Management Report

Calculation of EBIT(DA) Before Special Items

Key performance indicators for the Bayer Group are EBIT before special items, EBITDA before special items and the EBITDA margin before special items. These indicators are reported in order to allow a more accurate assessment of business operations. The special items – one-time effects that are non-recurring or do not regularly recur or attain similar magnitudes – are detailed in the following table. “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. The company considers EBITDA before special items to be a more suitable indicator of operating performance since it is not affected by depreciation, amortization, write-downs/write-backs or special items. The company also believes that this indicator gives readers a clearer picture of the results of operations and ensures greater comparability of data over time. The EBITDA margin before special items, which is the ratio of EBITDA before special items to sales, serves as a relative indicator for the internal and external comparison of operational earning power.

Depreciation and amortization in the first quarter of 2009 was slightly below the previous year at €688 million (-3.4%), comprising €378 million in amortization and write-downs of intangible assets and €310 million in depreciation and write-downs of property, plant and equipment. Of the included write-downs, €10 million constituted special items.

Special Items Reconciliation	EBIT* 1st Quarter 2008	EBIT* 1st Quarter 2009	EBITDA** 1st Quarter 2008	EBITDA** 1st Quarter 2009
	€ million	€ million	€ million	€ million
After special items	1,343	973	2,055	1,661
HealthCare	100	18	80	18
Schering PPA effects***	51	0	51	0
Schering integration costs	49	18	29	18
CropScience	54	8	50	4
Restructuring	54	8	50	4
MaterialScience	0	18	0	12
Restructuring	0	18	0	12
Total special items	154	44	130	34
Before special items	1,497	1,017	2,185	1,695
* EBIT as per income statements EBITDA: EBIT plus amortization of intangible assets and depreciation of property, plant and equipment. * 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). 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 and deducted when calculating EBIT before special items.