        As a results of the acquisition transactions, six private equity funds managed by affiliates of the Goldman Sachs Group, Inc. hold 33.08% of Messer Griesheim Group GmbH & Co. KGaA at September 30, 2002. Goldman Sachs International also is an affiliate of The Goldman Sachs Group, Inc. Goldman Sachs and its affiliates, in the ordinary course of business, engage in commercial banking, investment banking and financial advisory transactions with Messer Griesheim Group GmbH & Co. KGaA and the Group.
Goldman Sachs Group, Inc., Goldman Sachs International and their affiliates have provided merger and acquisition advisory services in connection with the acquisition transactions of the Group, and have received no related advisory fees for these services.

        Goldman Sachs International was a lender under the mezzanine facility of Messer Griesheim. Goldman Sachs International also is a lender under the senior facilities program of Messer Griesheim, the proceeds of which were used to repay the mezzanine facility. Goldman Sachs International ~~previously~~ received ~~an aggregate of~~ €20.0 4 million in financing/syndication fees in connection with these transactions. for the eight months ended December 31, 2001 and €0 million for the six months ended June 30, 2003 and 2002.

        Goldman Sachs International and its affiliates were the underwriters of the original ~~Senior~~senior ~~Notes~~notes and the lead arrangers of the senior and mezzanine facilities of Messer Griesheim. In connection with these activities, ~~approximately~~Goldman ~~€34.8 million~~Sachs International and its affiliates were paid approximately €14.4 million during the ~~two~~eight ~~month~~months ~~period~~ended December 31, 2001 and €0 million for the six months ended June 30, ~~2001~~2003 and 2002.

        Goldman Sachs was our agent in repurchasing the ~~Senior~~senior ~~Notes~~notes during the ~~nine~~twelve months ~~period~~ ended ~~September 30~~December 31, 2002 and ~~the~~received fees ~~paid~~ for this ~~were~~ service of €0.2 6 million. No fees were paid during the six months ended June 30, 2003 and 2002.

        The Group enters into derivative contracts to hedge their exposure to changes in interest rates and foreign currency. Affiliates of the Goldman Sachs Group act as a ~~counterparty~~counter party to certain interest rate swap contracts and forward exchange contracts which have a notional amount of €~~526~~448.7 million and €0 million at ~~September~~ June 30, ~~2002~~2003 and €511.2 Inmillion ~~addition~~and on€0.9 million at December 31, 2002. On June 24, 2002 the Group entered into €~~398~~367.4 0 million notional forward interest rate swaps with the same counterparty, which will partly replace the existing swaps when they expire in 2004. ~~The~~In ~~company made termination payments of €0.9 million~~addition, ~~€0 million~~in ~~and~~June ~~€0 million~~2003 ~~to Goldman Sachs for~~ the ~~nine~~Group ~~months~~entered ~~period~~into ~~ended September 30,~~€120.0 ~~2002,~~million ~~the~~notional ~~five~~forward ~~months~~interest ~~period~~rate ~~ended~~swaps ~~September 30,~~with ~~2001 and~~ the ~~four~~same ~~months period ended April 30, 2001, respectively~~counterparty.

        Goldman Sachs International and its affiliates are involved with providing investment banking services in connection with the Group's divestiture program, and are entitled to receive fees based upon a percentage of debt relief to the Group achieved by completed divestitures on which it has advised the Company. Fees paid or payable to Goldman Sachs International in connection with this arrangement, based on completed divestitures under the program, aggregated €52.6 1 million, €0 and €01.7 million for the ~~nine~~six ~~month~~months ~~period~~ ended ~~September 30,~~ ~~2002,~~June ~~the five month period ended September~~ 30, ~~2001~~2003 and ~~the four month period ended April 30~~2002, ~~2001,~~ respectively.

        An affiliate of Goldman Sachs Group, Inc. is a 20% shareholder in Mahler Italfilo Holding GmbH, which is currently in liquidation. On April 1, 2001, Mahler Italfilo Holding GmbH acquired the shares of Mahler AGS GmbH and Italfilo Engineering S.r.l. from the Messer Griesheim prior to the consummation of the acquisition transactions.

45Messer Industrie GmbH (MIG)

Prior to the acquisition transactions in April 30, 2001 MIG was the minority shareholder of Messer ~~Industrie~~Griesheim GmbH. ("As a result of the acquisition transactions MIG" holds 32.11% of Messer Griesheim Group GmbH & Co. KGaA. MIG owns through its 100% affiliate Bandinelli GmbH 22% of Mahler Italfilo Holding GmbH (currently in liquidation) , which acquired two subsidiaries of the Group (Mahler AGS GmbH and Italfilo Engineering S.r.l) in April 2001.

        ~~Prior~~On toApril 24, 2001, the ~~acquisition~~Group ~~transactions~~sold atits ~~April 30,~~interest ~~2001~~in ~~MIG~~a ~~was~~holding ~~the~~company ~~minority~~that ~~shareholder~~controls ofthree ~~Messer~~operating ~~Griesheim~~companies ~~GmbH.~~in AsCuba ato ~~result~~an ofentity ~~the~~which ~~acquisition transaction,~~is ~~MIG~~controlled ~~holds~~by 32Mr.~~11%~~ ofStefan Messer, ~~Griesheim~~a ~~Group~~member ~~GmbH &~~of ~~Co.~~the ~~KGaA.~~management ~~MIG~~board ~~was,~~of ~~through~~the ~~its~~Group. ~~100%~~Mr. ~~affiliate~~Stefan ~~Bandinelli~~Messer ~~GmbH,~~is also a ~~22%~~director and minority shareholder ofin ~~MWW~~MIG. ~~Zweiundachtzigste Vermögensverwaltungs~~The ~~GmbH~~total ~~(renamed~~purchase ~~Mahler~~price ~~Italfilo~~for ~~Holding~~the ~~GmbH),~~Cuban ~~which~~holding ~~acquired~~company ~~two~~was ~~subsidiaries~~US$7.0 million, of ~~the~~which ~~Group~~US$1.2 ~~(Mahler~~million ~~AGS~~was ~~GmbH~~paid in cash and ~~Italfilo~~the ~~Engineering~~remainder ~~S.r.l)~~by an unsecured note in ~~April 2001.~~the ~~MIG is~~principal ~~also~~amount anof ~~11%~~US$5.8 ~~shareholder~~(€5.1) inmillion, ~~Messer~~which ~~Singapore~~matures ~~Holding~~in ~~GmbH,~~2006 ~~the~~and ~~transactions~~accrues ofinterest ~~which~~at ~~are~~the ~~explained~~rate inof ~~note~~ 5.5% per year.

~~Other~~ Loans to and from related parties

        ~~Related~~As ~~party~~of ~~transactions~~December ~~with~~31, ~~respect~~2002, loans to ~~the~~related ~~sale~~parties ofprimarily ~~operating~~relate ~~companies~~to ina ~~Cuba~~non-interest isbearing ~~discussed~~note due from an equity method investment in ~~note 6~~Malaysia of approximately €5.1 ~~See~~million. ~~also~~In ~~"Loans~~the tosecond ~~related~~quarter ~~parties"~~2003, ~~below.~~the investment was sold.

~~Loans~~In October 2002 Messer Griesheim has received a loan from its shareholder Messer Griesheim Group GmbH & Co. KGaA amounting to ~~related~~€33.0 ~~parties~~ million. During January 1, 2003 to June 30, 2003 the interest expense amounted to €1.2 million. The loan bears a fixed interest rate of 5.0% per annum and has a maturity of five years. The interest is payable on the loan at such time as the principal amount is due and payable. The principal amount is due on the earlier of the maturity of the loan or the date following three months after Messer Griesheim Group GmbH & Co. KGaA declares the termination of the loan.

        As of September 30, 2002 and December 31, 2001, loans to related parties primarily relate to a non-interest bearing note due from an equity method investment in Malaysia of approximately €5.1 million and €5.1 million, respectively.
Shareholders' Agreement

        ~~Messer Industrie~~MIG, ACP and the GS Funds have entered into a shareholders' agreement. The shareholders' agreement provides, among other things, for the corporate governance of the Group and Messer Griesheim Group GmbH & Co. KGaA, including the right to appoint board members and other voting rights. The shareholders’ agreement generally allocates rights and obligations concerning matters between MIG, on the one hand, and ACP and the GS Funds, on the other hand, considered collectively, as the financial sponsors. The shareholders' agreement provides that all important decisions regarding Messer Griesheim's management, in particular decisions on divestitures and capital expenditures, are to be taken by Messer Griesheim Group GmbH & Co. KGaA and in certain cases requires 75% of shareholder approval. This includes divestitures in Europe, with the exception of the United Kingdom. With respect to a sale of Messer Griesheim, a 75% approval will be required until September 30, 2004,; thereafter only a majority approval is required. The shareholders' agreement also contains share transfer restrictions, including rights of first offer, rights to participate in sales by other shareholders and provisions regarding change of control. ~~Until October 2004, no shareholder may transfer its shares in Messer Griesheim without the approval of the other shareholders.~~

        ~~Due to certain antitrust considerations relating to ACP's equity interest in a competitor of Messer Griesheim~~Additionally, ~~ACP and~~ the GSshareholders’ ~~Funds~~agreement ~~entered~~grants ~~into~~MIG a ~~separate~~call ~~agreement.~~option ~~The~~between ~~agreement generally~~April ~~allocates the rights of ACP relating to the corporate governance~~ and ~~management~~September of2004 ~~the~~for ~~Group~~all toshares ~~the~~held GSby ~~Funds, until such time~~ the ~~antitrust~~financial ~~related considerations are no longer relevant. Accordingly~~sponsors, ~~until~~subject ~~then,~~to ~~the~~certain ~~members~~significant ofconditions ~~the shareholders' committee appointed by the GS Funds will represent all votes of the ACP~~ and ~~the GS Funds, which will constitute 66~~requirements.~~16%~~ ofAfter ~~all~~September ~~votes~~2004, ina ~~the shareholders'~~shareholder ~~committee.~~may ~~The~~freely ~~agreement~~transfer ~~also~~its ~~limits~~shares ~~ACP~~if ~~and~~they ~~the~~have GSfirst ~~Fund's~~been ~~ability~~offered to ~~sell~~the ~~their shares in Messer Griesheim Group GmbH & Co. KGaA independently of each~~ other. shareholder.

46Due to certain antitrust considerations relating to ACP's equity interest in a competitor of Messer Griesheim, ACP and the GS Funds entered into a separate agreement. The agreement generally allocates the rights of ACP relating to the corporate governance and management of the Group to the GS Funds, until such time the antitrust related considerations are no longer relevant. Accordingly, until then, the members of the shareholders' committee appointed by the GS Funds will represent all votes of the ACP and the GS Funds, which as of June 30, 2003 constitute 66.16% of all votes in the shareholders' committee. The agreement also limits ACP and the GS Funds’ability to sell their shares in Messer Griesheim Group GmbH & Co. KGaA independently of each other.

1712.   Stock purchase and option plan
During November 2001, the shareholders of Messer Griesheim Group GmbH & Co. KGaA approved a stock compensation plan for the benefit of key managers of the Group. The plan allows these employees to purchase shares of Messer Griesheim Group GmbH & Co. KGaA (original option). The shareholders of Messer Griesheim Group GmbH & Co. KGaA have agreed among each other that the maximum number of shares to be acquired by the managers under the stock purchase and option plan shall be limited to 6.5% of the then-outstanding stock of Messer Griesheim Group GmbH & Co. KGaA. The options to acquire shares have been priced at €74.25, the fair market value at the date of the change in control under the acquisition transactions (April 30, 2001). Upon exercise of the original options and for each share purchased, the participants receive conditionally exercisable, non transferable options to acquire three new shares in Messer Griesheim Group GmbH & Co. KGaA at the same price of €74.25. The conditionally exercisable options become exercisable no earlier than two years after the date of grant, and only upon the attainment of certain operating performance and investment yield targets, but in any case not before an exit event.

         All shares offered under this plan are subject to certain put and call provisions upon the occurrence of certain events. In November 2001, 176,563 original options were granted. Subsequent to December 31, 2001, 156 participants had purchased a total of 148,861 shares and were granted 446,583 conditionally exercisable options. 5,727 original options granted were forfeited during the six months ended June 30, 2003. None of these options were exercised~~, forfeited~~ or expired asduring ofthe ~~and~~second ~~for~~quarter ~~the~~2003. ~~nine~~As ~~month~~of ~~period~~June ~~ended September~~ 30, ~~2002.~~2003, 440,856 conditionally exercisable options were outstanding.

        During the second quarter 2002, a substantially similar stock purchase and option plan was approved for certain members of the shareholders'’ committee of the general partner of Messer Griesheim Group GmbH & Co. KGaA ~~(the Messer Griesheim Group)~~, Messer Griesheim Beteiligungsverwaltungs GmbH. The participating members were offered to acquire the shares in Messer Griesheim Group for a purchase price of €74.25, which was the fair market value at the date of the change in control under the acquisition transactions (April 30, 2001). In addition to the shares acquired by them from the shareholders of Messer Griesheim Group, Messer Griesheim Group has issued to the participants conditionally exercisable, non transferable convertible bonds for a purchase price of €1 each, convertible into one or more shares of Messer Griesheim Group for an additional payment of €73.25 for each share. The conversion rights become exercisable only upon the attainment of certain operating performance and investment yield targets and the number of years the participants have served as members of the shareholders' ’ committee, but in any case not before an exit event. All shares offered under this plan are subject to certain put and call provisions upon the occurrence of certain events. Subsequent to March 31, 2002, 6six participants had purchased a total of 24,612 shares and 38,112 conditionally exercisable, non transferable convertible bonds were issued for a purchase price of €1 each. None of these convertible bonds were exercised, forfeited or expired as of ~~and~~June ~~for the nine month period ended September~~ 30, ~~2002~~ 2003

        The Company'’s stock purchase and option plans for management and the Board are accounted for as provided by APB Opinion No. 25. No compensation cost has been recognized in connection with the granting of original options and convertible bonds for the ~~nine~~six ~~month~~months ~~period~~ended June 30, 2003, or the six months ended ~~September~~ June 30, 2002, respectively, as the purchase price the participants were required to pay was equivalent to the fair value of the shares of the Company with like features on the date of grant. With respect to the contingently exercisable options and convertible bonds, compensation cost will be measured and recognized immediately upon the occurrence of the contingent exit event.

        As an alternative to accounting for stock based compensation under APB No. 25, SFAS No. 123, "“Accounting for Stock Based Compensation"”, as amended by SFAS’148 “Accounting for Stock Based compensation –Transition and Disclosures” establishes a fair value method of accounting for stock purchase and option plan or similar equity instruments. Had compensation cost for these plans been determined in accordance with SFAS No. 123 as amended by SFAS 148, the Company'’s net earnings would not have been affected. Therefore, a pro forma table is not presented.

4713. Subsequent events

18On July 25, 2003, Messer Griesheim Group GmbH & Co.  ~~Subsequent~~ ~~events~~ KGaA has entered into a settlement agreement with Hoechst, which settled certain warranties and contingencies. This settlement agreement also obligates Messer to purchase the ACIC joint ventures.

        ~~From~~The ~~October 1,~~Group ~~2002 until October 8, 2002 Messer Griesheim~~ has ~~repurchased~~not ~~additional~~finalized ~~Senior~~its ~~Notes~~accounting ~~amounting~~analysis ~~to €39,236 for an average price~~ of 102.9%. In connection with the repurchase, unamortized finance cost of €3.3 million, fees and tender premium of €1.5 million were incurred. Goldman Sachs was our agent in repurchasing the additional Senior Notes and the fees paid for this ~~were~~settlement €0agreement.~~4 million.~~

        ~~In October 2002 DIOGENES 20~~14. ~~Vermögensverwaltung~~Reconciliation ~~GmbH,~~to ~~which owned 66~~U.~~67% of Messer Griesheim Holding was merged into Messer Griesheim Group~~S. GAAP
        ~~In October 2002~~The ~~Messer~~Group's ~~Griesheim~~unaudited ~~has~~interim ~~received~~condensed aconsolidated ~~loan~~financial statements have been prepared in accordance with IFRS, which differ in certain significant respects from ~~its~~accounting ~~shareholder~~principles ~~Messer~~generally ~~Griesheim~~accepted ~~Group~~in ~~amounting~~the toUnited ~~€33~~States of America (“U.~~0 million~~S. GAAP”). The ~~loan~~differences ~~bears~~that have a ~~fixed~~significant ~~interest rate~~impact ofon ~~5.0%~~net ~~per~~income ~~annum~~(loss) and ~~has~~stockholders' aequity ~~maturity~~ of ~~five~~the ~~years.~~Group are set out below:

        ~~Subsequent to~~ Reconciliation ~~September 30,~~of ~~2002~~net ~~Messer~~income ~~Singapore~~(loss) ~~Pte. Ltd. has entered into certain agreements~~ to ~~sell its Air Separation and Vacuum Flasher Units to Singapore Syngas Pte~~U. ~~Ltd~~S. ~~and~~GAAP tofor ~~sell~~ the ~~remaining~~three ~~assets of the company to Air Products Singapore Pte. Ltd.~~ and ~~Singapore~~six ~~Oxygen~~months ~~Air~~ended ~~Liquide~~June ~~Pte. Ltd.~~30, ~~Following these transactions~~2003, Messer Singapore Holding GmbH entered into agreements to sell all its shares in Singapore Syngas Pte. Ltd. to Chevron Texaco Singapore Energy Company. The Group has not finalized its accounting analysis of these agreements and ~~transactions. Finalization of this analysis is not expected to have a material effect on~~ the ~~Group's~~three ~~consolidated~~and ~~financial~~six ~~statements.~~months Inended ~~conjunction~~June ~~with the agreements~~30, certain guarantees totaling €16.6 million were given which are included in the funding agreement under the shareholder's agreement between Hoechst and Messer Holding (see note 5 "Singapore transactions"). As a result2002, ~~the~~respectively: ~~remaining Group's funding obligations under the cap are expected to increase to approximately €13.0 million.~~

19.  Reconciliation to U.S. GAAP

Note

Three months
ended
June 30, 2003

Three months
ended
June 30, 2002

Net loss as reported in the consolidated statements of operations under IFRS

(5,533)

(18,857)

U.S. GAAP adjustments:

Amortization expense

a

6,805

7,356

Assets to be sold

b

—

(62)

Restructuring costs

c

(272)

—

Provisions for pensions and similar obligations

f

207

480

Impairment charge (IFRS)

g

2,948

—

Tax effect of U.S. GAAP adjustments

i

26

(192)

Net income (loss) under U.S. GAAP before extraordinary item

4,181

(11,275)

Extraordinary loss (net of tax of € 0)

g

(2,948)

—

Net income (loss) under U.S. GAAP

1,233

(11,275)

        ~~The~~Reconciliation ~~Group's~~of ~~consolidated~~net ~~financial~~income ~~statements~~(loss) ~~have~~to ~~been prepared in accordance with IAS, which differ in certain significant respects from accounting principles generally accepted in the United States of America ("~~U.S. GAAP~~").~~ ~~The~~for ~~differences~~the ~~that~~six ~~have~~months aended ~~significant~~June ~~impact~~30, on2003, ~~net loss~~ and ~~stockholders'~~the ~~equity~~six ofmonths ~~the~~ended ~~Group~~June ~~are~~30, ~~set~~2002, ~~out below~~respectively:

        Reconciliation of net loss to U.S. GAAP for the three month period ended September 30, 2002 and the three month period ended September 30, 2001, respectively:

Note

Six months
ended
June 30,
2003

Six months⁽¹⁾ended
June 30,
2002

Net loss as reported in the consolidated statements of operations under IFRS

(9,053)

(32,251)

U.S. GAAP adjustments:

Amortization expense

a

13,719

14,757

Assets to be sold

b

—

630

Restructuring costs

c

(779)

—

Asset retirement obligations accretion expense

h

591

—

Provisions for pensions and similar obligations

f

788

448

Impairment charge (IFRS)

g

2,948

—

Tax effect of U.S. GAAP adjustments

i

(239)

(179)

Net income (loss) under U.S. GAAP before extraordinary item and cumulative effect of change in accounting principle

7,975

(16,595)

Extraordinary loss (net of tax of € 0)

g

(2,948)

—

Cumulative effect of change in accounting principle (net of taxes of €236 and €0, respectively)

a,g,h

(355)

(27,559)

Net income (loss) under U.S. GAAP

4,672

(44,154)

Successor
Note Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
Net loss as reported in the consolidated statements of operations under IAS (25,779 ) (41,306 )
U.S. GAAP adjustments:
Amortization expense a 6,875 (724 )
Assets to be sold b — 9,426
Provisions for pensions and similar obligations g 456 (742 )
Tax effect of U.S. GAAP adjustments h (182 ) (3,474 )
Net loss under U.S. GAAP (18,630 ) (36,820 )
(1) restated to reflect the adoption of SFAS 142.

48Reconciliation of stockholders' equity to U.S. GAAP as of June 30, 2003 and December 31, 2002, respectively:

        Reconciliation of net loss to U.S. GAAP for the nine month period ended September 30, 2002, the five month period ended September 30, 2001 and the four month period ended April 30, 2001, respectively:

Note

June 30,
2003

December 31,
2002

Stockholders' equity as reported in the consolidated balance sheets under IFRS

677,544

735,487

U.S. GAAP adjustments:

Amortization expense

a,b,c,d,e

39,552

25,833

Cumulative effect of change in accounting principle

a,g,h

(27,914)

(27,559)

Assets to be sold

b

6,102

6,102

Restructuring costs

c

(1,419)

(640)

Transaction costs

d

33,200

33,200

Provisions for pensions and similar obligations

f

(10,129)

(10,917)

Equity method investments expenses

g

19,846

19,846

Asset retirement obligations accretion expense

h

591

—

Tax effect of U.S. GAAP adjustments

i

4,041

4,280

Cumulative translation adjustment

j

(1,932)

(1,220)

Stockholders' equity under U.S. GAAP

739,482

784,412

Successor Predecessor
Note Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
Net loss as reported in the consolidated statements of operations under IAS (58,030 ) (56,208 ) (13,498 )
U.S. GAAP adjustments:
Amortization expense a 21,632 (1,196 ) —
Assets to be sold b 630 8,192 —
Property, plant and equipment f — — (74 )
Provisions for pensions and similar obligations g 904 (702 ) 176
Tax effect of U.S. GAAP adjustments h (361 ) (2,996 ) (41 )
Net loss under U.S. GAAP (35,225 ) (52,910 ) (13,437 )
a. Goodwill and Other Intangible Assets

        ~~Reconciliation~~ SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment annually (or more frequently if impairment indicators arise). In accordance with the provisions of ~~stockholders'~~SFAS ~~equity~~142 the Group has decided to test for goodwill impairment on January 1 of each fiscal year. Under IFRS, goodwill and intangible assets continue to be amortized on a systematic basis over their estimated useful lives not to exceed twenty years. This difference in accounting treatment results in a decrease in amortization expense under U.S. GAAP as of ~~September~~ €13,719 and €14,757 during the six months ended June 30, 2003 and June 30, 2002 respectively and of €6,805 and ~~December 31~~€7,356 ~~2001~~for the three months ended June 30, 2003 and 2002, respectively:.

Note September 30, 2002 December 31, 2001
Stockholders' equity as reported in the consolidated balance sheets under IAS 789,406 903,389
U.S. GAAP adjustments:
Amortization expense a,b,c,d,e 18,768 (2,864 )
Assets to be sold b 6,102 5,472
Transaction costs d 33,200 33,200
Provisions for pensions and similar obligations g 357 (547 )
Tax effect of U.S. GAAP adjustments h 554 915
Cumulative translation adjustment i (1,134 ) —
Stockholders' equity under U.S. GAAP 847,253 939,565
The Group adopted SFAS 142 on January 1, 2002. The transitional goodwill impairment evaluation was completed in December 2002 and resulted in the recognition of a transition impairment charge of €7,713, which is presented as part of the change in accounting principle caption in the above reconciliation of net income (loss) for the six months ended June 30, 2002.

        The ~~Group~~ ~~was~~implementation ~~required~~requirements toof ~~adopt~~ SFAS ~~142~~ ~~"Goodwill and Other Intangible Assets" in its entirety on January 1, 2002. SFAS~~ 142 ~~requires~~allowed ~~that~~up ~~goodwill~~to ~~and~~one ~~intangible~~year ~~assets~~from ~~with~~the ~~indefinite~~date ~~useful~~of ~~lives~~adoption noto ~~longer~~complete bethe ~~amortized,~~initial ~~but instead tested for~~ impairment ~~annually~~test ~~(or~~and ~~more~~any ~~frequently~~resulting if impairment ~~indicators~~ ~~arise)~~write-down inwas ~~accordance~~effective ~~with~~as ~~the provisions~~ of ~~SFAS 142.~~the ~~Under~~first ~~IAS,~~day ~~goodwill~~of ~~and~~the ~~intangible~~fiscal ~~assets~~year ~~continue~~in towhich bethe ~~amortized~~Standard onwas ~~a systematic basis over their estimated useful lives~~adopted. ~~This difference~~As ~~in accounting treatment results in~~ a ~~decrease~~result, inthe ~~amortization expense under~~ U.S. GAAP ofinformation ~~€6,875~~which ~~and~~is ~~€21~~presented above,~~632~~ ~~during~~required ~~the~~restatement ~~three~~to ~~month~~reflect ~~period ended September 30, 2002 and~~ the ~~nine~~cumulative ~~month~~effect ~~period~~of ~~ended~~a ~~September 30,~~change ~~2002.~~in ~~See "New U.S.~~ accounting ~~pronouncements"~~principles ~~below~~as ~~for~~if ~~further discussion~~the ofchange ~~the~~had ~~impact~~been ofinitially ~~the~~recorded ~~implementation~~as of ~~this~~January ~~new~~1, ~~standard~~2002.

        ~~The transitional~~As ~~disclosure provisions~~ of ~~SFAS 142~~January ~~require~~1, ~~disclosures~~2003 ofthe ~~what~~goodwill ~~reported~~impairment ~~income~~test ~~before~~did ~~extraordinary~~not ~~items~~result ~~and net income would have been~~ in ~~all periods presented exclusive of amortization expense (including~~ any related tax effects) recognized in those periods related to goodwill, intangible assets that are no longer being amortized, any deferred credit related to an excess over cost, equity method goodwill, and changes in amortization periods for intangible assets that will continue to impairment.

49The intangible assets are recorded at cost less accumulated amortization, as follows.

be amortized (including any related tax effects). The amortization expense and adjusted net loss of Messer Griesheim Holding AG for the periods prior to the period of initial application are as follows:

June 30, 2003

December 31, 2002

Trademarks, patents, licenses and other rights

157,053

157,081

Customer base

107,584

110,576

Other intangible assets

72,877

70,440

337,514

338,097

Less: Accumulated amortization

(74,356)

(61,362)

Intangible assets, net

263,158

276,735

Successor Messer Griesheim Holding AG Predecessor Messer Griesheim GmbH
Eight Months Ended December 31, 2001 Four Months Ended April 30, 2001 Twelve Months Ended December 31, 2000 Twelve Months Ended December 31, 1999 Twelve Months Ended December 31, 1998 Twelve Months Ended December 31, 1997
Reported net loss in accordance with U.S. GAAP (66,555 ) (13,437 ) (179,779 ) (21,346 ) N/A N/A
Add back: Goodwill amortization 20,608 2,951 9,322 8,181 N/A N/A
Adjusted net loss in accordance with U.S. GAAP (45,947 ) (10,486 ) (170,457 ) (13,165 ) N/A N/A
Table of Contents

        ~~Such goodwill~~MESSER ~~and~~GRIESHEIM ~~other~~HOLDING ~~intangible assets were pushed down to the individual subsidiary upon adoption of SFAS 142 at January 1, 2002.~~ AG

        ~~EITF Issue~~NOTES ~~No. 87-11~~TO ~~"Allocation~~UNAUDITED ofINTERIM ~~Purchase~~CONDENSED ~~Price~~CONSOLIDATED toFINANCIAL Assets to Be Sold" addresses issues relating to the allocation of the purchase price in a purchase business combination when the acquiring enterprise intends to sell certain operations of the acquired enterprise within one year of the date of the business combination. This EITF provides that the (i) estimated cash flows from the date of acquisition until the date of sale, (ii) estimated interest on incremental debt incurred during the holding period to finance the purchase of these subsidiaries and (iii) expected sales price less costs to sell should usually not affect earnings or losses reported in the acquiring enterprise's consolidated statement of operations for acquired operations that are expected to be sold within one year of the date of the business combination. Instead, these amounts should be considered in the purchase price allocation associated with the business combination. IAS does not allow a similar treatment in regards to the (i) estimated cash flows from the date of acquisition until the date of sale, or (ii) estimated interest on incremental debt incurred during the holding period to finance the purchase of these operations. Under U.S. GAAP these differences in accounting treatment result in a €0 and €9,426 decrease to net loss during the three month periods ended September 30, 2002 and 2001. For the nine month period ended September 30, 2002, the five month period ended September 30, 2001 and the four month period ended April 30, 2001 these differences result in a reduction to net loss of €630, €8,192 and €0 respectively. No deferred taxes have been recorded on these divestitures because under German tax law, the sale of subsidiaries is a non taxable transaction. Subsequent to April 30, 2002, the Company has started to apply to EITF 90-6 "Accounting for Certain Events Not Addressed in Issue No. 87-11 Relating to an Acquired Operating Unit to be Sold" for the subsidiaries which were not sold during twelve months following the beginning of the divestiture program. From that point forward results of operations and incremental interest expense incurred in financing the purchase of those entities are reported in the operations of the Group under U.S. GAAP. STATEMENTS

        ~~The impact~~(Amounts toin ~~the statement of operations of the goodwill difference, utilizing an estimated useful life of 20 years for the amortization of basis difference, was~~ €~~568~~ ~~for the eight month period ended December 31~~thousands, ~~2001,~~unless ~~which~~otherwise is reflected as a difference in the reconciliation of stockholders' equity to U.S. GAAP as of both September 30, 2002 and December 31, 2001. In accordance with SFAS 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for stated)

50Aggregated Amortization Expenses.
~~impairment~~ Three ~~annually~~months ~~(or~~ended ~~more~~June ~~frequently~~30, if2003 Six ~~impairment~~months ~~indicators~~ended ~~arise)~~June in30, ~~accordance~~2003 Three ~~with the provisions of SFAS~~months ~~142. See "New U.S. accounting~~ ~~pronouncements"~~ ~~below for further discussion of the impact of the implementation of this new standard. During the nine month period~~ ended ~~September~~ June 30, 2002 ~~acquisition~~ ~~goodwill~~ Six ~~was~~months ~~adjusted~~ended byJune ~~€10~~30,~~943~~ to2002 Aggregated €amortization expenses 6,~~102 to reflect the difference between estimated and released (i) cash flow from the date of acquisition~~110 12,155 ~~(ii) estimated interest on incremental debt during the holding period to finance the purchase~~ 5, ~~for those subsidiaries sold until April 30~~452 10, ~~2002.~~ 827

        ~~In accordance~~Estimated ~~with~~Amortization IAS 37, a provision for restructuring charges is recognized when a detailed formal plan for the restructuring has been developed and the company has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affectedExpenses. U.S. GAAP (see "New U.S. accounting pronouncements" below for a discussion regarding the initial application of SFAS 146) applies similar criteria to determine when a provision for restructuring charges should be established. However, under U.S. GAAP, a rebuttable presumption exists that an exit plan should be completed and all exit costs and involuntary employee termination costs should be incurred within one year from the commitment date. No similar provisions exist under IAS. Based on the difference in provisions, an adjustment to decrease acquisition goodwill totaling €7,147 was recorded under U.S. GAAP. This adjustment is primarily related to involuntary employee termination costs recorded in association with the acquisition transactions not expected to be incurred within one year from the commitment date. The impact to the statement of operations of this difference, utilizing an estimated useful life of 20 years for the amortization of basis difference, was a decrease to goodwill amortization of €238 for the eight month period ended December 31, 2001, which is reflected as a difference in the reconciliation of stockholders' equity to U.S. GAAP as of both September 30, 2002 and December 31, 2001. In accordance with SFAS 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for impairment annually (or more frequently if impairment indicators arise) in accordance with the provisions of SFAS 142. See "New U.S. accounting pronouncements" below for further discussion of the impact of the implementation of this new standard.

        Transaction costs totaling €33,200 were incurred by Messer Griesheim Group GmbH & Co. KGaA in connection with the acquisition transactions described in note 3. Under IAS, these transaction costs would not be treated as part of the purchase consideration. However, under U.S. GAAP, these costs are required to be considered as part of the purchase price allocation in the application of "push-down" accounting to the acquisition transactions. This difference in accounting treatment results in an increase to acquisition goodwill and equity of €33,200 as of the acquisition date and an increase to goodwill amortization of €1,107 during the eight month period ended December 31, 2001 under U.S. GAAP, which is reflected as a difference in the reconciliation of stockholders' equity to U.S. GAAP as of both September 30, 2002 and December 31, 2001. In accordance with SFAS 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for impairment annually (or more frequently if impairment indicators arise) in accordance with the provisions of SFAS 142. See "New U.S. accounting pronouncements" below for further discussion of the impact of the implementation of this new standard.

For the financial year until December 31,

(in € thousands)

2003^*

11,318

2004

23,360

2005

23,360

2006

23,360

2007

23,360

        ~~APB Opinion~~* ~~No. 17~~Remaining "Intangible Assets" ("APB 17") requires that the cost of identifiable intangible assets be separated from goodwill and assigned part of the total cost of assets acquired in a business combination. In accordance with APB 17, the Group recorded an intangible asset under U.S. GAAP totaling €15,657 associated with the Group's assembled workforce as of the date of the acquisition transactions described in note 3. This asset was amortized over an estimated useful life of 6 ~~years through December 31, 2001. Additionally, SFAS 109 "Accounting for Income Taxes" requires that~~ -months

51b. Divestiture of subsidiaries

~~deferred~~EITF ~~taxes~~Issue beNo. ~~recognized~~87-11 ~~for~~“Allocation ~~differences~~of ~~between~~Purchase ~~the~~Price ~~financial~~to ~~statement~~Assets ~~carrying~~to ~~amount~~Be ~~and~~Sold” addresses ~~the~~issues ~~tax~~relating ~~basis~~to the allocation of ~~all~~the ~~identifiable~~purchase ~~intangible~~price ~~assets,~~in ~~excluding~~a ~~goodwill.~~purchase ~~Accordingly,~~business ~~the~~combination ~~Group established~~when athe ~~deferred~~acquiring ~~tax~~enterprise ~~liability~~intends ofto ~~€6,263~~sell ~~associated~~certain ~~with~~operations of the ~~Group's~~acquired ~~assembled~~enterprise ~~workforce~~within asone year of the date of the ~~acquisition~~business ~~transactions,~~combination. ~~which~~This ~~resulted~~EITF inprovides athat ~~corresponding increase~~the in(i) ~~acquisition~~estimated ~~goodwill~~cash ~~under~~flows ~~U.S.~~from ~~GAAP.~~the ~~IAS~~date 38of ~~states~~acquisition ~~that~~until anthe ~~enterprise~~date ~~typically~~of ~~has~~sale, ~~insufficient~~(ii) ~~control~~estimated ~~over~~interest ~~the~~on ~~expected~~incremental ~~future~~debt ~~economic~~incurred ~~benefits~~during ~~arising~~the ~~from~~holding aperiod ~~team~~to finance the purchase of ~~skilled~~these ~~staff~~ subsidiaries and ~~from~~(iii) ~~training~~expected tosales ~~consider~~price ~~that~~less ~~these~~costs ~~items~~to ~~meet~~sell ~~the~~should ~~definition~~usually ofnot anaffect ~~intangible~~earnings ~~asset.~~or ~~Accordingly,~~losses ~~the~~reported ~~cost~~in ofthe acquiring ~~the Group~~enterprise's ~~assembled~~consolidated ~~workforce~~statement ~~forms~~of ~~part~~operations offor ~~the~~acquired ~~acquisition~~operations ~~goodwill under~~that ~~IAS~~are ~~and~~expected isto ~~being~~be ~~amortized~~sold ~~over~~within anone ~~estimated~~year ~~useful~~of ~~life~~the date of ~~20 years.~~the ~~Under~~business Ucombination.S. ~~GAAP~~Instead, these ~~differences~~amounts inshould ~~accounting~~be ~~treatment~~considered ~~resulted~~ in anthe ~~increase~~purchase inprice ~~intangible~~allocation ~~assets~~associated ~~of €15,657~~with ~~and~~the abusiness ~~decrease~~combination. inIFRS ~~goodwill~~do ofnot ~~€9,394~~allow asa ofsimilar ~~the~~treatment ~~acquisition~~in ~~date,~~regard asto ~~well~~the as(i) anestimated ~~increase~~cash inflows ~~amortization~~from ~~expense~~the date of ~~€1,427~~acquisition ~~for~~until the ~~eight~~date ~~month period~~of ~~ended December 31~~sale, ~~2001,~~or ~~which~~(ii) isestimated ~~reflected~~interest ason aincremental ~~difference~~debt inincurred during the ~~reconciliation~~holding ofperiod ~~stockholders' equity~~ to ~~U.S.~~finance ~~GAAP~~the aspurchase of ~~both~~these ~~September 30, 2002 and December 31, 2001~~operations.

        ~~The Group~~For ~~was~~the ~~required~~three tomonths ~~adopt~~ended ~~SFAS 141~~June ~~"Business Combinations" effective July 1~~30, ~~2001,~~2003 and ~~SFAS 142~~the inthree ~~its~~months ~~entirety on~~ended ~~January 1~~June 30, 2002. ~~SFAS 141~~under ~~states~~U.S. ~~explicitly~~GAAP ~~that~~these andifferences ~~assembled~~result ~~workforce~~in isa ~~not~~reduction/(increase) anto ~~identifiable~~net ~~intangible~~loss ~~asset~~of ~~apart~~€0 ~~from~~and ~~goodwill~~€(62) ~~if acquired in a purchase business combination~~respectively. ~~Additionally,~~ atFor the ~~date~~six ofmonths ~~adoption~~ended ofJune ~~SFAS 142~~30, ~~amortization~~2003 ~~has~~and ~~ceased~~2002 ~~for~~these ~~goodwill~~differences ~~and~~result ~~intangible~~in ~~assets~~a ~~determined~~reduction to ~~have~~net ~~indefinite~~loss ~~lives.~~of ~~Any~~€0 ~~intangible~~and ~~assets~~€630, ~~acquired~~respectively. inNo adeferred ~~business combination~~taxes ~~completed~~have ~~before~~been ~~July 1,~~recorded ~~2001~~on ~~that~~these dodivestitures ~~not~~because ~~meet~~under ~~the~~German ~~criteria~~tax ~~for~~law, ~~separate~~the ~~recognition~~sale inof ~~Statement~~subsidiaries ~~141~~is ~~must~~a benon ~~subsumed~~taxable ~~into goodwill (e~~transaction.~~g.,~~ ~~assembled~~Subsequent ~~workforce).~~to ~~Accordingly, effective~~April ~~January 1~~30, 2002, the ~~Group~~Company ~~was~~started ~~required~~to apply to ~~reallocate~~EITF as90-6 ~~additional~~“Accounting ~~goodwill~~for ~~the~~Certain ~~unamortized~~Events ~~assembled~~Not ~~workforce~~Addressed ~~balance~~in ofIssue ~~€13,917~~No. ~~recorded~~87-11 byRelating to an Acquired Operating Unit to be Sold” for the ~~Group~~subsidiaries ~~under~~which ~~prior U.S.~~were ~~GAAP~~not ~~standards~~sold induring ~~effect~~twelve ~~prior~~months tofollowing the ~~adoption~~beginning of ~~SFAS 141~~the ~~and~~divestiture ~~SFAS 142~~program. ~~See~~From ~~"New~~that ~~U.S.~~point ~~accounting~~forward ~~pronouncements"~~results ~~below~~of ~~for~~operations ~~further discussion~~and ofincremental interest expense incurred in financing the ~~impact~~purchase of those entities are reported in the ~~implementation~~operations of ~~this~~the ~~new~~Group ~~standard~~under U.S. GAAP.

        ~~In accordance with IAS 23, foreign currency gains and losses on borrowing costs directly attributable to construction can be capitalized~~c. ~~Such~~Restructuring costs are not capitalizable under U.S. GAAP. An additional €47 of depreciation expense would have been recognized under U.S. GAAP during the four month period ended April 30, 2001 as a result of not capitalizing such foreign currency gains in prior years.

        ~~Additionally, under~~In accordance with IAS 37, ~~impairments~~a ~~must~~provision befor ~~reversed~~restructuring charges is recognized when a detailed formal plan for the restructuring has been developed and the company has raised a valid expectation in ~~certain~~those ~~situations,~~affected ~~while~~that ~~under~~it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected. U.S. GAAP ~~impairments~~(see on“New ~~assets~~U.S. accounting pronouncements” below for a discussion regarding the initial application of SFAS 146) applies similar criteria to bedetermine ~~held~~when a provision for ~~use~~restructuring ~~may~~charges ~~not~~should be ~~reversed~~established. ~~During~~However, under U.S. GAAP, a rebuttable presumption exists that an exit plan should be completed and all exit costs and involuntary employee termination costs should be incurred within one year from the ~~four~~commitment ~~month period~~date. No similar provisions exist under IFRS. This difference in accounting treatment results in a €272 and €0 increase to net loss during the three months ended ~~April~~ June 30, ~~2001,~~2003 ~~the~~and ~~Group~~three ~~reversed~~months ~~impairment~~ended ~~charges~~June ~~under~~30, ~~IAS~~2002, ofrespectively and €27779 ~~which~~and ~~are~~€0 ~~not~~increase ~~reversed~~to ~~under~~net ~~U.S.~~loss ~~GAAP.~~during the six months ended June 30, 2003 and 2002, respectively.

        The Group's net obligation in respect of defined benefit pension plans and similar obligations is calculated using the projected unit credit method under IAS 19, which is the same valuation method required under Ud.S. ~~GAAP.~~Transaction In reconciling its defined benefit pension plans and similar obligations from IAS to U.S. GAAP, the Company has applied SFAS 87 "Employer's Accounting for Pensions" effective January 1, 1999, as it was not feasible to apply it as of January 1, 1987, the date specified in the standard. The principal actuarial assumptions used by the Company's actuaries in determining pension provisions and related costs under SFAS 87 are the same as those utilized in applying IAS 19. In applying the late adoption rules under SFAS 87, pension provisions and related costs differ from those calculated under IAS 19, as the amortization components for the transitional liabilities differ in certain respects. Further, under U.S. GAAP, when the accumulated benefit obligation exceeds the fair value of the plan assets, the excess is immediately recognized as an additional minimum liability. The cost of this is capitalized as an intangible asset up to the amount of any unrecognized net transition obligation, plus the unrecognized prior service costs, and the remainder is charged through other

52Transaction costs totaling €33,200 were incurred by Messer Griesheim Group GmbH & Co. KGaA in connection with the acquisition transactions. Under IFRS, these transaction costs would not be treated as part of the purchase consideration. However, under U.S. GAAP, these costs are required to be considered as part of the purchase price allocation in the application of “Pushdown” accounting to the acquisition transactions. This difference in accounting treatment results in an increase to acquisition goodwill and equity of €33,200 as of the acquisition date and an increase to goodwill amortization of €1,107 during the eight months ended December 31, 2001 under U.S. GAAP, which is reflected as a difference in the reconciliation of stockholders' equity to U.S. GAAP. In accordance with SFAS 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but instead tested for impairment annually (or more frequently if impairment indicators arise) in accordance with the provisions of SFAS 142.

~~comprehensive income~~e. ~~IAS~~Assembled 19 has no similar requirements equivalent to U.S. GAAP in such circumstances. These differences result in an decrease in net periodic pension cost and other comprehensive income totaling €(95) and €702, respectively, for the four month period ended April 30, 2001. Subsequent to April 30, 2001, all previously existing unrecognized net actuarial gains or losses, prior service costs and transition obligations or assets related to the Group's pension plans have been eliminated as a result of the allocation of the purchase price in the acquisition transactions (see note 3). workforce

        ~~Under IAS,~~APB ~~the~~Opinion ~~Group~~No. ~~has~~17 ~~established~~“Intangible ~~accruals~~Assets” (“APB ~~for~~17”) anrequires ~~estimated~~that ~~number~~the cost of ~~employees~~identifiable ~~that~~intangible ~~are~~assets ~~expected~~be toseparated ~~elect~~from ~~participation~~goodwill and assigned part of the total cost of assets acquired in a ~~voluntary~~business ~~early~~combination. ~~retirement~~In ~~program.~~accordance ~~Under~~with APB 17, the Group recorded an intangible asset under U.S. GAAP totaling €15,657 ~~such accruals~~associated ~~are~~with ~~only~~the ~~established~~Group’s ~~when~~assembled workforce as of the ~~employee~~date ~~has~~of ~~entered~~the ~~into~~acquisition atransactions. ~~binding~~This ~~contractual~~asset ~~agreement~~was ~~(see~~being ~~"New~~amortized Uover an estimated useful life of 6 years through December 31, 2001.S. ~~accounting~~Additionally, ~~pronouncements"~~SFAS ~~below~~109 “Accounting for aIncome ~~discussion~~Taxes” ~~regarding~~requires that deferred taxes be recognized for differences between the ~~initial~~financial ~~application~~statement carrying amount and the tax basis of ~~SFAS 146).~~ Inall ~~addition~~identifiable intangible assets, excluding goodwill. Accordingly, the Group ~~accrues~~established ~~certain~~a ~~amounts~~deferred ~~related~~tax toliability of €6,263 associated with the ~~early~~Group’s ~~retirement~~assembled ~~program~~workforce as aof ~~termination~~the ~~benefit~~date ~~that~~of isthe ~~recognized~~acquisition ~~when~~transactions, ~~the~~which ~~plan~~resulted isin ~~adopted~~a ~~under~~corresponding ~~IAS.~~increase ~~Under~~in acquisition goodwill under U.S. GAAP,. ~~such~~IAS ~~amounts~~38 ~~are~~states ~~accrued~~that ~~over~~an ~~the~~enterprise ~~employees'~~typically ~~remaining~~has ~~service~~insufficient ~~period.~~control ~~These~~over ~~differences~~the ~~result~~expected infuture aeconomic ~~reduction/(increase)~~benefits inarising ~~expense~~from a team of ~~€456~~skilled staff and ~~€(742) for~~ ~~the~~from ~~three~~training ~~month~~to ~~periods~~consider ~~ended~~that ~~September 30,~~these ~~2002,~~items ~~and~~meet ~~September 30,~~the ~~2001,~~definition ~~respectively~~of an intangible asset. ~~For~~Accordingly, the ~~nine~~cost ~~month~~of ~~period~~acquiring ~~ended~~the ~~September 30,~~Group’s ~~2002,~~assembled ~~the five~~workforce ~~month~~forms ~~period~~part ~~ended~~of ~~September 30,~~the ~~2001~~acquisition goodwill under IFRS and ~~the~~is ~~four~~being ~~month~~amortized ~~period~~over ~~ended~~an ~~April 30,~~estimated ~~2001~~useful life of 20 years. Under U.S. GAAP, these differences ~~result~~in accounting treatment resulted in an ~~reduction (~~increase) in intangible assets of €~~904~~15, ~~€(702)~~ 657 and a decrease in goodwill of €~~(81)~~9,394 ~~respectively~~as of the acquisition date, as well as an increase in amortization expense of €1,427 for the eight months ended December 31, 2001, which is reflected as a difference in the reconciliation of stockholders' equity to U.S. GAAP.

The Group was required to adopt SFAS 141 “Business Combinations” effective July 1, 2001, and SFAS 142 in its entirety on January 1, 2002. SFAS 141 states explicitly that an assembled workforce is not an identifiable intangible asset apart from goodwill if acquired in a purchase business combination. Additionally, at the date of adoption of SFAS 142, amortization has ceased for goodwill and intangible assets determined to have indefinite lives. Any intangible asset acquired in a business combination completed before July 1, 2001 that does not meet the criteria for separate recognition in Statement 141 must be subsumed into goodwill (e.g., assembled workforce). Accordingly, effective January 1, 2002, the Group was required to reallocate as additional goodwill the unamortized assembled workforce balance of €13,917 recorded by the Group under prior U.S. GAAP standards in effect prior to the adoption of SFAS 141 and SFAS 142.

f. Provisions for pensions and similar obligations

The Group's net obligation in respect of defined benefit pension plans and similar obligations is calculated using the projected unit credit method under IAS 19, which is the same valuation method required under U.S. GAAP. In reconciling its defined benefit pension plans and similar obligations from IFRS to U.S. GAAP, the Company has applied SFAS 87 “Employer's Accounting for Pensions” effective January 1, 1999, as it was not feasible to apply it as of January 1, 1987, the date specified in the standard. The principal actuarial assumptions used by the Company's actuaries in determining pension provisions and related costs under SFAS 87 are the same as those utilized in applying IAS 19.

At June 30, 2003 and December 31, 2002 the fair value of certain foreign defined benefit plan assets was less than the accumulated benefit obligation, a situation that requires special treatment under SFAS 87. When the accumulated benefit obligation exceeds the fair value of the plan assets and the already recognized liability for unfunded accrued pension costs, the excess is immediately recognized as an additional minimum liability. If an additional minimum liability is recognized, SFAS 87 also prescribes that an amount shall be recognized as an intangible asset of no more than the unrecognized prior service cost. The difference between the minimum liability and the intangible asset is then a charge to other comprehensive income. No similar provision exists under IFRS. These differences in accounting treatment result in a decrease in cumulative other comprehensive income totaling €0 as of June 30, 2003 and 2002, respectively.

Under IFRS, the Group has established accruals for an estimated number of employees that are expected to elect participation in a voluntary early retirement program. Under U.S. GAAP, such accruals are only established when the employee has entered into a binding contractual agreement (see “New U.S. accounting pronouncements” below for a discussion regarding the initial application of SFAS 146). In addition, the Group accrues certain amounts related to the early retirement program as a termination benefit that is recognized when the plan is adopted under IFRS. Under U.S. GAAP, accruable amounts are accrued over the employees' remaining service period. These differences result in a reduction in expense of €207, €788, €480 and €448 for the three months ended June 30, 2003, the six months ended June 30, 2003, the three months ended June 30, 2002 and the six months ended June 30, 2002, respectively.

g. Equity method investments expense, net

On January 1, 2002, Constar, an equity method investee of MGI, a wholly owned company of the Group, adopted SFAS No. 142, and completed the required goodwill impairment test, which resulted in an impairment charge of approximately €19,846, which has been recorded as a component of Constar’s €20.7 million loss for the year ended December 31, 2002. In accordance with the provisions of SFAS 142 and APB 18 “The Equity Method of Accounting for Investments in Common Stock”, the Group’s share of Constar’s goodwill impairment charge has been recorded under U.S. GAAP as part of the cumulative effect of change in accounting principle caption as of January 1, 2002.

In accordance with IAS 36, management reviewed the recoverability of its cash generating units (CGU’s) including goodwill. The application of IAS 36 resulted in the impairment charge being recorded in the fourth quarter 2002, as a component of Constar’s €20.7 million loss for the twelve months ended December 31,2002.

As explained in (a) above, the implementation requirements of SFAS 142 allowed up to one year from the date of adoption to complete the initial impairment test and any resulting impairment write-down was effective as of the first day of the fiscal year in which the Standard was adopted. As a result, the six months unaudited interim condensed consolidated financial statements for the fiscal year 2002, which are presented above, required restatement to reflect the cumulative effect of a change in accounting principles as if the change had been initially recorded as of January 1, 2002.

Constar was formed in 1996 as a limited liability company and its existence will continue until January 1, 2046 unless terminated earlier pursuant to the terms of its operating agreement. Interest is held by Lumsden Proctor Group, LLC (50%) and MGI (50%). Constar is mainly involved in the business of buying and distributing industrial gases and welding supplies as well as in the leasing of gas cylinders. Constar purchases these products from manufacturers and distributors and resells them on a retail and wholesale basis to commercial customers. As of December 31, 2002 and for the twelve month period then ended, the audited consolidated balance sheet and statement of operations of Constar presented total assets amounting to US$ 13.9 million and revenues of US$ 23.7 million.

The Group decided during the second quarter 2003 to early adopt FIN 46, “Consolidation of Variable Interest Entities- an interpretation of ARB No. 51”. As a consequence, MGI's equity investment in Constar has been fully consolidated. Under IFRS the Group consolidated Constar and recorded an impairment loss amounting to €2,9 million. This loss has been presented within the U.S. GAAP reconciliation as an extraordinary loss in accordance with the requirements of FIN 46.

h. Asset retirement obligations

The Group adopted SFAS 143, “Accounting for Asset Retirement Obligations” (ARO), on January 1, 2003. SFAS 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of a tangible long-lived asset. SFAS 143 also requires the enterprise to increase the carrying amount of the related long-lived asset by the associated asset retirement costs and to depreciate that cost over the remaining useful life of the asset. The liability is changed at the end of each period to reflect the passage of time (i.e., accretion expense) and changes in the estimated future cash flows underlying the initial fair value measurement. The Group’s asset retirement obligations relate to production equipment or to environmental remediation obligations resulting from normal operational use. As of January 1, 2003, the Group recognized transition amounts for asset retirement obligation liabilities, and associated assets of €7,407 and €6,816, respectively. A corresponding transition charge of €355 (net of deferred taxes of €236) was recorded in the Group’s unaudited interim condensed consolidated statement of operations as part of the cumulative effect of changes in accounting principle caption as of January 1, 2003. The accretion expense for the three and six months ended June 30, 2003 amounted to €94 and €187, respectively. As of June 30, 2003 the ARO amounts to €7,594. No additional ARO liabilities were incurred in the three months ended June 30, 2003 and there was no revision in estimated cash flows. Had the Group applied SFAS 143 for the three and six months ended June 30, 2002, the accretion expense would have been €89 and €177, respectively.

i. Tax effect of U.S. GAAP adjustments

This reconciliation item includes all tax effects due to the aforementioned reconciling items.

j. Cumulative translation adjustment

Upon the adoption of SFAS 142 the Group allocated goodwill to the individual reporting units. This reconciliation item represents the net foreign exchange effect of this allocation.

Additional U.S. GAAP information
~~Acquisition~~Change ~~transactions~~ in ownership

        As a result of the ~~acquisition~~change ~~transactions~~in ~~(see note 3)~~ownership, Messer Griesheim has become a wholly-owned subsidiary of Messer Griesheim Holding AG, which in turn was 100% acquired by Messer Griesheim Group GmbH & Co. KGaA in a purchase transaction. The series of transactions requires "~~push-down~~Pushdown" of the Messer Griesheim Group GmbH & Co. KGaA's basis under U.S. GAAP in accordance with EITF Topic D-97 "~~Push~~Pushdown-~~Down~~ Accounting", and SAB No. 54 ~~" "~~ “ “Pushdown"” Basis of Accounting in Financial Statements of Subsidiaries Acquired by Purchase"” . The "pushdown" of basis under U.S. GAAP differs from the allocation of cost to the net assets acquired under ~~IAS~~IFRS. The U.S. GAAP reconciliation of the stockholders' equity ~~as of September 30, 2002 and December 31, 2001~~ also reflects differences arising from the new bases of accounting under U.S. GAAP and ~~IAS~~IFRS.

         The consolidated financial statements reflect the deferred notes payable to Hoechst ~~(see note 3)~~ by the Group's parent, Messer Griesheim Group GmbH & Co. KGaA, as part of equity under ~~IAS~~IFRS and U.S. GAAP as the Company does not meet any of the criteria enumerated in SAB No. 73, which would require the recognition of such obligation as a liability in the Group consolidated financial statements. Therefore, the interest payable by Messer Griesheim Group GmbH & Co. KGaA relating to these deferred notes is not recorded under ~~IAS~~IFRS or U.S. GAAP.

Statement of operations

         Certain items in the consolidated statements of operations would be classified differently under U.S. GAAP. These items include the reversal of certain provisions and allowances for doubtful accounts that would generally be recorded in the same line items as the provisions were originally recorded under U.S. GAAP, rather than as other income. Also, these items include the accretion expense as it relates to the application of SFAS 143. Under U.S. GAAP, the accretion expense is recorded within operating expenses, whereas under IFRS, such accretion expense is recorded within interest expense.

53 U.S. GAAP requires the operating results of those subsidiaries which are expected to be divested more than one year from the measurement date to continue to be reflected in the consolidated statement of operations. Under IFRS, the Company has exercised the option of disclosing discontinuing operations in the notes to the financial statements. As a result, there is no difference between IFRS and U.S. GAAP in sales, net income and total assets as reflected in the consolidated financial statements with respect to these subsidiaries.

        U.S. GAAP requires the operating results of those subsidiaries which are expected to be divested more than one year from the measurement date to continue to be reflected in the consolidated statement of operations. Under IAS, the Company has exercised the option of disclosing discontinuing operations in the notes to the financial statements. As a result, there is no difference between IAS and U.S. GAAP in sales, net income and total assets as reflected in the consolidated financial statements with respect to these subsidiaries.
Balance sheet

        Certain items in the consolidated balance ~~sheets~~sheet would be classified differently under U.S. GAAP, including the net assets of entities included in the divestiture program ~~expected~~which toare beclassified ~~disposed~~as of“available ~~within~~for asale” ~~period~~under ofIFRS ~~one~~and ~~year from the date of the acquisition transactions~~ which ~~would~~are beno ~~classified~~longer presented as "“available for sale"” under U.S. GAAP.

        In accordance with ~~IAS~~IFRS, all deferred tax assets and liabilities are classified as non-current. Under U.S. GAAP, deferred tax assets and liabilities would be classified as current or non-current depending on when the related benefit or expense is expected to be realized. As of ~~September~~ June 30, ~~2002~~2003 and December 31, ~~2001,~~2002 €918,~~822~~446 and €622,~~227~~737, respectively, would be classified as current deferred tax assets and €2,~~507~~219 and €42,~~041~~846, respectively, would be classified as current deferred tax liabilities. Additionally, under U.S. GAAP, tax loss carry- forwards and other credits that are available to reduce future taxes are recognized as deferred tax assets. Such amounts are reduced by a valuation allowance to the extent that it is deemed more likely than not that the tax benefit related to the utilization of such tax loss carry- forwards or credits will not be realized. Under ~~IAS~~IFRS, a deferred tax asset should be recognized for the carry~~-forward~~ forwards of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Deferred tax assets related to tax loss carry forwards amounted to €~~118~~23,~~876~~235 and €~~133~~27,~~781~~869, net of valuation allowances of €713,~~014~~524 and €35,471, ~~related to tax loss carry-forwards~~ as of ~~September~~ June 30, ~~2002~~2003 and December 31, ~~2001~~2002, respectively.

Cash flow statement

The cash flow statement is prepared in accordance with IAS 7.

Reporting of comprehensive income

        SFAS No. 130 "“Reporting Comprehensive Income" ” requires the reporting of comprehensive ~~(loss)~~ income, which includes all changes in stockholders' equity except those resulting from investments by or distributions to shareholders.

         Statement of comprehensive ~~loss~~income for the three ~~month~~months ~~period~~ ended ~~September~~ June 30, ~~2002~~2003 and ~~the three month period ended September 30~~2002, ~~2001,~~ respectively:

Successor
Three monthsendedJune 30, 2003 Three monthsendedJune 30, 2002
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
Net income (loss) in accordance with U.S. GAAP 1,233 (11,275)
Net loss in accordance with U.S. GAAP (18,630 ) (36,820 )
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income:
Foreign currency translation adjustments (21,668) (78,128)
Foreign currency translation adjustments 24,688 (44,244 )
Change in fair value of derivative financial instruments, net of deferred taxes of €(29) and €(1,961), respectively 1,035 (4,210)
Change in fair value of derivative financial instruments, net of taxes of €5,303 and €7,735, respectively (8,917 ) (11,892 )
Comprehensive loss, net of tax (19,400) (93,613)
Comprehensive loss (2,859 ) (92,956 )

54 Statement of comprehensive income for the six months ended June 30, 2003 and 2002, respectively:

        Statement of comprehensive loss for the nine month period ended September 30, 2002, the five month period ended September 30, 2001 and the four month period ended April 30, 2001, respectively:

Six months
ended
June 30, 2003

Six months
ended
June 30, 2002

Net income (loss) in accordance with U.S. GAAP

4,672

(44,154)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

(49,307)

(72,215)

Change in fair value of derivative financial instruments, net of deferred taxes of €1,841 and €182, respectively

(295)

607

Comprehensive loss, net of tax

(44,930)

(115,762)

Successor Predecessor
Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
Net loss in accordance with U.S. GAAP (35,225 ) (52,910 ) (13,437 )
Other comprehensive (loss) income:
Foreign currency translation adjustments (48,777 ) (23,257 ) 3,522
Change in fair value of derivative financial instruments, net of taxes of €5,200 and €7,450, respectively (8,310 ) (11,180 ) —
Additional minimum pension liability — — (709 )
Comprehensive loss (92,312 ) (87,347 ) (10,624 )
Hyperinflation

         In accordance with ~~IAS~~IFRS, the financial statements of certain subsidiaries of the Messer Group have been restated in accordance with IAS 29. This treatment is different from that which would have been calculated under U.S. GAAP. No difference is included within the reconciliation of U.S. GAAP as foreign private issuers applying IAS 29 are granted relief from such requirement.

New U.S. accounting pronouncements

        In ~~June 1998~~July 2002, the FASB issued ~~SFAS 133~~Statement "146, “Accounting for ~~Derivative~~Costs ~~Instruments~~Associated ~~and~~with ~~Hedging~~ Exit or Disposal Activities"”. SFAS ~~133~~ ~~was~~146 ~~subsequently~~among ~~amended~~other things replaces previous accounting guidance provided by ~~SFAS 137~~EITF ~~"Deferral~~94-3, ofLiability ~~the~~Recognition ~~Effective~~for ~~Date~~Certain ofEmployee ~~FASB~~Termination ~~133"~~Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring), ~~which allowed~~and ~~entities~~requires ~~which~~companies ~~had~~to ~~not~~recognize ~~adopted~~costs ~~SFAS 133~~associated with exit or disposal activities when they are incurred (subsequent to ~~defer~~a ~~its~~commitment ~~effective~~to a plan) rather than at the date of a commitment to ~~all~~an ~~fiscal~~exit ~~quarters~~or disposal plan. Examples of ~~all~~costs ~~fiscal~~covered ~~years~~by ~~beginning~~the ~~after~~standard ~~June 15~~include lease termination costs and certain employee severance costs that are associated with restructurings, ~~2000~~discontinued operations, ~~and~~plant closings, or exit or disposal activities. The provisions of SFAS ~~138~~ ~~"Accounting~~146 ~~for Certain~~are ~~Derivative~~to ~~Instruments~~be ~~and~~applied ~~Certain~~prospectively ~~Hedging~~to ~~Activities—an~~exit ~~amendment~~or ofdisposal ~~FASB~~activities ~~Statement~~initiated ~~No. 133"~~after ~~which~~December ~~addresses~~31, a2002. ~~limited~~The ~~number~~adoption of ~~issues~~SFAS ~~causing~~146 ~~implementation~~had ~~difficulties for~~no ~~entities~~significant ~~that~~impact ~~apply~~on ~~SFAS 133~~the Group’s unaudited interim condensed consolidated financial statements (see “c. restructuring costs” above).

        ~~SFAS 133~~In November 2002, as ~~amended~~the FASB issued Interpretation No. 45, ~~establishes~~“Guarantor’s ~~accounting~~Accounting and ~~reporting~~Disclosure ~~standards~~Requirements for ~~derivative~~Guarantees, ~~instruments~~Including Indirect Guarantees of Indebtedness of Others” (“FIN No. 45”), ~~including~~which ~~derivative~~addresses ~~instruments~~the ~~embedded~~disclosure to be made by a guarantor in ~~other~~its ~~contracts,~~interim and ~~hedging activities~~annual financial statements about its obligation under guarantees. ~~Similar~~FIN toNo. ~~IAS~~45 ~~39,~~also ~~SFAS 133,~~requires asthe ~~amended,~~recognition of a liability by a guarantor at the inception of certain guarantees entered into or modified subsequent to adoption. FIN No. 45 requires the ~~Group~~guarantor to recognize ~~all~~a ~~derivatives~~liability for the non-contingent component of the guarantee, this is the obligation to stand ready to perform in the ~~consolidated~~event ~~balance~~that ~~sheet~~specified attriggering ~~fair~~events ~~value~~or conditions occur. The ~~financial~~initial ~~statement~~measurement ~~recognition~~ of ~~the change~~this inliability is the fair value of athe ~~derivative~~guarantee ~~depends~~at oninception. aThe ~~number~~recognition of ~~factors,~~the ~~including~~liability ~~the~~is ~~intended~~required ~~use~~even ofif it is not probable that payment will be required under the ~~derivative~~guarantee ~~and~~or if the ~~extent~~guarantee towas ~~which~~issued itwith isa ~~effective~~premium payment or as part of a ~~hedge~~ transaction with multiple elements. ~~SFAS 133,~~ asThe ~~amended,~~Group ~~was~~has adopted bythe disclosure requirements and applied the ~~Group~~recognition ~~effective~~and ~~January 1~~measurement provisions for all guarantees entered into or modified after December 31, ~~2001.~~2002, without significant impact to the Group’s consolidated financial statements.

        ~~Although IAS~~In 39November ~~and SFAS 133~~2002, asthe ~~amended,~~Emerging ~~are~~Issue ~~similar~~Task inForce ~~many~~(“EITF“) ~~respects,~~reached ~~the~~a ~~transition~~final ~~adjustments~~consensus ~~resulting~~on ~~from~~EITF ~~the~~00-21 ~~adoption~~“Revenue ofarrangements ~~IAS~~with 39Multiple ~~must~~Deliverables”. beEITF ~~reported~~00-21 inaddresses ~~shareholders'~~certain ~~equity, whereas~~aspects of the ~~transition~~accounting ~~adjustments~~for ~~resulting~~revenue ~~from~~arrangements ~~adoption~~with multiple deliverables by a vendor. The Issue outlines an approach to determine when a revenue arrangement for multiple deliverables should be divided into separate units of ~~SFAS 133~~accounting and, asif ~~amended~~separation is appropriate, ~~must~~how the arrangement consideration should be ~~reported~~allocated to the identified accounting units. The consensus reached in ~~earnings~~the orIssue ~~other~~will ~~comprehensive~~be ~~income,~~effective asfor ~~appropriate.~~the ~~Adoption~~Group ofin ~~SFAS~~its financial statements beginning July ~~133~~1, ~~did not~~2003 ~~have~~and athe ~~material~~Group will therefore apply the consensus prospectively commencing with the quarter beginning July 1, 2003. The Group is currently determining the impact of the adoption of EITF 00-21 on the Group'’s consolidated financial statements. but does not believe that the adoption of the consensus will have a material impact.

        In ~~September 2000~~ December 2002, the FASB issued ~~SFAS 140~~Statement "No. 148, “Accounting for ~~Transfers~~Stock-Based Compensation –Transition and ~~Servicing~~Disclosure”, ofwhich ~~Financial~~amends ~~Assets~~FASB ~~and~~Statement ~~Extinguishments~~No. ~~of Liabilities—a~~123, ~~replacement~~“Accounting offor ~~FASB~~Stock-Based NoCompensation”.~~125".~~ ~~This~~Statement ~~statement~~148 ~~revises~~provides ~~the~~alternative ~~standards~~methods of transition for a voluntary change to the fair value based method of accounting for ~~securitizations~~stock-based ~~and~~employee ~~other~~compensation. ~~transfers~~In addition, Statement 148 amends the disclosure requirements of ~~financial~~Statement ~~assets~~123 ~~and collateral~~to ~~and~~improve ~~requires~~the ~~certain~~clarity ~~financial~~and ~~statement~~prominence of disclosures. ~~SFAS 140~~about isthe ~~effective~~pro ~~for~~forma ~~transactions~~effects ~~occurring~~of ~~after~~using ~~March 31,~~the ~~2001,~~fair ~~except~~value based method of accounting for ~~certain~~Stock-Based ~~disclosure~~compensation ~~requirements~~for ~~which were~~all ~~effective~~companies ~~December 31,~~–regardless ~~2000.~~of the accounting method used –by requiring that the data be presented more prominently and in a more user-friendly format in the footnotes to the financial statements.

55The transition guidance and annual disclosure provisions of Statement 148 are effective for fiscal years ending after December 15, 2002, with earlier application permitted in certain circumstances. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002.

~~Adoption~~The ofGroup ~~this~~has ~~replacement~~adopted ~~standard~~the ~~did~~disclosure ~~not~~requirements ~~have~~of aSFAS ~~material~~148 ~~effect~~as onpresented ~~the~~in ~~Group's~~Note ~~consolidated~~12, ~~financial~~“Stock ~~statements.~~purchase and option plan”.

        ~~Effective July 1,~~In ~~2001~~January 2003, the ~~Group~~FASB ~~adopted~~issued ~~Statement~~FIN 46, ~~141~~“Consolidation ~~"Business~~of ~~Combinations"~~Variable ~~and~~Interest ~~certain~~Entities ~~provisions~~–an interpretation of ~~SFAS 142 "Goodwill~~ARB ~~and~~No. ~~Other~~51”, ~~Intangible~~which ~~Assets".~~clarifies ~~The~~the ~~Group~~application ~~adopted~~of ~~SFAS 142~~the inconsolidation ~~its~~rules ~~entirety~~to oncertain ~~January 1,~~variable ~~2002~~entities. ~~SFAS 141~~FIN ~~requires~~46 ~~that~~established a new multi-step model for the ~~purchase~~ ~~method~~consolidation of ~~accounting~~variable beinterest ~~used~~entities ~~for~~when ~~all~~a ~~business~~company ~~combinations~~has ~~initiated~~a ~~after~~controlling ~~June 30,~~financial ~~2001,~~interest asbased ~~well~~either ason ~~all~~voting ~~purchase~~interests ~~method~~or ~~business~~variable ~~combinations~~interests. ~~completed~~Consolidation ~~after~~based ~~June 30,~~on ~~2001. SFAS 141~~variable ~~also~~interests ~~specifies~~is ~~criteria~~required ~~intangible~~by ~~assets~~the ~~acquired~~primary inbeneficiary aif ~~purchase~~the ~~method~~equity ~~business~~investors ~~combination~~lack ~~must~~essential ~~meet~~characteristics toof bea ~~recognized~~controlling ~~and~~financial ~~reported~~interest ~~separately~~or ~~from~~if ~~goodwill,~~the ~~and~~equity ~~also~~investment ~~indicates~~at ~~that any~~risk ~~purchase~~is ~~price~~not ~~allocable~~sufficient for the entity to anfinance ~~assembled~~its ~~workforce~~activities ~~may~~without ~~not~~additional besubordinated ~~accounted~~financial ~~for~~support ~~separately.~~from ~~Additionally,~~other ~~SFAS 141~~parties. ~~required,~~The ~~upon~~primary ~~adoption~~beneficiary of ~~SFAS 142~~a invariable ~~its~~interest ~~entirety,~~entity ~~that~~is the ~~Group evaluate~~party ~~its~~that ~~existing~~absorbs ~~intangible~~a ~~assets~~majority ~~and~~of ~~goodwill~~the ~~that~~entity’s ~~were~~expected ~~acquired~~losses, inreceives a ~~prior~~majority ~~purchase~~of ~~business~~its ~~combination,~~expected ~~and~~residual toreturns, ~~make~~or ~~any~~both, ~~necessary~~as ~~reclassifications~~a inresult ~~order~~of toholding ~~conform~~variable ~~with~~interests. ~~the~~FIN ~~new~~46 ~~criteria in~~also ~~SFAS 141~~provides ~~for~~disclosure ~~recognition~~requirements ~~apart~~related ~~from~~to ~~goodwill.~~investments ~~SFAS 142~~in ~~requires~~variable ~~that~~interest ~~goodwill~~entities, ~~and~~whether ~~intangible~~or ~~assets~~not ~~with~~those ~~indefinite~~entities ~~useful~~are ~~lives~~consolidated. noFor ~~longer~~the ~~be amortized~~Group, ~~but~~FIN ~~instead~~46 ~~will~~applies beimmediately ~~tested~~to ~~for impairment~~variable ~~annually~~interest ~~(or~~entities ~~more~~created ~~frequently~~after ifJanuary ~~impairment~~31, ~~indicators~~2003, ~~arise)~~and into ~~accordance~~variable ~~with~~interest ~~the~~entities ~~provisions~~in ofwhich ~~SFAS 142.~~the ~~Intangible~~Group ~~assets~~obtains ~~with~~an ~~definite~~interest ~~useful~~after ~~lives~~that ~~will~~date. beFor ~~amortized~~variable ~~over~~interest ~~their respective~~entities ~~estimated~~created ~~useful~~prior ~~lives~~ to ~~their~~February ~~estimated~~1, ~~residual values~~2003, ~~and~~the ~~reviewed~~consolidation ~~for~~requirements ~~impairment~~of inFIN ~~accordance~~46 ~~with~~became ~~SFAS 144~~effective ~~"Accounting~~as ~~for the Impairment or Disposal~~ of ~~Long-Lived~~July ~~Assets".~~1, 2003.

        ~~Goodwill and~~The ~~intangible~~adoption ~~assets acquired in business combinations completed before July 1, 2001 continued to be amortized through December 31, 2001. As~~ of ~~December 31,~~ ~~2001,~~ the ~~amount~~disclosure ofrequirements ~~unamortized goodwill~~ under ~~U.S.~~Interpretation ~~GAAP was €598,756~~No. ~~Unamortized~~46 ~~assembled~~did ~~workforce~~not ~~totaled~~have ~~€13,917~~any assignificant ofeffect ~~December 31, 2001,~~on ~~was~~the ~~required~~Group’s toconsolidated befinancial ~~reallocated to goodwill upon adoption of SFAS 141 and SFAS 142~~statements. ~~Related~~The ~~deferred~~Group ~~tax~~early ~~liabilities~~adopted ofthe ~~€5,567~~requirements ~~were also required to be eliminated through a corresponding reduction under U.S. GAAP. The amount~~ of ~~unamortized~~Interpretation ~~goodwill under U~~No.S. 46 ~~GAAP~~during asthe ofsecond ~~September 30,~~quarter ~~2002 was €618,615~~2003.

        ~~As discussed~~In ~~above,~~April ~~upon adoption of SFAS 142~~2003, the ~~Group~~FASB ~~was~~issued ~~required~~SFAS to149 ~~evaluate~~“Amendment ~~its~~of ~~existing~~SFAS ~~intangible~~133 ~~assets~~on ~~and~~Derivative ~~goodwill~~Instruments ~~that were acquired in a prior purchase combination,~~ and toHedging ~~make any reclassifications in order to conform with the new criteria in SFAS 141 for recognition apart from goodwill. As a consequence~~Activities”, ~~the~~which ~~Group~~amends ~~was required to reallocate as additional goodwill the unamortized assembled workforce balance upon adoption of~~ SFAS ~~142.~~ ~~This~~133 ~~evaluation~~“Accounting ~~did~~for ~~not~~Derivative ~~result~~Instruments inand ~~any~~Hedging ~~other~~Activities” ~~significant~~and ~~reclassifications. Upon adoption of~~ SFAS ~~142,~~ ~~the Group~~138 ~~was~~“Accounting ~~also~~for ~~required~~Certain toDerivatives ~~reassess~~Instruments ~~the useful lives~~ and ~~residual~~Certain ~~values~~Hedging ofActivities”, ~~all~~which ~~intangible~~established ~~assets~~accounting ~~acquired,~~ and ~~make~~reporting ~~any~~standards ~~necessary~~for ~~amortization~~derivative ~~period~~instruments ~~adjustments~~including byderivatives ~~the~~embedded ~~end of the first interim period after adoption. This reassessment did not result~~ in ~~any~~other ~~significant~~contracts ~~amortization~~(collectively ~~period~~referred ~~adjustments. In addition,~~ to ~~the extent an intangible asset is identified~~ as ~~having~~derivatives) anand ~~indefinite useful life, the Group is required to test the intangible asset~~ for ~~impairment~~hedging ~~in accordance with the provisions of SFAS 142 within the first interim period~~activities. Any impairment loss should be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period. No impairment loss was recognized as a result of these impairment tests, as the Group did not identify any intangible asset as having an indefinite useful life.

        SFAS ~~142 requires~~ ~~the~~149 ~~Group~~amends toSFAS ~~perform~~133 anfor ~~assessment~~certain ofdecisions ~~whether~~made ~~there~~by isthe anBoard ~~indication that goodwill and/or equity method goodwill is impaired~~ as part of the ~~date~~Derivatives ofImplementation ~~adoption. To accomplish this, the~~ Group ~~identified~~(DIG) ~~its~~process. ~~reporting~~It ~~units~~also ~~and~~amends ~~determined~~SFAS ~~the~~133 ~~carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets,~~ to ~~those~~incorporate ~~reporting~~clarifications ~~units as~~ of ~~January 1, 2002. By June 30, 2002,~~ the ~~Group~~definition ~~determined the fair value~~ of ~~each~~a ~~reporting~~derivative. ~~unit~~It ~~and~~contains ~~compared~~amendments itrelating to ~~the~~FASB ~~carrying~~Concepts ~~amount~~Statements ~~of the reporting unit~~No. To7 ~~the~~“Using ~~extent~~Cash ~~the~~Flow ~~carrying~~Information ~~amount~~and ofPresent aValue ~~reporting~~in ~~unit~~Accounting”, ~~exceeds~~No. ~~the~~65 ~~fair~~“Accounting ~~value~~for ofCertain ~~the~~Measurements”, ~~reporting~~No. ~~unit,~~91 an“Accounting ~~indication~~for ~~existed~~Nonrefundable ~~that~~Fees ~~the~~and ~~reporting~~Costs ~~unit~~Associated ~~goodwill~~with ~~may~~Originating beor ~~impaired~~Acquiring Loans and ~~the Group~~Initial ~~will~~Direct ~~then~~Costs ~~have~~of toLeases”, ~~perform~~No. ~~the~~95 ~~second~~“Statement ~~step~~ of ~~the~~Cash ~~transitional~~Flows” ~~impairment~~and ~~test~~No. In126 ~~the~~“Exemption ~~second~~from ~~step,~~Certain ~~the~~Required ~~Group~~Disclosures ~~then,~~about ~~must~~Financial ~~compare~~Instruments ~~the~~for ~~implied~~Certain ~~fair~~Nonpublic Entities”.

56SFAS 149 shall be effective for contracts entered into or modified after June 30, 2003, with some exemptions. It also is effective for hedging relationships designated after June 30, 2003, with some exemptions. All provisions of SFAS 149 shall be applied prospectively with some exemptions. The adoption of SFAS 149 is not expected to have a significant impact on the Group’s consolidated financial statements.

~~value~~In ofMay 2003, the ~~reporting~~FASB ~~unit~~issued ~~goodwill~~SFAS ~~with~~150 ~~the~~“Accounting ~~carrying~~for ~~amount~~Certain ofFinancial ~~the~~Instruments ~~reporting~~with ~~unit~~characteristics ~~goodwill,~~of both ofLiabilities ~~which~~and ~~would~~Equity” be. ~~measured~~This asStatement ofestablishes ~~the~~standards ~~date~~for ofhow ~~adoption.~~an ~~The~~issuer ~~implied~~classifies ~~fair~~and ~~value~~measures ofcertain ~~goodwill~~financial ~~is determined~~instruments bywith ~~allocating~~characteristics ~~the fair value~~ of ~~the~~both ~~reporting~~liabilities ~~unit~~and toequity. ~~all~~It ofrequires ~~the~~that ~~assets~~an ~~(recognized~~issuer ~~and~~classify ~~unrecognized)~~a ~~and~~financial ~~liabilities~~instrument ofthat ~~the~~is ~~reporting~~within ~~unit~~its inscope as a ~~manner~~liability ~~similar~~(or toan aasset ~~purchase~~in ~~price allocation,~~some incircumstances). ~~accordance~~Many ~~with~~of ~~SFAS 141.~~those ~~The~~instruments ~~residual~~were ~~fair~~previously ~~value~~classified ~~after~~as ~~this~~equity. ~~allocation~~SFAS 150 is ~~the~~effective ~~implied~~for ~~fair~~financial ~~value~~instruments ofentered ~~the~~into ~~reporting~~or ~~unit~~modified ~~goodwill.~~after ~~This~~May ~~second~~31, ~~step~~2003, and otherwise is ~~required~~effective toat bethe ~~completed~~beginning ~~as soon~~of asthe ~~possible,~~first ~~but~~interim noperiod ~~later~~beginning ~~than~~after ~~the~~June ~~end~~15, of2003, ~~the~~except ~~calendar~~for ~~year~~mandatory ~~2002.~~redeemable ~~Any~~financing ~~transitional~~instruments ~~impairment~~of ~~loss~~nonpublic ~~will~~entities. beThe ~~recognized~~adoption asof ~~the~~SFAS ~~cumulative~~150 ~~effect~~is ofnot aexpected ~~change~~to inhave ~~accounting~~a ~~principle~~significant inimpact on the Group'’s ~~statement~~ ofconsolidated ~~earnings~~financial instruments. The ~~company~~Group ~~has~~did ~~completed~~not ~~the~~enter ~~first~~into ~~step~~such offinancial instruments during the ~~transitional~~six ~~goodwill~~month ~~impairment~~ended ~~test.~~June 30, 2003.

        AsTable ~~a result~~ of the Group's evaluation of its existing goodwill, an indication of impairment exists in reporting units located in North America and Eastern Europe. The second step of the impairment test will be completed by the end of the current fiscal year. Any transitional impairment loss will be recognized as a cumulative effect of a change in accounting principle. Contents

        Reported income net, exclusive of amortization expense associated with goodwill and assets with an indefinite useful life recognized in the three month period ended September 30, 2002 and the three month period ended September 30, 2001, respectively, is calculated as follows:
Successor
Three Months Ended September 30, 2002 Three Months Ended September 30, 2001
Net (loss) income in accordance with U.S. GAAP (18,630 ) (36,820 )
Add back:
Goodwill amortization — 12,855
Adjusted net (loss) income in accordance with U.S. GAAP (18,630 ) (23,965 )
        Reported income net, exclusive of amortization expense associated with goodwill and assets with an indefinite useful life recognized in the nine month period ended September 30, 2002, the five month period ended September 30, 2001 and the four month period ended April 30, 2001, respectively, is calculated as follows:
Successor Predecessor
Nine Months Ended September 30, 2002 Five Months Ended September 30, 2001 Four Months Ended April 30, 2001
Net (loss) income in accordance with U.S. GAAP (35,225 ) (52,910 ) (13,437 )
Add back:
Goodwill amortization — 20,095 2,951
Adjusted net (loss) income in accordance with U.S. GAAP (35,225 ) (32,815 ) (10,486 )
        In August 2001, the FASB issued SFAS 143 "Accounting for Asset Retirement Obligations". This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of a tangible long-lived asset. SFAS 143 also requires the enterprise to increase the carrying amount of the related long-lived asset by the associated asset retirement costs and to depreciate that cost over the remaining useful life of the asset. The liability is
57
changed at the end of each period to reflect the passage of time (i.e., accretion expense) and changes in the estimated future cash flows underlying the initial fair value measurement. Enterprises are required to adopt SFAS 143 for fiscal years beginning after June 15, 2002. The Group has started its analysis of the new pronouncement, but has not yet determined if the adoption of the new pronouncement will have a material effect on its financial statements.
        In August 2001, the FASB approved for issuance SFAS 144. This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes SFAS 121 and the accounting and reporting provisions of APB Opinion No. 30 "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends ARB No. 51 "Consolidated Financial Statements" to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Group adopted the provisions of this Statement on January 1, 2002. The adoption of the new pronouncement did not have a material effect on the unaudited interim condensed consolidated financial statements. However, the Group has noted that certain provisions of SFAS 144 will potentially impact its accounting and reporting for the remaining subsidiaries to be sold under its divestiture program. The Group has also noted that the provisions of SFAS 144 would supersede certain provisions of EITF 87-11 as they relate to allocation of purchase price in a business combination where the acquirer intends to sell a portion of the operations of the acquired enterprise (see note 19b) and, as a result, had SFAS 144 been applied in accounting for the acquisition transactions, certain of the differences between U.S. GAAP and IAS relating to operations and entities included in the divestiture program would not have occurred.
        The FASB issued SFAS 145 "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections", on April 30, 2002. SFAS 145 rescinds SFAS 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. Upon adoption of SFAS 145, the Group will be required to apply the criteria in APB Opinion No. 30, in determining the classification of gains and losses resulting from the extinguishment of debt. Additionally, SFAS 145 amends SFAS 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. While early adoption of the provisions related to the rescission of statement No. 4 is encouraged, the Group has decided to adopt SFAS 145 effective January 1, 2003. Upon adoption, the Group will have to reclassify prior period items that do not meet the extraordinary item classification criteria in Opinion No. 30. Adoption of this standard is not expected to have a material effect on the Group's consolidated financial statements.
        In July 2002, the FASB issued Statement 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 replaces previous accounting guidance provided by EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring), and requires companies to recognize costs associated with exit or disposal activities when they are incurred (subsequent to a commitment to a plan) rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or exit or disposal activity. The provisions of SFAS 146 are to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of SFAS 146 is not expected to have a material impact on the Group's consolidated financial statements.
58
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MESSER GRIESHEIM HOLDING AG
Messer Griesheim Holding AG
Date: November 20, 2002 By: /s/ KLAUS-JÜRGEN SCHMIEDER Klaus-Jürgen Schmieder Chief Executive Officer
By: /s/ Klaus-Jürgen Schmieder
Date: November 20, 2002 By: /s/ HARALD PINGER Harald Pinger Chief Financial Officer
Name: Klaus-Jürgen Schmieder
Title: Chief Executive Officer
Date: August 14, 2003
By: /s/ Harald Pinger
Name: Harald Pinger
Title: Chief Financial Officer
Date: August 14, 2003

Report for the Nine Month Period Ended September 30, 2002
Business
Management's Discussion and Analysis of Financial Condition and Results of Operations
Messer Griesheim Holding AG
Unaudited Financial Information
	Unaudited Interim Condensed Consolidated Statements of Operations
	Unaudited Interim Condensed Consolidated Balance Sheets
	Unaudited Interim Condensed Consolidated Statements of Changes in Stockholders' Equity
	Unaudited Interim Condensed Consolidated Statements of Cash Flows
	Notes to Unaudited Interim Condensed Consolidated Financial Statements

Report for the Six Months Ended June 30, 2003
Business
Management's Discussion and Analysis of Financial Condition and Results of Operations
Messer Griesheim Holding AG
Unaudited Financial Information
Unaudited Interim Condensed Consolidated Statements of Operations
Unaudited Interim Condensed Consolidated Balance Sheet
Unaudited Interim Condensed Consolidated Statements of Changes in Stockholders' Equity
Unaudited Interim Condensed Consolidated Statements of Cash Flows
Notes to Unaudited Interim Condensed Consolidated Financial Statements
Signatures

		Less than 1 year		1-3 years		4-5 years	After 5 years	Total
	Payments Due by Period
		€ (in millions)		€ (in millions)		€ (in millions)	€ (in millions)	€ (in millions)
	Less than1 Year	1-3 years	4-5 years	After5 years	Total
Contractual Obligations
	(in € millions)
Long-Term Debt		32.6		88.3		117.2	1,095.9	1,334.0
Contractual Obligations
Capital Lease Obligations(1)		16.9		53.6		59.0	33.0	162.5
Long-Term Debt	76.1	104.1	132.3	892.4	1,204.9
Operating Lease Obligations		8.9		17.5		15.2	50.5	92.1
Capital Lease Obligations(1)	27.3	65.1	64.0	0.8	157.2
Commitments
Operating Lease Obligations	10.4	15.0	7.2	23.3	55.9
Other Long-Term Obligations(2)								24.5
Commitments
ACIC Joint Ventures(3)								32.0
Guarantees – Sales of Investments(2)					116.6
Financial Guarantees(4)								127.8
Other Long-Term Obligations(3)					12.9
Long-Term Purchase Agreements								60.8
ACIC Joint Ventures					32.0
Commitments for capital to be funded to equity and cost method investees								15.9
Financial Guarantees(4)					39.6
Long-Term Purchase Agreements					47.1
Other(5)					4.6

		Contract Notional Amount	Contractual Rates	Fair value September 30, 2002
		(€ equivalent in thousands, except for contractual rates)
		€'000	%	€'000
Interest rate cap contracts(1)
	Euro	25,565	5.50000	13
Interest rate swap contracts
	Euro	86,573	4.45500	(2,046	)
	Euro	220,000	4.69500	(6,094	)
	Euro	53,350	4.73000	(1,528	)
	U.S. dollar(2)	252,632	5.00000	(13,798	)
	Euro	43,650	4.65250	(1,201	)
Forward interest rate swap contracts
	Euro	170,000	4.84500	(874	)
	U.S. dollar(2)	228,426	5.18500	(2,192	)
		Forward exchange rate
Foreign currency forward contracts(1)(2)
	Euro/U.S. dollar	25,380	0.87590	(3,087	)
	British pounds sterling/U.S. dollar	1,276	1.55896	6
	Euro/U.S. dollar	12,690	0.96130	282

	Note	As of September 30, 2002		As of December 31, 2001
Assets
Intangible assets		810,786		852,809
Property, plant and equipment		1,517,810		1,697,679
Equity method investments		17,882		19,186
Cost method and other investments		50,824		59,347
Deferred tax assets		6,309		4,546
Other long-term receivables, net and other assets	11	18,739		43,081
Non-current assets		2,422,350		2,676,648
Inventories	12	81,894		80,098
Trade accounts receivable, net		289,269		290,743
Investments in subsidiaries available for sale	9	17,529		42,183
Other receivables and other assets		61,787		71,796
Cash and cash equivalents	13	159,164		188,018
Current assets		609,643		672,838
Total assets		3,031,993		3,349,486
Stockholders' equity and liabilities
Issued capital and reserves		967,180		967,180
Accumulated deficit		(127,561	)	(69,531	)
Cumulative other comprehensive income (loss)		(50,213	)	5,740
Stockholders' equity		789,406		903,389
Minority interests		84,564		88,138
Provisions for pensions and similar obligations		169,008		166,356
Other provisions		65,297		53,344
Corporate debt, less current portion	4	1,368,374		1,540,312
Deferred tax liabilities		127,147		135,933
Other liabilities		28,967		25,353
Non-current liabilities		1,758,793		1,921,298
Other provisions		136,972		159,215
Corporate debt	4	31,845		40,927
Trade accounts payable		102,560		118,344
Miscellaneous liabilities		127,853		118,175
Current liabilities		399,230		436,661
Total stockholders' equity and liabilities		3,031,993		3,349,486

		September 30, 2002	December 31, 2001
Net assets of investments in subsidiaries available for sale		14,010	41,623
Advances to subsidiaries (net of impairment)		3,519	7,760
Provision for obligations		—	(7,200	)
	Total	17,529	42,183

		September 30, 2002	December 31, 2001
Balance Sheet:
	Current assets of other operations held for sale	29,228	38,091
	Non-current assets of other operations held for sale	89,196	100,686
	Total assets	118,424	138,777
	Current liabilities of other operations held for sale	21,329	30,946
	Non-current liabilities of other operations held for sale	11,869	13,221
	Total liabilities	33,198	44,167

	June 30, 2003	December 31, 2002

Trademarks, patents, licenses and other rights	157,053	157,081
Customer base	107,584	110,576
Other intangible assets	72,877	70,440
	337,514	338,097
Less: Accumulated amortization	(74,356)	(61,362)
Intangible assets, net	263,158	276,735

	Successor Messer Griesheim Holding AG		Predecessor Messer Griesheim GmbH
	Eight Months Ended December 31, 2001		Four Months Ended April 30, 2001		Twelve Months Ended December 31, 2000		Twelve Months Ended December 31, 1999		Twelve Months Ended December 31, 1998	Twelve Months Ended December 31, 1997
Reported net loss in accordance with U.S. GAAP	(66,555	)	(13,437	)	(179,779	)	(21,346	)	N/A	N/A
Add back: Goodwill amortization	20,608		2,951		9,322		8,181		N/A	N/A
Adjusted net loss in accordance with U.S. GAAP	(45,947	)	(10,486	)	(170,457	)	(13,165	)	N/A	N/A

			Successor
	Three monthsendedJune 30, 2003	Three monthsendedJune 30, 2002
			Three Months Ended September 30, 2002		Three Months Ended September 30, 2001
Net income (loss) in accordance with U.S. GAAP	1,233	(11,275)
Net loss in accordance with U.S. GAAP			(18,630	)	(36,820	)
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income:
Foreign currency translation adjustments	(21,668)	(78,128)
	Foreign currency translation adjustments		24,688		(44,244	)
Change in fair value of derivative financial instruments, net of deferred taxes of €(29) and €(1,961), respectively	1,035	(4,210)
	Change in fair value of derivative financial instruments, net of taxes of €5,303 and €7,735, respectively		(8,917	)	(11,892	)
Comprehensive loss, net of tax	(19,400)	(93,613)
Comprehensive loss			(2,859	)	(92,956	)

	Six months ended June 30, 2003	Six months ended June 30, 2002

Net income (loss) in accordance with U.S. GAAP	4,672	(44,154)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(49,307)	(72,215)
Change in fair value of derivative financial instruments, net of deferred taxes of €1,841 and €182, respectively	(295)	607
Comprehensive loss, net of tax	(44,930)	(115,762)

		Successor
		Three Months Ended September 30, 2002		Three Months Ended September 30, 2001
Net (loss) income in accordance with U.S. GAAP		(18,630	)	(36,820	)
Add back:
	Goodwill amortization	—		12,855
Adjusted net (loss) income in accordance with U.S. GAAP		(18,630	)	(23,965	)

		MESSER GRIESHEIM HOLDING AG
	Messer Griesheim Holding AG
Date: November 20, 2002		By:	/s/ KLAUS-JÜRGEN SCHMIEDER Klaus-Jürgen Schmieder Chief Executive Officer
	By:	/s/ Klaus-Jürgen Schmieder
Date: November 20, 2002		By:	/s/ HARALD PINGER Harald Pinger Chief Financial Officer
	Name:	Klaus-Jürgen Schmieder
	Title:	Chief Executive Officer
	Date:	August 14, 2003
	By:	/s/ Harald Pinger
	Name:	Harald Pinger
	Title:	Chief Financial Officer
	Date:	August 14, 2003

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