SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from       to

Commission File No. 0-19974

ICU MEDICAL, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE                                              33-0022692
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or organization)                              Identification No.)

951 CALLE AMANECER
SAN CLEMENTE, CALIFORNIA                                     92673
(Address of principal executive offices)                         (Zip Code)

Registrant's Telephone Number, Including Area Code: (949) 366-2183

Securities registered pursuant to Section 12(b) of the Act:
None

Securities Registered Pursuant to Section 12 (g) of the Act:
Common Stock, $.10 par value
Preferred Stock Purchase Rights

Indicate by check mark whether Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by checkmark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). [X] Yes [ ] No

The aggregate market value of the voting stock held by non-affiliates
of Registrant as of June 30, 2003, the last business day of Registrant's most
recently completed second fiscal quarter, was $379,861,351*.

The number of shares outstanding of Registrant's Common Stock, $.10 par
value, as of January 31, 2004 was 13,691,221.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Registrant's 2004 Annual Meeting of
Stockholders filed or to be filed pursuant to Regulation 14A within 120 days
following Registrant's fiscal year ended December 31, 2003, are incorporated by
reference into Part III of this Report.

-----------------
* Without acknowledging that any persons other than Dr. George A. Lopez and Dr.
Diana K. Lopez are affiliates, all directors and executive officers have been
included as affiliates solely for purposes of this computation.

PART I
ITEM 1.  BUSINESS.

We are a leader in the development, manufacture and sale of
proprietary, disposable medical connection systems for use in intravenous
("I.V.") therapy applications. Our devices are designed to protect healthcare
workers and their patients from exposure to infectious diseases such as
Hepatitis B and C and Human Immunodeficiency Virus ("HIV") through accidental
needlesticks. We are also a leader in the production of custom I.V. systems and
low cost generic I.V. systems and we incorporate our proprietary products on
many of those custom I.V. systems. We also manufacture and sell the
Punctur-Guard(R) line of blood collection needles, which we acquired in October
2002.

In 1993, we launched the CLAVE(R), an innovative one-piece, needleless
I.V. connection device that accounts for approximately 59% of our revenue,
exclusive of CLAVEs incorporated into custom I.V. systems. We believe that the
CLAVE offers healthcare providers a combination of safety, ease of use,
reliability and cost effectiveness that is superior to any other protective I.V.
connection system on the market. It allows protected, secure and sterile I.V.
connections without needles and without failure-prone mechanical valves used in
the I.V. connection systems of some competitors. The CLAVE is a successor to our
protected needle products first introduced in 1984. We designed the CLAVE to
eliminate needles from certain applications in acute care hospitals, home
healthcare, ambulatory surgical centers, nursing homes, convalescent facilities,
physicians' offices, medical clinics, and emergency centers. Reduction in the
use of needles not only decreases needlesticks but also reduces the number of
needles to be disposed of and certain safety risks inherent in needle handling
and disposal.

Although CLAVE sales have increased steadily since we introduced it in
1993, we have undertaken a strategic initiative to reduce our dependence on the
CLAVE. The initiative involves a planned transition from being primarily a
manufacturer of I.V. system components to producing and distributing complete
I.V. systems, both custom and low-cost, generic systems, blood collection
devices and other products. Many of the I.V. systems include our I.V.
proprietary component products.

We have been manufacturing and distributing custom and generic I.V.
systems since late 1995. In 1999, we decided to substantially increase our
emphasis on marketing and selling custom I.V. systems. A key element of our
strategy to expand our custom I.V. system business has been the development and
implementation of our proprietary software for custom product design, customer
orders and order tracking, combined with an innovative system to coordinate the
manufacture of components in the U.S., assembly of components into sets in
Mexico and Italy and distribution of finished products. We believe that we offer
customers substantially shorter delivery times and lower costs than other
manufacturers of I.V. systems can currently offer.

The principal products that we have introduced in recent years are the
CLC2000(R), the 1o2 Valve(R), and, with the acquisition of Bio-Plexus, Inc.
("Bio-Plexus") in late 2002, the Punctur-Guard line of blood collection needles.

We currently sell substantially all of our products to I.V. product
manufacturers and independent distributors. Our largest customer is Abbott
Laboratories ("Abbott"), who accounted for 67% of our revenues in 2003.

First person pronouns used in this Report, such as "we," "us," and
"our," refer to ICU Medical, Inc. and its subsidiaries unless context requires
otherwise.

Our website address is http://www.icumed.com. We make available our
Annual Reports on Form 10-K, Quarterly Reports on 10-Q and Current Reports on
Form 8-K free of charge on our website as soon as reasonably practicable after
filing them with the Securities and Exchange Commission. The information on our
website is not incorporated into this annual report.

I.V. USAGE AND INFECTION CONTROL

Primary I.V. therapy lines, used in hospitals, nursing homes, emergency
units and in home healthcare, consist of a tube running from a bottle or plastic
bag containing an I.V. solution to a catheter inserted in a patient's vein. The
tube typically has several injection ports or Y sites (conventionally, entry

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tubes covered by latex caps) to which a secondary I.V. line can be connected to
permit constant intravenous administration of medications, fluids and nutrients,
and to allow instantaneous intravenous administration of emergency medication.

In conventional practice, primary I.V. system connections are made by
inserting an exposed steel hollow-bore needle attached to the primary I.V. line
into an injection port connected to the catheter. Conventional secondary I.V.
connections, so called piggyback connections, are made by inserting an exposed
steel hollow-bore needle attached to a secondary I.V. line into an injection
port or other I.V. connector. In a conventional I.V. connection, the needle,
which typically is secured only with tape, can detach from the catheter or
injection port resulting in disconnection and a serious and sometimes fatal
interruption of the flow of the I.V. solution to the patient. The exposed
needles can easily be contaminated by contact with unsterile objects or through
contact with fluid in the I.V. lines. Accidental needlesticks from contaminated
needles can result in infection to healthcare workers and, less frequently,
patients. Increasing awareness of the risk of infection from needlesticks and
the substantial and increasing expense to healthcare providers of complying with
regulatory protocols when needlesticks occur have led to a growing demand for
safe medical devices such as our protective I.V. connectors.

Hepatitis B and C and HIV are transmitted through blood and other body
fluids, and workers who come in contact with such infectious materials are at
risk of contracting these diseases. Transmissions may occur from needlesticks by
contaminated needles or exposure of mucous membranes to infectious body fluids
containing blood traces. Following each needlestick, the healthcare employer is
required to perform a series of tests on the healthcare worker for both
Hepatitis B and C and HIV, as well as track and record each needlestick
incident. Thus, needlesticks result in time lost from work and substantial
expense regardless of whether transmission of an infectious disease is detected.
Our protective I.V. connectors are designed to prevent accidental needlesticks
from needles originating from primary and secondary I.V. connections.

Heightened awareness of the risk of infection from needlesticks and the
substantial expense to healthcare providers of complying with regulatory
protocols when needlesticks occur have led to growing demand for safe medical
devices such as our needleless I.V. connectors. This awareness has also lead to
significant federal and state legislation. In addition, the federal Needlestick
Safety and Prevention Act, enacted in 2000, modified standards promulgated by
the Occupational Safety and Health Administration ("OSHA"), to require employers
to use needle-safe systems where appropriate to reduce risk of injury to
employees from needlesticks. This is a significant expansion of the previous
OSHA mandate that "universal precautions" be observed to minimize exposure to
blood and other body fluids. In September 1998, the State of California enacted
the bloodborne pathogen standard under the state's occupational safety and
health statute. This standard mandates use of needlestick prevention controls,
including needleless systems. California was the first state to enact such
legislation, and since then many other states have enacted similar legislation.
Our devices will allow a healthcare provider to be compliant with any of these
standards.

PRODUCTS

CLAVE PRODUCTS

A conventional I.V. line terminates with a male luer connector to which
a hollow-bore needle would be attached to penetrate a latex or non-latex rubber
covered injection port to make a primary or secondary I.V. connection. With the
CLAVE system, instead of attaching a hollow-bore needle to the male luer, a
CLAVE is used in place of the injection port and the male luer, without a
needle, is simply threaded into the CLAVE with a half turn. The CLAVE consists
of a cylindrical housing, which contains a silicone compression seal and a
recessed plastic piercing element. As the luer tip enters the CLAVE housing, it
depresses the silicone seal back into the housing and slides over the piercing
element, which penetrates through the compressed silicone. Fluid channels in the
piercing element create a continuous fluid pathway from the I.V. line, through
the CLAVE into the primary I.V. line and into the catheter. The luer tip creates
a tight seal against the top of the silicone thereby preventing contaminants
from entering the fluid pathway or from fluid escaping the connection. When the
I.V. line is disconnected from the CLAVE, the silicone compression seal expands
to again fill the housing and reseal the opening. When the CLAVE is not in use,
the silicone compression seal fills the opening in the housing and covers the
plastic piercing element, thus completely sealing the connector and presenting a
flush surface that can be cleansed with an alcohol swab. The CLAVE contains no
natural rubber latex.

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Emergency medications can be administered through the CLAVE by using a
standard syringe without a hypodermic needle attached. The CLAVE can be used
with any conventional peripheral or central vascular access systems, both for
venous and arterial applications. The resilience of the silicone compression
seal permits repeated connections and disconnections without replacing the
CLAVE.

The CLAVE Integrated Y site is designed to be integrated directly into
primary and secondary I.V. sets, thus eliminating the need for special adapters,
pre-slit injection ports, or metal needles when making piggyback I.V.
connections. Currently, many popular I.V. connection systems that compete with
our systems require either a metal needle, a pre-slit injection port or a
special adapter to make piggyback connections. The original CLAVE can be used to
make a piggyback connection, but it also requires a special adapter when used in
piggyback applications. We believe the CLAVE Integrated Y site offers a lower
cost alternative to existing systems by eliminating the need for multiple parts.
The healthcare professional simply inserts the male luer of any secondary I.V.
set, without a needle, into the CLAVE Integrated Y site and twists to make the
connection. The CLAVE Integrated Y site will not replace CLAVE products used in
non-piggyback connections. Unlike the original CLAVE site, the CLAVE Integrated
Y site is marketed exclusively to I.V. set manufacturers, such as Abbott, to
build directly into their I.V. sets or used by us in our custom I.V. sets.

The CLAVE is our largest selling product line, and accounted for 59% of
our net revenue in 2003, or 73% if custom I.V. systems including one or more
CLAVEs are included.

In October 2001, we commenced production of the "MicroCLAVE(R)." It is
smaller than the existing CLAVE but is functionally similar. We are marketing it
as an extension of the CLAVE product line for use where its smaller size is
advantageous, such as pediatric care.

CUSTOM I.V. SYSTEMS

During late 1995, we entered the low end of the safe medical connector
market by manufacturing and distributing I.V. sets which incorporated lower
priced safe medical connectors, and also commenced manufacturing and
distributing custom I.V. sets incorporating the CLAVE. In 1999, we substantially
increased our emphasis on marketing and selling custom I.V. systems. To promote
the growth of the business, we have developed innovative software systems and
manufacturing processes that permit us to design a custom I.V. set to a
hospital's or clinician's exact specifications, commence production within less
than a day after we receive the customer order and ship the custom I.V. sets to
the customer within three of receipt for smaller orders. While we are capable of
meeting customer demand on this accelerated three-day schedule, in normal
circumstances we ship within twenty-one to thirty days of receipt of the
customers' order. This is a fraction of the time required by other custom set
manufacturers. The use of sophisticated design, ordering and order tracking
systems and streamlined assembly and distribution processes allows us to sell
custom I.V. sets at prices substantially lower than those charged by other
producers of custom I.V. sets.

We have also developed proprietary Internet-based electronic ordering,
order tracking, invoicing and payment systems. Hospitals and other healthcare
providers have been slow to change from traditional methods of ordering products
and supplies to ordering over the internet, and to date we receive most of our
orders by facsimile or telephone. We believe, however, that customers will
gradually make the transition from traditional ordering methods to internet
ordering.

On February 27, 2001, we signed an agreement with Abbott under which we
will manufacture all new custom I.V. sets for sale by Abbott, and the two
companies will jointly promote the products under the name SetSource(TM). Sales
of custom I.V. systems increased as a result of the agreement and we expect
further significant increases in sales of custom I.V. systems, although there is
no assurance that such increase will be achieved.

We have committed significant resources to the strategic initiative to
expand our custom I.V. system businesses and expect to incur additional expenses
for continuing software development and enhancements in the manufacturing
process. To date, most of the I.V. set sales volume is in custom I.V. systems,
and we expect this to continue.

4

During 2001, 2002 and 2003, net sales of custom I.V. systems were
approximately $9,263,000, $15,205,000 and $22,823,000, respectively.
Approximately 70% of the growth in 2003 custom I.V. systems net sales was
because of the SetSource program.

PUNCTUR-GUARD

We acquired the Punctur-Guard product line and technology with the
purchase of Bio-Plexus on October 31, 2002. The Punctur-Guard products are based
on a patented technology that internally blunts a needle while still in the
patient's vein, and are the only products which allow the procedure to continue
while the needle is rendered safe. We currently use the technology to make blood
collection needles ("BCN") and Winged Sets, primarily for use by phlebotomists
and other medical personnel in hospitals and independent clinical laboratories.

Hollow bore needles are broadly used for venous access to a patient,
and expose healthcare workers to accidental needlesticks. There are essentially
three safety technology platforms for use with hollow-bore needles:
"outer-sheath" which uses an outer sheath stored behind the needle during use
and is advanced over the needle after use; "retractable" which uses a chamber
behind the needle and a spring that retracts the needle into the chamber after
use; and, internal needle blunting. The majority of the first two technologies
require that the needle be withdrawn from the patient prior to activation of the
safety feature, exposing the healthcare worker to a sharp, contaminated needle
during the procedure and/ or following removal of the needle from the patient.
However, with the internal blunting that we use in the Punctur-Guard products,
the safety feature can be activated while the needle is in the patient
immediately upon achieving venous access, thereby significantly reducing any
risk of accidental needlestick during or after the procedure.

The internal blunting is achieved by positioning a blunt hollow-bore
needle within the conventional sharp needle. The healthcare worker is able to
activate the safety device that causes the blunt needle to advance just beyond
the sharp tip of the outer needle. It can be activated immediately after
achieving venous access, either at the beginning of the procedure or at the end
immediately before withdrawing the needle from the patient. We believe that
products using our internal blunting technology provide safety that is superior
to that of the products using other safety technologies.

Our internal needle blunting technology is licensed to Medex, Inc.
(successor to Johnson & Johnson Medical) and to TFX Medical, a division of
Teleflex Incorporated, for use in various types of catheters. None of the
applications of the patented technology under those licenses compete with our
Punctur-Guard line of blood collection products.

After our acquisition of Bio-Plexus on October 31, 2002, we made
significant improvements to the Punctur-Guard products and manufacturing
processes. We did not actively promote sales of those products until completion
of those product improvements. We completed improvements on the Winged Set
products and re-launched them on March 1, 2003. We completed improvements on the
BCN and started selling the improved product in late September 2003. Sales of
Punctur-Guard products and royalties from licenses of the related technology for
2003 totaled $8,446,000.

CLC2000

The CLC2000 is a one piece, swabable connector used to connect I.V.
lines to catheters, which is engineered to prevent the back-flow of blood into
the catheter. The CLC2000 does not permit the use of needles, thereby ensuring
compliance with needle-free policies of healthcare providers. The CLC2000 also
contains no natural rubber latex.

The CLC2000 is typically used on central venous catheters where
catheter occlusion is most prevalent. Generally, when an I.V. line is
disconnected, there is a back-flow of blood into the catheter that is in the
patient's vein. That blood in time coagulates and occludes the catheter.
Occlusion ("clotting off") of catheters requires expensive drugs and procedures
to "flush" the catheter, or if those procedures are not effective, replacement
of the catheter.

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The CLC2000 was developed to reduce clotting of catheters because of
"back-flow" when the I.V. line is disconnected. The CLC2000 consists of a "T"
shaped cylindrical housing, which contains a poppet that is depressed as the
luer tip enters the CLC2000. Fluid flows around the poppet and through the
housing and into the catheter. When the luer is removed from the CLC2000, a
portion of the fluid remaining in the housing is expelled out through the tip of
the catheter while a constant positive pressure is maintained to prevent any
back-flow into the catheter.

We began marketing the CLC2000 in November 1997. We are concentrating
the marketing of the CLC2000 where its "no back-flow" features are of maximum
benefit in patient care. These are generally therapies that use long-term
indwelling catheters such as oncology, dialysis and long-term infusion of
medication. We commenced production on automated assembly equipment in the
fourth quarter of 2002. CLC2000 accounted for 4% of our net revenue in 2003.

1O2 VALVE

The 1o2 Valve is the first one-way or two-way drug delivery system. It
functions as a single unit or in multiple "ganged" units as a manifold, for use
throughout a hospital. It provides the safety features of an automatic one-way
valve, yet allows aspiration, or two-way function by simply pushing a button.
The 1o2 Valve can be used in place of products such as stopcocks and check valve
manifolds. We actively commenced sales in April 2000. Our initial manufacturing
focus has been on anesthesia and critical care usage and we are selling the 1o2
Valve only as part of I.V. sets that we manufacture. In the third quarter of
2002, we commenced production on automated assembly equipment. Sales of I.V.
sets containing 1o2 Valves were approximately $3,613,000 in 2003.

OTHER PRODUCTS AND REVENUES

The Lopez Enteral Valve(R) is a small "T" valve designed to be
connected into nasogastric, gastric or jejunostomy tube systems. The valve
permits intermittent injection of medications, irrigation or suction without
having to disconnect the line and thereby opening the system. By eliminating the
need to open the system, the Lopez Valve helps prevent the splashing of and risk
of contact with potentially infectious stomach fluids and also saves valuable
time.

We have developed a family of inexpensive single-use needleless
connectors for use in piggyback and non-piggyback applications. The RF100 is
designed for use in piggyback applications. We developed the RF150, called the
"Rhino," specifically for Abbott for use with pre-slit injection ports in
piggyback and non-piggyback applications.
Although we believe that the CLAVE has significant functional advantages over
the RF100 and RF150, these products are alternative and less expensive
needleless I.V. connectors.

We manufactured and sold Click Lock and Piggy Lock products, which were
our first products, introduced in 1984. They use needles recessed in a clear
plastic shroud. We discontinued these products in early 2003. We also
manufacture the McGaw Protected Needle, which is similar to the Click Lock, for
B. Braun Medical Inc. ("B. Braun"). B. Braun also pays us a share of its
revenues on its SafeLine products. The market for all of these products has been
declining as the market shifts to swabable needleless products.

We have a significant number of patents on the technology in our
products and methods used to manufacture them. We have continuing royalty,
license fee and revenue share income from our technology and from time to time
may receive license fees or royalties from other entities for the use of our
technology.

NEW PRODUCTS

We are developing several new products that we intend to introduce in
2004 and later. We believe innovative products continue to be important to
maintaining and increasing our sales levels.

We plan to launch, in limited markets, a new I.V. connector currently
under development. We expect to apply in 2004 to the Food & Drug Administration
("FDA") under Section 510(k) of the Federal Food, Drug and Cosmetics Act ("FDC
Act") for approval to market this new connector. There is no assurance that the
FDA will grant marketing clearance, that we will launch this new product, or
that it will achieve sales if and when we commence marketing it.

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MARKETING AND DISTRIBUTION

The influence of managed care and the growing trend toward
consolidation among healthcare providers are the driving forces behind our sales
and marketing strategies. Many healthcare providers are consolidating to create
economies of scale and to increase negotiating power with suppliers. In an
effort to further control costs, many of these consolidated groups are entering
into long-term contracts with medical suppliers at fixed pricing. In this
changing market place, we believe it is becoming increasingly important to
secure contracts with major buying organizations in addition to targeting
specific healthcare providers.

As of January 31, 2004, we employed 34 product specialists in the
United States and Canada to support the salespeople employed by the medical
product manufacturers and independent domestic distributors. Our product
specialists call on prospective customers, demonstrate products and support
programs to train the salespeople and customers' staffs in the use of our
products.

MEDICAL PRODUCTS MANUFACTURERS

We have a strategic supply and distribution relationship with Abbott, a
major I.V. product supplier, which has a significant share of the I.V. set
market under contract. The agreement confers to Abbott conditional exclusive and
nonexclusive rights to distribute certain CLAVE and our other products to
certain categories of customers.

Abbott purchases CLAVE products packaged separately for distribution to
healthcare providers and in bulk for assembly into Abbott's full range of I.V.
products. MicroCLAVE, 1o2 Valve, CLC2000, Punctur-Guard, Lopez Valve and Rhino
products are purchased packaged separately.

Under another agreement with Abbott that extends to December 2014, we
have the exclusive right to manufacture all new custom I.V. sets for sale by
Abbott, and Abbott and we will jointly promote the products under the name
SetSource. Abbott is the exclusive and non-exclusive distributor and co-promoter
of SetSource products to certain categories of customers, including SetSource
products containing both companies' proprietary products.

The Abbott agreements were extended in January 2004 from 2009 to 2014,
their scope was expanded to include all of our products not previously included,
and the scope further expanded to be worldwide.

Sales to Abbott accounted for approximately 67%, 57% and 53% of net
sales in 2003, 2002 and 2001 respectively. The loss of Abbott as a customer
could have a significant adverse effect on our business and operating results
because they have full-line contracts with numerous healthcare providers to
supply substantially all I.V. products and solutions to those customers.

In August 2003, Abbott announced that it will spin off its core
Hospital Products Division to its stockholders as an independent company. The
Hospital Products Business, which will become Hospira, Inc., accounts for
virtually all of our sales to Abbott. We believe the spin-off is a positive
development for us and will result in new business opportunities with the new
Hospira. We have agreed for Abbott to assign our contracts to Hospira.

Through December 31, 2002, we had a supply and distribution agreement
with B. Braun under which B. Braun had conditional exclusive and nonexclusive
rights to distribute certain CLAVE products to certain categories of customers.
Revenue from B. Braun was approximately $9.9 million in 2002, of which CLAVE
products accounted for $8.6 million, or 10% of our total revenue. In connection
with the settlement in November 2002 of our contract litigation against B.
Braun, we terminated the manufacture and supply agreement under which we sold
CLAVE products to B. Braun effective December 31, 2002. We sold virtually no
CLAVE products to B. Braun in 2003 and will not sell CLAVE product sales to B.
Braun in the future. As explained further in Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, while the termination
of the B. Braun CLAVE agreement has had a short-term adverse effect on us, we do
not believe there will be any material adverse long-term effects. We believe
many of B. Braun's customers prefer the CLAVE to B. Braun's products and that
many of them will continue to buy CLAVE products through either Abbott or our
independent distributors when they are no longer available from B. Braun. We
have contracts to supply B. Braun a protected needle product, and B. Braun pays
us under the Safeline revenue sharing agreement. We expect both of these revenue
streams to continue to decrease as the market shifts to one piece, swabable,
needleless technology.

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INDEPENDENT DOMESTIC DISTRIBUTORS

We currently have approximately 22 independent distributors in the
United States and Canada who employ approximately 185 salespeople in the
aggregate and which accounted for approximately 23% of our net revenues in 2003.
We include Canada as "domestic" for administrative purposes. Distributors
purchase and stock our products for resale to healthcare providers.

No single independent distributor accounts for as much as 4% of net
sales. Although the loss of one or more of our larger distributors could have an
adverse affect on our business, we believe we could readily locate other
distributors in the same territories who could continue to distribute our
products to the same customers.

For several years before 2001, our sales to independent distributors
had been declining. In 2001, they showed a modest 6% increase in sales after we
took steps to provide better field support for independent distributors in order
to increase our net sales to them. In 2003, sales to our independent
distributors grew 42% in total, and 12% without the inclusion of sales
originating with Bio-Plexus. While we believe that the declining trend in sales
to the independent distributors has been reversed, and that sales to them will
grow in 2004, there is no assurance that continuing growth will be achieved, or
that sales to them will not decline in the future.

INTERNATIONAL

We distribute products in the principal countries in Western Europe,
the Pacific Rim, Latin America and in South Africa. Foreign sales (excluding
Canada) accounted for approximately 6%, 8% and 8% of our net sales in each of
the years 2003, 2002 and 2001 respectively. The International Division currently
has approximately 68 distributors. We have three business development managers
in Europe, one each in New Zealand and Australia who together serve the entire
Pacific Rim, Southeast Asia, the Middle East, Africa and South America. We
expect to add several more business development managers in 2004. Administrative
operations are in Roncanova in northern Italy (at the site of our assembly
plant) and San Clemente.

Currently, we export from the United States substantially all the
products sold internationally. All sales from the United States are denominated
in U.S. dollars and sales from Italy are denominated in Euros. We believe it
will be necessary for us to establish production facilities in a number of
locations outside North America to meet local demands and avoid high
transportation costs.

MANUFACTURING

Manufacturing of our products involves injection molding of plastic and
silicone parts, manual and automated assembly of the molded plastic parts,
needles and other components, quality control inspection, packaging and
sterilization. We mold all of our proprietary components, and perform all
assembly, quality control, inspection, packaging, labeling and shipping of our
products. Our manufacturing operations function as a separate group, producing
products for the marketing and sales groups.

We own a fully integrated medical device manufacturing facility in two
adjacent buildings totaling 78,000 square feet in San Clemente, California. A
mold maintenance shop supports the repair and maintenance needs of our molding
operation and manufactures some of our production molds. In addition, the mold
maintenance shop serves as a research and development prototype shop, and
utilizes advanced computer assisted design systems and automated machining
equipment. The state-of-the-art medical device molding facility includes a
24,425 square foot class 100,000 clean room in which all molding and automated
assembly of our proprietary medical components is performed. The clean room is
equipped with 42 injection molding machines and ancillary equipment including
robots designed to minimize human intervention, and sophisticated, highly
automated assembly systems to assemble the CLAVE, CLAVE Integrated Y site,
MicroCLAVE, CLAVE vial access spike, CLC2000, 1o2 Valve, RF150 and the McGaw
Protected Needle products. The assembly systems are custom designed and
manufactured for us.

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We assemble our Punctur-Guard products in our 37,500 square foot
manufacturing facility in Vernon, Connecticut (near Hartford), which includes
two clean rooms. The assembly processes for both the BCN and the Winged Set use
custom made automated assembly systems. Molding of Punctur-Guard components,
which had been done by outside custom molding companies, will all be transfered
in our San Clemente facility by the end of the second quarter of 2004.

Most of our manual assembly is done at our facilities in Ensenada, Baja
California, Mexico. Those facilities include approximately 60,000 square feet of
production and warehousing space and an electron beam sterilizer. Principal
products assembled manually are I.V. therapy systems, the Lopez Valve, and CLAVE
ancillary products and accessories. We also assemble I.V. therapy systems in our
approximately 10,000 square foot leased facility in northern Italy that we
acquired in June 2003.

Our state-of-the-art injection molding technology and highly automated
assembly systems are designed to maintain a high level of product quality and
achieve high volume production at low unit manufacturing costs. To achieve these
advantages and to gain greater control over raw material and finished product
delivery times, we mold our entire requirements of proprietary molded
components. The raw materials for our molding operation are principally resins
and silicones, and these materials are available from several sources. Generic,
"off-the-shelf" items are purchased from outside vendors unless significant cost
savings can be achieved by molding in-house. We are not dependent on any
individual vendor for purchased parts and have no contracts with our suppliers
beyond the terms of purchase orders issued.

Our products are sterilized in processes which use either gamma or
electron beam ("e-beam") radiation. Most of the sterilization is by e-beam,
which is less expensive and quicker than gamma radiation sterilization. While
all sterilization was performed by independent companies through the end of
2003, we commenced limited operation of our own sterilization facility at our
plant in Mexico in February 2004 and we will sterilize all of our products that
are assembled in Mexico at that facility. We will continue to use independent
contractors to sterilize products assembled in San Clemente and Italy.

We have an ongoing program to increase systems capabilities, improve
manufacturing efficiency, reduce labor costs, reduce time needed to produce an
order, and minimize investment in inventory. In the third quarter of 2002 we
commenced use of automated assembly equipment for the 1o2 Valve and commenced
use of automated assembly equipment for the CLC2000 in the fourth quarter of
2002. Throughout 2002 and through mid 2003 we added molding and automated
assembly capacity for CLAVE production. In the third quarter of 2002 we
commenced a significant expansion of our manual assembly capacity in Mexico;
clean room and warehouse space was completed in June 2003, and we completed
construction and installation and limited production start-up of an electron
beam sterilizer in the first quarter of 2004. In late 2003 and early 2004, we
commenced moving plastic injection molding done for our Connecticut Division
(formerly Bio-Plexus) to our San Clemente facility, which is scheduled for
completion by the end of the second quarter of 2004; the purpose of the move is
to ensure more consistent quality in our molded components and decrease costs.
Ongoing steps also include automation of the production of new products and
other products for which volume is growing. We have been considering
establishment of production facilities outside North America for some time, and
in June 2003 we acquired a manufacturer of I.V. sets in Italy. We continue to
consider establishment of production facilities in other areas. Because
significant innovation is required to achieve these goals, there is no assurance
that these steps will achieve the desired results. Further, our Connecticut and,
more recently, our Italian facilities are transitioning to our manufacturing
methods, but there is no assurance as to the completion or success of those
transitions.

GOVERNMENT REGULATION

Government regulation is a significant factor in the development,
marketing and manufacturing of our products. The FDA regulates medical product
manufacturers and their products under a number of statutes including the FDC
Act, and we and our products are subject to the regulations of the FDA. The FDC
Act provides two basic review procedures for medical devices. Certain products
may qualify for a submission authorized by Section 510(k) of the FDC Act, under

9

which the manufacturer gives the FDA a pre-market notification of the
manufacturer's intention to commence marketing the product. The manufacturer
must, among other things, establish that the product to be marketed is
substantially equivalent to another legally marketed product. Marketing may
commence when the FDA issues a letter finding substantial equivalence. If a
medical device does not qualify for the Section 510(k) procedure, the
manufacturer must file a pre-market approval ("PMA") application. This requires
substantially more extensive pre-filing testing than the Section 510(k)
procedure and involves a significantly longer FDA review process. FDA approval
of a PMA application occurs only after the applicant has established safety and
efficacy to the satisfaction of the FDA. Each of our current products has
qualified, and we anticipate that any new products that we are likely to market
will qualify, for the expedited Section 510(k) clearance procedure. There is no
assurance, however, that new products that we develop or any manufacturers that
we might acquire, or claims that we may make concerning those products, will
qualify for expedited clearance rather than the more time consuming PMA
procedure or that, in any case, they will receive clearance from the FDA. FDA
regulatory processes are time consuming and expensive. Uncertainties as to time
required to obtain FDA clearances or approvals could adversely affect the timing
and expense of new product introductions. All of the regulated products that we
currently manufacture are classified as Class II medical devices by the FDA.
Class II medical devices are subject to performance standards relating to one or
more aspects of the design, manufacturing, testing and performance or other
characteristics of the product in addition to general controls involving
compliance with labeling and record keeping requirements.

We must comply with FDA regulations governing medical device
manufacturing practices. The FDA and the California Department of Health
Services ("DHS") require manufacturers to register and subject manufacturers to
periodic FDA and DHS inspections of their manufacturing facilities. We are an
FDA registered medical device manufacturer, and must demonstrate that we and our
contract manufacturers comply with the FDA's current Quality System Regulations
("QSR"). Under these regulations, the manufacturing process must be regulated
and controlled by the use of written procedures and the ability to produce
devices that meet the manufacturer's specifications must be validated by
extensive and detailed testing of every critical aspect of the process. They
also require investigation of any deficiencies in the manufacturing process or
in the products produced and detailed record keeping. Further, the FDA's
interpretation and enforcement of these requirements has been increasingly
strict in recent years and seems likely to be even more stringent in the future.
Failure to adhere to QSRs would cause the products produced to be considered in
violation of the applicable law and subject to enforcement action. The FDA
monitors compliance with these requirements by requiring manufacturers to
register with the FDA, and by subjecting them to periodic FDA inspections of
manufacturing facilities. If an FDA inspector observes conditions that might be
violative, the manufacturer must correct those conditions or explain them
satisfactorily, or face potential regulatory action that might include physical
removal of the product from the marketplace.

We believe that our products and procedures are in compliance with all
applicable FDA and DHS regulations. There can be no assurance, however, that
other products we are developing or products that we may develop in the future
will be cleared by the FDA and classified as Class II products, or that
additional regulations restricting the sale of our present or proposed products
will not be promulgated by the FDA or DHS. In addition, changes in FDA, DHS or
other federal or state health, environmental or safety regulations or their
applications could adversely affect our business.

To market our products in the European Community ("EC"), we must
conform to additional requirements of the EC and demonstrate conformance to
established quality standards and applicable directives. As a manufacturer that
designs, manufactures and markets its own devices, we must comply with the
quality management standards of EN ISO 9001(1994) / EN 46001 (1996). Those
quality standards are similar to the QSR regulations but incorporate the quality
requirements for product design and development.

Manufacturers of medical devices must also conform to EC Directives
such as Council Directive 93/42/EEC ("Medical Device Directive") and their
applicable annexes. Those regulations assure that medical devices are both safe
and effective and meet all applicable established standards prior to being
marketed in the EC. Once a manufacturer and its devices are in conformance with
the Medical Device Directive, the "CE" Mark may be affixed to its devices. The
CE Mark gives devices an unobstructed entry to all the member countries of the
EC.

We have demonstrated conformity to the regulations of both ISO 9001
(1994) / EN 46001 (1996), ISO 13485 (1996) and the Medical Device Directive and
we affix the CE Mark to our device labeling for product sold in member countries
of the EC.

10

We believe our products and systems are in compliance with all EC
requirements. There can be no assurance, however, that other products we are
developing or products that we may develop in the future will conform or that
additional regulations restricting the sale of our present or proposed products
will not be promulgated by the EC.

COMPETITION

The market for I.V. products is intensely competitive. We believe that
our ability to compete depends upon our continued product innovation, the
quality, convenience and reliability of our products, access to distribution
channels, patent protection, and pricing. We encounter significant competition
in this market both from large established medical device manufacturers and from
smaller companies. Our ability to compete effectively depends on our ability to
differentiate our products based on safety features, product quality, cost
effectiveness, ease of use and convenience, as well as our ability to perceive
and respond to changing customer needs. In the long term, we expect that our
ability to compete will continue to be affected by our ability to reduce unit
manufacturing costs through higher volume production.

In addition to competing with conventional needle I.V. connection
systems and protected needle connection systems marketed by companies such as
Baxter Healthcare Corporation ("Baxter") and Abbott, our present and future
products will compete with needleless I.V. connection systems like those
marketed by Baxter, Becton-Dickinson and Company ("BD"), B.Braun, Alaris
Corporation and others. Although we believe that our needleless CLAVE has
distinct advantages over competing systems, there is no assurance that it will
be able to compete successfully with these products.

The blood collection needle market is highly competitive, and a large
segment of the market continues to use non-safety devices that are generally
less expensive than safety devices such as the Punctur-Guard products. The
largest share of the blood collection needle market is held by BD.

Manufacturers of products with which we currently compete, or might
compete in the future, include large companies with an established presence in
the healthcare products market and substantially greater financial, marketing
and distribution, managerial and other resources. In particular, Baxter, Abbott
and B.Braun are leading distributors of I.V. therapy systems, while BD dominates
the blood collection needle market. Several of these competitors have broad
product lines and have been successful in obtaining full-line contracts with a
significant number of hospitals to supply substantially all of their I.V.
product requirements. In order to penetrate more of these hospitals, we have
established a strategic supply and distribution relationship with Abbott.

We believe the success of the CLAVE has, and will continue to motivate
others to develop one-piece needleless connectors, which may incorporate many of
the same functional and physical characteristics as the CLAVE. We are aware of a
number of such products. We believe most of those products were developed
primarily by companies who currently do not have the distribution or financial
capabilities that we have, although some of those products may be distributed in
the future by larger companies that do have such capabilities. We believe these
products have had a modest impact on our CLAVE business to date, but there is no
assurance that our current or future products will be able to successfully
compete with these or future products developed by others.

We believe that our ability to compete in the custom I.V. systems
market depends upon the same factors affecting our existing products, but will
be particularly affected by cost to the customer and delivery times. While we
believe we have advantages in these two areas, there is no assurance that other
companies will not be able to compete successfully with our custom I.V. systems.

11

PATENTS

We have United States and certain foreign patents on the CLAVE,
CLC2000, Punctur-Guard technology, Click Lock, and Piggy Lock I.V. connectors
and have United States patents on the Lopez Valve connector. We have
applications pending for additional United States and foreign patents on the 1o2
Valve, CLC2000, CLAVE, Punctur-Guard, Click Lock and Piggy Lock I.V. connectors.
The expiration dates of our patents range from 2006 to 2019. (While we no longer
manufacture and sell the Click Lock and Piggy Lock, the patents have
considerable value for potential use in other devices.)

Our success may depend in part on our ability to obtain patent
protection for our products and to operate without infringing the proprietary
rights of third parties. While we have obtained certain patents and applied for
additional United States and foreign patents covering certain of our products,
there is no assurance that any additional patents will be issued, that the scope
of any patent protection will prevent competitors from introducing similar
devices or that any of our patents will be held valid if subsequently
challenged. We also believe that patents on the Click Lock and the Lopez Valve
products may have been, and that patent protection on the CLAVE may be,
important in preventing others from introducing competing products that are as
effective as our products. The loss of patent protection on CLAVE, CLC2000,
Punctur-Guard, Click Lock or Lopez Valve products could adversely affect our
ability to exclude other manufacturers from producing effective competitive
products and could have an adverse impact on our financial results.

The fact that a patent is issued to us does not eliminate the
possibility that patents owned by others may contain claims that are infringed
by our products.

There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry. Litigation, which
would result in substantial cost to us and in diversion of our resources, may be
necessary to defend us against claimed infringement of the rights of others and
to determine the scope and validity of the proprietary rights of others. Adverse
determinations in such litigation could subject us to significant liabilities to
third parties or could require us to seek licenses from third parties and could
prevent us from manufacturing, selling or using our products, any of which could
have a material adverse effect on our business. In addition, we have initiated
litigation, and will continue to initiate litigation in the future, to enforce
our intellectual property rights against those we believe to be infringing on
our patents. Such litigation could result in substantial cost and diversion of
resources.

ICU FINANCE

In 2002 we established ICU Finance, Inc., a wholly-owned consolidated
subsidiary, to provide financing to healthcare entities. As of December 31, 2003
we had finance loans receivable of approximately $8.9 million; they are fully
secured by real and personal property. We plan to hold the loans to maturity or
payoff. Weighted average maturity (principal and interest) at December 31, 2003
was 2.2 years and the weighted average interest rate was 5.5%. We discontinued
new lending activities in October 2003 but will honor existing lending
commitments. Unfunded commitments were approximately $4.0 million at December
31, 2003.

EMPLOYEES

At January 31, 2004 we had 574 full-time employees, consisting of 94
engaged in sales, marketing and administration, and 480 in manufacturing,
molding, product development and quality control, including approximately 300 in
Mexico. We contract with an independent temporary agency to provide some of the
production personnel at our manufacturing facility in San Clemente, California;
we employ none of the personnel provided through the agency. At January 31,
2004, the number of temporary production personnel was approximately 30.

ITEM 2.  PROPERTIES.

We own two adjacent 39,000 square foot buildings in San Clemente,
California, another 28,000 square foot building in the same business park, a
37,500 square foot building in Vernon, Connecticut a 60,000 square foot building
on approximately 94 acres of land in Ensenada, Baja California, Mexico and a
17,500 square foot building in Roncanova, Italy. We also lease a 10,000 square
foot building in Roncanova, Italy.

12

ITEM 3.  LEGAL PROCEEDINGS.

In an action filed August 21, 2001 entitled ICU MEDICAL, INC. V. B
BRAUN MEDICAL, INC. pending in the United States District Court for the Northern
District of California, we allege that B. Braun infringes ICU's patent by the
manufacture and sale of its UltraSite medical connector. On December 30, 2003,
we were awarded an additional patent and on December 30, 2003 we filed an
additional action against B. Braun for patent infringement and moved to amend
the 2001 action to include that allegation. The 2001 action has since been
amended to include our claim of infringement of the additional patent. We seek
monetary damages and injunctive relief and intend to vigorously pursue this
matter. The outcome of this matter cannot be determined at this time.

We are from time to time involved in various other legal proceedings,
either as a defendant or plaintiff, most of which are routine litigation in the
normal course of business. We believe that the resolution of the legal
proceedings in which we are involved will not have a material adverse effect on
our financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

EXECUTIVE OFFICERS OF REGISTRANT.

The following table lists the names, ages, certain positions and
offices held by our executive officers and key employees. Officers serve at the
pleasure of the Board of Directors.

Age                      Office Held
---                      -----------
George A. Lopez, M.D.           56            Chairman of the Board, President 
and Chief Executive Officer

Alison D. Burcar                31            Vice President of Marketing

Richard A. Costello             40            Vice President of Sales

Francis J. O'Brien              61            Chief Financial Officer, Secretary
and Treasurer

Steven C. Riggs                 45            Vice President of Operations

Dr. Lopez and Messrs. Costello and O'Brien have been employed by us in
their current positions for more than five years.

Ms. Burcar became Vice President of Marketing in August 2002, after
having been Marketing Operations Manager since March 1998. Ms. Burcar has been
with us since 1995. She is the niece of Dr. Lopez

Mr. Riggs became Vice President of Operations in August 2002, after
having been Director of Operations since 1998. Mr. Riggs has been with us since
1992.

13

PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our Common Stock has been traded on the Nasdaq Stock Market National
Market Tier under the symbol "ICUI" since our initial public offering on March
31, 1992. The following table sets forth, for the quarters indicated, the high
and low closing prices for our Common Stock quoted by the Nasdaq:

2002                               High            Low
----                               ----            ---
First Quarter                     $37.30          $29.29
Second Quarter                     41.97           29.55
Third Quarter                      38.61           25.75
Fourth Quarter                     43.89           32.60

2003                               High            Low
----                               ----            ---
First Quarter                     $37.50          $25.87
Second Quarter                     33.33           26.41
Third Quarter                      30.22           22.95
Fourth Quarter                     35.55           25.35

We have never paid dividends and do not anticipate paying dividends in
the foreseeable future as the Board of Directors intends to retain future
earnings for use in our business. Any future determination as to payment of
dividends will depend upon our financial condition, results of operations and
such other factors as the Board of Directors deems relevant.

As of December 31, 2003 we had 155 stockholders of record and believe
we have approximately 5,000 beneficial stockholders.

We have a 1993 Stock Incentive Plan and a 2003 Stock Option Plan under
which we grant options to purchase our Common Stock to our employees and have a
2001 Directors' Stock Option Plan under which we grant options to purchase our
Common stock to our Directors. We also have an Employee Stock Purchase Plan. All
plans were approved by our stockholders. Further information about the plans is
in Note 5 to the consolidated financial statements. Certain information about
the plans is as follows:

Number of shares
remaining available for
Number of shares to be issued            Weighted-average                 future issuance under
upon exercise of                   exercise price of                 equity compensation
outstanding options,               outstanding options,         plans (excluding shares reflected
warrants and rights                warrants and rights                  in column (a))
(a)                                (b)                                 (c)

4,367,330                           $16.91                            3,754,864

14

ITEM 6.  SELECTED FINANCIAL DATA

ICU MEDICAL, INC.
-----------------
SELECTED FINANCIAL DATA
-----------------------

Year ended December 31,
-----------------------------------------------------------------
(in thousands, except per share data)
2003          2002           2001         2000          1999
---------     ---------     ---------     ---------     ---------

INCOME DATA:
Revenue
Net Sales                             $102,726      $ 84,218      $ 69,055      $ 56,191      $ 47,014
Other                                    4,628         3,589            --            --            --
---------     ---------     ---------     ---------     ---------
Total Revenue                             107,354        87,807        69,055        56,191        47,014

Cost of Sales                              48,444        36,464        28,932        23,787        19,883
---------     ---------     ---------     ---------     ---------
Gross profit                               58,910        51,343        40,123        32,404        27,131

Selling, general and administrative
expenses                                23,029        19,871        16,816        14,302        12,529
Research and development expenses           1,757         1,472         1,188         1,480         1,214
---------     ---------     ---------     ---------     ---------
Total operating expenses                   24,786        21,343        18,004        15,782        13,743
---------     ---------     ---------     ---------     ---------
Income from operations                     34,124        30,000        22,119        16,622        13,388
Investment  income                          1,123         1,432         1,988         2,096         1,431
---------     ---------     ---------     ---------     ---------
Income before income taxes                 35,247        31,432        24,107        18,718        14,819
Provision for income taxes                 12,950        11,750         8,720         6,930         5,400
---------     ---------     ---------     ---------     ---------
Net income                                    $ 22,297      $ 19,682      $ 15,387      $ 11,788      $  9,419
=========     =========     =========     =========     =========

Net income per common share
Basic                                 $   1.62      $   1.43      $   1.20      $   0.94      $   0.77
Diluted                               $   1.48      $   1.28      $   1.06      $   0.87      $   0.72
=========     =========     =========     =========     =========
Weighted average number of shares
Basic                                   13,753        13,793        12,841        12,495        12,232
Diluted                                 15,050        15,352        14,454        13,588        13,036
=========     =========     =========     =========     =========

CASH FLOW DATA:
Cash flows from operations,
excluding tax benefits from
exercise of stock options             $ 21,987      $ 17,905      $ 20,565      $ 12,760      $ 14,767
Total cash flows from operations         $ 22,829      $ 28,097      $ 24,329      $ 13,462      $ 15,518

BALANCE SHEET DATA:
Cash and liquid investments              $ 73,137      $ 88,465      $ 73,027      $ 50,786      $ 38,442
Working capital                           102,932       102,564        79,736        57,718        42,024
Total assets                              164,288       157,032       117,342        92,860        75,364
Long-term debt                                 --            --            --            --            --
Stockholders' equity                      156,003       145,387       106,677        83,380        68,014

15

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

We are a leader in the development, manufacture and sale of
proprietary, disposable medical connection systems for use in intravenous
("I.V.") therapy applications. Our devices are designed to protect healthcare
workers and their patients from exposure to infectious diseases such as
Hepatitis B and C and Human Immunodeficiency Virus (HIV") through accidental
needlesticks. We are also a leader in the production of custom I.V. systems and
low cost generic I.V. systems and we incorporate our proprietary products on
many of those custom I.V. systems. We also manufacture and sell the
Punctur-Guard line of blood collection needles, which we acquired in October
2002.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are summarized in Note 1 to the
Consolidated Financial Statements and our critical accounting policies are
summarized below. In preparing our financial statements, we make estimates and
assumptions that affect the expected amounts of assets and liabilities and
disclosure of contingent assets and liabilities. We apply our accounting
policies on a consistent basis. As circumstances change, they are considered in
our estimates and judgments, and future changes in circumstances could result in
changes in amounts at which assets and liabilities are recorded.

Investment securities are all marketable and considered "available for
sale". See Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Under our current investment policies, the securities in which we invest have no
significant difference between cost and fair value. If our investment policies
were to change, and there were differences between cost and fair value, that
difference, net of tax effect, would be reflected as a separate component of
stockholders' equity.

We record sales and related costs when ownership of the product
transfers to the customer. Under the terms of most purchase orders, ownership
transfers on shipment, but in some cases it transfers on delivery. If there are
significant doubts at the time of shipment as to the collectibility of the
receivable, we defer recognition of the sale in revenue until the receivable is
collected. Most of our customers are medical product manufacturers or
distributors, although some are end-users. Our only post-sale obligations are
warranty and certain rebates. We warrant products against defects and have a
policy permitting the return of defective products. We provide a reserve for
warranty returns as an expense; amounts have been insignificant. Customers, with
certain exceptions, do not retain any right of return and there is no price
protection with respect to unsold products; returns from customers with return
rights have not been significant. We accrue rebates as a reduction in revenue
based on contractual commitments and historical experience. Adjustments of
estimates of warranty claims, rebates or returns, which have not been, and are
not expected to be material, affect current operating results when they are
determined.

Accounts receivable are stated at net realizable value. An allowance is
provided for estimated collection losses based on specific past due accounts for
which we consider collection to be doubtful. Loss exposure is principally with
international distributors for whom normal payment terms are long in comparison
to those of our other customers and, to a lesser extent, domestic distributors.
Many of these distributors are relatively small and we are vulnerable to adverse
developments in their businesses that can hinder our collection of amounts due.
If actual collection losses exceed expectations, we could be required to accrue
additional bad debt expense, which could have an adverse effect on our operating
results in the period in which the accrual occurs.

Inventories are stated at the lower of cost or market. We need to carry
many components to accommodate our rapid product delivery, and if we misestimate
demand or if customer requirements change, we may have components in inventory
that we may not be able to use. Most finished products are made only after we
receive orders, but for those that are not, we need to estimate what may not be
saleable. We regularly review inventory for slow moving items and write off all
items we do not expect to use in manufacturing, or finished products we do not
expect to sell. If actual usage of components or sales of finished goods
inventory is less than our estimates, we would be required to write off
additional inventory, which could have an adverse effect on our operating
results in the period in which the write-off occurs.

16

Property and equipment is carried at cost and depreciated on the
straight-line method over the estimated useful lives. The estimates of useful
lives are significant judgments in accounting for property and equipment,
particularly for molds and automated assembly machines that are custom made for
us. We may retire them on an accelerated basis if we replace them with larger or
more technologically advanced tooling. The remaining useful lives of all
property and equipment are reviewed regularly and lives are adjusted or assets
written off based on current estimates of future use. As part of that review,
property and equipment is reviewed for other indicators of impairment, but to
date we have not encountered circumstances indicating the carrying amount of an
asset, or group of assets, may not be recoverable. An unexpected shortening of
useful lives of property and equipment that significantly increases depreciation
provisions, or other circumstances causing us to record an impairment loss on
such assets, could have an adverse effect on our operating results in the period
in which the related charges are recorded.

NEW ACCOUNTING PRONOUNCEMENTS

We have implemented all new accounting pronouncements that are in
effect and that may impact our consolidated financial statements and do not
believe that there are any other new accounting pronouncements that have been
issued that might have a material impact on our consolidated financial
statements.

BUSINESS OVERVIEW

Until the late 1990s, our primary emphasis in product development,
sales and marketing was disposable medical connectors for use in I.V. therapy,
and our principal product was the CLAVE. In the late 1990s, we commenced a
transition from a product-centered company to an innovative, fast, efficient,
low-cost manufacturer of custom I.V. systems, using processes that we believe
can be readily applied to a variety of disposable medical devices. This strategy
enables us to capture revenue on the entire I.V. system, and not just a
component of the system.

We are also increasing our efforts to acquire new products. We acquired
the Punctur-Guard line of blood collection needles in 2002 and are continuing to
seek other opportunities. However, there can be no assurance that we will be
successful in finding acquisition opportunities, or in acquiring companies or
products.

Custom I.V. systems and new products will be of increasing importance
to us in future years. We expect CLAVE products to continue to grow in the U.S.,
but at a slower percentage growth rate than in the past because of our large
market penetration. Growth of all our products outside the U.S. could be
substantial, although to date it has been modest. Therefore, we will be
directing increasing product development, acquisition, sales and marketing
efforts to custom I.V. systems and new products in the U.S. and increasing our
emphasis on the markets outside the U.S.

Our relationship with Abbott has been and will continue to be of
singular importance to our growth. In 2003, approximately 67% of our revenue was
from sales to Abbott, and we expect this percentage to increase in the future.
Abbott has a significant share of the I.V. set market in the U.S., and provides
us access to that market. We expect that Abbott will be important to our growth
for CLAVE, custom I.V. systems, and our other products in the U.S. and also
outside the U.S.

We believe that achievement of our growth objectives, both within the
U.S., and outside the U.S., will require increased efforts by us in sales and
marketing and product development, and we expect to increase expenditures for
those starting in 2004.

There is no assurance that we will be successful in implementing our
growth strategy. The custom I.V. systems market is still small and we could
encounter customer resistance to custom products. Further, we could encounter
increased competition as other companies see opportunity. Product development or
acquisition efforts may not succeed, and even if we do develop or acquire
products, there is no assurance that we will achieve profitable sales of such
products. An adverse change in our relationship with Abbott, or a deterioration
of Abbott's position in the market, could have an adverse effect on us.
Increased expenditures for sales and marketing and product acquisition and
development may not yield desired results when expected, or at all. While we
have taken steps to control all these risks, there are certain of those risks
which may be outside of our control, and there is no assurance that steps we
have taken will succeed.

17

OVERVIEW OF OPERATIONS

The following table sets forth, for the periods indicated, net revenues
by product as a percentage of total net revenues:

---------------------------------------- ------------------------ ----------------------- -----------------------
Product Line                                      2003                     2002                    2001
---------------------------------------- ------------------------ ----------------------- -----------------------

CLAVE                                              59%                      67%                    74%
Custom and Generic I.V. Systems                    22%                      17%                    13%
Punctur-Guard                                      7%                       1%                      -
CLC2000                                            4%                       4%                     3%
Other Products                                     4%                       7%                     10%
License, royalty and revenue share                 4%                       4%                      -
---------------------------------------- ------------------------ ----------------------- -----------------------
Total                                             100%                     100%                   100%
---------------------------------------- ------------------------ ----------------------- -----------------------

Most custom I.V. systems include one or more CLAVEs. Total CLAVE sales
including custom I.V. systems with at least one CLAVE were 77% of net revenue in
2002 and 73% of net revenue in 2003.

We sell our products to independent distributors and through agreements
with Abbott (the "Abbott Agreements") and certain other medical product
manufacturers. Most independent distributors handle the full line of our
products. Abbott purchases CLAVE products, principally bulk, non-sterile
connectors, and the CLC2000. In addition, we sell custom I.V. systems to Abbott
under a program referred to as SetSource. In January 2004, we announced the
execution of amendments to our existing agreements with Abbott. The amendments
extend the terms of our agreements to 2014 and provide Abbott with rights to
distribute all existing ICU Medical products worldwide. We signed another
contract amendment with Abbott in January 2004 to distribute our Punctur-Guard
line of blood collection needles in the U.S. and the rest of the world. We also
sell certain other products to a number of other medical product manufacturers.

In August 2003, Abbott announced that it will spin off its core
Hospital Products Division to its stockholders as an independent company. The
Hospital Products Business, which will become Hospira, Inc., accounts for
virtually all of our sales to Abbott. We believe the spin-off is a positive
development for us and will result in new business opportunities with the new
Hospira.

We believe that as healthcare providers continue to either consolidate
or join major buying organizations, our success in marketing and distributing
CLAVE products will depend, in part, on our ability, either independently or
through strategic relationships such as our Abbott relationship, to secure
long-term CLAVE contracts with large healthcare providers and major buying
organizations. As a result of this marketing and distribution strategy we derive
most of our revenues from a relatively small number of distributors and
manufacturers. The loss of a strategic relationship with a customer or a decline
in demand for a manufacturing customer's products could have a material adverse
effect on our operating results.

We believe the success of the CLAVE has motivated, and will continue to
motivate others to develop one-piece, swabbable, needleless connectors that may
incorporate many of the same functional and physical characteristics as the
CLAVE. We are aware of a number of such products. In response to competitive
pressure, we have been reducing prices to protect and expand our market,
although overall pricing has been stable recently. The price reductions to date
have been more than offset by increased volume. We expect that the average price
of our CLAVE products may continue to decline. There is no assurance that our
current or future products will be able to successfully compete with products
developed by others.

18

The federal Needlestick Safety and Prevention Act, enacted in November
2000, modified standards promulgated by the Occupational Safety and Health
Administration to require employers to use safety I.V. systems where appropriate
to reduce risk of injury to employees from needlesticks. We believe this law has
had and will continue to have a positive effect on sales of our needleless
systems, although we are unable to quantify the current or anticipated effect of
the law on our sales.

We are taking steps to reduce our dependence on our current proprietary
products. We are seeking to substantially expand our custom I.V. systems
business through increased sales to medical product manufacturers and
independent distributors. Under one of our Abbott Agreements, we manufacture all
new custom I.V. sets for sale by Abbott and jointly promote the products under
the name SetSource. We expect continuing significant increases in sales of
custom I.V. systems under this agreement. We also contract with group purchasing
organizations and independent dealer networks for inclusion of our products
among those available to members of those entities. Custom I.V. systems
accounted for approximately $22.8 million of net sales in 2003, including net
sales under the Abbott SetSource program of approximately $10.4 million. There
is no assurance that either one of these initiatives will continue to succeed.

In the fourth quarter of 2002 we acquired Bio-Plexus. Inc. for
approximately $8.8 million (before expenses), net of cash acquired, and
Bio-Plexus has been included in our consolidated financial statements since
October 31, 2002. Bio-Plexus's principal products are blood collection needles,
under the Punctur-Guard name, that are designed to eliminate exposure to sharp,
contaminated needles. Bio-Plexus's revenues in 2003, including royalties, were
$8.4 million, and its effect on net income was immaterial.

We have an ongoing program to increase systems capabilities, improve
manufacturing efficiency, reduce labor costs, reduce time needed to produce an
order, and minimize investment in inventory. These include use of automated
assembly equipment for new products and other products for which volume is
growing, use of larger molds and molding machines, centralization of all
proprietary molding in San Clemente, expansion of our production facility in
Mexico, and the establishment of other production facilities outside the U.S.

We distribute products through three distribution channels. Net product
revenues for each distribution channel were as follows:

---------------------------------------- ------------------------ ----------------------- -----------------------
Channel                                           2003                     2002                    2001
---------------------------------------- ------------------------ ----------------------- -----------------------

Medical product manufacturers                      71%                      73%                    72%
Independent domestic distributors                  23%                      19%                    20%
International                                       6%                       8%                     8%
---------------------------------------- ------------------------ ----------------------- -----------------------
Total                                             100%                     100%                   100%
---------------------------------------- ------------------------ ----------------------- -----------------------

QUARTERLY RESULTS: The healthcare business in the United States is
subject to seasonal fluctuations, and activity tends to diminish somewhat in the
summer months of June, July and August, when illness is less frequent than in
winter months and patients tend to postpone elective procedures. This typically
causes seasonal fluctuations in our business. In addition, we can experience
fluctuations in net sales as a result of variations in the ordering patterns of
our largest customers, which may be driven more by production scheduling and
their inventory levels, and less by seasonality. Our expenses often do not
fluctuate in the same manner as net sales, which may cause fluctuations in
operating income that are disproportionate to fluctuations in our revenue.

19

YEAR-TO-YEAR COMPARISONS

We present summarized income statement data in Item 6. Selected
Financial Data. The following table shows, for the three most recent years, the
percentages of each income statement caption in relation to revenues, and the
percentage change in each caption in each year. (We currently calculate our
gross profit percentage based on net sales, which includes only product sales
and excludes non-product revenue such as license fees. (See below for more
information on non-product revenue. We present the alternative calculation based
on total revenue for the convenience of readers who prefer to view it that way).

-----------------------------------------------------------------------------------------------------------------------
Percentage of Revenues                   Changes             
----------------------------    --------------------------------
2003       2002       2001      2003 v. 2002      2002 v. 2001
----       ----       ----      ------------      ------------

Revenue
Net Sales                                             96%        96%       100%           22%                22%
Other                                                  4%         4%          -           29%               100%
-----      -----      -----         -----              -----
Total Revenues                                          100%       100%       100%           22%                27%
Cost of Sales                                            47%        43%        42%           33%                26%

Gross Profit
Percentage of Net Sales                               53%        57%        58%           14%                19%
Percentage of All Revenues                            55%        58%        58%           15%                28%

Selling, General and Administrative expenses             21%        22%        24%           16%                17%
Research and Development expenses                         2%         2%         2%           19%                24%
-----      -----      -----         -----              -----
Total operating expenses                                 23%        24%        26%           16%                18%
-----      -----      -----         -----              -----

Income from operations                                   32%        34%        32%           14%                36%
-----      -----      -----         -----              -----
Investment income                                         1%         2%         3%          (22%)              (28%)
-----      -----      -----         -----              -----
Income before income taxes                               33%        36%        35%           12%                31%
Income taxes                                             12%        14%        13%           10%                35%
-----      -----      -----         -----              -----
Net income                                               21%        22%        22%           13%                29%
=====      =====      =====         =====              =====
-----------------------------------------------------------------------------------------------------------------------

As further explained below, our growth in net income of 13% in 2003 was
less than our revenue growth of 22%, principally because our gross margin
decreased and the decrease was only partially offset by a reduction of operating
expenses and income taxes as a percentage or revenues.

COMPARISON OF 2003 TO 2002

In 2003 we had total revenues of $107,354,000, which was $19,547,000,
or 22%, higher than the total revenues of $87,807,000 reported in 2002. The
increase was primarily attributable to the increase in sales of custom I.V.
systems, which increased $7,652,000, Punctur-Guard, which increased by
$6,201,000 and CLAVE products, which increased by $4,393,000,

DISTRIBUTION CHANNELS: Net sales to Abbott were $71,294,000 in 2003,
compared to $49,990,000 in 2002, an increase of 43%. CLAVE sales to Abbott
increased 38% to $55,745,000 from $40,494,000 principally because of an increase
in unit volume as the CLAVE product penetration of Abbott customer accounts
increased. Sales of custom I.V. systems to Abbott under the SetSource program
approximated $10,447,000 for the year, up from $5,666,000 in 2002 principally
because of an increase in the number of units sold. We expect a continued
increase in CLAVE unit and dollar sales volume with Abbott, as well as a
significant increase in SetSource unit and dollar sales volume in 2004. Net
sales of the CLC2000 to Abbott increased to approximately $1,927,000 from
$1,608,000 in 2002 and we expect sales of the CLC2000 to Abbott will continue to
increase in the future. Net sales of Rhino decreased 14% to $1,674,000 for 2003.

20

Sales of Rhino started to decline in early 2001, and they are expected to
continue to decline in the future as the market shifts to swabbable technology.
There is no assurance as to the amount of any of the future sales increases to
Abbott.

In connection with the November 2002 settlement of our contract
litigation against B. Braun, we terminated the manufacture and supply agreement
under which we sold CLAVE products to B. Braun effective December 31, 2002. We
sold virtually no CLAVE products to B. Braun in 2003 as compared with $8,183,000
in 2002, and will not sell CLAVE product sales to B. Braun in the future.
Revenue derived from B. Braun was $1,365,000 in 2003 compared to $9,861,000 in
2002. The termination of the CLAVE agreement has had a short-term adverse effect
on us because B. Braun has been filling customer orders from its inventory of
CLAVE products, with the result that some former B. Braun customers may not
order from alternative CLAVE distribution channels until B. Braun's CLAVE
inventory is exhausted. We do not believe the termination of the B. Braun
agreement will have any material long-term adverse effect on us. We have lost
some sales unit volume to B. Braun products that compete with CLAVE, but we
believe many of B. Braun's customers prefer the CLAVE to B. Braun's products and
will continue to buy CLAVE products from alternative distribution channels,
which are either Abbott or our independent distributors. We estimate, based on
information from distribution channels, that B. Braun customers that accounted
for approximately 50% of the unit volume of CLAVE products formerly sold by B.
Braun were purchasing CLAVE products from alternative distribution channels by
December 31, 2003. We believe that the unit volume to former B. Braun CLAVE
customers through other CLAVE distribution channels will increase when CLAVE
products are no longer available from B. Braun. To the extent that customers'
needs are filled through independent distributors, we generate higher revenue
and profit per CLAVE connector, because independent distributors purchase
packaged sterilized products, often complete I.V. sets, from us at higher prices
than the bulk nonsterile CLAVE sites which accounted for most of the CLAVEs that
we sold to B. Braun. We have contracts to supply B. Braun a protected needle
product, and B. Braun pays us under the Safeline revenue sharing agreement. We
expect both of these revenue streams to continue to decrease as the market
shifts to one piece, swabbable, needleless technology.

Net sales to independent domestic distributors (including Canada)
increased approximately 42% to $24,106,000 in 2003 from $16,966,000 in 2002. The
increase was due principally to the inclusion of $6,260,000 of Punctur-Guard
product sales which included 12 months of revenue compared to $1,063,000 in
2002, which included revenue only for the last two months of the year following
our acquisition of Bio-Plexus on October 31, 2002. Also contributing to this
increase is a 19% increase in custom I.V. systems, and a 9% increase in CLAVE
product sales, both principally due to an increase in unit volume. We believe
this increase in sales of CLAVE and custom I.V. systems with CLAVEs is because
of acquisition by our independent distributors of market share from B. Braun and
we expect a continued increase in unit sales of CLAVE and custom I.V. systems
with CLAVEs to independent distributors. There is no assurance as to the amount
of any future sales increases to the independent domestic distributors.

Net sales to international distributors (excluding Canada) were
$5,111,000 in 2003, as compared with $7,085,000 in 2002. The decrease in 2003
was due primarily to a decrease in CLAVE product sales as distributors slowed
their orders to reduce their inventory levels. This decrease was partially
offset by an increase in custom I.V. system product sales and Punctur-Guard
product sales. We expect increases in foreign sales in the future in response to
increased sales and marketing efforts including additional business development
managers. Also, we believe we will see a positive impact beginning late in 2004
or 2005 from our recently announced Abbott contract amendments with rights to
distribute all ICU Medical products and Punctur-Guard products outside the
United States. There is no assurance that these expectations will be realized.

PRODUCT AND OTHER REVENUE: Total net sales of CLAVE products (excluding
custom CLAVE I.V. systems) increased approximately 8% to $62,864,000 in 2003
from $58,471,000 in 2002. Total net sales of CLAVE products including custom
I.V. systems with CLAVE increased from $66,951,000 in 2002 to $78,748,000 in
2003, or 16%. This increase was due primarily to an increase in unit shipments
of CLAVE products to Abbott and our domestic distributors, offset by a decrease
in unit shipments to our international distributors and the absence of shipments
to B. Braun. The aggregate average net selling price of CLAVE products in 2003
changed little from 2002 and while we expect some decrease in 2004, we expect
the decreases to be minimal. We expect continued growth in CLAVE unit and dollar
sales volume in 2004, notwithstanding the termination of distribution through B.
Braun, because of the growth that we expect in our other distribution channels.
However, there is no assurance that the expectations will be realized.

21

In October 2001, we commenced production of the MicroCLAVE. It is
smaller than the existing CLAVE but is functionally similar. We market it as an
extension of the CLAVE product line for use where its smaller size is
advantageous, such as pediatric care. Sales are included in CLAVE product sales.

Net sales of custom and generic I.V. systems, which included custom
I.V. sets, both with a CLAVE and without a CLAVE, were $22,823,000 in 2003
compared to $15,205,000 in 2002, an increase of $6,974,000, or 50%. The
SetSource program with Abbott accounted for approximately 69% of the increase,
with most of the balance in sales to independent domestic and international
distributors.

We acquired the Punctur-Guard product line and technology with the
purchase of Bio-Plexus on October 31, 2002. We now produce the Punctur-Guard
line of products and also license the technology to two medical device
manufacturers for use in catheters. After our acquisition of Bio-Plexus on
October 31, 2002, we made significant improvements to the Punctur-Guard products
and manufacturing processes. We did not actively promote sales of those products
until completion of those product improvements. We completed improvements on the
Winged Set products and re-launched them on March 1, 2003. We completed
improvements on the BCN and started selling the improved product in late
September 2003. Sales of Punctur-Guard products (excluding royalties) were
$7,264,000 in 2003 compared to $1,063,000 for the last two months of 2002. We
expect sales of these products to increase in the future, but we give no
assurance that such increases will be achieved.

Net sales of the CLC2000 grew slightly from $3,744,000 in 2002 to
$3,903,000 in 2003, an increase of 4%. Sales to Abbott and domestic distributors
accounted for all the growth offset by a decrease in sales to foreign
distributors. We expect sales of the CLC2000 to increase in 2004 and later years
through all of our distribution channels, but there is no assurance as to the
amount or timing of future CLC2000 sales.

Other products consist principally of the Lopez Valve and protected
needle products. Increases in Lopez Valve sales in 2003 were offset by decreases
in protected needle sales as the safe connector market continues its shift to
needleless technology.

Other revenue consists of license, royalty and revenue share income,
and has been presented separately in our financial statements since the fourth
quarter of 2002; amounts were not significant prior to this. The principal
component was ongoing royalties received for other companies' use of
Punctur-Guard technology of $1,182,000, SafeLine revenue share payments from B.
Braun of approximately $791,000 and one-time license fees of $2,657,000. We
expect to receive ongoing royalties for the use of Punctur-Guard technology and
SafeLine revenue share payments from B. Braun as well as additional payments
under another license of approximately $235,000 per quarter for four years
starting in the first quarter of 2004. We may receive other license fees or
royalties in the future for the use of our technology. We give no assurance as
to amounts or timing of any future payments, or whether such payments will be
received.

We expect revenue growth in 2004 to be lower than it was in 2003. The
percentage growth in our CLAVE business (including custom I. V. systems) in 2004
is expected to be lower than in 2003, although similar in dollar amount. We
expect significant growth in custom I.V. systems and in the Punctur-Guard
product line and modest growth in our international markets. We do expect
significant new revenues under the amendments to the Abbott contracts signed in
January 2004, but we cannot, at this time, estimate how quickly such revenues
will be achieved or whether they will have any significant effect on 2004
results. We do expect to have a greater percentage of revenue growth in 2005
than our current expectations for 2004. However, there can be no assurance that
our expectations for 2004 and 2005 will be achieved.

GROSS MARGIN for 2003, calculated on net sales and excluding other
revenue, was 53% as compared to 57% in 2002. We believe approximately half of
this difference is due to several temporary factors, the principal one relating
to improvements in our automated production in San Clemente during the third
quarter which resulted in a period of unabsorbed overhead. The other half
relates principally to gross margins in our Punctur-Guard products being lower
than most of our other products. In the fourth quarter of 2003 gross margin had
improved to 55%. We expect margins on the Punctur-Guard products to improve over
the next year as we continue to improve sales and fully convert this product
line to our manufacturing techniques. We anticipate that improvements in the
Punctur-Guard margin and improvements in our automated production in San
Clemente will result in a modest increase in the gross margin in 2004, but we do
not expect it to be as high as it was in 2002. We give no assurance as to the
amount or timing of future improvements to our gross margins.

22

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") in 2003,
excluding research and development expenses, increased 16% to $23,029,000 and
was approximately 21% of revenue in 2003 as compared with $19,871,000, or 23% of
revenue in 2002. A portion of the increase was because of the inclusion of
Bio-Plexus and a small increase in sales and marketing costs related to
increased sales. Administrative costs were higher because of personnel additions
and increased information technology expenses, but those higher costs were
offset by decreased litigation expenses. We expect SG&A costs to increase in
2004 because of growth in the Company, and addition of new sales personnel and
additional sales and marketing expenses in order to support sales growth,
including support of the expanding business with Abbott.

RESEARCH AND DEVELOPMENT EXPENSES ("R&D") in 2003 increased 19% to
$1,757,000 and was 1.6% of revenue in 2003 as compared to 1.7% in 2002. Spending
was principally on new product development, product improvements to
Punctur-Guard, and software development to support manufacturing and
distribution of custom and generic I.V. systems. We estimate that R&D costs will
increase in 2004 to support on-going new product development and various product
and process improvements. However, R&D costs could differ from these estimates
and the R&D may not be completed as expected.

INCOME FROM OPERATIONS increased $4,124,000 or 14% and was 32% of
revenues as compared to 34% in 2002. The decline in income from operations as a
percentage of revenue was because of the decrease in gross margin as a
percentage of sales. The effect of that decrease was partially offset by the
level of operating expenses, which increased only 16% while net revenue
increased 22%.

INVESTMENT INCOME decreased in 2003 as compared with 2002, principally
because of a decrease in the investment portfolio and declines in interest rates
slightly offset by higher interest rates through our finance loans receivable.

INCOME TAXES: Our effective income tax rate in 2003 was 36.7%, a
decrease from 37.4% in 2002 principally because of savings in state income
taxes. We expect a slight increase in the effective tax rate in 2004.

NET INCOME in 2003 increased 13%. While revenues increased 22%, gross
margin decreased from 57% to 53%. That decrease caused the amount of gross
profit to increase only 15%. Operating expenses increased slightly more than
that, 16%, causing income from operations to increase only 14%. The drop in
investment income caused the increase in revenue before income taxes to be only
12%, and this was partially offset by a savings in income taxes, leaving the
overall increase at 13%. Net income per share (diluted) increased $0.20 or 16%.
The percentage increase in earnings per share was more than that of net income
because there were fewer shares outstanding due to our stock repurchase of
common shares and there were fewer dilutive shares as a result of the lower
average market price of our common stock.

COMPARISON OF 2002 TO 2001

In 2002, we had total revenues of $87,807,000, which was $18,752,000,
or 27%, higher than the total revenues of $69,055,000 reported in 2001. The
increase was primarily attributable to the increase in sales of CLAVE products,
which increased by $7,341,000 and custom I.V. systems, which increased
$5,492,000.

Net sales to Abbott were $49,990,000 in 2002, compared to $36,793,000
in 2001. CLAVE sales to Abbott increased to $40,494,000 from $32,282,000
principally because of an increase in unit volume as the CLAVE product
penetration of Abbott customer accounts increased. Sales of custom I.V. systems
to Abbott under the SetSource program approximated $5,666,000 for the year, up
from $1,171,000 in 2001, the year the program was initiated. Net sales of the
CLC2000 to Abbott almost tripled to approximately $1.6 million from the low
levels of 2001 when Abbott was balancing its inventory position. Net sales of
Rhino were virtually unchanged, at just below $2.0 million for 2002.

23

Revenue from B.Braun, including revenue sharing, amounted to $9,861,000
in 2002, compared to $12,872,000 in 2001. The decrease was principally because
of a decrease in sales of CLAVE products from $10,544,000 to $8,183,000, on
lower unit volume. CLAVE product sales to B.Braun in the fourth quarter of 2002
accounted for approximately 40% of B.Braun's annual CLAVE volume, as B.Braun
made its final purchases under the agreement to purchase CLAVE products. Most of
the balance of the decrease in net revenue from B.Braun was in sales of the
McGaw Protected Needle. SafeLine revenue sharing payments decreased slightly
from last year.

Net sales to independent domestic distributors increased approximately
24% to $16,966,000 in 2002 from $13,669,000 in 2001. (These sales include
$1,063,000 of Punctur-Guard sales after we acquired Bio-Plexus on October 31,
2002. The increase was due principally to an 18% increase in custom I.V.
systems, the inclusion of Punctur-Guard sales for two months, and a 4% increase
in CLAVE product sales. The increase in sales of custom I.V. systems was
attributable to an increase in unit volume. The increase in CLAVE product sales
was also because of higher unit volume. We believe the increase in sales of
CLAVE products to independent distributors was principally because of
acquisition of market share from B. Braun.

Total sales to international distributors (excluding Canada) were
$7,085,000 in 2002, as compared with $5,384,000 in 2001. We have distribution
arrangements in the principal countries in Western Europe, the Pacific Rim and
Latin America and in South Africa.

Total net sales of CLAVE products (excluding custom CLAVE I.V. systems)
increased approximately 14% to $58,471,000 in 2002 from $51,130,000 in 2001.
Unit shipments of CLAVE products in 2002 increased approximately 15% over 2001.
Abbott accounted for 112% of the growth in dollar sales of CLAVE, International
approximately 18%, partially offset by the decline in sales to B.Braun. The
aggregate average net selling price of CLAVE products in 2002 was virtually the
same as in 2001.

Net sales of custom I.V. systems were $15,205,000 in 2002 compared to
$9,263,000 in 2001, an increase of $5,942,000, or 64%. The SetSource program
with Abbott accounted for about 75% of the increase, with most of the balance in
sales to independent domestic distributors.

Net sales of the CLC2000 grew from $2,043,000 in 2001 to $3,744,000, an
increase of 83%. Abbott accounted for approximately 60% of the increase, with
the balance among domestic and international distributors.

Other products consist principally of the Lopez Valve and protected
needle products. Net sales of the Lopez Valve increased 8% in 2002 to
$1,563,000, on higher unit volume to domestic and international distributors.
Net sales of protected needle products decreased 37%, principally because of a
decrease in sales of the McGaw Protected Needle. Sales of Click Lock and Piggy
Lock products were the same in both years at approximately $730,000. We
discontinued sales of Click Lock and Piggy Lock Products in the first quarter of
2003, and sales of the other protected needle products decreased in 2003 as the
safe connector market continues its shift to needleless technology.

Other revenue consisted primarily of a payment for a fully paid up
license to use certain of our patents of $3.2 million received in December 2002,
royalties received for other companies' use of Punctur-Guard technology of
$156,000 and SafeLine revenue share (fourth quarter only) of approximately $0.2
million.

Gross margin for 2002, calculated on Net sales and excluding Other
Revenue, declined from 58% in 2001 to 57% in 2002 because of significant
unabsorbed overhead in the fourth quarter of 2002. This occurred because of
three weeks of substantially reduced production in Mexico as a result of
difficulty in processing orders and preparing production orders at the time we
implemented our new enterprise software, and because of a planned two-week
shutdown of the automated production facility in San Clemente for preventive
maintenance in December. Until the fourth quarter, gross margins had been at
58%.

Selling, general and administrative ("SG&A") costs increased by
$3,055,000, or 18%, to $19,871,000 in 2002, compared to $16,816,000 in 2001.
SG&A costs were 23% of net revenue in 2002 compared to 24% in 2001. Sales and
marketing costs increased approximately $1.7 million, but decreased as a
percentage of sales from 14% to 13%. Increases were principally in salaries and
related costs and travel. General and administrative costs increased
approximately $1.3 million, and were approximately 10% of net revenue in both
years. Increases were principally in salary and benefits.

24

Research and development ("R&D") costs increased in 2002 by $284,000 to
$1,472,000, and were approximately 2% of net revenue in both 2002 and 2001. The
principal increase in spending was on product development for the Punctur-Guard
product line to make product improvements that we felt were necessary to
successfully market and sell the products. Spending on new product development
also increased from 2001.

The operating margin increased to 34% in 2002, compared to 32% in 2001,
principally because operating expenses decreased as a percentage of net sales.

Investment income decreased by $556,000 in 2002, notwithstanding an
increase in the investment portfolio, because of the effect of continuing
declines in interest rates since the beginning of 2001.

Our effective income tax rate in 2002 was 37%, up from 36% in 2001
principally because state tax credits were lower in 2002 than in 2001 and tax
exempt investment income declined as a percentage of taxable income.

Net income in 2002 increased 28% from 2001 principally because the
gross profit increased 28%, but operating expenses increased only 19%. This
resulted in a 36% increase in operating margin that was partially offset by the
decline in investment income and the increase in the effective income tax rate.
Net income per share (diluted) increased $0.22, or 21%. The percentage increase
in earnings per share was less than that for net income because there were more
shares outstanding.

LIQUIDITY AND CAPITAL RESOURCES

During 2003, our working capital increased slightly by $368,000 to
$102,932,000 from $102,564,000. The increase was due to working capital
generated by operations which was virtually offset by the purchases of treasury
stock, investment in property and equipment, acquisitions and new finance loans.
Our cash and cash equivalents and investment securities position decreased in
2003 by $15,328,000 to $73,137,000 from $88,465,000 at December 31, 2002. This
is because the purchase of $15,324,000 of treasury stock, purchases of property
and equipment of $10,668,000, net advances of $8,907,000 made under finance
loans and cash payment of $5,882,000 for acquisitions exceeded the aggregate of
cash provided by operating activities (excluding the tax benefits from exercise
of stock options) of $21,987,000 and cash provided by the company's employee
equity plans of $3,466,000.

During 2002, our working capital increased approximately $22,828,000 to
$102,564,000 from $79,736,000. Our cash and cash equivalents and liquid
investment securities increased by $15,438,000 to $88,465,000 from $73,027,000.
That increase was due primarily to $17,905,000 of cash flows from operating
activities (excluding tax benefits from exercise of stock options) and
$18,911,000 from exercise of stock options (including tax benefits), partially
offset by $11,894,000 used to purchase property and equipment and $9,484,000
used to acquire Bio-Plexus (net of cash acquired).

INVESTING ACTIVITIES: Capital expenditures continued at a relatively
high rate in 2003 principally because of our expansion in Mexico, including an
electron-beam sterilizer, and investment in molds, molding equipment, automated
assembly equipment, computers and software.

Capital expenditures increased in 2002 principally for investment in
molding machines, molds and automated assembly machines, as well as recurring
facilities improvements and acquisition of computer equipment and software. We
also replaced our enterprise software with Oracle Corporation's R11i business
suite in 2002.

Upon completing an evaluation of the design and capacity of our
manufacturing facilities, we estimate that our current facilities will be
adequate through 2004, but that production after 2004 may require additional
clean room facilities for molding and automated assembly. We expect to decide in
the future how to meet the need for any additional facilities and the location
of additional clean room facilities for molding and automated assembly.

25

We currently estimate that capital expenditures for 2004 will be
approximately $6 million and will be paid from cash we generate from operations.
We expect the $6 million will be spent on molds, molding equipment and automated
assembly equipment, computers and software to maintain current capacity
including targeted growth for 2004. Of those amounts, approximately $1 million
was committed under contracts at December 31, 2003, and we expect to commit the
balance in 2004. Amounts of spending are estimates and actual spending may
substantially differ from those amounts.

In June 2003 we acquired the assets of two affiliated manufacturers of
I.V. systems located in northern Italy for a cash payment of approximately $4.6
million. Principal assets acquired are assembly facilities and related equipment
and inventories and intangible assets. The acquired assets and related operating
results are included in our consolidated financial statements since June 30,
2003. Their effect on our financial statements is immaterial. We may acquire
other businesses or product lines in the future.

ICU Finance, Inc. is a wholly owned consolidated subsidiary that we
established in 2002 as a licensed commercial lender to provide financing to
companies involved in distribution of healthcare products and provision of
healthcare services. Loans are made only to credit-worthy healthcare entites and
are fully secured by real and personal property. At December 31, 2003, it had
$8,907,000 in loans outstanding. Scheduled maturities are: 2004 $4,142,000; 2005
$1,336,000; 2006 $1,306,000; 2007 $1,289,000 and 2008 $834,000. Weighted average
maturity (principal and interest) at December 31, 2003 was 2.2 years and the
weighted average interest rate was 5.5%. In October 2003, we discontinued new
lending activities. We will honor unfunded lending commitments on existing
credit facilities, which totaled approximately $4,030,000 at December 31, 2003.

FINANCING ACTIVITIES: In 2003 we purchased 589,292 shares of our common
stock for $15,324,000. Until those purchases, we had not purchased treasury
stock since October 1999, except for a small amount in March 2000. We may
purchase additional shares in the future. However, future purchases, if any,
will depend on market conditions and other factors.

Cash provided by stock options and the employee stock purchase plan,
including tax benefits, was $3,467,000 in 2003 as compared with $18,911,000 in
2002; options were exercised on 167,996 shares in 2003 as compared with 962,193
shares in 2002.

OPERATING ACTIVITIES: Our cash provided by operating activities tends
to increase over time because of increases in our net income. However, it is
subject to fluctuations, principally from changes in accounts receivable,
inventories, current liabilities and tax benefits from exercise of stock
options.

Normally the substantial majority of our accounts receivable are
current or no more than thirty days past due. In recent years, the majority of
each quarter's sales have been in that last half of the quarter with the result
that the amount of accounts receivable reported as of the end of each quarter
tend to be higher than the amounts at other times during a quarter.

Accounts receivable increased from $16,633,000 at December 31, 2002 to
$24,943,000 at December 31, 2003, or 50%; the increase was because of a 25%
increase in fourth quarter revenue from year-to-year, and because shipments in
the fourth quarter of 2003 were generally made later in the quarter than in
2002.

We generally try to maintain a minimal amount of inventory of finished
goods and work in process, but will maintain larger amounts of components
(classified as raw material) acquired from third parties to avoid production
delays if deliveries by our suppliers are late. However, in order to avoid
production inefficiencies caused by fluctuating production levels, we will level
out our production volumes and build finished goods of our standard (non-custom)
products to meet future orders. This may cause fluctuations in our quarterly
inventory levels.

Inventories decreased from $5,749,000 at December 31, 2002 to
$3,398,000 at December 31, 2003 principally because of a $1,554,000 decrease in
finished goods (offsetting the effect of shipments that were deferred from
December 2002 to early 2003) and a $603,000 decrease in raw materials because of
better inventory controls.

26

Our current liabilities tend to fluctuate based on the timing of when
liabilities are incurred and paid. The largest single source of fluctuation has
been income tax liabilities, and those fluctuations are generally a function of
the timing and amount of estimated tax payments in relation to actual tax
liabilities.

The tax benefits from the exercise of stock options, which we believe
is more properly related to the sale of our stock which is a financing activity,
fluctuates based principally on when employees choose to exercise their vested
stock options.

Tax benefits from the exercise of stock options fluctuated from
$842,000 in 2003 to $10,192,000 in 2002 to $3,764,000 in 2001. Options exercised
were 167,996, 962,193 and 526,960 in the respective years, with the balance in
the fluctuation related to differences between the market prices at date of
exercise and exercise prices in each year.

We expect that sales of our products will continue to grow in 2004. If
sales continue to increase, accounts receivable and inventories are expected to
increase as well. As a result of these and other factors, we expect the use of
working capital to fund our operations to continue to increase.

We have a large cash and liquid investment position generated from
profitable operations and stock sales, principally from the exercise of employee
stock options. We maintain this position to fund our growth, meet increasing
working capital requirements, fund capital expenditures, and potentially to take
advantage of acquisition opportunities that may arise. Our primary investment
goal is capital preservation, as further described in Item 7A. Quantitative and
Qualitative Disclosures about Market Risk, our liquid investments have very
little credit risk or market risk.

We believe that our existing working capital, supplemented by income
from operations, will be sufficient to fund our capital expenditures and
increased working capital requirements for the foreseeable future.

OFF BALANCE SHEET ARRANGEMENTS

In the normal course of business, we have agreed to indemnify officers
and directors of the Company to the maximum extent permitted under Delaware law
and to indemnify customers as to certain intellectual property matters related
to sales of our products. There is no maximum limit on the indemnification that
may be required under these agreements. We have never incurred, nor do we expect
to incur, any liability for indemnification. Except for indemnification
agreements, we do not have any "off balance sheet arrangements".

CONTRACTUAL OBLIGATIONS

We have the following contractual obligations of approximately the
following amounts. These amounts exclude purchase orders for goods and services
for current delivery; we do not have any long-term purchase commitments for such
items.

Payments due: less than 1 year 
Total           from December 31, 2003
-----           ----------------------
Property and equipment         $1,000,000                $1,000,000
==========                ==========

27

FORWARD LOOKING STATEMENTS

Various portions of this Report, including this Management's Discussion
and Analysis, describe trends in our business and finances that we perceive and
state some of our expectations and beliefs about our future. These statements
about the future are "forward looking statements," and we identify them by using
words such as "believe," "expect," "estimate," "plan," "will," "continue,"
"could," may," and by similar expressions and statements about aims, goals and
plans. The forward looking statements are based on the best information
currently available to us and assumptions that we believe are reasonable, but we
do not intend the statements to be representations as to future results. They
include, among other things, statements about:

o        future operating results and various elements of operating
results, including sales and unit volumes of products, future
license, royalty and revenue share income, production costs,
gross margins, SG&A, and R&D expense and income taxes;
o        factors affecting operating results, such as shipments to
specific customers, expansion in international markets,
selling prices, the market shift to needleless technology,
future increases or decreases in sales of certain products and
in certain markets and distribution channels, impact of safety
legislation, increases in systems capabilities, introduction
and sales of new products, manufacturing efficiencies, unit
manufacturing costs, acquisition and use of production
equipment and expansion of facilities and assembly capacity,
expansion of markets and the need for additional facilities,
business seasonality and fluctuations in quarterly results,
and customer ordering patterns;
o        new or extended contracts with manufacturers and buying
organizations, and dependence on a small number of customers,
effect of Abbott's spin-off of its Hospital Products Division,
effect of contract amendments with Abbott, long-term effects
of termination of the B. Braun CLAVE agreement, ability to
replace distributors, and the outcome of our strategic
initiatives;
o        regulatory approval and outcome of litigation; competitive and
market factors, including continuing development of competing
products by other manufacturers, consolidation of the
healthcare provider market and downward pressure on selling
prices; and working capital requirements, changes in accounts
receivable and inventories, current liabilities, capital
expenditures, acquisitions of other businesses or product
lines, indemnification liabilities, contractual liabilities
and common stock repurchases.

The kinds of statements described above and similar forward looking
statements about our future performance are subject to a number of risks and
uncertainties which one should consider in evaluating the statements. First, one
should consider the factors and risks described in the statements themselves.
Those factors are uncertain, and if one or more of them turn out differently
than we currently expect, our operating results may differ materially from our
current expectations.

Second, one should read the forward looking statements in conjunction
with the Risk Factors in our Current Report on Form 8-K to the Securities and
Exchange Commission dated February 15, 2002 which is incorporated by reference.

Third, our actual future operating results are subject to other
important factors that we cannot predict or control, including among others the
following:

o        general economic and business conditions;
o        the effect of price and safety considerations on the
healthcare industry;
o        competitive factors, such as product innovation, new
technologies, marketing and distribution strength and price
erosion;
o        unanticipated market shifts and trends;
o        the impact of legislation affecting government reimbursement
of healthcare costs;
o        changes by our major customers and independent distributors in
their strategies that might affect their efforts to market our
products;
o        unanticipated production problems; and

28

o        the availability of patent protection and the cost of
enforcing and of defending patent claims.

We disclaim any obligation to update the statements or to announce publicly the
result of any revision to any of the statements contained herein to reflect
future events or developments.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We have a portfolio of corporate preferred stocks and
federal-tax-exempt state and municipal government debt securities. The
securities are all "investment grade" and we believe that we have virtually no
exposure to credit risk. Dividend and interest rates reset at auction for most
of the securities from between seven and forty-nine day intervals, with some
longer but none beyond twelve months, so we have very little market risk, that
is, risk that the fair value of the security will change because of changes in
market interest rates; they are readily saleable at par at auction dates, and
can normally be sold at par between auction dates.

Our future earnings are subject to potential increase or decrease
because of changes in short-term interest rates. Generally, each one-percentage
point change in the discount rate will cause our overall yield to change by
two-thirds to three-quarters of a percentage point, depending upon the relative
mix of federal-tax-exempt securities and corporate preferred stocks in the
portfolio and market conditions specific to the securities in which we invest.

At December 31, 2003 we had outstanding commercial loans of
approximately $8,907,000. Loans are made only to credit worthy parties and are
fully secured by real and personal property. We plan to hold the loans until
maturity or payoff. Maturities are five years or less and the weighted average
maturity (principal and interest payments) is 2.2 years. Because of the
relatively small amount of the commercial loans, market risk is not significant
to our financial statements.

We do not have any significant foreign currency risk. Sales to foreign
distributors are all denominated in U.S. dollars. Cash and receivables in
entities outside the United States, principally in Mexico and Italy, which are
denominated in foreign currency are insignificant and are generally offset by
accounts payable in the same foreign currency.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

29

INDEPENDENT AUDITORS' REPORT
----------------------------

Board of Directors and Stockholders
ICU Medical, Inc.

We have audited the accompanying consolidated balance sheets of ICU Medical,
Inc. (the "Company") and subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of income, stockholders' equity and
comprehensive income, and cash flows for the years then ended. Our audits also
included the financial statement schedule for 2003 and 2002 listed in Item
15(a)2. These consolidated financial statements and the financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and the
financial statement schedule based on our audits. The consolidated financial
statements and financial statement schedule of ICU Medical, Inc. and
subsidiaries for the year ended December 31, 2001, were audited by other
auditors who have ceased operations. Those auditors expressed an unqualified
opinion on those financial statements (prior to adjustment for a three-for-two
stock split described in Note 1) and stated that such 2001 financial statement
schedule, when considered in relation to the 2001 basic financial statements
taken as a whole presents fairly, in all material respects, the information set
forth therein in their report dated January 29, 2002.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of ICU Medical, Inc. and subsidiaries
as of December 31, 2003 and 2002, and the results of their operations and their
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule for 2003 and 2002, when considered in relation to
the basic 2003 and 2002 consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

As discussed above, the consolidated financial statements of ICU Medical, Inc.
for the year ended December 31, 2001 were audited by other auditors who have
ceased operations. As described in Note 1, these consolidated financial
statements have been adjusted to reflect a three-for-two stock split that was
effected on March 15, 2002, and have been revised to include certain disclosures
required by Statement of Financial Accounting Standards No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE, which disclosure provisions
were adopted by the Company on December 31, 2002. We audited the adjustments
described in Note 1 that were applied to revise the 2001 consolidated financial
statements. Our audit procedures with respect to the pro forma disclosures in
Note 1 pertaining to 2001 included agreeing the previously reported net income
and pro forma net income amounts to previously issued financial statements and
the adjustment to reported net income representing total stock-based employee
compensation expense determined under the fair value based method for all
awards, net of related tax effects, to the Company's underlying records obtained
from management. In our opinion, such adjustments and disclosures are
appropriate and such adjustments have been properly applied. However, we were
not engaged to audit, review or apply any procedures to the 2001 consolidated
financial statements of the Company other than with respect to such adjustments
and disclosures and, accordingly, we do not express an opinion or any other form
of assurance on the 2001 consolidated financial statements taken as a whole.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

Costa Mesa, California
March 10, 2004

30

The following report of Arthur Andersen LLP ("Andersen") is a copy of the
original report dated January 29, 2002, rendered on the 2001 consolidated
financial statements. The SEC has provided regulatory relief designed to allow
public companies to dispense with the requirements to file a reissued report and
consent of Andersen in certain circumstances. After reasonable efforts, we have
not been able to obtain a reissued report or consent from Andersen.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------

To the Board of Directors and Stockholders of ICU Medical, Inc.:

We have audited the accompanying consolidated balance sheets of ICU MEDICAL,
INC. (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ICU
Medical, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in Item
14(a)2 of this Form 10-K is presented for purposes of complying with the
Securities and Exchange Commissions rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
consolidated financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Orange County, California
January 29, 2002

31

ICU MEDICAL, INC. AND SUBSIDIARIES
----------------------------------

CONSOLIDATED BALANCE SHEETS
---------------------------

ASSETS
------

December 31,
----------------------------------
2003                2002
--------------      --------------

CURRENT ASSETS:
Cash and cash equivalents                           $   1,787,000       $   4,165,000
Liquid investments                                     71,350,000          84,300,000
--------------      --------------
Cash and liquid investments                      73,137,000          88,465,000
Accounts receivable, net of
allowance for doubtful accounts
of $742,000 in 2003 and $665,000 in 2002         24,943,000          16,633,000
Finance loans receivable - current portion              4,142,000                  --
Inventories                                             3,398,000           5,749,000
Prepaid income taxes                                    1,662,000                  --
Prepaid expenses and other current assets               1,927,000           1,652,000
Deferred income taxes - current portion                 2,008,000           1,710,000
--------------      --------------
Total current assets                         111,217,000         114,209,000
--------------      --------------
PROPERTY AND EQUIPMENT, at cost:
Land, building and building improvements                    16,887,000          15,197,000
Machinery and equipment                                     26,429,000          19,142,000
Furniture and fixtures                                       6,572,000           5,343,000
Molds                                                       11,480,000           9,534,000
Construction in process                                     10,247,000           9,742,000
--------------      --------------
71,615,000          58,958,000
Less--Accumulated depreciation                             (30,574,000)        (24,350,000)
--------------      --------------
41,041,000          34,608,000
--------------      --------------
FINANCE LOANS RECEIVABLE - non current portion                 4,765,000                  --
DEFERRED INCOME TAXES - non current portion                    2,680,000           4,313,000
INTANGIBLE ASSETS, net                                         4,166,000           3,352,000
OTHER ASSETS                                                     419,000             550,000
--------------      --------------
$ 164,288,000       $ 157,032,000
==============      ==============

The accompanying notes are an integral part of these consolidated financial statements.

32

ICU MEDICAL, INC. AND SUBSIDIARIES
----------------------------------

CONSOLIDATED BALANCE SHEETS
---------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

December 31,
----------------------------------
2003                2002
--------------      --------------

CURRENT LIABILITIES:
Accounts payable                                           $   3,051,000       $   5,046,000
Accrued liabilities                                            5,234,000           6,599,000
--------------      --------------
Total current liabilities                           8,285,000          11,645,000
--------------      --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Convertible preferred stock, $1.00 par value
Authorized--500,000 shares;
Issued and outstanding--none                                       --                  --
Common stock, $0.10 par value-
Authorized--80,000,000 shares;
Issued -- 14,158,612 and 14,087,026 shares in 2003          1,416,000           1,409,000
and 2002, respectively
Additional paid-in capital                                    63,535,000          63,284,000
Treasury stock, at cost -- 471,390 shares in 2003            (12,116,000)                 --
Retained earnings                                            102,991,000          80,694,000
Accumulated other comprehensive income                           177,000                  --
--------------      --------------
Total stockholders' equity                        156,003,000         145,387,000
--------------      --------------
$ 164,288,000       $ 157,032,000
==============      ==============

The accompanying notes are an integral part of these consolidated financial statements.

33

ICU MEDICAL, INC. AND SUBSIDIARIES
----------------------------------

CONSOLIDATED STATEMENTS OF INCOME
---------------------------------

For the years ended December 31,
-------------------------------------------------

2003              2002              2001
-------------     -------------     -------------

REVENUES:
Net sales                                $102,726,000      $ 84,218,000      $ 69,055,000
Other                                       4,628,000         3,589,000                --
-------------     -------------     -------------
TOTAL REVENUE                                 $107,354,000      $ 87,807,000      $ 69,055,000
COST OF GOODS SOLD                              48,444,000        36,464,000        28,932,000
-------------     -------------     -------------
Gross profit                            58,910,000        51,343,000        40,123,000
-------------     -------------     -------------

OPERATING EXPENSES:
Selling, general and administrative        23,029,000        19,871,000        16,816,000
Research and development                    1,757,000         1,472,000         1,188,000
-------------     -------------     -------------
Total operating expenses                24,786,000        21,343,000        18,004,000
-------------     -------------     -------------
Income from operations                  34,124,000        30,000,000        22,119,000

INVESTMENT INCOME                                1,123,000         1,432,000         1,988,000
-------------     -------------     -------------
Income before income taxes              35,247,000        31,432,000        24,107,000

PROVISION FOR INCOME TAXES                      12,950,000        11,750,000         8,720,000
-------------     -------------     -------------
NET INCOME                                    $ 22,297,000      $ 19,682,000      $ 15,387,000
=============     =============     =============

NET INCOME PER COMMON SHARE
Basic                                 $       1.62      $       1.43      $       1.20
Diluted                               $       1.48      $       1.28      $       1.06
=============     =============     =============
Weighted average number of shares
Basic                                   13,752,732        13,792,760        12,840,556
Diluted                                 15,050,437        15,352,419        14,454,087
=============     =============     =============

The accompanying notes are an integral part of these consolidated financial statements.

34

ICU MEDICAL, INC. AND SUBSIDIARIES
----------------------------------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
------------------------------------------------------------------------

Common Stock
----------------------
Accumulated
Number                Additional                    Other
of Shares                Paid-In      Treasury    Comprehensive   Retained  Comprehensive
Outstanding   Amount      Capital       Stock         Income       Earnings      Income        Total
----------- ---------- ------------ ------------- -------------- ------------ -----------  ------------

BALANCE, December 31, 2000   12,591,344  $  887,000 $41,702,000  $ (4,819,000) $          -- $ 45,610,000 $        --  $ 83,380,000

Exercise of stock 
options and
related income 
tax benefits,
and other                534,711          --   4,063,000     3,832,000             --       15,000                 7,910,000
Net income                       --          --          --            --             --   15,387,000  15,387,000    15,387,000
----------- ---------- ------------ ------------- ------------- ------------ ============ -------------

BALANCE, December 31, 2001   13,126,055     887,000  45,765,000      (987,000)            --   61,012,000               106,677,000

Exercise of stock 
options and
related income tax 
benefits, and other      962,193      79,000  18,023,000       987,000             --           --                19,089,000
Stock split                  (1,222)    443,000    (504,000)           --             --           --                   (61,000)
Net income                       --          --          --            --             --   19,682,000  19,682,000    19,682,000
----------- ---------- ------------ ------------- ------------- ------------ ============ -------------

BALANCE, December 31, 2002   14,087,026   1,409,000  63,284,000            --             --   80,694,000               145,387,000

Purchase of treasury 
stock                   (589,292)         --          --   (15,324,000)            --           --               (15,324,000)
Exercise of stock 
options and
related income tax 
benefits                 166,994       6,000      14,000     2,885,000             --           --                 2,905,000
Proceeds from employee 
stock purchase plan       22,493       1,000     237,000       323,000             --           --                   561,000

Comprehensive income
Net income                    --          --          --            --             --   22,297,000  22,297,000    22,297,000
Other comprehensive 
income, net of tax:
Foreign currency 
translation 
adjustment              --          --          --            --        177,000           --     177,000       177,000
-----------
Comprehensive income                                                                                  $22,474,000
----------- ---------- ------------ ------------- ------------- ------------ ============ -------------

BALANCE, December 31, 2003   13,687,221  $1,416,000 $63,535,000  $(12,116,000) $     177,000 $102,991,000              $156,003,000
=========== ========== ============ ============= ============= ============              =============

The accompanying notes are an integral part of these consolidated financial statements.

35

ICU MEDICAL, INC. AND SUBSIDIARIES
----------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------

For the years ended December 31,
---------------------------------------------------

2003               2002                2001
-------------      -------------      -------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                    $ 22,297,000       $ 19,682,000       $ 15,387,000
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation and amortization                               7,361,000          5,288,000          5,034,000
Deferred income taxes, non-current                          1,446,000            528,000            (74,000)
(Increase) decrease, net of acquisition, in:
Accounts receivable                                     (8,310,000)        (3,188,000)          (637,000)
Inventories                                              3,462,000         (2,869,000)          (159,000)
Prepaid expenses and other assets                       (1,649,000)          (831,000)          (208,000)
Increase (decrease), net of acquisition, in:
Accounts payable                                          (774,000)         2,283,000            714,000
Accrued liabilities                                     (1,548,000)        (3,176,000)           471,000
Deferred income taxes, current                            (298,000)           188,000             37,000
-------------      -------------      -------------
21,987,000         17,905,000         20,565,000
Tax benefits from exercise of stock options                842,000         10,192,000          3,764,000
-------------      -------------      -------------
Net cash provided by operating activities                  22,829,000         28,097,000         24,329,000
-------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                       (10,668,000)       (11,894,000)        (6,234,000)
Cash paid for acquisitions, net of cash acquired           (5,882,000)        (9,484,000)                --
Advances under finance loans, net                          (8,907,000)                --                 --
Net change in liquid investments                           12,950,000        (15,174,000)       (20,285,000)
-------------      -------------      -------------
Net cash (used in) investing activities                   (12,507,000)       (36,552,000)       (26,519,000)
-------------      -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and other           2,063,000          8,719,000          4,146,000
Proceeds from employee stock purchase plan                    561,000                 --                 --
Purchase of treasury stock                                (15,324,000)                --                 --
-------------      -------------      -------------
Net cash provided by (used in) financing activities       (12,700,000)         8,719,000          4,146,000
-------------      -------------      -------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                           (2,378,000)           264,000          1,956,000

CASH AND CASH EQUIVALENTS, beginning of year                     4,165,000          3,901,000          1,945,000
-------------      -------------      -------------
CASH AND CASH EQUIVALENTS, end of year                        $  1,787,000       $  4,165,000       $  3,901,000
=============      =============      =============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for income taxes            $ 14,065,000       $  1,145,000       $  5,685,000
=============      =============      =============

The accompanying notes are an integral part of these consolidated financial statements.

36

ICU MEDICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003, 2002 AND 2001

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.       General
-------

The accompanying consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America.

ICU Medical, Inc. (the "Company" - a Delaware corporation) operates
principally in one business segment engaged in the development, manufacturing
and marketing of disposable medical devices designed to protect healthcare
workers and patients from the spread of infectious diseases. The Company's
devices are sold principally to distributors and medical product manufacturers
throughout the United States and a small portion internationally. All
subsidiaries are wholly owned and are included in the consolidated financial
statements. All intercompany balances and transactions have been eliminated.

All share and per share data for periods prior to 2002 have been
adjusted for a three-for-two stock split effected March 15, 2002 in the form of
a stock dividend.

b.       Cash Equivalents 
---------------- 

Cash equivalents include certificates of deposit and money market funds
with initial maturities of three months or less.

c.       Inventories
-----------

Inventories are stated at the lower of cost or market with cost
determined using the first-in, first-out method. Inventory costs include
material, labor and overhead related to the manufacturing of medical devices.

Inventories consist of the following at December 31:

2003                 2002
-----------         -----------
Raw materials                           $2,699,000          $3,302,000
Work in process                            340,000             534,000
Finished goods                             359,000           1,913,000
-----------         -----------
$3,398,000          $5,749,000
===========         ===========

37

d.       Property and Equipment
----------------------

The Company uses the straight-line method for depreciating property and
equipment over their estimated useful lives. Estimated useful lives are:

Buildings                                       15 - 30 years
Building improvements                           15 years
Machinery and equipment                         2 - 10 years
Furniture, fixtures and molds                   2 - 5 years

The Company follows the policy of capitalizing expenditures that
materially increase the life of the related assets; maintenance and repairs are
expensed as incurred. The costs and related accumulated depreciation applicable
to property and equipment sold or retired are removed from the accounts and any
gain or loss is reflected in the statements of income at the time of disposal.

e.       Intangible Assets
-----------------

At December 31, 2002 intangible assets consisted primarily of patents
and licenses, which had a net book value of $3,352,000, net of accumulated
amortization of $803,000, and they were being amortized using the straight-line
method over 10 years, which was the estimated useful life of the patent or
license.

Additions to intangible assets in 2003 were $1,422,000, principally
from additional cost related to the acquisition of Bio-Plexus in October 2002,
the acquisition of the I.V. systems company in Italy and the costs of obtaining
patents.

Intangible assets were as follows:

December 31, 2003
--------------------------------------------
Amortization                      Accumulated
Life in Years        Cost         Amortization          Net
-------------     -----------      -----------      -----------     

Patents and licenses              10           $2,923,000       $1,020,000       $1,903,000
Royalty agreements                 6            1,630,000          308,000        1,322,000
Non compete agreement              5              818,000           36,000          782,000
Other                           5 to 10           206,000           47,000          159,000
-----------      -----------      -----------
Total                                          $5,577,000       $1,411,000       $4,166,000
===========      ===========      ===========

December 31, 2002
--------------------------------------------
Amortization                      Accumulated
Life in Years        Cost         Amortization         Net
-------------     -----------      -----------      -----------     
Patents and licenses              10           $2,452,000         $755,000       $1,697,000
Royalty agreements                 6            1,497,000           42,000        1,455,000
Other                           5 to 10           206,000            6,000          200,000
-----------      -----------      -----------
Total                                          $4,155,000         $803,000       $3,352,000
===========      ===========      ===========

Amortization expense in 2003 and 2002 was $717,000 and $181,000,
respectively. Estimated annual amortization for each of the next five years is
approximately $700,000.

38

f.       Research and Development
------------------------

The Company expenses research and development costs as incurred.

g.       Net Income Per Share
--------------------

"Basic" earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding. "Diluted" earnings per
share is computed by dividing net income by the weighted average number of
common shares outstanding plus dilutive securities. Dilutive securities are
outstanding common stock options (excluding stock options with an exercise price
in excess of average market value), less the number of shares that could have
been purchased with the proceeds from the exercise of the options, using the
treasury stock method.

h.       Investment Securities
---------------------

The Company accounts for investments in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." That statement requires that
securities classified as available for sale be carried at their fair values and
changes in the securities' fair values be recorded, net of income tax effect, as
a separate component of stockholders' equity. Debt securities that the Company
would intend to hold to maturity would be carried at amortized cost reduced only
for other than temporary impairment in values; the Company has no debt
securities that it intends to hold to maturity.

i.       Income Taxes
------------

The Company accounts for income taxes in accordance with SFAS 109
"Accounting for Income Taxes" using the asset and liability approach. Under this
approach, deferred taxes are determined based on the differences between the
financial statements and the tax bases using rates as enacted in tax laws. A
valuation allowance is established if it is "more likely than not" that all or a
portion of the deferred tax assets will not be realized.

j.       Revenue Recognition
-------------------

Most of the Company's product sales are FOB shipping point and
ownership of the product transfers to the customer on shipment by the Company.
Certain other product sales are FOB destination and ownership of the product
transfers to the customer at destination. The Company records sales and related
costs when ownership of the product transfers to the customer. Most of the
Company's customers are distributors or medical product manufacturers, although
there are some sales to end-users. The Company's only post-sale obligations are
warranty and certain rebates. Customers, with certain exceptions, do not retain
any right of return and there is no price protection with respect to unsold
product; returns from customers with return rights have not been significant.

The Company warrants products against defects and has a policy
permitting the return of defective products. The Company provides a reserve for
warranty returns as an expense; total warranty expense has been insignificant.
The Company accrues rebates based on contractual commitments and on historical
experience as a reduction in revenue at the time of sale; amounts have not been
significant.

Other revenue consists of license, royalty and revenue sharing
payments. Payments expected to be received are estimated and recorded in the
period earned, and adjusted to actual amounts when reports are received from
payers; if there is insufficient data to make such estimates, payments are not
recorded until reported by the payers.

k.       Post-retirement and Post-employment Benefits
--------------------------------------------

The Company does not provide post-retirement or post-employment
benefits to employees. The Company maintains a Section 401(k) retirement plan
for employees. Company contributions to that plan in 2003 and 2002 were
approximately $131,000 and $104,000, respectively.

39

l.       Stock Options
-------------

The Company accounts for its stock options granted to employees and
directors under Accounting Principles Board ("APB") Opinion No. 25 "Accounting
for Stock Issued to Employees" and related interpretations as permitted by SFAS
No. 123 "Accounting for Stock-Based Compensation," and does not recognize
compensation expense because the exercise price of the options equals the fair
market value of the underlying shares at the date of grant. Under SFAS No. 123,
the Company is required to present certain pro forma earnings information
determined as if employee stock options were accounted for under the fair value
method of that Statement. The fair value for options granted in 2003, 2002, and
2001 was estimated as of the date of grant using a Black-Scholes option pricing
model. The Black-Scholes option valuation model was developed for use in
estimating fair value of fully transferable traded options with no vesting
restrictions, and, similar to other option valuation models, requires use of
highly subjective assumptions, including expected stock price volatility. The
characteristics of the Company's stock options differ substantially from those
of traded stock options, and changes in the subjective assumptions can
materially affect estimated fair values; therefore, in Management's opinion,
existing option valuation models do not necessarily provide a reliable single
measure of the fair value of the Company's stock options. The following
information is provided pursuant to SFAS No. 123, as amended. The pro forma
adjustment reflects stock-based compensation cost calculated under the fair
value method, net of related tax effects, calculated pursuant to SFAS No. 123.

2003              2002             2001
------------      ------------     ------------

Net Income, as reported..........          $22,297,000       $19,682,000      $15,387,000
Pro forma adjustment.............           $5,131,000        $6,271,000       $3,970,000
------------      ------------     ------------
Net Income, pro forma............          $17,166,000       $13,411,000      $11,417,000
============      ============     ============

Net Income per share.............
Basic, as reported                 $1.62             $1.43            $1.20
Diluted, as reported               $1.48             $1.28            $1.06

Basic, pro forma                   $1.28             $1.00            $0.92
Diluted, pro forma                 $1.16             $0.89            $0.81

m.       Impairment or Disposal of Long-Lived Assets
-------------------------------------------

The Company accounts for any impairment or disposal of long-lived
assets in accordance with SFAS No. 144, "Accounting for Impairment or Disposal
of Long-Lived Assets." This SFAS, which requires a periodic review of long-lived
assets for indicators of impairment, was first effective for the year ended
December 31, 2002, and had no effect on the Company's consolidated financial
statements in 2003 and 2002.

n.       Accounting Estimates
--------------------

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2.       ACQUISITION

On October 31, 2002, the Company acquired for cash 84% of the common
stock of Bio-Plexus, Inc. ("Bio-Plexus") and notes payable by Bio-Plexus of
$2,500,000, and in a series of transactions through November 13, 2002 acquired
the remaining minority interest for cash and brought its ownership to 100%.
Bio-Plexus is engaged in the design, development, manufacture, sale and
licensing of medical products designed to prevent infection of healthcare
workers through accidental needlesticks. Bio-Plexus's principal products are
blood collection needles, under the Punctur-Guard name, that are designed to
eliminate exposure to sharp, contaminated needles. These products are an
extension of the needlesafe products the Company already sells.

40

The acquisition was accounted for as a purchase, and Bio-Plexus is
included in the Company's consolidated financial statements since October 31,
2002. The acquisition cost, net of cash acquired, was $9,484,000, consisting of
the following:

Cash paid for stock and notes                         $10,144,000
Transaction fees and expenses                             708,000
Severance payment and other costs                         741,000
Less:  Cash acquired                                   (2,109,000)
------------
Total acquisition cost                                $ 9,484,000
============

The acquisition cost was allocated to the net tangible and intangible
assets acquired, based on estimated fair values at date of purchase, as follows:

Accounts receivable                                   $   383,000
Inventory                                               1,286,000
Other current assets                                      382,000
Property and equipment                                  2,711,000
Patents and royalty rights, and other                   3,057,000
Deferred taxes                                          3,538,000
Current liabilities                                    (1,873,000)
------------
Total                                                 $ 9,484,000
============

Included in current liabilities at December 31, 2002 was a mortgage
liability of $1,220,000 paid on January 2, 2003.

Property and equipment valuation is based on the estimated value of the
land, building and improvements if sold ($1,605,000), and the depreciated
replacement cost of automated assembly machines, molds and other equipment that
the Company expects to use in the future ($1,106,000). Depreciable lives are
thirty years for the building and improvements and two to three years for
equipment. Patents and royalty rights valuations are based on the present value
of the incremental cash flows which the Company estimates it will realize over
the estimated duration of the patents ($1,354,000) and royalty agreements
($1,497,000). Other intangibles are customer contracts and trademarks.
Amortization lives are ten years for patents and six years for royalty
agreements; the overall weighted average amortization period is 7.2 years. All
depreciation and amortization is provided on the straight-line method. The
allocations reflect a reduction for a "bargain purchase" credit for the excess
of the estimated values over the acquisition cost.

Deferred taxes arise principally from certain expenses of Bio-Plexus
incurred before the acquisition which are capitalized for tax purposes but
expensed for financial reporting purposes, the future benefit of a portion of
Bio-Plexus's net operating loss carryforwards, and the tax basis in excess of
the allocated acquisition cost of tangible assets acquired, partially offset by
the excess of the acquisition cost of intangible assets over their tax basis.

Prior to October 31, 2003, the Company identified additional
acquisition costs of $400,000 and these were allocated to property and equipment
and intangible assets. At December 31, 2003, all but approximately $300,000 of
costs accrued at the time of the acquisition or later have been incurred. If
those amounts are ultimately not incurred, the acquisition cost will be adjusted
and intangible assets reduced. If any additional costs of the acquisition are
identified after October 31, 2003, they will be recorded as an expense in the
income statement.

41

Unaudited pro forma combined results of operations of the Company and
Bio-Plexus for the past two years, assuming the acquisition occurred on January
1, 2001, are:

2002                  2001   
----------------       ------------
Net revenues                        $94,534,000            $75,426,000
Net income                           20,002,000             14,387,000
Net income per share - diluted            $1.30                  $1.00

Pro forma adjustments have been made to eliminate operating and
financing costs not being incurred by Bio-Plexus since the acquisition, to
adjust for differences in depreciation and amortization, and to account for the
Company's cost of capital used for the acquisition, all net of income tax
effects. This information does not reflect the actual results that would have
occurred nor is it necessarily indicative of the future operations of the
combined enterprise.

In June 2003 we acquired the assets of two affiliated manufacturers of
I.V. systems located in northern Italy for a cash payment of approximately $4.6
million. Principal assets acquired are assembly facilities and related equipment
of $2,443,000 and inventories of $1,110,000 and an agreement not to compete
valued at approximately $818,000. The acquired assets and related operating
results are included in our consolidated financial statements since June 30,
2003. Their effect on our financial statements is immaterial.

3.       LIQUID INVESTMENTS

The Company's liquid investments, all of which are marketable
securities and are considered "available for sale," consist principally of
corporate preferred stocks and federal-tax-exempt state and municipal government
debt securities that reset dividend or interest rates at auction, principally
from between seven and forty-nine day intervals. They are carried at cost, which
closely approximates both fair value and par value throughout the period they
are held. They are readily saleable at par at auction dates, and can normally be
sold at par between auction dates. All securities are "investment grade' and
there have been no gains or losses on their disposal. Balances consist of the
following at December 31:

2003             2002
------------     ------------

Corporate preferred stocks              $19,100,000      $31,500,000
Federal tax-exempt debt securities       52,250,000       52,800,000
------------     ------------
$71,350,000      $84,300,000
============     ============

The scheduled maturities of the debt securities are: 2005-2008
$1,200,000; 2009-2013 $2,150,000; and after 2013 $48,900,000.

Investment income, including interest on certificates of deposit, money
market funds and finance loans, consisted of the following for each year:

2003             2002            2001
-----------     -----------     ----------- 
Corporate dividends      $  280,000      $  432,000      $  527,000 
Tax-exempt interest         605,000         874,000       1,330,000 
Other interest              238,000         126,000         131,000 
-----------     -----------     ----------- 
$1,123,000      $1,432,000      $1,988,000 
==========      ==========      ========== 

42

4.       ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31:

2003            2002
-----------     ----------- 
Accrued incentive compensation      $1,555,000      $1,978,000 
Taxes payable                              -0-       1,513,000 
Other accruals                       3,679,000       3,108,000 
-----------     ----------- 
$5,234,000      $6,599,000 
===========     ===========

5.       COMMON STOCK AND COMMON STOCK OPTIONS GRANTED

In 1993, the Company adopted the 1993 Stock Incentive Plan (the "1993
Plan"). In 1996, the 1993 Plan was amended to increase the number of shares
reserved for issuance to employees from 1,912,500 to 4,912,500, and in 1999 it
was again amended to increase the number of shares reserved for issuance to
employees to 7,162,500. No options may be granted under the 1993 Plan after
January 2005. Options granted under the 1993 Plan expire eleven years from
issuance and all options issued through early 2000 are time-accelerated options
which vest upon the earlier of the Company attaining specific operating
performance levels or ten years from the date of grant. Almost all options
issued after early 2000 vest in equal amounts on the first, second and third
anniversary of their issuance ("time vested"). The 1993 Plan includes conditions
whereby options not vested are canceled if employment is terminated. All options
have been granted at the fair market value of the Company's stock on the date of
grant. Upon exercise of options, the Company is generally entitled to a tax
deduction for an amount equal to the excess over the exercise price of the fair
market value of the shares at the date of exercise.

In June 2003, stockholders approved the 2003 Stock Option Plan (the
"2003 Plan"). The terms of the 2003 Plan are similar to those of the 1993 Plan,
except that options expire no more than ten years from issuance, and the Company
may grant "incentive stock options," as defined in Section 422 of the Internal
Revenue Code of 1986, as amended; the Company is generally not entitled to any
tax deduction on an incentive stock option.

In May 2002, stockholders approved the 2001 Directors' Stock Option
Plan (the "Directors' Plan"), which had been adopted in November 2001. There are
750,000 shares reserved for issuance under the Directors' Plan. Options to
purchase 1,875 shares of Common Stock are granted quarterly to non-employee
Directors (of which there are currently six) at fair market value of the Common
Stock at the date of grant. The options become exercisable six months after the
grant date and expire eleven years after the grant date. Options not vested
terminate if directorship is terminated. Options to purchase 101,250 shares of
Common Stock were issued upon stockholder approval of the Directors' Plan; they
included 11,250 granted subject to stockholder approval in November 2001 for
which a compensation charge of $117,000 was recorded for the increase in the
fair market value of the Common Stock from the grant date to the date of
stockholder approval. An additional 22,500 options were granted later in 2002
and 45,000 in 2003.

Upon approval of the Directors' Plan by the stockholders, the existing
Directors' Stock Award Plan, under which each non-employee Director was awarded
1,500 shares of Common Stock annually, was terminated and the award payable on
the date of the 2002 annual meeting was not made.

In 2002, the Company adopted the 2002 Employee Stock Purchase Plan (the
"ESPP") under which certain employees may purchase up to $25,000 annually of
Common Stock at 85% of its fair market value at the beginning or the end of a
six-month offering period, whichever is lower. There are 750,000 shares of
Common Stock reserved for issuance under the ESPP, which number is subject to
annual increase; the Board of Directors determined that the annual increase due
January 1, 2003 and 2004 would not take place. The ESPP is intended to
constitute an "employee stock purchase plan" within the meaning of Section 423
of the Internal Revenue Code. Employees purchased 22,493 shares of Common Stock
under the ESPP Plan in 2003 and are enrolled to purchase approximately 11,400
shares of Common Stock in the offering period ending February 13, 2004.

43

A summary of the Company's stock option activity is as follows:

Exercise Price
---------------------------------------------------
Weighted
Shares                       Range                         Average
----------       --------------------------------         ----------

Outstanding at December 31, 2000               4,486,581        $    5.08   -         $   18.97          $    9.03

Granted                                     548,565            17.00   -             29.17              23.23
Exercised                                  (526,960)            5.08   -             18.00               7.51
Forfeited                                  (119,588)            7.29   -             25.42               9.09
----------       ----------            ----------         ----------

Outstanding at December 31, 2001               4,388,598             5.08   -             29.17              10.95

Granted                                     707,150            26.51   -             40.62              33.83
Exercised                                  (962,193)            5.33   -             32.48               9.13
Forfeited                                   (20,754)           12.17   -             29.89              19.72
----------       ----------            ----------         ----------

Outstanding at December 31, 2002               4,112,801             5.08   -             40.62              13.62

Granted                                     457,250            24.83   -             37.29              31.25
Exercised                                  (166,994)            5.33   -             33.07              12.36
Forfeited                                   (47,127)           14.81   -             39.30              29.82
==========       ==========            ==========         ==========

Outstanding at December 31, 2003               4,355,930        $    5.08             $   40.62          $   16.88
==========       ==========            ==========         ==========

Exercisable at December 31:

2001                                        3,200,997        $    5.08   -         $   18.98          $    8.81  
2002                                        2,869,651             5.08   -             39.25              11.09  
2003                                        3,368,078             5.08   -             40.62              13.06  

Available for grant at December 31, 2003

1993 Plan                                   207,507
Directors' Plan                             581,250
2003 Plan                                 1,500,000
----------
2,288,757
==========

There are 4,355,930 options outstanding at December 31, 2003 of which
4,187,180 were issued under the 1993 Plan and 168,750 were issued under the
Directors' Plan. 3,368,078 of the outstanding options are vested. Of the 987,852
unvested options, 120,000 options are time accelerated options issued from 1999
to 2002 and the remaining are time vested options granted from 2000 to 2002 with
vesting dates from 2003 to 2005. All options expire eleven years after issuance.
Options outstanding at December 31, 2003 were issued as follows:

44

Exercise Price
-----------------------------------
Year of                                                  Weighted
Grant           Shares                Range               Average
-------       ---------       -------------------        --------

1994             4,750       $5.54   -     $5.54          $5.54
1996           352,763        5.33   -     10.25          10.25
1997           587,115        5.08   -      7.92           6.32
1998         1,151,477        8.04   -     10.63           8.18
1999           237,720        8.50   -     14.29          10.75
2000           448,110        9.58   -     18.98          15.22
2001           476,137       17.00   -     29.16          23.68
2002           653,359       26.51   -     40.62          33.94
2003           444,500       24.83   -     37.29          31.33

All options granted before 1999 and in 2000 are vested. Of the options
granted in 1999, 2001, 2002 and 2003, the number vested and average exercise
prices are 220,220 at $10.72; 354,139 at $32.60; 167,554 at $ 27.21; and 23,500
at $30.35, respectively.

Dilutive stock options account for the difference in the number of
shares used to calculate basic and diluted net income per share and were
1,297,705 in 2003, 1,559,659 in 2002 and 1,613,531 in 2001. The average number
of options that are anti-dilutive because their average exercise price exceeded
the average market price of the Company's common stock approximated 575,000,
130,000 and 30,000 in 2003, 2002, 2001, respectively. At December 31, 2003,
3,992,530 outstanding options had exercise prices less than the market price of
the Company's common stock and 363,400 had exercise prices greater than the
market price of the Company's common stock.

In 2000, two of the Company's wholly owned subsidiaries, Budget Medical
Products, Inc. and SetFinder, Inc., adopted stock option plans. In 2002,
non-Director employees of the subsidiaries exchanged the options to acquire
stock of the subsidiaries, which options were estimated to have an exercise
price no less than the fair value of the subsidiaries' stock, for options to buy
the Company's Common Stock at fair market value on the exchange date. In January
2003, the remaining option holders, consisting solely of the Company's
Directors, agreed to surrender their options for no consideration, and the stock
option plans of the subsidiaries were terminated.

The following information relates to the pro forma earnings information
presented pursuant to SFAS No. 123, as amended. It pertains to options under the
Company's 1993 Plan, the Directors' Plan in 2003 and 2002, and the ESPP in 2003
and 2002. The following weighted-average assumptions for 2003, 2002, and 2001
were used: risk-free interest rate of 2.7, 4.1, and 4.9 percent, respectively;
expected option life of 4.6, 4.9, and 6.2 years, respectively; expected
volatility of 51, 52, and 50 percent, respectively; and, no dividends. The
weighted average fair value of stock options granted in 2003, 2002, and 2001 was
$13.58 per share, $16.80 per share, and $12.49 per share, respectively. The
total estimated fair value is amortized to expense over the vesting period. The
weighted average number of common shares used in calculating pro forma net
income per share is as follows: 2003 basic 13,378,000, diluted 14,720,000; 2002
basic 13,452,000, diluted 15,012,000; and 2001 basic 12,430,000, diluted
14,043,000.

The fair value of the options of the subsidiaries was estimated using
the same methodology as for grants by the Company; substantially all options
were granted in 2000, when assumptions were a 6.8 percent risk free interest
rate, option life of 6.9 years, and expected volatility of 53 percent.
Volatility was estimated using the Company's volatility since there is no market
for the subsidiaries' shares. The effect of the pro forma amortization of the
value of the subsidiaries' options on pro forma income was a net reduction of
approximately $75,000 in 2002, and $400,000 in 2001.

45

6.       STOCKHOLDER RIGHTS PLAN

In July 1997, the Board of Directors adopted a Stockholder Rights Plan.
The Company distributed a Preferred Share Purchase Right (a "Right") for each
share of the Company's Common Stock outstanding. The Rights generally will not
be exercisable until a person or group has acquired 15% or more of the Company's
Common Stock in a transaction that is not approved in advance by the Board of
Directors or ten days after the commencement of a tender offer which could
result in a person or group owning 15 percent or more of the Common Stock.

On exercise, each Right entitles the holder to buy one share of Common
Stock at an exercise price of $115, as amended in April 2002. In the event a
third party or group were to acquire 15 percent or more of the Company's
outstanding Common Stock without the prior approval of the Board of Directors,
each Right will entitle the holder, other than the acquirer, to buy Common Stock
with a market value of twice the exercise price, for the Right's then current
exercise price. In addition, if the Company were to be acquired in a merger,
shareholders with unexercised Rights could purchase common stock of the acquirer
with a value of twice the exercise price of the Rights.

The Company's Board of Directors may redeem the Rights for a nominal
amount at any time prior to the tenth business day following an event that
causes the Rights to become exercisable. The Rights will expire unless
previously redeemed or exercised on August 7, 2007.

7.       INCOME TAXES

The provision for income taxes for the years ended December 31, 2003,
2002 and 2001 is as follows:

2003              2001              2000
-------------     -------------      ------------- 
Current:                                                         
Federal      $ 10,762,000      $  8,591,000       $  7,165,000 
State           1,040,000         2,443,000          1,592,000 
-------------     -------------      ------------- 
11,802,000        11,034,000          8,757,000 
-------------     -------------      ------------- 
Deferred:                                                        
Federal           838,000           759,000            (85,000)
State             310,000           (43,000)            48,000 
-------------     -------------      ------------- 
1,148,000           716,000            (37,000)
-------------     -------------      ------------- 
$ 12,950,000      $ 11,750,000       $  8,720,000 
=============     =============      ============= 

Current income taxes payable were reduced from the amounts in the above
table by $842,000, $10,192,000 and $3,764,000 in 2003, 2002 and 2001,
respectively, equal to the tax benefit that the Company receives upon exercise
of stock options by employees and directors. That benefit is allocated to
stockholders' equity.

46

A reconciliation of the provision for income taxes at the statutory
rate to the Company's effective rate is as follows:

2003                         2002                         2001
--------------------------     --------------------------     --------------------------

Amount        Percent         Amount         Percent        Amount          Percent
------        -------         ------         -------        ------          -------

Federal tax at the expected
statutory rate                 $ 12,336,000         35.0%     $ 10,687,000         34.0%     $  8,196,000         34.0%
State income tax, net of
federal benefit                     994,000          2.8         1,562,000          5.0         1,347,000          5.7
Tax-exempt interest and
dividends                          (284,000)        (0.8)         (400,000)        (1.3)         (553,000)        (2.4)
Tax credits                           (96,000)        (0.3)          (99,000)        (0.3)         (270,000)        (1.1)
-------------      -------     -------------      -------     -------------      -------

Provision                        $ 12,950,000         36.7%     $ 11,750,000         37.4%     $  8,720,000         36.2%
=============      =======     =============      =======     =============      =======

The components of the Company's deferred income tax provision for the
years ended December 31, 2003, 2002, and 2001 are as follows:

2003              2002               2001
------------      ------------      ------------

Allowance for doubtful accounts      $   (33,000)      $   (31,000)      $   (24,000)
Inventory reserves                       101,000          (114,000)          (32,000)
Accruals                                 171,000           167,000           363,000
State income taxes                      (508,000)          507,000          (270,000)
Acquired future tax deductions           359,000           585,000                --
Depreciation                           1,058,000          (398,000)          (74,000)
------------      ------------      ------------
$ 1,148,000       $   716,000       $   (37,000)
============      ============      ============

The components of the Company's deferred income tax benefit are as
follows:

2003              2002  
------------      ------------
Current deferred tax benefit:
Allowance for doubtful accounts               $   317,000       $   284,000
Inventory reserves                                276,000           377,000
Accruals                                        1,044,000         1,215,000
State income taxes                                371,000          (166,000)
------------      ------------
$ 2,008,000       $ 1,710,000
============      ============
Non-current deferred tax benefit:
Depreciation                                  $    61,000       $ 1,231,000
Acquired future tax deductions                  2,723,000         3,082,000
Foreign currency translation adjustments         (104,000)               --
------------      ------------
$ 2,680,000       $ 4,313,000
============      ============

47

Acquired future tax deductions are the benefits of future tax
deductions in the Company's consolidated income tax returns originating in
Bio-Plexus before its acquisition by the Company. They consist of: (a) the net
benefit of items expensed for financial statement purposes but capitalized and
amortized for tax purposes of $1,877,000 at acquisition date, less $284,000
realized since acquisition; most of the balance of $1,593,000 will be realized
in approximately equal amounts over the next nine years; (b) the benefit of a
portion of Bio-Plexus's net operating loss ("NOL") carryforward of $1,790,000,
less $121,000 realized since acquisition, which will be realized in
approximately equal amounts over the next nineteen years, (c) reduced by the tax
effect of non-amortizable basis differences of $539,000.

At October 31, 2002, Bio-Plexus had federal NOL carryforwards of
approximately $86 million. Under Section 382 of the Internal Revenue Code,
certain ownership changes limit utilization of the NOL carryforwards, and the
amount recorded is the net federal benefit. Bio-Plexus also has approximately
$33 million of Connecticut State NOL carryforwards expiring through 2007.
Realization of any of these is unlikely, and the Company has not ascribed any
value to them.

The accounting for the benefits of the acquired future tax deductions
as described above will not have any direct impact on net income in the future.
However, if any benefits are realized in excess of those recorded, they will be
allocated to reduce non-current intangible assets related to the acquisition
(patent and royalty rights, and other) until those amounts are reduced to zero,
with any excess then recognized as a reduction in tax expense.

Foreign currency translation adjustments, and related tax effects, are
an element of "other comprehensive income" and are not included in net income.

8.       PRODUCTS, MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISKS

All of the Company's products are disposable medical devices. The
Company's principal product is its CLAVE needleless I.V. connection system which
accounted for $62,864,000 of consolidated net sales in 2003, $58,471,000 in
2002, and $51,130,000 in 2001. Custom I.V. systems, many of which incorporate
the CLAVE connector, accounted for $22,179,000 of consolidated net revenues in
2003, $15,205,000 in 2002 and $9,263,000 in 2001. Each of the Company's other
products account for less than 8% of net revenues.

The Company sells products, which are sold on credit terms, principally
throughout the United States to medical product manufacturers, independent
medical supply distributors, and in selected cases to hospitals and homecare
providers. The manufacturers and distributors, in turn, sell the Company's
products to healthcare providers. For the years ended December 31, 2003, 2002
and 2001, the Company had sales of 10 percent or greater to two manufacturers as
follows:

2003         2002         2001
----         ----         ----
Manufacturer A           67%          57%          53%
Manufacturer B            1%          11%          19%

Export sales accounted for 5%, 8% and 8% of consolidated net revenue in
2003, 2002, and 2001, respectively.

Approximately $13,933,000 of the Company's long-lived assets,
principally property and equipment, are located outside the United States:
approximately $10,406,000 in Mexico and approximately $3,527,000 in Italy.

9.       FINANCE LOANS RECEIVABLE

Finance loans receivable are commercial loans by ICU Finance, Inc., a
wholly-owned consolidated subsidiary. We plan to hold the loans to maturity or
payoff. They are carried at their outstanding principal amount, and will be
reduced for an allowance for credit losses and charge offs if any such
reductions are determined to be necessary in the future. Interest is accrued as
earned based on the stated interest rate and amounts outstanding. Loan fees and
costs have not been material. Scheduled maturities are: 2004 $4,142,000; 2005
$1,336,000; 2006 $1,306,000; 2007 $1,289,000 and 2008 $834,000. Weighted average
maturity (principal and interest) at December 31, 2003 is 2.2 years and the
weighted average interest rate is 5.5%. In October 2003, we decided to
discontinue new lending activities; we will honor existing lending commitments;
unfunded commitments were approximately $4.0 million at December 31, 2003.

48

10.      COMMITMENTS AND CONTINGENCIES

The Company is from time to time involved in various legal proceedings,
most of which are routine litigation, in the normal course of business. In the
opinion of management, the resolution of the legal proceedings in which the
Company is involved will not have a material adverse impact on the Company's
financial position or results of operations.

In the normal course of business, we have agreed to indemnify officers
and directors of the Company to the maximum extent permitted under Delaware law
and to indemnify customers as to certain intellectual property matters related
to sales of our products. There is no maximum limit on the indemnification that
may be required under these agreements. We have never incurred, nor do we expect
to incur, any liability for indemnification. Except for indemnification
agreements, we do not have any "off balance sheet arrangements".

11.      QUARTERLY FINANCIAL DATA -- UNAUDITED -- (DOLLARS IN THOUSANDS, EXCEPT 
PER SHARE DATA)

Quarter Ended
---------------------------------------------------------------
March 31           June 30           Sept. 30           Dec. 31
--------           -------           --------           -------

2003
----
Total Revenue                       $30,776           $21,283            $25,524           $29,771
Gross Profit                         17,732            12,135             12,278            16,765
Net Income                            7,070            3, 899              4,125             7,203
Net Income Per Share:
Basic                            $0.50             $0.28              $0.31             $0.54
Diluted                          $0.46             $0.26              $0.28             $0.48

2002
----
Total Revenue                       $20,905           $22,668            $20,105           $24,129
Gross Profit                         12,349            13,336             11,564            14,094
Net Income                            4,523             4,998              4,276             5,885
Net Income Per Share:
Basic                            $0.34             $0.36              $0.31             $0.42
Diluted                          $0.30             $0.32              $0.28             $0.38

49

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer have
concluded, based on their evaluation of our disclosure controls and procedures
(as defined in Regulations 13a-14(c) and 15a-14(c) under the Securities Exchange
Act of 1934) as of the end of the period covered by this Report, that our
disclosure controls and procedures are effective to ensure that the information
we are required to disclose in the reports that we file or submit under the
Exchange Act is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure and that such information
is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities Exchange Commission. There
were no significant changes in our internal controls or in other factors that
could significantly affect our internal controls subsequent to the date of the
principal executive officer's and principal financial officer's evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.

The information about Registrant's directors and disclosure of Form 3,
4 or 5 delinquent filers called for by Item 10, Part III of Form 10-K is set
forth in Registrant's definitive Proxy Statement filed or to be filed pursuant
to Regulation 14A within 120 days of Registrant's fiscal year ended December 31,
2003 and such information is incorporated herein by reference. Pursuant to
Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation
S-K, information about Registrant's executive officers called for by Item 10,
Part III of Form 10-K is set forth in Part I of this Report in a separate item
captioned "Executive Officers of Registrant."

ITEMS 11 THOUGH 14.

The information called for by Part III of Form 10-K (Item 11 -
Executive Compensation, Item 12 - Security Ownership of Certain Beneficial
Owners and Management, Item 13 - Certain Relationships and Related Transactions
and Item 14 - Principal Accountant Fees and Services) is set forth in
Registrant's definitive Proxy Statement filed or to be filed pursuant to
Regulation 14A within 120 days of Registrant's fiscal year ended December 31,
2003, and such information is incorporated herein by this reference.

50

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K.

(a) The following documents are filed as part of this Report:

1.  Financial Statements
FORM 10-K
The financial statements listed below are set forth in Item 8 of this Annual Report.                  PAGE NO.
-----------

Independent Auditors' Report.................................................................          30
Report of Independent Public Accountants.....................................................          31
Consolidated Balance Sheets at December 31, 2003 and 2002....................................          32-33
Consolidated Statements of Income for the Years Ended December 31, 2003, 2002, and 2001 .....          34
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2003, 2002, and 2001.........................................................          35
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001..          36
Notes to Consolidated Financial Statements...................................................          37-49

2.   Financial Statement Schedules

The Financial Statement Schedules required to be filed as a part of
this Report are:

Schedule II - Valuation and Qualifying Accounts.............................................          56

Schedules other than those listed above are omitted since they are not
applicable, not required or the information required to be set forth therein is
included in Consolidated Financial Statements or Notes thereto included in this
Report.

3.  Exhibits

Exhibits required to be filed as part of this report are:

EXHIBIT
NUMBER                              DESCRIPTION
------                              -----------

3.1      Registrant's Certificate of Incorporation, as amended.(1)

3.2      Registrant's Bylaws, as amended.(1)

10.1     Form of Indemnity Agreement with Executive Officers.(1)

10.2     Registrant's Amended and Restated 1993 Incentive Stock Plan.(2)

10.3     Manufacture and Supply Agreement dated September 13, 1993 between
Registrant and B.Braun, Inc. relating to the Protected Needle
product.(3)

10.4     Supply and Distribution Agreement dated April 3, 1995 between
Registrant and Abbott Laboratories, Inc. relating to the CLAVE
product.(4)

10.5     Rights Agreement dated July 15, 1998 between Registrant and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent.(5)

51

10.6     SafeLine Agreement effective October 1, 1999 by and between Registrant
and B.Braun Medical, Inc.(6)

10.7     Amendment to April 3, 1995 Supply and Distribution Agreement, dated
January 1, 1999, between Registrant and Abbott Laboratories.(7)

10.8     Amendment No. 1 to Rights Agreement, dated January 30, 1999, between
Registrant and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent.(8)

10.9     Co-Promotion and Distribution Agreement, dated February 27, 2001
between Registrant and Abbott Laboratories.(9)

10.10    Amended and Restated Rights Agreement, dated as of May 10, 2002,
between Registrant and Mellon Investor services, L.L.C., as Rights
Agent.(10)

10.11    Registrant' 2001 Directors' Stock Option Plan.(11)

10.12    Registrants 2002 Employee Stock Purchase Plan.(11)

10.13    Securities Purchase Agreement (between Registrant and Sellers of Common
Stock of Bio-Plexus, Inc.(12)

10.14    Note Purchase Agreement (between Registrant and Sellers of Notes
Payable of Bio-Plexus, Inc.(12)

10.15    Registrant's 2003 Stock Option Plan.(13)

10.16    Amendment to April 3, 1995 Supply and Distribution Agreement, dated as
of January 14, 2004, between Registrant and Abbott Laboratories.(14)

10.17    Amendment to February 27, 2001 Co-Promotion and Distribution Agreement,
dated as of January 14, 2004, between Registrant and Abbott
Laboratories.(14)

21.1     Subsidiaries of Registrant.

23.1     Consent of Deloitte & Touche LLP.

23.2     Consent of Arthur Andersen LLP.

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

32       Certifications of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)      Filed as an exhibit to Registrant's Registration Statement Form S-1
(Registration No. 33-45734) filed on February 14, 1992, and
incorporated herein by reference.

(2)      Filed as an Exhibit to Registrant's definitive Proxy Statement filed
pursuant to Regulation 14A on March 4, 1999 and incorporated herein by
reference.

(3)      Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended September 30, 1993, and incorporated herein by
reference.

(4)      Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for
the Quarter ended March 31, 1995, and incorporated herein by reference.

52

(5)      Filed as an exhibit to Registrant's Registration Statement on Form 8-A
dated July 23, 1998 and incorporated herein by reference.

(6)      Filed as an exhibit to Registrant's Current Report on Form 8-K dated
June 18, 1999, and incorporated herein by reference.

(7)      Filed as an exhibit to Registrant's Current Report on Form 8-K dated
February 23, 1999, and incorporated herein by reference.

(8)      Filed as an exhibit to Registrant's Registration Statement on Form
8-A/A dated February 9, 1999 and incorporated herein by reference.

(9)      Filed as an exhibit to Registrant's Current Report on Form 8-K dated
March 7, 2001 and incorporated herein by reference.

(10)     Filed as an Exhibit to Registrant's Registration Statement on Form 8A/A
dated May 14, 2002, and incorporated herein by reference.

(11)     Filed as an exhibit to Registrant's definitive Proxy Statement filed
pursuant to Regulation 14A on April 2, 2002 and incorporated herein by
reference

(12)     Filed as an exhibit to Registrant's Schedule 13D dated November 12,
2002 and incorporated herein by reference.

(13)     Filed as an exhibit to Registrant's definitive Proxy Statement filed
pursuant to Regulation 14A on April 25, 2003 and incorporated herein by
reference.

(14)     Filed as an exhibit to Registrant's Current Report on Form 8-K dated
January 15, 2004, and incorporated herein by reference.

(b) Reports on Form 8-K.

Item 2 (Form 8K/A) - October 2, 2003

The following financial statements were filed as part of the Report on
Form 8-K/A of October 2, 2003:

(a)      Financial Statements of Business Acquired

The financial statements of Bio-Plexus, Inc. at December 31, 2001 and
for the three years then ended and the report of independent
auditors: incorporated by reference to Bio-Plexus, Inc.'s Form 10-K
filed with the Securities and Exchange Commission (Commission file
number 0-24218) for the year ended December 31, 2001.

The unaudited condensed financial statements of Bio-Plexus, Inc. at
June 30, 2002 and for the six months then ended: incorporated by
reference to Bio-Plexus, Inc.'s Form 10-Q filed with the Securities
and Exchange Commission for the quarter ended June 30, 2002.

(b)      Pro Forma Financial Information

ICU Medical, Inc. and Bio-Plexus, Inc.:

Unaudited Pro Forma Condensed Combined Balance Sheets at June 30, 
2002

53

Unaudited Pro Forma Condensed Combined Consolidated Statements of 
Operations for the Year Ended December 31, 2001

Unaudited Pro Forma Condensed Combined Consolidated Statements of
Operations for the Six Months Ended June 30, 2002.

Items 7 and 12 - October 16, 2003

54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

ICU MEDICAL, INC.

By:      /s/  George A. Lopez, M.D.
--------------------------
George A. Lopez, M.D.
Chairman of the Board

Dated:   March 11, 2004

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
Registrant and in the capacities and on the dates indicated.

Signature                              Title                                         Date
---------                              -----                                         ----

/s/ George A. Lopez, M.D.              Chairman of the Board, President,               March 11, 2004
--------------------------             and Chief Executive Officer, (Principal     
George A. Lopez, M.D.              Executive Officer)                        

/s/ Francis J. O'Brien                 Chief Financial Officer                         March 11, 2004
-----------------------                (Principal Financial Officer)
Francis J. O'Brien                

/s/ Scott E. Lamb                      Controller                                      March 11, 2004
------------------                     (Principal Accounting Officer)
Scott E. Lamb                     

/s/ Jack W. Brown                      Director                                        March 11, 2004
-----------------
Jack W. Brown

/s/ John J. Connors                    Director                                        March 11, 2004
--------------------
John J. Connors

/s/ Michael T. Kovalchik, III, M.D.    Director                                        March 11, 2004
-----------------------------------
Michael T. Kovalchik, III, M.D.

/s/ Joseph R. Saucedo                  Director                                        March 11, 2004
---------------------
Joseph R. Saucedo

/s/ Richard H. Sherman, M.D.           Director                                        March 11, 2004
----------------------------
Richard H. Sherman, M.D.

/s/ Robert S. Swinney, M.D.            Director                                        March 11, 2004
---------------------------
Robert S. Swinney, M.D.

55

SCHEDULE II

ICU MEDICAL, INC.
-----------------

VALUATION AND QUALIFYING ACCOUNTS
---------------------------------

Additions
--------------------------
Balance at    Charged to                                  Balance
Beginning     Costs and     Charged to     Write-offs/     at End
Description                     of Period      Expenses   Other Accounts    Disposals     of Period
-----------                     ---------      --------   --------------    ---------     ---------

For the year ended December 31, 2001:
Allowance for
doubtful accounts                     $505,000      $100,000      $      --      ($24,000)      $581,000
=========     =========     ==========     =========      =========

For the year ended December 31, 2002:
Allowance for
doubtful accounts                     $581,000      $100,000      $  11,000      ($27,000)      $665,000
=========     =========     ==========     =========      =========

For the year ended December 31, 2003:
Allowance for
doubtful accounts                     $665,000      $170,000      $      --      ($93,000)      $742,000
=========     =========     ==========     =========      =========

56

EXHIBIT INDEX

Exhibit Number        Description                                                    Sequentially Numbered Page
---------------------------------------------------------------------------------------------------------------

21.1                  Subsidiaries of Registrant                                                 58

23.1                  Consent of Deloitte & Touche LLP                                           59

23.2                  Consent of Arthur Andersen LLP                                             60

31.1                  Certification of Chief Executive Officer pursuant to Section 302 of        61                        
the Sarbanes-Oxley Act of 2002

31.2                  Certification of Chief Financial Officer pursuant to Section 302 of        62                        
the Sarbanes-Oxley Act of 2002

32                    Certifications of Chief Executive Officer and Chief Financial Officer      63
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

57

Exhibit 21.1

SUBSIDIARIES OF REGISTRANT
--------------------------

NAME                                       STATE OF INCORPORATION
----------------------------                            -----------------------
ICU Medical Sales, Inc.                                       Delaware

ICU Finance, Inc.                                             California

Budget Medical Products, Inc.                                 California

ICU MedEurope Limited                                         United Kingdom

ICU MedEurope (NZ) Limited                                    New Zealand

ICU Medical Europe S.r.l.                                     Italy

BMP de Mexico, S.A. de C.V.                                   Mexico

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT
-----------------------------

We consent to the incorporation by reference in Registration Statements No.
333-04171 No. 333-58024, No. 333-90642 and No. 333-90464 of ICU Medical, Inc. on
Form S-8 of our report dated March 10, 2004 relating to the consolidated
financial statements and financial statement schedule of ICU Medical, Inc. and
subsidiaries as of and for the years ended December 31, 2003 and 2002 (which
report expresses an unqualified opinion and includes an explanatory paragraph
relating to the application of procedures relating to certain disclosures and
the adjustment of financial statement amounts for a three-for-two stock split
related to the 2001 consolidated financial statements that were audited by other
auditors who have ceased operations and for which we have expressed no opinion
or other form of assurance other than with respect to such disclosures and
adjustments), appearing in this Annual Report on Form 10-K of ICU Medical, Inc.
for the year ended December 31, 2003.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

Costa Mesa, California
March 10, 2004

Exhibit 23.2

The following consent of Arthur Andersen LLP ("Andersen") is a copy of the
original consent dated February 19, 2002, included in the Form 10-K for December
31, 2001. The SEC has provided regulatory relief designed to allow public
companies to dispense with the requirements to file a reissued report and
consent of Andersen in certain circumstances. After reasonable efforts, we have
not been able to obtain a reissued report or consent from Andersen.

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------

As independent public accountants, we hereby consent to the incorporation of our
report dated January 29, 2002 included in this Form 10-K, into the Company's
previously filed Form S-8 Registration Statement File No. 33-49822. It should be
noted that we have not audited any financial statements of the Company
subsequent to December 31, 2001 or performed any audit procedures subsequent to
the date of our report.

/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP

Orange County, California
February 19, 2002

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, the Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of ICU Medical,
Inc.:

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)       designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b)       [paragraph omitted pursuant to SEC Release Nos. 33-8238 and
34-47986]

c)       evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and

d)       disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of registrant's
board of directors:

a)       all significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and

b)       any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.

Date:  March 11, 2004

/s/ George A. Lopez, M.D.
-------------------------
Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, the Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K of ICU Medical,
Inc.:

2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)       designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;

b)       [paragraph omitted pursuant to SEC Release Nos. 33-8238 and
34-47986]

c)       evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and

d)       disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of registrant's
board of directors:

a)       all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and

b)       any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.

Date:  March 11, 2004

/s/ Francis J. O'Brien
----------------------
Chief Financial Officer

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ICU Medical, Inc. (the "Company") on
Form 10-K for the period ended December 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, George A. Lopez,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.

/s/ George A. Lopez, M.D.
-------------------------
George A. Lopez, M.D.

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ICU Medical, Inc. (the "Company") on
Form 10-K for the period ended December 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Francis J.
O'Brien, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.

/s/ Francis J. O'Brien
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Francis J. O'Brien