Bayer AG - Stockholders' Newsletter Third Quarter 2006

Financial Statements

Bayer Group Consolidated Statements of Cash Flows

	3rd Quarter 2005	3rd Quarter 2006	First Nine Months 2005	First Nine Months 2006
€ million
EBIT*	796	659	2,489	2,614
Income taxes	(59)	(243)	(460)	(753)
Depreciation and amortization	461	511	1,251	1,346
Change in pension provisions	(325)	(4)	(460)	(186)
(Gains) losses on retirements of noncurrent assets	(10)	(28)	(30)	(36)
Non-cash effects of the remeasurement of acquired inventories (work-down)	–	275	–	275
Gross cash flow	863	1,170	2,790	3,260
Decrease (increase) in inventories	(38)	(216)	(369)	(348)
Decrease (increase) in trade accounts receivable	440	167	(96)	(706)
Increase (decrease) in trade accounts payable	(124)	(16)	(469)	(286)
Changes in other working capital, other non-cash items	233	416	227	560
Net cash provided by (used in) operating activities (net cash flow), continuing operations	1,374	1,521	2,083	2,480
Net cash provided by (used in) operating activities (net cash flow), discontinued operations	52	(26)	110	145
Net cash flow provided by (used in) operating activities (net cash flow), total	1,426	1,495	2,193	2,625
Cash outflows for additions to property, plant, equipment and intangible assets	(346)	(325)	(798)	(1,084)
Cash inflows from sales of property, plant, equipment and other assets	48	46	320	129
Cash inflows from sales of investments	(1)	(6)	1,266	63
Cash outflows for acquisitions less acquired cash	(121)	(1,164)	(2,179)	(15,294)
Interest and dividends received	62	80	424	562
Cash inflows/outflows from marketable securities	(34)	56	(125)	283
Net cash provided by (used in) investing activities (total)	(392)	(1,313)	(1,092)	(15,341)
Capital contributions	0	1,177	0	1,177
Bayer AG dividend, dividend payments to minority stockholders, reimbursements of advance capital gains tax payments	(16)	(6)	(478)	(533)
Issuances of debt	1,412	69	1,853	13,831
Retirements of debt	(1,052)	(740)	(2,262)	(1,153)
Interest paid	(190)	(265)	(736)	(954)
Net cash provided by (used in) financing activities (total)	154	235	(1,623)	12,368
Change in cash and cash equivalents due to business activities (total)	1,188	417	(522)	(348)
Cash and cash equivalents at beginning of period	1,698	2,491	3,570	3,290
Change in cash and cash equivalents due to changes in scope of consolidation	0	0	(196)	(2)
Changes in cash and cash equivalents due to exchange rate movements	1	(1)	35	(33)
Cash and cash equivalents at end of period	2,887	2,907	2,887	2,907
Marketable securities and other instruments	153	29	153	29
Liquid assets as per balance sheets	3,040	2,936	3,040	2,936

2005 figures restated
* for definition see Bayer Group Key Data