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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 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 28, 2001 was $217,859,963. *
The number of shares outstanding of Registrant's Common Stock, $.10 par

value, as of February 28, 2001 was 8,424,523.
Portions of the Proxy Statement for Registrant's 2001 Annual Meeting of

Stockholders, filed or to be filed pursuant to Regulation 14A within 120 days

following Registrant's fiscal year ended December 31, 2000, 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.
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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 devices are designed to protect

healthcare workers and their patients from exposure to infectious diseases such

as Hepatitis B and C and Human Immunodeficiency Virus ("HIV") through accidental

needlesticks. 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 needleless I.V. connectors. This awareness has

also lead to significant federal and state legislation. On November 6, 2000, the

President of the United States signed the federal Needlestick Safety and

Prevention Act, which provides for needlestick protections for nurses and other

healthcare workers under the Occupational Safety and Health Administration

("OSHA"). The federal legislation, which is to be effective later in 2001, will

require hospitals and other healthcare employers to use needleless intravenous

systems, like the CLAVE Connector, among other protective technologies to reduce

the risk of needlestick injuries to employees. This is a significant expansion

of the previous OSHA mandate that "universal precautions" be observed to

minimize exposure to blood and other body fluids. In September 1998, the State

of California enacted the bloodborne pathogen standard under the state's

occupational safety and health statute. The standard mandates use of needlestick

prevention controls, including needleless systems. California was the first

state to enact such legislation, and since then 16 other states have enacted

similar legislation. 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
In 1993, the Company introduced the CLAVE needleless I.V. connection

system. It allows protected, secure and sterile I.V. connections without needles

and without failure-prone mechanical valves used in the I.V. connection systems

of some competitors. This was a successor to the Company's protected needle

products first introduced in 1984. 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.
The Company has been manufacturing and distributing custom I.V. systems

since late 1995. In 1999, the Company decided to substantially increase its

emphasis on marketing and selling custom I.V. systems.
The Company's principal products introduced in recent years are the

CLC2000(TM) and the 1o2 Valve(TM).
Effective January 1, 2000, the Company reoriented its manufacturing and

distribution operations. Marketing and sales operations are 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(TM). Manufacturing is

in a separate group, producing products for the four marketing and sales groups.
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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 transmission of an infectious disease is detected.

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.
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
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offers a lower cost alternative to existing systems by eliminating the need for

multiple parts. The healthcare professional simply inserts the male luer of any

secondary I.V. set, without a needle, into the CLAVE Integrated Y site and

twists to make the connection. The CLAVE Integrated Y site will not replace

CLAVE products used in non-piggyback connections. Unlike the original CLAVE

site, the CLAVE Integrated Y site is marketed exclusively to I.V. set

manufacturers, such as Abbott Laboratories ("Abbott") and B.Braun Medical, Inc.

("B.Braun") to build directly into their I.V. sets.
The CLAVE is the Company's largest selling product line, and accounted

for 71% of the Company's net sales in 2000.
CLICK LOCK(R) AND PIGGY LOCK(R) PRODUCTS
The Company's first products, the Click Lock and Piggy Lock, initially

introduced in 1984, were designed to overcome the limitations of conventional

I.V. connections which use exposed needles that are secured by tape or open luer

lock connections. 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.
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. 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

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