Bayer AG - Stockholders' Newsletter Third Quarter 2007 - Calculation of EBIT(DA) Before Special Items

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Management Report

Calculation of EBIT(DA) Before Special Items

To permit a more accurate assessment of business operations, EBIT and EBITDA are also stated “before special items.” The special items concerned are detailed in the table below. “EBITDA,” “EBITDA before special items” and “EBIT before special items” are not defined in the International Financial Reporting Standards and should therefore be regarded only as supplementary information.

Special Items Reconciliation	EBIT 3rd Quarter 2006	EBIT 3rd Quarter 2007	EBIT First Nine Months 2006	EBIT First Nine Months 2007	EBITDA 3rd Quarter 2006	EBITDA 3rd Quarter 2007	EBITDA First Nine Months 2006	EBITDA First Nine Months 2007
€ million
After special items	630	677	2,556	2,769	1,124	1,439	3,829	4,785
HealthCare	106	269	128	617	317	117	339	463
Schering PPA effects*	37	51	37	104	267	51	267	165
Schering integration costs	30	68	44	363	30	68	44	300
Changes in intangible asset values	19	152	19	152	0	0	0	0
Restructuring	17	0	20	0	17	0	20	0
Litigation	13	27	18	27	13	27	18	27
Other	(10)	(29)	(10)	(29)	(10)	(29)	(10)	(29)
CropScience	15	4	15	94	3	1	3	85
Restructuring	40	4	40	61	28	1	28	52
Litigation	0	0	0	33	0	0	0	33
Other	(25)	0	(25)	0	(25)	0	(25)	0
MaterialScience	32	3	162	33	29	2	159	22
Restructuring	11	3	11	33	8	2	8	22
Litigation	21	0	151	0	21	0	151	0
Reconciliation	(14)	0	(4)	0	(14)	0	(4)	0
Restructuring	(14)	0	(4)	0	(14)	0	(4)	0
Total special items	139	276	301	744	335	120	497	570
Before special items	769	953	2,857	3,513	1,459	1,559	4,326	5,355

2006 figures restated
* The purchase price paid for Schering AG, Germany, was allocated among the acquired assets and assumed liabilities in accordance with the International Financial Reporting Standards (IFRS). The purchase price allocation resulted in total charges to EBIT of €254 million in the third quarter of 2007. To ensure comparability with future earnings data, the expected long-term effects of the step-up are reflected in EBIT and EBITDA before special items, whereas temporary, non-cash effects of the purchase price allocation are eliminated. When calculating EBIT before special items, we deducted a €51 million special charge recorded in this connection. EBIT before special items therefore reflects €203 million in charges resulting from the purchase price allocation. EBITDA before special items remains unaffected by the purchase price allocation.