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

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 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

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. Yes _X_ 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.

The aggregate market value of the voting stock held by non-affiliates
of Registrant as of February 29, 2000 was $109,027,884. *

The number of shares outstanding of Registrant's Common Stock, $.10 par
value, as of February 29, 2000 was 8,304,039.

Portions of the Proxy Statement for Registrant's 2000 Annual Meeting of
Stockholders, filed or to be filed pursuant to Regulation 14A within 120 days
following Registrant's fiscal year ended December 31, 1999, 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.

1



PART I
ITEM 1. BUSINESS.

ICU Medical, Inc. is a leader in the development, manufacture and sale
of proprietary, disposable medical connection systems for use in intravenous
("I.V.") therapy applications. The Company's I.V. connectors are designed to
prevent accidental disconnection of I.V. lines and to protect healthcare workers
and their patients from the spread of infectious diseases such as Hepatitis B
and C and Human Immunodeficiency Virus ("HIV") by significantly reducing the
risk of accidental needlesticks. In 1993, the Company launched the CLAVE(R), an
innovative one-piece, needleless I.V. connection device that has become the
Company's largest selling product. The Company believes 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.

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 the Company's protective I.V. connectors. In addition,
healthcare regulations promulgated by 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. The standard mandates use of
needlestick prevention controls, including needleless systems. Since then, four
other states have enacted similar legislation, and legislation is pending is
approximately 26 other states and in the U.S. Congress. ICU Medical's devices
will allow a healthcare provider to be compliant with any of these standards.

The Company currently sells its products to I.V. product manufacturers
and through independent distributors.

BACKGROUND

The Company's first products, the Click Lock(R) and Piggy Lock(R),
feature protected needles to prevent accidental contact with needles and include
locking mechanisms to prevent accidental disconnections. These products were
designed to replace conventional products and methods, such as I.V. connectors
with exposed needles that are secured by tape or open luer lock connections.

Recognizing the inherent risks associated with needle handling and
disposal, even with protected needle systems, the Company developed the CLAVE, a
needleless I.V. connection system that was introduced in 1993. The CLAVE
needleless I.V. connection system 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 was designed to
eliminate needles from certain applications by acute care hospitals, home
healthcare providers, ambulatory surgical centers, nursing homes, convalescent
facilities, physicians' offices, medical clinics, and emergency services.
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. While the Company continues to manufacture and
sell protected needle products, sales of those products are declining as the
market penetration of needleless systems such as the CLAVE and other competitive
needleless products increases.

The Company has been manufacturing and distributing custom I.V. systems
through its wholly owned subsidiary, Budget Medical Products, Inc. ("BMP"),
since it established BMP in late 1995. In 1999, the Company decided to
substantially increase its emphasis on marketing and selling custom I.V.
systems.

Effective January 1, 2000, the Company reoriented its manufacturing and
distribution operations. Marketing and sales operations will be in four groups:
medical product manufacturers under the ICU Medical name, independent domestic
distributors under the Budget Medical Products name, international manufacturers
and distributors under the ICU Medical name and SetFinder. Manufacturing will be
in a separate group, producing products for the four marketing and sales groups.
BMP, until this reorientation, had been responsible for marketing and sales of
only custom I.V. systems to both independent distributors and medical product
manufacturers. Because BMP will now represent not a product line, but a
distribution channel to independent distributors, the custom I.V. systems
product line, formerly referred to as the BMP product line, will now be referred
to as the "custom I.V. systems" product line.

2


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
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 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 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. A contaminated needle can result in infection to healthcare workers and,
less frequently, patients, as a result of accidental needlesticks. 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 the Company's 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 an infectious disease is transmitted. The
Company's protective I.V. connectors are designed to prevent accidental
needlesticks from needles originating from primary and secondary I.V.
connections.

PRODUCTS

CLAVE PRODUCTS

A conventional I.V. line terminates with a male luer connector to which
a 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 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. 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 which can be cleansed with
an alcohol swab. The CLAVE contains no natural rubber latex.

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 primary I.V. system, acute and chronic central venous I.V.
system, acute care catheter, multi-lumen catheter, peripheral catheter and a
variety of other standard devices. The resilience of the silicone compression
seal permits repeated connections and disconnections without replacing the
CLAVE.

3


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, most popular I.V. connection systems that compete with
the Company's 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. The Company believes 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 B.Braun Medical, Inc. ("B.Braun") and Abbott Laboratories
("Abbott") to build directly into their I.V. sets. Sales of the CLAVE Integrated
Y site to date have only been to Abbott.

The CLAVE is the Company's largest selling product line, and accounted
for 68% of the Company's net sales in 1999.

CLICK LOCK AND PIGGY LOCK PRODUCTS

The Company's first products, the Click Lock and Piggy Lock, were
designed to overcome the limitations of conventional I.V. connections which use
exposed needles. The needles in the Click Lock and Piggy Lock systems are
completely recessed into a clear plastic cylindrical housing to reduce the risk
of needlesticks and contamination by preventing contact between the needle and
other objects. Locking devices which snap closed with an audible click are
designed to prevent accidental disconnection but permit immediate and easy
disconnection when desired.

The Click Lock housing locks onto the Company's matching injection port
located on either piggyback I.V. sets or extension I.V. sets manufactured by the
Company. The Piggy Lock was developed as a less expensive, more convenient
alternative to using a Click Lock and related I.V. set combination to make a
secondary or piggyback I.V. connection.

With the availability of the CLAVE and other needleless products sold
by competitors, the market is shifting rapidly away from protected needle
products to needleless connection systems. Sales of Click Lock and Piggy Lock
products are declining both absolutely and as a percentage of net sales.

MCGAW PROTECTED NEEDLE AND SAFELINE PRODUCTS

The Company has a Manufacture and Supply Agreement with B.Braun,
successor to McGaw, Inc., (the "B.Braun MPN Agreement"), which grants the
Company exclusive rights to perform certain assembly of the McGaw Protected
Needle which is marketed and distributed by B.Braun. The McGaw Protected Needle
is similar to the Click Lock, and competes with the Company's I.V. connection
systems. The B.Braun MPN Agreement provides that the Company release B.Braun
from any claims for patent infringement resulting from the sale of McGaw
Protected Needles prior to the effective date of the B.Braun MPN Agreement, and
for as long as the B.Braun MPN Agreement is in effect. The Company began
assembly of the McGaw Protected Needle during 1994. Sales of the McGaw Protected
Needle under the B.Braun MPN Agreement accounted for approximately 3% of the
Company's net sales in 1999. With the continuing shift in demand from protected
needle to needleless products, the Company expects sales of McGaw Protected
Needles will continue to decline. Pursuant to a May 1995 amendment to another
agreement with B.Braun, B.Braun also agreed to pay the Company a share of
B.Braun's revenues on SafeLine, a then new needleless I.V. connector designed
and manufactured by B.Braun for use with pre-slit injection ports. Such payments
commenced in 1996 and accounted for approximately 4% of the Company's net sales
in 1999. The Company expects that agreement, which expires in June 2000, will be
extended, although there is no certainty as to this matter.

LOPEZ VALVE(R)

The Company's Lopez Valve 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.

4


RF100 AND RF150

The Company has developed a family of inexpensive single-use needleless
connectors for use in both piggyback and non-piggyback applications. The RF100,
designed for use in piggyback applications, is a one-piece, needleless I.V.
connector comprised of a small plastic piercing element that is recessed into a
plastic housing. The RF100 locks onto any standard Y site reducing the potential
for accidental disconnection. The RF150 is similar to the RF100 in that it is
comprised of a small plastic piercing element that is recessed into a plastic
housing. The RF150, called the "Rhino," was developed specifically for Abbott
for use with pre-slit injection ports in piggyback and non-piggyback
applications. Once the injection port is pierced, the protective housing opens
much like a clothes pin, and locks over the pre-slit injection port thus
reducing the potential for accidental disconnections. Although the Company
believes that the CLAVE has significant functional advantages over the RF100 and
RF150, these products are alternative and less expensive needleless I.V.
connectors.

CLC2000(TM)

The CLC2000 is a one piece, swabable connector, engineered with the
only technology currently in the marketplace 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 used on the I.V. line in the same manner as the CLAVE.
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 procedures to "flush" the catheter, or if those procedures are not
effective, replacement of the catheter. Flushing often requires use of expensive
drugs and carries the risk of infection from bacteria in the occluded blood.
Because of this risk of infection, the United States Food and Drug
Administration has recently suggested use of procedures other than drugs to
prevent occlusion of catheters.

The CLC2000 was developed to reduce clotting of catheters because of
"back-flow" after the catheter 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 into the primary I.V. line 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.

The Company is currently conducting trials with the objective of
receiving FDA approval for certain performance claims for the CLC2000. While the
Company believes it can achieve such approval, there is no assurance that it
will ultimately receive it.

The Company began marketing the CLC2000 in November 1997. The Company
is concentrating the marketing of the CLC2000 where its "no back-flow" features
are of maximum benefit in patient care. These are generally therapies which use
small diameter, long-dwelling catheters such as oncology, dialysis and long-term
infusion of medication. CLC2000 accounted for less than 2% of the Company's net
sales in 1999.

1o2 VALVE(TM)

The 1o2 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. The Company commenced marketing the 1o2 Valve in November 1998, and
commenced shipment mid-1999. Initially, the Company intends to focus marketing
efforts on anesthesia and critical care usage. Sales to date have not been
significant.

CUSTOM I.V. SYSTEMS

During late 1995, the Company created BMP as a wholly owned subsidiary.
BMP was established to service the low end of the safe medical connector market
by distributing custom I.V. sets manufactured by the Company, which incorporate
lower priced safe medical connectors, and custom I.V. sets incorporating the
CLAVE. Under the reorientation of distribution operations in 2000, BMP will be
responsible for all sales to independent domestic distributors, including custom
I.V. systems. Custom I.V. systems sold to medical product manufacturers will be
distributed under the ICU Medical name.

5


During 1997, 1998 and 1999, net sales of custom I.V. systems to medical
product manufacturers and independent domestic distributors were approximately
$1,800,000, $3,200,000 and $5,300,000, respectively. Most of the growth in 1997
and 1998 net sales was because of increased unit shipments of custom I.V. sets
incorporating the CLAVE.

SETFINDER(TM)

In the fourth quarter of 1999, the Company launched SETFINDER.COM,
which will distribute commodity-type standard I.V. sets directly to healthcare
providers. This operation will be carried out through SetFinder, Inc., a
separate, wholly owned subsidiary. Orders can be taken over the internet at a
special "web-site" named SETFINDER.COM, and initially will also be accepted by
telephone, facsimile and e-mail. Through use of ICU's manufacturing capability
and direct distribution, SetFinder expects to be a low-cost provider with fast
order fulfillment times, while offering the customer the convenience of ordering
24 hours a day.

Because significant innovation is required to launch and operate
SETFINDER.COM, there is no assurance that its launch will be successful or that
current plans for SetFinder will not change materially. Further, there can be no
assurance that SetFinder will achieve sales and the amount of future operating
profits or losses is dependent upon future development of the SetFinder
business, the outcome of which is not known at this time. Sales of SetFinder to
date have been minimal.

NEW PRODUCTS

The Company is developing several new products that it intends to
introduce in 2000 and later. The Company believes innovative products continue
to be important to maintaining and increasing its sales levels.

MARKETING AND DISTRIBUTION

The influence of managed care and the growing trend toward
consolidation among healthcare providers are the driving forces behind the
Company's 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, the Company believes it is
becoming increasingly important to secure contracts with major buying
organizations in addition to targeting specific healthcare providers.

Effective January 1, 2000, the Company reoriented its distribution
operations into four groups: medical product manufacturers under the ICU Medical
name, independent domestic distributors under the Budget Medical Products name,
international manufacturers and distributors under the ICU Medical name, and
SetFinder.

MEDICAL PRODUCTS MANUFACTURERS

The Company has entered into strategic supply and distribution
relationships with B.Braun and Abbott, two major I.V. product suppliers, each of
whom has a significant share of the I.V. set market under contract. The
agreement with B.Braun, which extends to December 2002, confers to B.Braun
exclusive and nonexclusive rights to distribute certain CLAVE products to
certain categories of customers. Under the agreement with Abbott, which extends
to December 2009, Abbott has rights to distribute certain CLAVE products, the
Rhino and the CLC2000.

B.Braun and Abbott purchase CLAVE products packaged separately and in
bulk for distribution to healthcare providers. CLAVE products purchased in bulk
are assembled into B.Braun's and Abbott's full range of I.V. products. Both
B.Braun and Abbott purchase other CLAVE products, which are sold as accessories.

C.R. Bard, Inc. ("Bard") distributes the Lopez Valve under a five-year
agreement signed in June 1999.

The Company employs 25 product specialists in the United States and
Canada who support the Abbott and B.Braun salespeople, calling on prospective
customers, demonstrating products and supporting programs to train the
salespeople and customers' staffs in the use of the Company's products.

6


Sales to B.Braun of CLAVE products and McGaw Protected Needles and
SafeLine revenue share accounted for approximately 36%, 35% and 28% of the
Company's net sales in 1997, 1998 and 1999, respectively. Sales to Abbott
accounted for approximately 16%, 29% and 42% of net sales in 1997, 1998 and
1999, respectively. The loss of B.Braun or Abbott as a customer could have a
significant adverse effect on the Company's business and operating results
because these customers have full-line contracts with numerous healthcare
providers to supply all I.V. products and solutions to those customers.

INDEPENDENT DOMESTIC DISTRIBUTORS

The Company currently has approximately 13 independent distributors in
the United States and Canada who employ approximately 125 salespeople in the
aggregate and accounted for approximately 25% of the Company's net sales in
1999. (Canada is included by the Company as "domestic" for administrative
purposes.) In addition, the Company employs 8 product specialists in the United
States who support the Company's distributors. Independent distributors in
Canada are supported by the same product specialists who work with the medical
products manufacturers. Distributors purchase and stock the Company's products
for resale to healthcare providers.

One independent distributor accounted for approximately 7% of net
sales. All other independent distributors account for smaller percentages of net
sales. Although the loss of one or more of the several larger distributors could
have an adverse affect on the Company's business, the Company believes it could
readily locate other distributors in the same territories who could continue to
distribute the Company's products to the same customers.

Net sales to independent domestic distributors have been declining over
the past several years. The Company has set up a separate sales group to deal
only with those distributors in an effort to arrest the decline and increase net
sales to specialty distributors. However, there can be no assurance that the
decline in net sales will be corrected or that increased net sales to
independent domestic distributors will be achieved.

INTERNATIONAL

The Company's products are distributed in most European countries,
Canada, the Middle East, Australia, Japan and other parts of Asia and South
America. Foreign sales (excluding Canada) accounted for approximately 3%, 3% and
4% of the Company's net sales in each of the years 1997, 1998 and 1999,
respectively. The Company has four product specialists in Europe.

MANUFACTURING

Manufacturing of the Company's 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. The Company molds the majority of its requirements for
components, performs all assembly, quality control, inspection, packaging,
labeling and shipping of its products. Sterilization and sterility testing are
performed under contract by independent companies.

The Company has 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
the Company's molding operation. 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 an 8,000 square foot class 100,000
clean room in which all molding of the Company's proprietary medical components
is performed. The clean room is equipped with 30 injection molding machines and
ancillary equipment including robots designed to minimize human intervention.
The Company uses sophisticated, highly automated assembly systems to assemble
the CLAVE, CLAVE Integrated Y site, Click Lock, RF150 and the McGaw Protected
Needle products. The assembly systems are custom designed and manufactured for
the Company. The Piggy Lock, Lopez Valve and I.V. sets are assembled manually.
The CLC2000 and 1o2 Valve are currently assembled manually pending installation
of automated assembly in 2000.

The Company's 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, the Company molds its entire requirements of
proprietary molded components. Generic, "off-the-shelf" items are purchased from
outside vendors unless significant cost savings can be achieved by molding
in-house. The Company is not dependent on any individual vendor for purchased
parts and has no contracts with its suppliers beyond the terms of purchase
orders issued.

7


Over the past several years, the Company has taken significant steps at
increasing systems capabilities, improving manufacturing efficiency, reducing
labor costs and enhancing distribution. These steps were initially focused on
production of custom I.V. systems and, in part, led to the transfer of most
manual assembly to a new 20,000 square foot facility in Ensenada, Baja
California, Mexico. The program has now been expanded to include all the
Company's automated and manual manufacturing operations. The Company believes it
is building expertise that will enable it to reduce labor costs and minimize
investment in inventory, while at the same time reducing to a bare minimum the
time from when an order is received to when it is shipped. Because significant
innovation is required to achieve these goals, there is no assurance that the
steps and programs will achieve the desired results.

The Company's products are currently sterilized in processes, which use
either gamma or electronic beam ("e-beam") radiation. In 1998, most of the
Company's sterilization was by gamma radiation. By the end of 1999, most of the
sterilization had been moved to e-beam. E-beam sterilization is less expensive
and quicker than gamma radiation sterilization. Sterilization is performed by
independent companies.

GOVERNMENT REGULATION

Government regulation is a significant factor in the development,
marketing and manufacturing of the Company's products. The Company and its
products are regulated by the FDA under a number of statutes including the
Federal Food, Drug and Cosmetics Act ("FDC Act"). 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 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 the Company's current products has qualified, and the Company
anticipates that any new products that it is likely to market will qualify, for
the expedited Section 510(k) clearance procedure. There is no assurance,
however, that new products developed by the Company or any manufacturers that
the Company might acquire, or claims that the Company 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. Certain product performance claims for the CLC2000 require FDA approval
after extensive testing that is not yet completed. 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 currently manufactured by
the Company 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.

The Company 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 them to periodic
FDA and DHS inspections of their manufacturing facilities. The Company is an FDA
registered medical device manufacturer, and must demonstrate that the Company
and its contract manufacturers comply with the FDA's current Quality System
Regulations ("QSR") regulations. Under these regulations, the manufacturing
process must be regulated and controlled by the use of written procedures and
the ability to produce devices which 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 the 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.

8


The Company believes that its products and procedures are in compliance
with all applicable FDA and DHS regulations. There can be no assurance, however,
that other products under development by the Company or products developed by
the Company in the future will be cleared by the FDA and classified as Class II
products, or that additional regulations restricting the sale of its 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 the Company's business.

To market its products in the European Community ("EC"), the Company
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, the Company 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.

The Company has demonstrated conformity to the regulations of both EN
ISO 9001 (1994) / EN 46001 (1996) and the Medical Device Directive and affixes
the CE Mark to its device labeling for product sold in member countries of the
EC.

The Company believes its products and systems are in compliance with
all EC requirements. There can be no assurance, however, that other products
under development by the Company or products developed by the Company in the
future will conform or that additional regulations restricting the sale of its
present or proposed products will not be promulgated by the EC.

COMPETITION

The market for I.V. products is intensely competitive. The Company
believes that its ability to compete depends upon its continued product
innovation, the quality, convenience and reliability of its products, access to
distribution channels, patent protection, and pricing. The Company encounters
significant competition in this market both from large established medical
device manufacturers and from smaller companies. The Company's ability to
compete effectively depends on its ability to differentiate the products based
on safety features, product quality, cost effectiveness, ease of use and
convenience, as well as the Company's ability to perceive and respond to
changing customer needs. In the long term, the Company's ability to compete may
be affected by its 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, the Company's present and
future products will compete with needleless I.V. connection systems like those
marketed by Baxter, Becton-Dickinson and Company, B. Braun, Alaris Corporation
and others. Although the Company believes that its needleless CLAVE has distinct
advantages over competing systems, there is no assurance that it will be able to
compete successfully with these products.

Manufacturers of products with which the Company currently competes, 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 Becton-Dickinson and Company and Sherwood Medical Company dominate the
hypodermic 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 all of their I.V. product requirements. In order
to penetrate more of these hospitals, the Company has established strategic
supply and distribution relationships with B.Braun and Abbott.

9


The Company believes 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. The Company is aware of a number of such products. The Company believes
most of those products were developed primarily by companies who currently do
not have the distribution or financial capabilities of the Company, although
some of those products may be distributed in the future by larger companies that
do have such capabilities. The Company believes these products have had a modest
impact on its CLAVE business to date, but there is no assurance that the
Company's current or future products will be able to successfully compete with
these or future products developed by others.

The Company believes that its ability to compete in the custom I.V.
systems market will be impacted by the same factors affecting its existing
products, but will be particularly sensitive to cost to the customer and
delivery times. While the Company believes it has advantages in the two areas,
there is no assurance that other companies will not be able to compete
successfully with the Company's custom I.V. systems.

The Company believes its ability to compete in the commodity-type
standard I.V. set business through its e-commerce SETFINDER.COM site will depend
on its ability to achieve name recognition among its potential customer base,
competitive pricing and rapid order fulfillment, none of which have been proven
to date. In addition, the Company expects significant competition from other
e-commerce companies, including some newly formed companies, that may have more
financial resources than the Company, a broader product line, more name
recognition, lower pricing, better order fulfillment, a more attractive or
easier-to-use website, or other competitive advantages. The Company does not
know whether, or the extent to which, other existing medical product
manufacturers will compete directly in the e-commerce arena, but believes that
whether or not they compete in that arena, they will continue to be significant
competitors. In addition, customers in many cases must be educated to use, and
overcome resistance to using, what for many is, new technology. There is no
assurance that the Company will be able to successfully compete in this
environment.

PATENTS

The Company has United States and certain foreign patents on the CLAVE,
Click Lock and Piggy Lock I.V. connectors and has United States patents on the
Lopez Valve connector. The Company has applications pending for additional
United States and foreign patents on the 1o2, CLC2000, CLAVE, Click Lock and
Piggy Lock I.V. connectors. The expiration dates of the Company's patents range
from 2005 to 2016.

The Company's success may depend in part on its ability to obtain
patent protection for its products and to operate without infringing the
proprietary rights of third parties. While the Company has obtained certain
patents and applied for additional United States and foreign patents covering
certain of its 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 the Company's patents will be held
valid if subsequently challenged. The Company also believes 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 which are as effective as the Company's products. The loss of
patent protection on Click Lock, Lopez Valve or CLAVE products could adversely
affect the Company's ability to exclude other manufacturers from producing
effective competitive products and could have an adverse impact on the Company's
financial results.

The fact that a patent is issued to the Company does not eliminate the
possibility that patents owned by others may contain claims which are infringed
by the Company's 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 and diversion of resources by the Company,
may be necessary to defend the Company against claimed infringement of the
rights of others and to determine the scope and validity of the proprietary
rights of others. In addition, enforcement of the Company's intellectual
property rights through litigation could result in substantial cost and
diversion of resources. Adverse determinations in litigation could subject the
Company to significant liabilities to third parties or could require the Company
to seek licenses from third parties and could prevent the Company from
manufacturing, selling or using its products, any of which could have a material
adverse effect on the Company's business.

In 1999, the Company became involved in patent litigation with Medex,
Inc. See: Item 3 "Legal Proceedings."

10



EMPLOYEES

At February 29, 2000, the Company had 274 full-time employees,
consisting of 70 engaged in sales, marketing and administration, and 204 in
manufacturing, molding, product development and quality control, including 103
in Mexico. The Company contracts with an independent temporary agency to provide
certain of its production personnel at its manufacturing facility in San
Clemente, California; none of the personnel provided through the agency are
employed by the Company. At February 29, 2000, the number of temporary
production personnel was approximately 94.

ITEM 2. PROPERTIES.

The Company owns two adjacent 39,000 square foot buildings in San
Clemente, California, another 28,000 square foot building in the same business
park in San Clemente, California and a 20,000 square foot building on
approximately 94 acres of land in Ensenada, Baja California, Mexico.

ITEM 3. LEGAL PROCEEDINGS.

In an action entitled MEDEX, INC. v. ICU MEDICAL, INC. pending in the
United States District Court for the Southern District of Ohio, Eastern
Division, and served on the Company on November 4, 1999, Medex alleges that ICU
Medical infringes its patent by the manufacture and sale of the CLAVE connector,
and Medex seeks monetary damages and injunctive relief. The Company, based on
advice of counsel, believes the suit against the Company is without merit and
the Company intends to vigorously defend itself in the action. The Company has
brought an action entitled ICU MEDICAL, INC. v. MEDEX, INC. in the United States
District Court for the Central District of California against Medex, Inc. for
infringing several patents of the Company by the manufacture and sale of certain
blood access devices. The Company seeks monetary damages and injunctive relief.
The Company intends to vigorously pursue this matter.

On April 7, 1998, in an action entitled ALLEN PETTY, dba CARMEL
DEVELOPMENT INTERNATIONAL v. ICU MEDICAL, INC., an Orange County, California,
Superior Court jury rendered a verdict in favor of the Plaintiff and against the
Company in the sum of $795,448 in an action brought by the Plaintiff for
commissions allegedly owed him. On June 23, 1998, the Court reduced the
judgement to $727,522 ($673,142 plus certain expenses), but denied the balance
of the Company's motion to set aside the jury verdict. The Company believes the
verdict is against the facts in the case and is contrary to well established
law, and has appealed to have the balance of the judgement overturned. In view
of the Court decision in June 1998 and the uncertainties of the appeal process,
the Company accrued a provision for this matter in its June 1998 financial
statements.

The Company is 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. The Company believes that the
resolution of the legal proceedings in which it is involved will not have a
material adverse effect on the Company's financial position or results of
operations.


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

Not Applicable.


11


EXECUTIVE OFFICERS OF REGISTRANT.

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


EXECUTIVE OFFICERS: Age Office Held
--- -----------


George A. Lopez, M.D. 52 Chairman of the Board, President and Chief Executive Officer

Richard A. Costello 36 Vice President of Sales

Evelyn L. Foss 44 Vice President of Marketing

Francis J. O'Brien 57 Chief Financial Officer, Secretary and Treasurer



Dr. Lopez is the founder of the Company and has served as Chairman of
the Board, President and Chief Executive Officer since August 1989.

Mr. Costello became Vice President of Sales in December 1997, after
having been National Sales Manager since August, 1996 and a product specialist
since 1992.

Ms. Foss became Vice President of Marketing in 1992.

Mr. O'Brien became Chief Financial Officer in November, 1996 and was
elected as Secretary in December, 1996. From October 1994 to November 1996, he
was an independent consultant and prior to 1994 he was a partner with Ernst &
Young LLP.

PART II

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

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

1998 High Low
---- ---- ---
First Quarter $ 16 1/4 $ 12 1/2
Second Quarter 16 3/16 13 5/8
Third Quarter 15 1/4 11 7/8
Fourth Quarter 22 12 3/4

1999 High Low
---- ---- ---
First Quarter $21 5/16 $ 15 3/8
Second Quarter 19 3/4 14 3/8
Third Quarter 19 3/4 13 7/8
Fourth Quarter 16 1/4 11 5/8

The Company has never paid dividends and does not anticipate paying
dividends in the foreseeable future as the Board of Directors intends to retain
future earnings for use in the Company's business. Any future determination as
to payment of dividends will depend upon the Company's financial condition,
results of operations and such other factors as the Board of Directors deems
relevant.

As of February 29, 2000 the Company had 125 stockholders of record and
believes it has approximately 2,900 beneficial stockholders.


12




ITEM 6. SELECTED FINANCIAL DATA


ICU MEDICAL, INC.

SELECTED FINANCIAL DATA




YEAR ENDED DECEMBER 31,
-----------------------
(in thousands, except per share data)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

INCOME DATA:
Net sales $ 47,014 $ 39,842 $ 30,404 $ 24,599 $ 21,282
Cost of goods sold 19,883 16,687 12,817 10,438 10,276
---------- ---------- ---------- ---------- ----------
Gross profit 27,131 23,155 17,587 14,161 11,006
Operating expenses 13,743 13,141 9,725 8,236 5,600
---------- ---------- ---------- ---------- ----------
Income from operations 13,388 10,014 7,862 5,925 5,406
Investment income and other 1,431 1,408 1,269 1,289 713
Provision for income taxes 5,400 4,200 3,450 2,475 1,958
---------- ---------- ---------- ---------- ----------
Net income $ 9,419 $ 7,222 $ 5,681 $ 4,739 $ 4,161
========== ========== ========== ========== ==========
Income from continuing operations
Per Share
Basic $ 1.16 $ 0.90 $ 0.71 $ 0.54 $ 0.53
Diluted $ 1.08 0.86 0.71 0.54 0.52
========== ========== ========== ========== ==========
Weighted average number of shares
Basic 8,155 7,990 7,946 8,722 7,906
Diluted 8,690 8,423 8,029 8,842 8,040
========== ========== ========== ========== ==========

CASH FLOW DATA:
Cash flows from operations $ 14,767 $ 6,574 $ 8,666 $ 6,513 $ 6,997

BALANCE SHEET DATA:
Cash and liquid investments $ 38,442 $ 38,090 $ 35,112 $ 31,760 $ 29,665
Working capital 42,024 43,817 37,993 35,587 33,762
Total assets 75,364 62,360 51,186 49,639 47,850
Long-term debt - - - - -
Stockholders' equity 68,014 58,229 47,947 46,749 45,658


13



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

OVERVIEW

The Company's principal product is its CLAVE needleless I.V. connection
system. The following table sets forth, for the periods indicated, net sales by
product as a percentage of total net sales:


------------------------------------ ----------- ----------- -----------
Product Line 1999 1998 1997
------------------------------------ ----------- ----------- -----------
CLAVE 68% 69% 65%
Click Lock 3% 4% 7%
McGaw Protected Needle 3% 4% 5%
Lopez Valve and other 5% 5% 4%
RF100-RF150 ("Rhino") 6% 5% 7%
Custom I.V. Systems 11% 8% 6%
B.Braun SafeLine Revenue Sharing 4% 5% 6%
------------------------------------ ----------- ----------- -----------
Total 100% 100% 100%
------------------------------------ ----------- ----------- -----------


The Company sells its products to independent distributors and through
supply and distribution agreements with B.Braun, Abbott (the "B.Braun Agreement"
and the "Abbott Agreement," respectively) and C. R. Bard, Inc. ("Bard"). Most
independent distributors handle the full line of the Company's products. B.Braun
and Abbott both purchase CLAVE products, principally bulk non-sterile
connectors. B.Braun also purchases the McGaw Protected Needle and pays the
Company revenue sharing payments on its sales of its SafeLine products. Abbott
also purchases the Rhino, a low-priced connector specifically designed for
Abbott and the CLC2000. Bard distributes the Lopez Valve under a five-year
agreement signed in June 1999.

The B.Braun Agreement, except for the SafeLine Revenue Sharing, extends
to December 2002, and has extension provisions beyond then.

In January 1999, the Company and Abbott agreed to a significant
expansion of their agreement for CLAVE products. The new agreement has
assurances of substantial increases in sales unit volume, accompanied by price
reductions. The new agreement was extended from April 2002 to December 2009, and
designates the Company as Abbott's preferred supplier for all Abbott's
needlefree technology. In July 1999 the contract was amended to include the
CLC2000.

Management believes that as the healthcare provider market continues to
consolidate, the Company's success in marketing and distributing CLAVE products
will depend, in part, on the Company's ability, either independently or through
strategic supply and distribution arrangements, to secure long-term CLAVE
contracts with major buying organizations. Further, the Company's marketing and
distribution strategy may result in a significant share of the Company's
revenues being concentrated among a small number of customers. The loss of a
strategic supply and distribution agreement with a customer or the loss of a
large contract by such a customer could have a material adverse effect on
operating results.

Management believes 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. The
Company is aware of a number of such products. In response to competitive
pressure, the Company has been reducing prices to protect and expand its market.
The price reductions to date have been more than offset by increased volume.
Management expects that the average price of its CLAVE products will continue to
decline. There is no assurance that the Company's current or future products
will be able to successfully compete with products developed by others.

14


The Company has commenced two initiatives that, if successful, will
reduce its dependence on its current proprietary products. It is seeking to
substantially expand its custom I.V. systems business with products sold to
medical product manufacturers and independent distributors. It is also launching
SETFINDER.COM, which will distribute commodity-type standard I.V. sets directly
to healthcare providers. There is no assurance that either one of these
initiatives will succeed.

Effective January 1, 2000, the Company reoriented its manufacturing and
distribution operations. Marketing and sales operations will be in four groups:
medical product manufacturers under the ICU Medical name, independent domestic
distributors under the Budget Medical Products name, international manufacturers
and distributors under the ICU Medical name and SetFinder. Manufacturing will be
in a separate group, producing products for the four marketing and sales groups.
BMP, until this reorientation, had been responsible for marketing and sales of
only custom I.V. systems to both independent distributors and medical product
manufacturers. Because BMP will now represent not a product line, but a
distribution channel, the custom I.V. systems product line, formerly referred to
as the BMP product line, will now be referred to as the "custom I.V. systems"
product line.

Net sales for each distribution channel, based on the new grouping,
were as follows:

------------------------------------ ----------- ----------- -----------
Channel 1999 1998 1997
------------------------------------ ----------- ----------- -----------
Medical product manufacturers 71% 64% 52%
Independent domestic distributors 25% 33% 45%
International 4% 3% 3%
------------------------------------ ----------- ----------- -----------
Total 100% 100% 100%
------------------------------------ ----------- ----------- -----------


COMPARISON OF 1999 TO 1998

In 1999, the Company had net sales of $47,014,000 which was $7,172,000,
or 18%, higher than the net sales of $39,842,000 reported in 1998. The increase
was primarily attributable to the increase in sales of CLAVE products, including
custom CLAVE I.V. systems.

Net sales to Abbott were to $19,862,000 in 1999, compared to
$11,601,000 in 1998. CLAVE unit sales were 2.4 times the amount in 1998. Most of
the balance of the sales increase was in the low-priced Rhino, which increased
to $2,605,000 from $1,987,000 in 1998. Based upon the terms of the Abbott
agreement as amended through January 2000, Management expects a substantial
increase in CLAVE unit and dollar sales volume with Abbott in 2000, although
there is no assurance as to the amount of such increase.

Net sales to B.Braun, including revenue sharing, amounted to
$12,974,000 in 1999, compared to $13,961,000 in 1998. CLAVE net sales to B.Braun
decreased approximately 9% because of decreased average selling prices; unit
shipments were up slightly. Management expects increases in CLAVE unit shipments
to B.Braun in 2000, although there is no assurance that this expectation will be
realized. Net sales of the McGaw Protected Needle decreased 13%, and management
expects those sales to continue to decline in the future as the market for safe
connectors continues its shift to needleless technology. Under an agreement with
B.Braun, the Company receives revenue sharing payments on B.Braun's sales of its
SafeLine products; such payments commenced in 1996, and the Company recorded
estimated revenue sharing of approximately $1,751,000 in 1999, compared to
$1,995,000 in 1998. The Company expects that the agreement, which expires in
June 2000, will be extended, but there is no certainty as to this matter.
Although Management anticipates that such revenue sharing will continue, the
actual amount will depend on the volume and selling prices of B.Braun's SafeLine
products, which Management has no means of forecasting accurately.

15


Total net sales of CLAVE products (excluding custom CLAVE I.V. systems)
increased approximately 17% from $27,508,000 in 1998 to $32,059,000 in 1999.
Unit shipments of CLAVE products in 1999 increased approximately 58% over 1998,
with Abbott accounting for the entire unit growth. The aggregate average net
selling price of CLAVE products in 1999 decreased approximately 26% as compared
with 1998. That decrease reflects lower prices from independent distributors and
lower prices on bulk, non-sterile CLAVE products sold to B.Braun and Abbott, as
well as a higher percentage of the sales mix being accounted for by bulk,
non-sterile CLAVEs.

CLAVE product sales, excluding custom CLAVE I.V. systems, to
independent domestic distributors decreased approximately 32%, caused
approximately equally by decreased average selling prices and decreased unit
volume. Management expects a continued decrease in the net sales of standard
CLAVE products to the independent domestic distributors, but expects that
decrease to be more than offset by sales of custom I.V. systems and new products
such as the CLC2000 and the 1o2 Valve. There is no assurance that the Company
will achieve increased net sales to independent domestic distributors in the
future. Further, the ability of the independent distributors to sustain their
unit sales may be impacted by competition from existing and new competitive
products or acquisition of CLAVE market share by Abbott and B.Braun. Management
expects to encounter continued pricing pressure from individual end users, and
expects continued declines in net prices to the independent distributors.

Net sales of Click Lock and Piggy Lock decreased 22% in 1999 compared
to 1998, because of the safe connector market's continued shift to needleless
technology. Management expects that decline to continue.

The Lopez Valve showed a 39% growth in 1999 net sales compared to 1998
principally because of shipments to Bard under the contract signed in June 1999.
Management expects continued increases in Lopez Valve net sales in 2000.

Net sales of custom I.V. systems were $5,251,000 in 1999 compared to
$3,218,000 in 1998. Most of the increase in 1999 net sales was because of
increased unit shipments of custom I.V. sets incorporating the CLAVE.

Total sales to foreign distributors were $1,878,000 in 1999 compared to
$1,364,000 in 1998. (Those amounts do not include distribution in Canada.) Since
mid-1998, the Company has been arranging distribution in each country in Europe
to replace and expand upon that handled by a single distributor that was
terminated in August 1998. The Company now has distribution arrangements in most
of the principal countries in Europe, although there can be no assurance that
those distribution arrangements will be satisfactory. Net sales to European
customers increased 79% in 1999. Management expects that its sales to European
and other foreign customers will continue to increase in the future.

In the fourth quarter of 1999, the Company launched SetFinder doing
business as SETFINDER.COM. The effect of SetFinder on 1999 results of operations
was insignificant. The Company expects to spend a significant amount to continue
to the launch and development of SetFinder in 2000. There can be no assurance
that SetFinder will achieve sales and the amount of future operating profits or
losses is dependent upon the future development of the SetFinder business, the
outcome of which s not known at this time.

Gross margin for 1999 was unchanged from the 58% registered in 1998.
The continued increases in the benefits of the Company's extensive efforts to
improve manufacturing efficiency, particularly late in 1999, and the increased
absorption of overhead by higher production volumes offset the effect of lower
average unit selling prices.

The Company is currently taking steps aimed at improving manufacturing
efficiency principally by reducing labor costs and minimizing investment in
inventory. The original focus was on production of custom I.V. systems, which is
relatively labor intensive; it has now been expanded to include all the
Company's automated and manual manufacturing operations. Substantially all
manual assembly is now performed at the facility that the Company opened in
December 1998 in Ensenada, Baja California, Mexico. In 1999, the Company made
significant investment in automated molding and assembly equipment. Both these
steps should reduce unit production costs in 2000. Ongoing steps are aimed at
increasing systems capabilities, improving manufacturing efficiency and
enhancing distribution, as well as automation of the production of new products,
such as the CLC2000 and the 1o2 Valve, and other products for which volume is
growing. Because significant innovation is required to achieve these goals,
there is no assurance that these steps will achieve the desired results.
However, even if they are successful, management expects that profit margins for
custom I.V. systems, SetFinder products and certain other manually assembled
products will be lower than those historically recorded by the Company because
their production is relatively labor intensive. The Company expects that its
unit production costs will continue to decrease in 2000, but that the gross
margin percentage will be equal to or slightly lower than that achieved in 1999
as average unit sales prices continue to decrease.

16


Selling, general and administrative costs ("SG&A") increased by
$435,000, or 4%, to $12,529,000 in 1999, compared to $12,094,000 in 1998. SG&A
costs were 27% of net sales in 1999 compared to 30% in 1998. The increase in
SG&A costs was primarily due to increased sales and marketing costs related to
the introduction of new products and expansion of the Company's business,
substantially offset by a significant decrease in litigation costs. Management
expects SG&A costs to increase in 2000, because of growth in the Company,
increased domestic and international sales and marketing costs, promotional
costs of new products and expansion of the custom I.V. system business and
SetFinder.

Research and development ("R&D") costs increased in 1999 by
approximately $167,000 to $1,214,000, or 3% of net sales, compared to
approximately $1,047,000, or 3% of net sales, in 1998. Management estimates that
R&D costs in 2000 will continue at approximately the same percentage of net
sales as in 1999. However, R&D costs could differ from those estimates and the
R&D may not be completed as expected.

The operating margin increased to 28% in 1999, compared to 25% in 1998,
principally because SG&A decreased as a percentage of net sales.

The Company's effective income tax rate in 1999 was 36%, down from 37%
in 1998. Management expects its effective tax rate in 2000 to be equal to or
slightly lower than the 1999 rate.

Net income in 1999 increased 30% from 1998 principally because the
gross profit increased 17%, but operating expenses increased only 5%. Net income
per share (diluted) increased $0.22, or 26%. The percentage increase in earnings
per share was less than that for net income, principally because the increased
average number of shares outstanding.


COMPARISON OF 1998 TO 1997

In 1998, the Company reported net sales of $39,842,000 which was
$9,438,000, or 31%, higher than the net sales of $30,404,000 reported in 1997.
The most significant factor in the increase was a $7,969,000, or 41%, increase
in CLAVE net sales. Net sales in all of the Company's other product lines were
equal to or more than those for 1997, except for a decrease in Click Lock and
Piggy Lock net sales.

Total CLAVE net sales increased approximately 41% from $19,539,000 in
1997 to $27,508,000 in 1998. Unit shipments of CLAVE products in 1998 increased
approximately 88% over 1997, with B.Braun and Abbott accounting for the entire
unit growth. Unit sales to independent distributors were down slightly. The
aggregate average net selling price of CLAVE products in 1998 decreased
approximately 25% as compared with 1997. That decrease reflects lower prices
from independent distributors and lower prices on bulk, non-sterile CLAVE
products sold to B.Braun and Abbott, as well as a higher percentage of the sales
mix being accounted for by bulk, non-sterile CLAVEs.

Net sales to Abbott amounted to $11,601,000 in 1998, compared to
$4,993,000 in 1997. CLAVE sales were 3.24 times the amount in 1997. Most of the
balance of the sales were in the low-priced Rhino, which were $1,987,000
compared with $2,087,000 in 1997.

Net sales to B.Braun, including revenue sharing, amounted to
$13,961,000 in 1998, compared to $10,971,000 in 1997. CLAVE net sales to B.Braun
increased approximately 36%, principally because of an increase in unit
shipments. Net sales of the McGaw Protected Needle were virtually unchanged.
Revenue sharing payments on B.Braun's sales of its SafeLine products was
approximately $1,995,000 in 1998, compared to $1,767,000 in 1997.

Net sales of Click Lock and Piggy Lock decreased 29% in 1998 compared
to 1997, because of the safe connector market's continued shift to needleless
technology.

17


The Lopez Valve showed a 24% growth in 1998 net sales compared to 1997
principally because of increased unit shipments.

The Company's net sales of custom I.V. systems were $3,218,000 in 1998
compared to $1,828,000 in 1997. Most of the increase in 1998 net sales was
because of increased unit shipments of custom I.V. systems incorporating the
CLAVE.

Total sales to foreign distributors were $1,364,000 in 1998 compared to
$908,000 in 1997.

Gross margin for 1998 was unchanged from the 58% registered in 1997.
The shift in sales mix toward a higher percentage of the relatively
higher-margin CLAVE products, continued increases in the benefits of the
Company's extensive production automation, and the increased absorption of
overhead by higher production volumes offset the effect of lower average unit
selling prices.

Selling, general and administrative costs ("SG&A") increased by
approximately $3,630,000 to $12,094,000 in 1998, compared to $8,464,000 in 1997.
SG&A costs were 30% of net sales in 1998 compared to 28% in 1997. The increase
in SG&A costs was primarily due to increased sales and marketing costs related
to the Company's domestic expansion of the CLAVE product line, growth of BMP,
expansion of the international sales efforts, and legal fees.

Research and development ("R&D") costs decreased in 1998 by
approximately $214,000 to $1,047,000, or 3% of net sales, compared to
approximately $1,261,000, or 4% of sales, in 1997.

The operating margin decreased to 25% in 1998, compared with 26% in
1997, principally because SG&A increased as a percentage of net sales.

Investment income increased 11% from 1997 to 1998, principally because
of an increase in invested funds.

The Company's effective income tax rate in 1998 was 37%, approximately
the same as in 1997.

Income from operations increased 27%, as the increase in operating
expenses of 35% exceeded the 32% increase in gross profit. Net income increased
27%. Net income per share (diluted) increased $0.15, or 21%. The percentage
increase in earnings per share was less than that for net income, principally
because the increase in the price of the Company's stock increased the dilutive
effect of stock options.


LIQUIDITY AND CAPITAL RESOURCES

During 1999, working capital decreased approximately $1,793,000 to
$42,024,000 from $43,817,000. The Company's cash and cash equivalents and
investment securities, including liquid investments, increased by $352,000 to
$38,442,000 from $38,090,000. That increase was due primarily to $14,767,000 of
cash flows from operating activities and $2,016,000 from exercise of stock
options, partially offset by $14,781,000 used to purchase property and
equipment, and $1,650,000 used to acquire treasury stock.

During 1998, working capital increased approximately $5,824,000 to
$43,817,000 from $37,993,000. The Company's cash and cash equivalents and
investment securities, including liquid investments, increased to $38,090,000
from $35,112,000, due primarily to $6,574000 of cash flows from operating
activities and $3,460,000 from exercise of stock options, partially, offset by
$6,657,000 used to acquire treasury stock.

Capital expenditures increased substantially in 1999 from the
relatively low levels in 1995 through 1997. Most of the expenditures were
molding machines, molds and automated assembly machines in the Company's San
Clemente, California production facilities. In addition, in April 1999, the
Company purchased a 28,000 square foot building near its other two buildings in
San Clemente to accommodate its expansion. Production capacity in San Clemente
significantly exceeds the Company's current production requirements.

18


Management expects that sales of the Company's products will continue
to grow in 2000. If sales continue to increase, accounts receivable and
inventories are expected to increase as well. As a result of these and other
factors, the Company expects the use of working capital to fund its operations
to continue to increase.

In October 1999, the Company purchased 121,000 shares of its stock for
treasury at a cost of $1,650,000. The Company had not purchased treasury stock
from August 1998 through September 30, 1999. It may purchase additional shares
in the future. However, future acquisitions, if any, will depend on market
conditions and other factors.

The Company believes that its existing working capital, supplemented by
income from operations, will be sufficient to fund capital expenditures and
increased working capital requirements for the foreseeable future.


YEAR 2000 COMPLIANCE

Many older computer programs use only the last two digits to refer to a
year. Therefore, they do not properly recognize a year that begins with "20"
rather than "19." This is referred to as the Year 2000, or Y2K problem. The Y2K
problem has been eliminated in many new programs and systems, which are said to
be "Y2K compliant." The Company has not encountered any Y2K problems, and
believes that it is extremely unlikely that it will. Costs to assure Y2K
compliance were nominal.


FORWARD LOOKING STATEMENTS

Various portions of this Report, including Management's Discussion and
Analysis describe trends in the Company's business and finances that Management
perceives and states some of its expectations and beliefs about the Company's
future. These statements about the future are "forward looking statements," and
the Company identifies them by using words such as "believes," "expects,"
"anticipates," "estimates," "intends," "plans," "will," "continuing," "could,"
and similar expressions and by statements about aims, goals and plans. The
forward looking statements are based on the best information currently available
to Management and assumptions that Management believes are reasonable, but
Management does 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,
production costs, gross margins, selling, general and
administrative costs, sales and marketing costs, promotional
costs, and research and development expense and income taxes;
o factors affecting operating results, such as shipments to
specific customers, product mix, selling prices, future
revenue sharing payments to the Company, the market shift to
needleless products, achievement of business expansion goals,
manufacturing efficiencies, labor costs, investment in
inventory, unit production costs, production automation,
expansion of markets and distribution costs;
o new or extended contracts with manufacturers and buying
organizations and dependence on a small number of customers;
o regulatory approvals and outcome of litigation;
o 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;
o working capital requirements, capital expenditures and common
stock repurchases; and
o Y2K issues.

19


The kinds of statements described above and similar forward looking
statements about the Company's 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. These factors are uncertain, and if one or more of them turn out
differently than Management currently expects, the Company's operating results
may differ materially from Management's current expectations.

Second, one should read the forward looking statements in conjunction
with the Risk Factors in the Company's Current Report on Form 8-K to the
Securities and Exchange Commission dated November 5, 1999, which is incorporated
by reference.

Third, the Company's actual future operating results are subject to
other important factors that the Company 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 the Company's major customers and independent
distributors in their strategies that might affect their
efforts to market the Company's products;
o unanticipated production problems; and
o the availability of patent protection and the cost of
enforcing and of defending patent claims.


The Company disclaims 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.

Not Applicable.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



20



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) as of December 31, 1999 and 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
three years ended December 31, 1999. These consolidated financial statements and
the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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. as of December 31, 1999 and 1998, and the consolidated results of
its operations and its consolidated cash flows for three years ended December
31, 1999, in conformity with generally accepted accounting principles.

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 28, 2000



21




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

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


ASSETS
------



December 31,
--------------------------------------
1999 1998
--------------- ---------------

CURRENT ASSETS:
Cash and cash equivalents $ 1,901,000 $ 2,049,000
Liquid investments 36,541,000 36,041,000
--------------- ---------------
Cash and liquid investments 38,442,000 38,090,000
Accounts receivable, net of
allowance for doubtful accounts
of $368,000 in 1999 and $342,000 in 1998 7,129,000 6,492,000
Inventories 2,056,000 1,990,000
Prepaid expenses and other 402,000 385,000
Deferred income taxes - current portion 1,345,000 991,000
--------------- ---------------
Total current assets 49,374,000 47,948,000
--------------- ---------------
PROPERTY AND EQUIPMENT, at cost:
Land, building and building improvements 12,173,000 7,191,000
Machinery and equipment 13,752,000 8,225,000
Furniture and fixtures 2,524,000 2,044,000
Molds 5,608,000 3,710,000
Construction in process 2,866,000 1,703,000
--------------- ---------------
36,923,000 22,873,000
Less--Accumulated depreciation (12,483,000) (9,109,000)
--------------- ---------------
24,440,000 13,764,000
--------------- ---------------
DEFERRED INCOME TAXES 806,000 92,000
OTHER ASSETS 744,000 556,000
--------------- ---------------
$ 75,364,000 $ 62,360,000
=============== ===============


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

22





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

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


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



December 31,
--------------------------------------
1999 1998
--------------- ---------------

CURRENT LIABILITIES:
Accounts payable $ 965,000 $ 683,000
Accrued liabilities 6,385,000 3,448,000
--------------- ---------------
Total current liabilities 7,350,000 4,131,000
--------------- ---------------



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--20,000,000 shares;
Issued -- 8,867,162 shares in 1999 and 1998 887,000 887,000
Additional paid-in capital 40,843,000 40,241,000
Treasury stock, at cost -- 765,123 shares in 1999
and 807,847 shares in 1998 (7,153,000) (7,117,000)
Retained earnings 33,437,000 24,218,000
--------------- ---------------
Total stockholders' equity 68,014,000 58,229,000
--------------- ---------------
$ 75,364,000 $ 62,360,000
=============== ===============


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

23






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


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



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

1999 1998 1997
--------------- --------------- ---------------

NET SALES $ 47,014,000 $ 39,842,000 $ 30,404,000
COST OF GOODS SOLD 19,883,000 16,687,000 12,817,000
--------------- --------------- ---------------
Gross profit 27,131,000 23,155,000 17,587,000

OPERATING EXPENSES:
Selling, general and administrative 12,529,000 12,094,000 8,464,000
Research and development 1,214,000 1,047,000 1,261,000
--------------- --------------- ---------------
Total operating expenses 13,743,000 13,141,000 9,725,000
--------------- --------------- ---------------
Income from operations 13,388,000 10,014,000 7,862,000

INVESTMENT INCOME 1,431,000 1,408,000 1,269,000
--------------- --------------- ---------------
Income before income taxes 14,819,000 11,422,000 9,131,000

PROVISION FOR INCOME TAXES 5,400,000 4,200,000 3,450,000
--------------- --------------- ---------------
NET INCOME $ 9,419,000 $ 7,222,000 $ 5,681,000
=============== =============== ===============

NET INCOME PER SHARE
Basic $1.16 $0.90 $0.71
Diluted $1.08 $0.86 $0.71
=============== =============== ===============
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 8,154,859 7,989,534 7,946,328
Diluted 8,690,443 8,422,613 8,028,991
=============== =============== ===============


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

24





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


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------


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

BALANCE, December 31, 1996 8,300,451 887,000 39,447,000 (4,848,000) 11,264,000 46,750,000

Acquire shares for treasury (549,565) - - (4,606,000) - (4,606,000)
Exercise of stock options and
related income tax benefits,
and other 15,500 - 8,000 134,000 (20,000) 122,000
Net Income - - - - 5,681,000 5,681,000
------------- ------------- -------------- -------------- ------------- --------------
BALANCE, December 31, 1997 7,766,386 887,000 39,455,000 (9,320,000) 16,925,000 47,947,000

Acquire shares for treasury (32,100) - - (401,000) - (401,000)
Exercise of stock options and
related income tax benefits,
and other 325,029 - 786,000 2,604,000 71,000 3,461,000
Net Income - - - - 7,222,000 7,222,000
------------- ------------- -------------- -------------- ------------- --------------
BALANCE, December 31, 1998 8,059,315 $ 887,000 $ 40,241,000 $ (7,117,000) $ 24,218,000 $ 58,229,000

Acquire shares for treasury (121,000) - - (1,650,000) - (1,650,000)
Exercise of stock options and
related income tax benefits,
and other 163,724 - 602,000 1,614,000 (200,000) 2,016,000
Net Income - - - - 9,419,000 9,419,000
------------- ------------- -------------- -------------- ------------- --------------
BALANCE, December 31, 1999 8,102,039 $ 887,000 $ 40,843,000 $ (7,153,000) $ 33,437,000 $ 68,014,000
============= ============= ============== ============== ============= ==============



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

25






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


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



For the years ended December 31,
--------------------------------------------------------
1999 1998 1997
-------------- -------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 9,419,000 $ 7,222,000 $ 5,681,000
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation and amortization 3,917,000 2,364,000 2,149,000
Deferred income taxes, non-current (714,000) (174,000) (145,000)
(Increase) decrease in:
Accounts receivable (637,000) (3,126,000) (279,000)
Inventories (66,000) (228,000) 471,000
Prepaid expenses and other assets (17,000) (184,000) 562,000
Increase (decrease) in:
Accounts payable 282,000 (720,000) (499,000)
Accrued liabilities 2,937,000 1,694,000 993,000
Deferred income taxes, current (354,000) (274,000) (267,000)
-------------- -------------- --------------
Net cash provided by operating activities 14,767,000 6,574,000 8,666,000
-------------- -------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (14,781,000) (6,657,000) (829,000)
Net change in liquid investments (500,000) (3,891,000) (2,450,000)
-------------- -------------- --------------
Net cash (used in) investing activities (15,281,000) (10,548,000) (3,279,000)
-------------- -------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock
options and related income tax benefits, and other 2,016,000 3,461,000 122,000
Purchase of treasury stock (1,650,000) (401,000) (4,606,000)
-------------- -------------- --------------
Net cash provided by (used in) financing activities 366,000 3,060,000 (4,484,000)
-------------- -------------- --------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (148,000) (914,000) 903,000

CASH AND CASH EQUIVALENTS, beginning of year 2,049,000 2,963,000 2,060,000
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS, end of year $ 1,901,000 $ 2,049,000 $ 2,963,000
============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for income taxes $ 4,555,000 $ 3,727,000 $ 2,862,000
============== ============== ==============


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

26




ICU MEDICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999, 1998 AND 1997



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. General
-------

ICU Medical, Inc. (the "Company" - a Delaware Corporation) operates
principally in one business segment engaged in the development and marketing of
proprietary 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. All wholly owned subsidiaries are included in the
Consolidated Financial Statements.

b. 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 at December 31, consist of the following:

1999 1998
-------------- --------------
Raw materials $ 962,000 $ 1,121,000
Work in process 287,000 509,000
Finished goods 807,000 360,000
-------------- --------------
$ 2,056,000 $ 1,990,000
============== ==============
c. 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 30 years
Building improvements 15 years
Machinery and equipment 5 - 10 years
Furniture, fixtures and molds 3 - 5 years

The Company follows the policy of capitalizing expenditures that
materially increase the life of the related assets; maintenance and repairs are
charged directly to expense 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.


27



d. Patents and Licenses
--------------------

Patents and licenses, which are shown in other assets in the
accompanying consolidated balance sheets, are stated at cost and are amortized
using the straight-line method over 10 years which is the estimated useful life
of the patent or license. At December 31, 1999 and 1998, the net book value of
patents and licenses was $448,000 and $508,000, respectively, net of accumulated
amortization of $431,000 and $323,000, respectively.

e. Research and Development
------------------------

The Company expenses research and development costs as incurred.

f. Cash Equivalents
----------------

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

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

The Company follows Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share" in calculating net income per share. This
statement provides for the presentation of (i) "basic" earnings per share, which
is computed by dividing net income by the weighted average number of common
shares outstanding and (ii) "diluted" earnings per share which is computed by
dividing net income by the weighted average number of common shares outstanding
plus dilutive securities. The Company's dilutive securities are outstanding
common stock options (excluding stock options with an exercise price in excess
of 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 SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." This
statement addresses the accounting and reporting for investments in equity
securities that have readily determinable fair values and for all investments in
debt securities. It requires that securities classified as available for sale be
carried at their market values and changes in the securities market values be
recorded, net of income tax effect, as a separate component of stockholders'
equity. Debt securities that the Company intends to hold to maturity can be
carried at amortized cost with no accounting for market value fluctuations.

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

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach in
accounting for income taxes payable or refundable at the date of the financial
statements as a result of all events that have been recognized in the financial
statements as measured by enacted tax laws. Additionally, SFAS No. 109 requires
that deferred tax assets be evaluated and a valuation allowance be established
if it is "more likely than not" that all or a portion of the deferred tax asset
will not be realized.

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

Sales and related costs are recorded by the Company upon shipment of
products to non-related distributors and end-users. Distributors and end-users
do not retain any right of return or price protection with respect to unsold
product. The Company warrants products against defects and has a policy
permitting the return of products under such circumstances. The Company provides
a reserve for future returns and price adjustments (including rebates) based on
historical experience. Revenue sharing payments 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, the revenue
sharing is not recorded until reported by the payers.


28



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

The Company does not provide post-retirement or post-employment
benefits to employees.

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

The Company accounts for its stock options 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".

m. 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. LIQUID INVESTMENTS

The Company's liquid investments, which 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 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. Balances consist of :




1999 1998 1997
------------- ------------- -------------
Corporate preferred stocks $ 14,800,000 $ 14,600,000 $ 26,450,000
Federal tax-exempt debt securities 20,650,000 20,350,000 5,700,000
Certificate of deposit 1,091,000 1,091,000 -
------------- ------------- -------------
$ 36,541,000 $ 36,041,000 $ 32,150,000
============= ============= =============



The certificate of deposit is pledged to secure a letter of credit.


Investment income, including interest on certificates of deposit and
money market funds, consisted of:




1999 1998 1997
------------- ------------- -------------


Corporate dividends $ 699,000 $ 516,000 $ 612,000
Tax-exempt interest 551,000 758,000 575,000
Other interest 181,000 134,000 82,000
------------- ------------- -------------
$ 1,431,000 $ 1,408,000 $ 1,269,000
============= ============= =============



29



3. ACCRUED LIABILITIES

Accrued liabilities consists of the following:



1999 1998
------------- -------------

Accrued incentive compensation $ 1,368,000 $ 703,000
Taxes payable 2,299,000 802,000
Other accruals 2,718,000 1,943,000
------------- -------------
Total accrued liabilities $ 6,385,000 $ 3,448,000
============= =============



4. COMMON STOCK AND COMMON STOCK OPTIONS GRANTED

In 1993, the Company adopted the 1993 Stock Incentive Plan and
Directors' Stock Option Plan (the "Plans"). In 1996, the 1993 Stock Incentive
Plan was amended to increase the number of shares reserved for issuance to
employees from 1,275,000 to 3,275,000, and in 1999 it was again amended to
increase the number of shares reserved for issuance to employees to 4,775,000.
Options granted under the 1993 Stock Incentive Plan expire eleven years from
issuance and 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. The 1993 Directors' Stock Option Plan, under which 225,000 shares
had been reserved for issuance, called for options to be granted to non-employee
Directors every three years; fifty percent of each Director's options vested on
the date of the first annual shareholders meeting following the grant and the
other fifty percent on the date of the second such meeting. The Plans include
conditions whereby options not vested are canceled if employment or directorship
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 1997, the Directors' Stock Award Plan, under which each non-employee
Director is awarded 1,000 shares of Common Stock annually, was adopted. Further,
grants under the Directors' Stock Option Plan were discontinued, reducing the
number of shares reserved for issuance under that Plan to 60,000.

A summary of the Company's stock option activity is in the following
table. Options canceled in 1997 were replaced with options granted at exercise
prices ranging from $8.19 to $8.31 (weighted average $8.24 per share).

Of the options outstanding at December 31, 1999, 2,833,368 are
time-accelerated options, which were issued under the 1993 Stock Incentive Plan.
Of those options, 40,700 issued in 1993 at an average exercise price of $9.56
expire in 2004; 109,500 issued in 1994 at an average exercise price of $11.00
expire in 2005; 15,000 issued in 1995 at an average exercise price of $12.56
expire in 2006; 504,709 issued in 1996 at an average exercise price of $13.58
expire in 2007; 1,016,292 issued in 1997 at an average exercise price of $9.22
expire in 2008; 835,227 issued in 1998 at an average exercise price of $12.40
expire in 2009 and, 311,940 issued in 1999 at an average exercise price of
$16.86 expire in 2010. The remaining 30,000 options that are not
time-accelerated are at an exercise price of $16.13 and expire in 2001. In
January 2000, options granted from 1998 to January 1999 to purchase 96,940
shares of common stock at prices ranging from $12.25 to $18.31 (weighted average
$15.94 per share) became vested.

Dilutive stock options account for the difference in the number of
shares used to calculate basic and diluted net income per share. Options which
are anti-dilutive because their exercise price exceeded the average market price
of the Company's common stock approximated 90,000, 360,000, and 870,000 in 1999,
1998 and 1997, respectively. At December 31, 1999, 2,133,428 options had
exercise prices less than the market price of the Company's common stock.

30



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



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

Outstanding at December 31, 1996 1,739,150 $5.75 - $ 23.00 $13.82

Granted 1,371,002 7.50 - 12.94 8.97
Canceled 830,000 9.19 - 23.00 14.39
Exercised 11,500 5.75 - 7.33 7.05
Forfeited 121,200 8.19 - 15.63 9.54
------------- ---------- ---------- ----------

Outstanding at December 31, 1997 2,147,452 7.19 - 16.25 10.29

Granted 910,229 12.06 - 16.38 12.16
Exercised 321,029 7.69 - 14.00 8.24
Forfeited 17,500 7.38 - 15.13 12.51
------------- ---------- ---------- ----------

Outstanding at December 31, 1998 2,719,152 7.19 - 16.38 11.15

Granted 330,000 12.75 - 21.44 16.90
Exercised 158,724 7.19 - 14.28 8.65
Forfeited 27,060 13.00 - 21.31 16.14
------------- ---------- ---------- ----------

Outstanding at December 31, 1999 2,863,368 $ 7.19 - $ 21.44 $ 11.91
============= ========== ========== ==========
Exercisable at December 31:
1997 $ 9.50 - $ 16.13 $ 14.88
1998 430,621 8.00 - 16.13 9.08
1999 1,357,656 7.63 - 16.13 10.84

Available for grant at December 31, 1999 1,464,379
============



The Company applies APB Opinion No. 25 and related interpretations in
accounting for stock options granted to employees, 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. Directors' stock
options are treated in the same manner as employee stock options for accounting
purposes.

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 1999, 1998 and 1997 was estimated as of the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions in the respective years: risk-free interest rate of 5.4, 5.7 and 5.9
percent, respectively; expected option life of 4.1, 4.7 and 4.3 years,
respectively; expected volatility of 58, 52 and 54 percent, respectively; and,
no dividends. 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.


31



For purposes of the following required pro forma information, the
weighted average fair value of stock options granted in 1999, 1998 and 1997 was
$8.36, $6.05 and $3.33, respectively. The total estimated fair value is
amortized to expense over the vesting period.



1999 1998 1997
------------- ------------- -------------

Proforma:
Net Income....................... $ 7,005,000 $ 3,328,000 $ 3,682,000

Net Income per share - basic..... $0.89 $0.44 $0.52
- diluted... $0.83 $0.42 $0.51

Weighted average number of
common shares - basic..... 7,891,000 7,558,000 7,120,000
- diluted... 8,426,000 7,991,000 7,209,000



5. 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 $50.00. 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 that 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.

6. INCOME TAXES

The provision for income taxes for the years ended December 31, 1999,
1998 and 1997, is as follows:



1999 1998 1997
------------- -------------- -------------

Current:
Federal $ 5,093,000 $ 3,694,000 $ 2,826,000
State 1,375,000 954,000 1,036,000
-------------- -------------- --------------
6,468,000 4,648,000 3,862,000
-------------- -------------- --------------
Deferred:
Federal (852,000) (379,000) (311,000)
State (216,000) (69,000) (101,000)
-------------- -------------- --------------
(1,068,000) (448,000) (412,000)
-------------- -------------- --------------
$ 5,400,000 $ 4,200,000 $ 3,450,000
============== ============== ==============



32



Current income taxes payable were reduced from the amounts in the above
table by $751,000, $843,000 and $8,000 in 1999, 1998 and 1997, 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.

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



1999 1998 1997
------------------------ ------------------------ -------------------------

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

Federal tax at the
expected statutory rate $ 5,038,000 34.0% $ 3,884,000 34.0% $ 3,105,000 34.0%
State income tax, net of
federal benefit 794,000 5.3 754,000 6.6 661,000 7.2
Tax-exempt interest and
dividends (353,000) (2.4) (380,000) (3.3) (316,000) (3.4)
Tax credits (79,000) (0.5) (58,000) (0.5) - -
------------- ------- ------------- ------- ------------- -------
Provision $ 5,400,000 36.4% $ 4,200,000 36.8% $ 3,450,000 37.8%
============= ======= ============= ======= ============= =======



The components of the Company's deferred income tax provision for the
years ended December 31, 1999, 1998 and 1997 are as follows:

1999 1998 1997
------------ ------------ ------------

Allowance for doubtful accounts $ (11,000) $ (6,000) $ (13,000)
Inventory reserves - 30,000 (105,000)
Accruals (317,000) (367,000) (45,000)
State income taxes (26,000) 69,000 (104,000)
Depreciation (714,000) (174,000) (145,000)
------------ ------------ ------------
$(1,068,000) $ (448,000) $ (412,000)
============ ============ ============


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


1999 1998
----------- -----------
Current deferred tax benefit:
Allowance for doubtful accounts $ 157,000 $ 146,000
Inventory reserves 270,000 270,000
Accruals 799,000 482,000
State income taxes 119,000 93,000
----------- -----------
$1,345,000 $ 991,000
=========== ===========
Long-term deferred tax benefit:
Depreciation $ 806,000 $ 92,000
=========== ===========


33




PRODUCTS, MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISKS

All the Company's products are disposable medical devices. Its
principal product is its CLAVE needleless I.V. connection system which accounted
for $32,059,000 of consolidated net sales in 1999, $27,508,000 in 1998 and
$19,539,000 in 1997. Custom I.V. systems, many of which incorporate the CLAVE
connector, accounted for $5,251,000 of consolidated net sales in 1999,
$3,218,000 in 1998 and $1,828,000 in 1997. All other products account for less
than 10% of net sales.

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, 1999, 1998
and 1997, the Company had sales of 10 percent or greater to two manufacturers as
follows:


1999 1998 1997
---- ---- ----

Manufacturer A 28% 35% 36%
Manufacturer B 42 29 16


8. 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, after consultation with legal counsel, the resolution of
these matters will not have a material adverse impact on the Company's financial
position or results of operations.

In June 1998, the Company suffered a judgment against it in the amount
of $728,000 after a jury verdict in favor of a plaintiff for commissions alleged
owed him. The Company is appealing the judgment, but in view of the
uncertainties of the appeal process, accrued a provision for this matter in its
1998 financial statements.

In November 1999, a medical products manufacturer commenced a patent
infringement action against the Company over the CLAVE connector. The Company
believes the action against it is without merit and intends to vigorously defend
itself. The Company has also brought a patent infringement action against that
Company and intends to vigorously pursue this matter.


34


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

Quarter Ended
------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1999
- ----
Net Sales $ 11,442 $ 11,699 $ 10,712 $ 13,161
Gross Profit 6,709 6,602 5,876 7,944
Net Income 2,184 2,220 1,946 3,069
Net Income Per Share:
Basic $ 0.27 $ 0.27 $ 0.24 $ 0.38
Diluted $ 0.25 $ 0.25 $ 0.22 $ 0.36


1998
- ----
Net Sales $ 9,982 $ 10,430 $ 9,618 $ 9,812
Gross Profit 5,815 6,062 5,598 5,680
Net Income 1,660 1,719 1,823 2,020
Net Income Per Share:
Basic $ 0.21 $ 0.21 $ 0.23 $ 0.25
Diluted $ 0.20 $ 0.20 $ 0.22 $ 0.24


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

None.


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,
1999, and such information is incorporated herein by this 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 13.

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 and Item 13 - Certain Relationships and Related
Transactions) 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, 1999, and such information is incorporated herein by
this reference.



35




PART IV

ITEM 14. 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.
-----------

Report of Independent Public Accountants......................................................... 21
Consolidated Balance Sheets at December 31, 1999 and 1998........................................ 22-23
Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997........... 24
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997.............................................................. 25
Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997....... 26
Notes to Consolidated Financial Statements....................................................... 27-35


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................................................. 39


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 Registrant's Directors' Stock Option Plan.(3)

10.4 Manufacture and Supply Agreement dated September 13, 1993 between
Registrant and B.Braun, Inc. relating to the Protected Needle
product.(4)

10.5 Supply and Distribution Agreement dated April 3, 1995 between
Registrant and Abbott Laboratories, Inc. relating to the CLAVE
product.(5)

10.6 Registrant's Director's Stock Award Plan.(6)

10.7 Rights Agreement dated July 15, 1998 between Registrant and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent.(7)

36


10.8 Manufacture and Supply Agreement dated January 1, 1999 by and between
Registrant and B.Braun Medical, Inc. relating to the CLAVE product.(8)

10.9 SafeLine Agreement effective October 1, 1999 by and between Registrant
and B.Braun Medical, Inc.(8)

10.10 Amendment to Abbott and ICU Medical Agreement, dated January 1, 1999
between Registrant and Abbott Laboratories.(9)

10.11 Amendment No. 1 to Rights Agreement, dated January 30, 1999, between
Registrant and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent.(10)

21.1 Subsidiaries of Registrant.

23.1 Consent of Arthur Andersen LLP.

27.1 Financial Data Schedule.

(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 May 4, 1996 and incorporated herein by
reference.
(3) Filed as an exhibit to Registrant's definitive Proxy Statement filed
pursuant to Regulation 14A on March 22, 1993 and incorporated herein by
reference.
(4) 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.
(5) 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.
(6) Filed as exhibit to Registrant's definitive Proxy Statement filed pursuant
to Regulation 14A on April 11, 1998 and incorporated herein by reference.
(7) Filed as an exhibit to Registrant's Registration Statement on Form 8-A
dated July 23, 1998 and incorporated herein by reference.
(8) Filed as an exhibit to Registrant's Quarterly Report on Form 8-K dated June
18, 1999, and incorporated herein by reference.
(9) Filed as an exhibit to Registrant's Quarterly Report on Form 8-K dated
February 23, 1999, and incorporated herein by reference.
(10) Filed as an exhibit to Registrant's Registration Statement on Form 8-A/A
dated February 9, 1999 and incorporated herein by reference.

(b) Reports on Form 8-K.

Registrant filed the following Report on Form 8-K during the last
quarter of the period covered by this Report:

Item 5 - November 5, 1999


37



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 9, 2000






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 9, 2000
- -------------------------- and Chief Executive Officer, (Principal
George A. Lopez, M.D. Executive Officer)


/s/ Francis J. O'Brien Chief Financial Officer March 9, 2000
- ----------------------- and Principal Accounting Officer
Francis J. O'Brien


/s/ Jack W. Brown Director March 9, 2000
- -----------------
Jack W. Brown


/s/ John J. Connors Director March 9, 2000
- --------------------
John J. Connors


/s/ Michael T. Kovalchik, III, M.D. Director March 9, 2000
- -----------------------------------
Michael T. Kovalchik, III, M.D.


/s/ Richard H. Sherman, M.D. Director March 9, 2000
- ----------------------------
Richard H. Sherman, M.D.


/s/ Robert S. Swinney, M.D. Director March 9, 2000
- ---------------------------
Robert S. Swinney, M.D.



38



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, 1997:

Allowance for
doubtful account $ 293,000 $ 35,000 $ - $ 4,000 $ 324,000
========== ========== ========== ========== ==========
Inventory reserves $ 274,000 $ 244,000 $ - $ 18,000 $ 500,000
========== ========== ========== ========== ==========

For the year ended
December 31, 1998:

Allowance for
doubtful accounts $ 324,000 $ 40,000 $ - $ 22,000 $ 342,000
========== ========== ========== ========== ==========
Inventory reserves $ 500,000 $ 62,000 $ - $ 96,000 $ 466,000
========== ========== ========== ========== ==========

For the year ended
December 31, 1999:

Allowance for
doubtful accounts $ 342,000 $ 100,000 $ - $ 74,000 $ 368,000
========== ========== ========== ========== ==========
Inventory reserves $ 466,000 $ - $ - $ - $ 466,000
========== ========== ========== ========== ==========




39





EXHIBIT INDEX


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

21.1 Subsidiaries of Registrant 41
23.1 Consent of Arthur Andersen LLP 42
27.1 Financial Data Schedule 43










40