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4.2 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 – comprising 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 2009 increased by 3.2% to €2,809 million (2008: €2,722 million), comprising €1,537 million (2008: €1,550 million) in amortization and write-downs of intangible assets and €1,272 million (2008: €1,172 million) in depreciation and write-downs of property, plant and equipment. Total asset write-downs were €149 million. Of this amount, €109 million constituted special items.

Special Items Reconciliation				[Table 3.16]
	EBIT* 2008	EBIT* 2009	EBITDA** 2008	EBITDA** 2009
	€ million	€ million	€ million	€ million
After special items	3,544	3,006	6,266	5,815
HealthCare	583	372	465	320
Schering PPA effects***	208	0	208	0
Schering integration costs	157	87	111	79
of which gain from divestitures	(69)	(114)	(69)	(114)
Write-downs	98	32	26	0
Restructuring	0	47	0	35
Litigations	106	180	106	180
Additional funding for the pension assurance association	0	26	0	26
Other	14	0	14	0
CropScience	166	219	153	197
Restructuring	166	177	153	155
Litigations	0	35	0	35
Additional funding for the pension assurance association	0	7	0	7
MaterialScience	49	140	47	105
Restructuring	49	130	47	95
Additional funding for the pension assurance association	0	10	0	10
Reconciliation	0	35	0	35
Litigations	0	10	0	10
Additional funding for the pension assurance association	0	25	0	25
Total special items	798	766	665	657
Before special items	4,342	3,772	6,931	6,472
* EBIT = operating result 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, Berlin, 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.