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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 2008 was virtually level with the previous year at €2,722 million (+0.4%), comprising €1,550 million in amortization and write-downs of intangible assets and €1,172 million in depreciation and write-downs of property, plant and equipment. Of the included write-downs, €133 million constituted special items.

Reconciliation of Special Items	EBIT* 2007	EBIT* 2008	EBITDA** 2007	EBITDA** 2008
	€ million	€ million	€ million	€ million
After special items	3,154	3,544	5,866	6,266
HealthCare	928	583	727	465
Schering PPA effects ***	177	208	216	208
Schering integration costs	506	157	418	111
Write-downs	166	98	14	26
Litigations	106	106	106	106
Other	(27)	14	(27)	14
CropScience	130	166	120	153
Restructuring	97	166	87	153
Litigations	33	0	33	0
MaterialScience	75	49	64	47
Restructuring	75	49	64	47
Reconciliation	0	0	0	0
Total special items	1,133	798	911	665
Before special items	4,287	4,342	6,777	6,931
2007 figures restated * EBIT as shown in the income statement EBITDA: EBIT plus amortization of intangible assets and depreciation of property, plant and equipment. The underlying EBITDA margin is calculated by dividing underlying EBITDA by sales. * 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.