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(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005. | |
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report.... |
Title of Each Class: | Name of Each Exchange on Which Registered: | |
American Depositary Shares representing Bayer AG ordinary shares of no par value Bayer AG ordinary shares of no par value | New York Stock Exchange New York Stock Exchange** |
* | Bayer Corporation is also the name of a wholly-owned subsidiary of the registrant in the United States. |
** | Not for trading, but only in connection with the registration of American Depositary Shares. |
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• | cyclicality in our industries; | |
• | reduced demand for older products in response to advances in technology; | |
• | increasingly stringent regulatory controls; | |
• | increased raw materials prices; | |
• | the expiration of patent protections; | |
• | environmental liabilities and compliance costs; | |
• | failure to compete successfully, integrate acquired companies or develop new products and technologies; | |
• | risks from hazardous materials; | |
• | litigation and product liability claims; and | |
• | fluctuations in currency exchange rates. |
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• | the U.S. court lacked jurisdiction, as determined under German law; | |
• | the person against whom the judgment was obtained did not receive service of process adequate to permit a proper defense, did not otherwise acquiesce in the original action and raises the lack of service of process as a defense against the grant of the execution order; | |
• | the judgment would conflict with the final judgment of a German court or with the final judgment of another foreign court that is recognizable under German law; | |
• | recognition of the judgment would violate an important principle of German law, especially basic constitutional rights; or | |
• | there is a lack of reciprocity between Germany and the jurisdiction whose court rendered the original judgment. |
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Item 1. | Identity of Directors, Senior Management and Advisors |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
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Consolidated Income Statement Data |
Year ended December 31, | |||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2005 | ||||||||||||||||||||
€ | € | € | € | € | $ | ||||||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||||||||
IFRS: | |||||||||||||||||||||||||
Net sales (continuing operations) | 21,981 | 22,283 | 22,417 | 23,278 | 27,383 | 32,427 | |||||||||||||||||||
Operating result (continuing operations) | 1,518 | 815 | 575 | 1,875 | 2,812 | 3,330 | |||||||||||||||||||
Non-operating result(1) | (467 | ) | (423 | ) | (708 | ) | (653 | ) | (613 | ) | (726 | ) | |||||||||||||
Income before income taxes(1) | 1,051 | 392 | (133 | ) | 1,222 | 2,199 | 2,604 | ||||||||||||||||||
Income taxes(1) | (173 | ) | 5 | 84 | (473 | ) | (641 | ) | (759 | ) | |||||||||||||||
Income after taxes(1) | 878 | 397 | (49 | ) | 749 | 1,558 | 1,845 | ||||||||||||||||||
Income after taxes from discontinued operations(1) | 50 | 681 | (1,242 | ) | (67 | ) | 37 | 44 | |||||||||||||||||
Income after taxes total(1) | 928 | 1,078 | (1,291 | ) | 682 | 1,595 | 1,889 | ||||||||||||||||||
Minority stockholders’ interest | 4 | (3 | ) | (12 | ) | 3 | 2 | 2 | |||||||||||||||||
Net income | 932 | 1,075 | (1,303 | ) | 685 | 1,597 | 1,891 | ||||||||||||||||||
Average number of shares in issue | 730 | 730 | 730 | 730 | 730 | 730 | |||||||||||||||||||
Operating result from continuing | |||||||||||||||||||||||||
operations per share(1) | 2.08 | 1.12 | 0.79 | 2.57 | 3.85 | 4.56 | |||||||||||||||||||
Basic net income/loss per share(1) | 1.28 | 1.47 | (1.78 | ) | 0.94 | 2.19 | 2.59 | ||||||||||||||||||
Diluted net income/loss per share(1) | 1.28 | 1.47 | (1.78 | ) | 0.94 | 2.19 | 2.59 | ||||||||||||||||||
Dividends per share(1) | 0.90 | 0.90 | 0.50 | 0.55 | N/A | (2) | N/A | (2) | |||||||||||||||||
U.S. GAAP: | |||||||||||||||||||||||||
Net income | 800 | 1,277 | (1,445 | ) | 653 | 1,327 | 1,571 | ||||||||||||||||||
Basic and diluted net income per share | 1.10 | 1.75 | (1.98 | ) | 0.89 | 1.82 | 2.15 |
(1) | Prior year data have been restated for these items due to adoption of new IFRS accounting standards. For more details, see Notes 2, 3 and 28 to the consolidated financial statements appearing elsewhere in this annual report. |
(2) | The dividend payment for 2005 has not yet been decided on. Our Supervisory Board has accepted our Board of Management’s proposal to recommend at our Annual Stockholders’ Meeting a dividend for 2005 of€0.95 per share, for a total dividend of€694 million. |
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Consolidated Balance Sheet Data |
Year ended December 31, | ||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2005 | |||||||||||||||||||
€ | € | € | € | € | $ | |||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||||||
IFRS: | ||||||||||||||||||||||||
Total Assets(1) | 36,868 | 40,966 | 37,516 | 37,588 | 36,722 | 43,486 | ||||||||||||||||||
Stockholders’ equity(1) | 16,916 | 14,666 | 11,290 | 10,943 | 11,157 | 13,212 | ||||||||||||||||||
Liabilities(1) | 19,952 | 26,300 | 26,226 | 26,645 | 25,565 | 30,274 | ||||||||||||||||||
of which noncurrent financial obligations | 2,981 | 7,228 | 7,288 | 7,025 | 7,185 | 8,508 | ||||||||||||||||||
U.S. GAAP: | ||||||||||||||||||||||||
Stockholders’ equity | 18,300 | 16,734 | 13,325 | 13,046 | 12,347 | 14,621 | ||||||||||||||||||
Total assets | 37,831 | 42,668 | 38,012 | 38,496 | 38,133 | 45,157 |
(1) | Prior year data have been restated for these items due to adoption of new IFRS accounting standards. For more details, see Notes 2, 3 and 28 to the consolidated financial statements appearing elsewhere in this annual report. |
2003 | 2004 | 2005 | ||||||||||
Total dividend (€ in millions) | 365 | 402 | N/A | (1) | ||||||||
Dividend per share (€) | 0.50 | 0.55 | N/A | (1) | ||||||||
Dividend per share ($) | 0.57 | 0.68 | N/A | (1) |
(1) | The dividend payment for 2005 has not yet been decided on. Our Supervisory Board has accepted our Board of Management’s proposal to recommend at our Annual Stockholders’ Meeting a dividend for 2005 of€0.95 per share, for a total dividend of€694 million. |
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Year | Period End | Average | High | Low | ||||||||||||
(U.S. dollar per euro) | ||||||||||||||||
2001 | 0.8901 | 0.8909 | 0.9535 | 0.8370 | ||||||||||||
2002 | 1.0485 | 0.9454 | 1.0485 | 0.8594 | ||||||||||||
2003 | 1.2597 | 1.1321 | 1.2597 | 1.0361 | ||||||||||||
2004 | 1.3538 | 1.2438 | 1.3625 | 1.1801 | ||||||||||||
2005 | 1.1842 | 1.2449 | 1.3476 | 1.1667 |
Previous six months | High | Low | ||||||
(U.S. dollar | ||||||||
per euro) | ||||||||
September 2005 | 1.2538 | 1.2011 | ||||||
October 2005 | 1.2148 | 1.1914 | ||||||
November 2005 | 1.2067 | 1.1667 | ||||||
December 2005 | 1.2041 | 1.1699 | ||||||
January 2006 | 1.2287 | 1.1980 | ||||||
February 2006 | 1.2100 | 1.1860 |
Cyclicality may reduce our operating margins or cause operating losses |
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Failure to develop new products and production technologies may harm our competitive position |
Regulatory controls and changes in public policy may reduce the profitability of new or current products |
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Our operating margins may decrease if we are not be able to pass increased raw material prices on to customers or if prices for our products decrease faster than raw material prices |
Shortages or disruptions of supplies to customers due to unplanned capacity decreases or shutdowns of production plants may reduce sales |
Litigation and administrative claims could harm our operating results and cash flows |
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Competition from generic pharmaceuticals after patent expiration may reduce market share and sales revenue |
The loss of patent protection or ineffective patent protection for marketed products may result in loss of sales to competing products |
Failure to compete successfully or weak performance by our marketing partners may reduce our operating results |
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Our transactions relating to LANXESS expose us to continuing liability |
Risks from the handling of hazardous materials could negatively impact our operating results |
• | pipeline and storage tank leaks and ruptures; | |
• | fires and explosions; | |
• | malfunction and operational failure; and | |
• | releases, discharges or disposal of toxic and/or hazardous substances resulting from these or other causes. |
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Environmental liabilities and compliance costs may have a significant negative effect on our operating results |
• | that we currently own or operate; | |
• | that we formerly owned or operated; | |
• | where we disposed of waste from our operations; | |
• | where external toll manufacturers operate or operated; or | |
• | where property owned by third parties was contaminated by the emission or spill of contaminants for which we bear responsibility. |
Existing insurance coverage may turn out to be inadequate |
Significant fluctuations in exchange rates affect our financial results |
• | the relative prices at which we and our competitors sell products in the same market; | |
• | the cost of products and services we require for our operations; and | |
• | the euro-denominated items in our financial statements. |
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Negative developments affecting capital markets may make additional contributions to our pension funds necessary and changes in the yield assumptions could have an impact on the valuation of liabilities |
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Item 4. | Information on the Company |
• | In 2003, we spent a total of€68 million on acquisitions, mainly for increasing our interest in the Bayer Polymers Sheet Europe Group (formerly known as Makroform) to 100 percent. | |
• | In 2004, Bayer spent a total of€0.4 billion on acquisitions. Of this amount, approximately€0.1 billion was used for the purchase of Crompton Corporation’s 50 percent stake in the Gustafson joint venture (seed treatment business) based in the United States, Canada and Mexico, in which Bayer already held a 50 percent share. In connection with the acquisition of Roche’s Consumer Health business in 2005, Bayer acquired, by the end of 2004, Roche’s 50 percent interest in the Bayer-Roche joint venture that had been established in the United States in 1996. The purchase price for the 50 percent equity interest was€0.2 billion. Not included in the 2004 total acquisition amount is a first payment of€0.2 billion we made for Roche’s Consumer Health business in the rest of the world, because, as of December 31, 2004, this business had not yet been transferred to Bayer. | |
• | In 2005, we spent a total of€2.4 billion on acquisitions. Roche’s Consumer Health business in the rest of the world (except in Japan) was acquired for approximately€2.1 billion. Both this amount and the 2005 total acquisition amount include the first payment of€0.2 billion we made for Roche’s Consumer Health business in the rest of the world. Since January 2005, the business involving non-prescription drugs and vitamins has been part of Bayer HealthCare’s Consumer Care Division and has already been integrated into the Bayer organization. Aside from the 50 percent stake in the Bayer-Roche joint venture, the acquired business includes five production sites, consumer brands such asAleve®,Bepanthen®,Redoxon®, Rennie® andSupradyn®, vitamins and nutritional supplements. The acquisition has primarily been financed through the use of our own funds, although loans were taken out in several countries for legal and tax reasons. |
The remaining 2005 acquisition amount of approximately€0.3 billion related primarily to expenses incurred in connection with a license agreement and a co-marketing and distribution agreement. After divesting its product rights concerning the active ingredient fipronil (see below), Bayer signed an agreement with BASF at the end of January 2005 to license back fipronil for agricultural uses in certain countries outside Europe, the United States and Brazil. The transaction has been approved by the relevant authorities. In July 2005, Bayer acquired marketing rights for the cardiovascular drugZetia® under a co-marketing and distribution agreement with Schering-Plough. |
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• | In 2003, we sold the remaining parts of the household insecticides business (€0.3 billion), our 50 percent interest in PolymerLatex (€0.1 billion) and our stake in the biotechnology company Millennium Pharmaceuticals, Inc. (€0.3 billion). As part of the conditions imposed by the European, U.S. and Canadian antitrust authorities in connection with the Aventis CropScience acquisition in 2002, a number of active ingredients, especially in the area of insecticides and fungicides, were divested (€1.3 billion). In particular, Bayer divested the product rights concerning the active ingredient fipronil in the first quarter of 2003. | |
• | In July 2004, we sold, pursuant to contractual obligations, our 15 percent interest in the KWS Saat AG, a seed company acquired as part of Aventis CropScience in 2002. | |
• | In 2005, we divested our LANXESS subgroup, our plasma operations and several CropScience operations. |
– | LANXESS: At the end of January 2005, the LANXESS subgroup was spun off and ceased to be part of the Bayer Group. As part of its portfolio realignment, Bayer had combined its former Bayer Chemicals segment (except for Wolff Walsrode and H.C. Starck) with parts of its former Bayer Polymers business to form the LANXESS subgroup with economic effect from July 1, 2004. Those portions of our business that were combined into our LANXESS subgroup and subsequently spun off are shown as “discontinued operations” in accordance with International Financial Reporting Standard (IFRS) 5. For further information on IFRS 5 and the treatment of LANXESS for reporting purposes, please refer to Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Discontinued Operations and Note 7.2 to the consolidated financial statements contained elsewhere in this annual report. | |
– | Plasma: At the end of March 2005, Bayer divested the U.S. plasma operations of its former Biological Products division to two U.S. financial investors (approximately€0.2 billion). All plasma activities in the United States were transferred to Talecris BioTherapeutics, Inc. (Talecris), a corporation newly formed by the two investors. To account for the final agreements signed at the end of March 2005, we adjusted the previous year’s presentation to show the continued non-U.S. marketing and distribution activities as part of the continuing operations. In our financial statements for 2005, only the U.S. plasma business is reflected in discontinued operations. Revenues from our marketing and distribution activities for plasma products outside the United States are reflected in sales from continuing operations of our Pharmaceuticals, Biological Products segment. The comparative periods 2004 and 2003 have been adjusted to reflect the inclusion of non-U.S. distribution in continuing operations. For further details on the treatment of our plasma operations for reporting purposes, please refer to — Bayer HealthCare — Pharmaceuticals, Biological Products; Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Discontinued Operations; and Note 7.2 to the consolidated financial statements contained elsewhere in this annual report. | |
– | The Bayer CropScience subgroup divested a number of operations in 2005 for an aggregate selling price of approximately€80 million. These included the subsidiaries Philagro Holding S.A., France, and EqSeeds Comercia de Sementes Ltda., Brazil, as well as the location in Hauxton, UK. Bayer CropScience also divested the businesses relating to the manufacturing and marketing of certain active ingredients used by the Crop Protection business units and the Environmental Science business group, including the acaricide and insecticide amitraz (Mitac®). |
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• | Bayer HealthCare (consisting of four segments: Pharmaceuticals, Biological Products (renamed Pharmaceuticals as of January 1, 2006); Consumer Care; Diabetes Care, Diagnostics; and Animal Health) develops, produces and markets: |
– | prescription pharmaceuticals and biological products; | |
– | over-the-counter medications and nutritional supplements; | |
– | diagnostic products for laboratory testing, near-patient testing and self-testing applications; and | |
– | veterinary medicines, nutritionals and grooming products for companion animals and livestock. |
• | Bayer CropScience (consisting of the Crop Protection segment and the Environmental Science, BioScience segment): |
– | develops and markets a comprehensive portfolio of fungicides, herbicides, insecticides and seed treatment products to meet a wide range of regional requirements; and | |
– | develops and markets a wide range of products for the green industry, garden care, non-agricultural pest and weed control and conventional seeds, and is active in plant biotechnology. |
• | Bayer MaterialScience (comprising the Materials segment and the Systems segment) primarily develops, manufactures and markets: |
– | high-quality plastic granules, methylcellulose, metallic and ceramic powders and semi-finished products; and | |
– | polyurethanes for a wide variety of applications as well as coating and adhesive raw materials and basic inorganic chemicals. |
• | Bayer Technology Services, which provides engineering functions such as process development, process and plant engineering, construction and optimization. | |
• | Bayer Business Services, which provides information management, accounting, consulting and administrative services. | |
• | Bayer Industry Services, which operates the Bayer Chemical Park network of industrial facilities in Germany and provides site-specific services in the areas of technology, environmental protection, waste management, utility supply, infrastructure, safety, chemical analysis and vocational training to Bayer and non-Bayer companies. Bayer Industry Services GmbH & Co. OHG is held by Bayer AG (60 percent) and by LANXESS (40 percent). |
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Percentage | Percentage | Percentage | |||||||||||||||||||||||
2003 | of total sales | 2004 | of total sales | 2005 | of total sales | ||||||||||||||||||||
(Euros in millions) | |||||||||||||||||||||||||
HealthCare | 8,497 | 37.9 | 8,058 | 34.6 | 9,429 | 34.4 | |||||||||||||||||||
Pharmaceuticals, Biological Products(a) | 4,371 | 19.5 | 3,961 | 17.0 | 4,067 | 14.9 | |||||||||||||||||||
Consumer Care | 1,403 | 6.3 | 1,336 | 5.7 | 2,355 | 8.6 | |||||||||||||||||||
Diabetes Care, Diagnostics | 1,933 | 8.6 | 1,975 | 8.5 | 2,151 | 7.9 | |||||||||||||||||||
Animal Health | 790 | 3.5 | 786 | 3.4 | 856 | 3.0 | |||||||||||||||||||
CropScience | 5,764 | 25.7 | 5,946 | 25.5 | 5,896 | 21.5 | |||||||||||||||||||
Crop Protection | 4,801 | 21.4 | 4,957 | 21.3 | 4,874 | 17.8 | |||||||||||||||||||
Environmental Science, BioScience | 963 | 4.3 | 989 | 4.2 | 1,022 | 3.7 | |||||||||||||||||||
MaterialScience | 7,453 | 33.2 | 8,597 | 36.9 | 10,695 | 39.1 | |||||||||||||||||||
Materials | 2,777 | 12.4 | 3,248 | 13.9 | 4,086 | 14.9 | |||||||||||||||||||
Systems | 4,676 | 20.8 | 5,349 | 23.0 | 6,609 | 24.2 | |||||||||||||||||||
Reconciliation | 703 | 3.2 | 677 | 3.0 | 1,363 | 5.0 | |||||||||||||||||||
Total Sales from Continuing Operations(b) | 22,417 | 100.0 | 23,278 | 100.0 | 27,383 | 100.0 |
(a) | With effect from January 1, 2006, the former Pharmaceuticals, Biological Products segment has been renamed the Pharmaceuticals segment. |
(b) | In accordance with new accounting standard IFRS 5 and other related standards, the financial information presented in this annual report only includes the continuing operations of the Bayer Group and its segments, except where specific reference is made to discontinued operations. Our revenues from discontinued operations were€627 million in 2005,€6,480 million in 2004 and€6,150 million in 2003. |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 4,371 | 3,961 | 4,067 | ||||||||||
Percentage of total sales | 19.5 | 17.0 | 14.9 | ||||||||||
Intersegment sales | 42 | 38 | 58 | ||||||||||
Operating result | (16 | ) | 399 | 475 | |||||||||
thereof special items(a) | (515 | ) | (53 | ) | (140 | ) |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003,2004 and 2005 — Segment Data. |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 1,412 | 1,577 | 1,600 | ||||||||||
North America | 1,817 | 1,172 | 1,129 | ||||||||||
Asia/Pacific | 804 | 851 | 900 | ||||||||||
Latin America/ Africa/Middle East | 338 | 361 | 438 | ||||||||||
Total | 4,371 | 3,961 | 4,067 | ||||||||||
2003 | 2004 | 2005 | |||||||||||||||||||||||
Percentage of | Percentage of | Percentage of | |||||||||||||||||||||||
Product | Sales | Segment Sales | Sales | Segment Sales | Sales | Segment Sales | |||||||||||||||||||
(Euros in | (Euros in | (Euros in | |||||||||||||||||||||||
millions) | millions) | millions) | |||||||||||||||||||||||
Kogenate® | 497 | 11.4 | 563 | 14.2 | 663 | 16.3 | |||||||||||||||||||
Adalat® | 676 | 15.5 | 670 | 16.9 | 659 | 16.2 | |||||||||||||||||||
Ciprobay®/Cipro® | 1,411 | 32.3 | 837 | 21.2 | 525 | 12.9 | |||||||||||||||||||
Avalox®/Avelox® | 299 | 6.8 | 318 | 8.0 | 364 | 9.0 | |||||||||||||||||||
Glucobay® | 273 | 6.2 | 278 | 7.0 | 295 | 7.2 | |||||||||||||||||||
Levitra® | 144 | 3.3 | 193 | 4.9 | 260 | 6.4 | |||||||||||||||||||
Trasylol® | 157 | 3.6 | 171 | 4.3 | 230 | 5.7 | |||||||||||||||||||
Aspirin®(a) | 111 | 2.5 | 147 | 3.7 | 177 | 4.3 | |||||||||||||||||||
Other | 803 | 18.4 | 784 | 19.8 | 894 | 22.0 | |||||||||||||||||||
Total | 4,371 | 3,961 | 4,067 | ||||||||||||||||||||||
(a) | CardioAspirin is also distributed by our Consumer Care division. These figures do not include sales by the Consumer Care division. |
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• | antibacterial products: Pfizer, GlaxoSmithKline and Abbott Laboratories; | |
• | hypertension and coronary heart disease therapy: Pfizer, Novartis, AstraZeneca and Merck & Co.; | |
• | oral antidiabetics: Takeda, GlaxoSmithKline, Aventis and Bristol-Myers Squibb; | |
• | blood coagulation: Baxter, Wyeth and ZLB Behring; and | |
• | erectile dysfunction: Pfizer and Eli Lilly. |
Life Cycle Management |
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Phase II/III Trials |
Project | Indication | Status | ||
Factor Xa inhibitor | VTE prevention, | In Phase III | ||
VTE treatment, | In Phase II | |||
Stroke prevention in patients with atrial fibrillation | ||||
Nexavar® | Advanced renal cell carcinoma, | FDA approval | ||
Hepatocellular carcinoma, | In Phase III | |||
Malignant melanoma, NSCLC, | ||||
First line renal cell carcinoma | In Phase II | |||
Trasylol® (aprotinin injection) | Hematology | In Phase III | ||
(Hip-surgery, Spinal-surgery) | ||||
Alfimeprase | Acute peripheral arterial | In Phase III | ||
occlusion (PAO)/catheter occlusion (CO) |
Kogenate® |
Kogenate® — Next Generation |
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Kogenate®FSBio-Set®Delivery System |
Gene Therapy |
Bayer HealthCare posts information on clinical trials on the internet |
Research Collaborations |
Research Cycle | Discipline/ Technique | Research Company | ||
Understanding the disease mechanism and identifying new targets | Functional genomics (functional analysis of genetic data) | Affymetrix, CuraGen | ||
Screening the candidate substances | High-throughput screening (rapid, automated testing of compounds for potential effectiveness against a given target) | Axxam | ||
Increasing the pool of potential drug candidates by small-chemical molecules and macromolecules (proteins, peptides) | Pharmacophore informatics Pool of Bayer biomolecules (for example, monoclonal antibodies and conjugates) | MetaKey Software Morphosys; Seattle Genetics |
CuraGen |
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Product Development Collaborations |
Onyx |
Schering-Plough |
GlaxoSmithKline |
Johnson & Johnson |
In-licensing activities |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 1,403 | 1,336 | 2,355 | ||||||||||
Percentage of total sales | 6.3 | 5.7 | 8.6 | ||||||||||
Intersegment sales | 7 | 16 | 14 | ||||||||||
Operating result | 486 | 183 | 174 | ||||||||||
thereof special items(a) | 288 | (30 | ) | (118 | ) |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 387 | 401 | 1,019 | ||||||||||
North America | 668 | 616 | 665 | ||||||||||
Asia/Pacific | 56 | 40 | 132 | ||||||||||
Latin America/ Africa/Middle East | 292 | 279 | 539 | ||||||||||
Total | 1,403 | 1,336 | 2,355 | ||||||||||
2003 | 2004 | 2005 | |||||||||||||||||||||||
Percentage | Percentage | Percentage | |||||||||||||||||||||||
of Segment | of Segment | of Segment | |||||||||||||||||||||||
Product | Sales | Sales | Sales | Sales | Sales | Sales | |||||||||||||||||||
(Euros in | (Euros in | (Euros in | |||||||||||||||||||||||
millions) | millions) | millions) | |||||||||||||||||||||||
Aspirin®(a) | 463 | 33.0 | 454 | 34.0 | 453 | 19.2 | |||||||||||||||||||
Aleve®/Naproxen(b) | 88 | 6.3 | 90 | 6.7 | 178 | 7.6 | |||||||||||||||||||
Canesten® | 135 | 9.6 | 140 | 10.5 | 145 | 6.2 | |||||||||||||||||||
Supradyn®(c) | — | — | — | — | 125 | 5.3 | |||||||||||||||||||
One-A-Day® | 130 | 9.3 | 127 | 9.5 | 118 | 5.0 | |||||||||||||||||||
Other | 587 | 41.8 | 525 | 39.3 | 1,336 | 56.7 | |||||||||||||||||||
Total | 1,403 | 1,336 | 2,355 | ||||||||||||||||||||||
(a) | CardioAspirin is also distributed by our Pharmaceuticals division. These figures do not include sales by the Pharmaceuticals division. |
(b) | As the productAleve® was part of the former U.S. joint venture with Roche, sales figures for 2003 and 2004 only represent the Bayer portion of the joint venture’s sales. 2005 sales figures represent total sales of the product after the acquisition of the remaining 50 percent of the U.S. joint venture.Naproxen is the active ingredient included in products marketed in the United States under the brandAleve® and in other countries using different local brands, the latter having been acquired as part of Roche’s Consumer Health business in 2005. |
(c) | Acquired as part of Roche’s Consumer Health business in 2005. |
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Analgesics |
CardioAspirin (see — Pharmaceuticals, Biological Products — Major Products) |
Cough/Cold |
Dermatologicals |
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Gastrointestinals |
Nutritionals |
• | analgesics: Johnson & Johnson, Bristol-Myers Squibb and Wyeth; | |
• | cough and cold products: Pfizer, Schering Plough and Novartis; | |
• | dermatological products: Johnson & Johnson, Pfizer and Novartis; |
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• | gastrointestinal products: Procter & Gamble, Johnson & Johnson and GlaxoSmithKline; and | |
• | vitamins: Wyeth and Merck KGaA. |
• | efficient development of new products and indications to support current brands; and | |
• | product development, clinical and regulatory strategies, which provide opportunity to capitalize on new technologies, expanded label indications and reclassifications of products from those for which a prescription is required to those dispensed over-the-counter. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 1,933 | 1,975 | 2,151 | ||||||||||
Percentage of total sales | 8.6 | 8.5 | 7.9 | ||||||||||
Intersegment sales | 0 | 1 | 1 | ||||||||||
Operating result | 115 | 217 | 274 | ||||||||||
thereof special items(a) | (20 | ) | 0 | 34 |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 735 | 785 | 848 | ||||||||||
North America | 836 | 824 | 893 | ||||||||||
Asia/Pacific | 246 | 249 | 277 | ||||||||||
Latin America/ Africa/Middle East | 116 | 117 | 133 | ||||||||||
Total | 1,933 | 1,975 | 2,151 | ||||||||||
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Division | 2003 | 2004 | 2005 | ||||||||||
(Euros in millions) | |||||||||||||
Diagnostics | 1,308 | 1,322 | 1,433 | ||||||||||
Diabetes Care | 625 | 653 | 718 | ||||||||||
Total | 1,933 | 1,975 | 2,151 | ||||||||||
2003 | 2004 | 2005 | |||||||||||||||||||||||
Percentage of | Percentage of | Percentage of | |||||||||||||||||||||||
Product | Sales | Segment Sales | Sales | Segment Sales | Sales | Segment Sales | |||||||||||||||||||
(Euros in | (Euros in | (Euros in | |||||||||||||||||||||||
millions) | millions) | millions) | |||||||||||||||||||||||
Ascensia® | 578 | 29.9 | 627 | 31.7 | 701 | 32.6 | |||||||||||||||||||
Advia Centaur® | 387 | 20.0 | 441 | 22.3 | 512 | 23.8 | |||||||||||||||||||
Rapidlab®/Rapidpoint® | 154 | 8.0 | 153 | 7.7 | 163 | 7.6 | |||||||||||||||||||
Clinitek®Urinalysis | 156 | 8.1 | 147 | 7.4 | 152 | 7.1 | |||||||||||||||||||
Advia Hematology® | 117 | 6.0 | 130 | 6.6 | 141 | 6.6 | |||||||||||||||||||
Other | 541 | 28.0 | 477 | 24.3 | 482 | 22.3 | |||||||||||||||||||
Total | 1,933 | 1,975 | 2,151 | ||||||||||||||||||||||
Diagnostics |
• | focusing on growth in market segments that offer the greatest opportunity; | |
• | expanding to reach new groups of customers with our existing products while investing in fast growing markets such as Asia Pacific; and | |
• | building customer loyalty by delivering cost efficient systems solutions across all groups of customers we serve. |
Diabetes Care |
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Overview |
Major Products |
Central Laboratory Testing |
Near Patient Testing |
Molecular Testing |
Home Healthcare |
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Product/ Brand Name | Principal application | Status(a) | ||
Advia Centaur® menu expansion | Eight new infectious disease assays launched (HCV, HAV IgM & Total, HBc IgM, anti-HBs & HBc Total, HBsAg and HBsAg Confirmatory). Two additional claims for BNP. | Launched throughout 2005 | ||
Advia®1650andAdvia® 2400menu expansion | Nine new drugs-of-abuse assays (cannabinoid (thC), opiate (300 & 2000), benzodiazepine, methadone, phencyclidine, propoxyphene, cocaine, amphetamine and barbiturate). | Launched throughout 2005 | ||
Rapidlab®1200 | High throughput, bench-top analyzer | Launched in July 2005 | ||
Advia Centaur®CP | Medium throughput, bench-top immunoassay analyzer | Launched in November 2005 |
(a) | The term “throughout” refers to the fact that there are various versions of the products that were launched at different times throughout the year; “launched in” refers to a single product. |
Markets and Distribution |
• | Central Laboratory Testing: Roche, Abbott, Beckman Coulter, Dade Behring and Ortho Clinical Diagnostics; | |
• | Molecular Testing: Roche, Abbott and Gen-Probe; | |
• | Near Patient Testing: Roche, Radiometer, Abbott, Ortho Clinical Diagnostics and Biosite; | |
• | Home Healthcare: Alere Medical, AMD Telemedicine, American TeleCare, Cardiocom, Cybernet Medical, Health Hero Honeywell HomMed, iMetrikus, Philips Medical Systems. |
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Research and Development |
• | in Central Laboratory Testing, through development of theAdvia® family of systems and in the expansion of assays in growth areas; | |
• | in Molecular Testing, through menu expansion of assays for infectious disease and automation; | |
• | in Near Patient Testing, through enhancements of ourDCA 2000®+ analyzer and through expansion of the immunoassay menu on theClinitek Status® analyzer. |
Product/ Brand Name | Principal Application | Status(a) | ||
Advia Centaur® andAdvia Centaur®CPmenu expansion | Menu expansion for infectious disease, autoimmune, transplant drug monitoring, allergy and cardiovascular disease. | Launches planned throughout 2006 | ||
Advia®1800 | Fully automated chemistry analyzer with 1800 test throughput per hour | Launch planned in 2006 | ||
Versant®440 | Complete viral-load molecular system | Launch planned in 2006 | ||
Advia Centaur®XP | Next generation high throughput immunoassay system | Launch planned in 2006 |
(a) | The term “launch(es) planned throughout” refers to the fact that there are multiple products that we expect to launch at different times throughout the year; “launch planned in” refers to a single product. |
Overview |
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Major Products |
Markets and Distribution |
Research and Development |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 790 | 786 | 856 | ||||||||||
Percentage of total sales | 3.5 | 3.4 | 3.0 | ||||||||||
Intersegment sales | 6 | 4 | 8 | ||||||||||
Operating result | 172 | 157 | 179 | ||||||||||
thereof special items(a) | 22 | 0 | 7 |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 242 | 245 | 252 | ||||||||||
North America | 305 | 295 | 314 | ||||||||||
Asia/Pacific | 122 | 120 | 141 | ||||||||||
Latin America/ Africa/Middle East | 121 | 126 | 149 | ||||||||||
Total | 790 | 786 | 856 | ||||||||||
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Food Animal | 383 | 375 | 394 | ||||||||||
Companion Animal | 407 | 411 | 462 | ||||||||||
Total | 790 | 786 | 856 | ||||||||||
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Parasiticides |
Antimicrobials |
Biologicals |
Nutritionals |
Farm Hygiene |
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Projects/ Products | Indication | Status | ||
Endoparasiticide and ectoparasiticide combinations | Control of fleas, ticks, heartworm and gastrointestinal worms in cats and dogs | Launch/in registration/in clinical development | ||
Red mite control remedy | Poultry | Submitted | ||
Baycox® calves | Coccidiosis control in calves | In registration | ||
Baytril® swine (North America) | Antimicrobial infections in pigs | In registration | ||
Pradofloxacin | Antimicrobial for dogs and cats | In clinical development, two formulations in EU already submitted | ||
Renal failure and congestive heart failure | Non-infectious diseases in dog and cats | Clinical development started |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 4,801 | 4,957 | 4,874 | ||||||||||
Percentage of total sales | 21.4 | 21.3 | 17.8 | ||||||||||
Intersegment sales | 62 | 71 | 70 | ||||||||||
Operating result | 242 | 386 | 532 | ||||||||||
thereof special items(a) | (70 | ) | (42 | ) | 7 |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 1,945 | 1,898 | 1,901 | ||||||||||
North America | 919 | 979 | 1,076 | ||||||||||
Asia/Pacific | 863 | 820 | 811 | ||||||||||
Latin America/ Africa/Middle East | 1,074 | 1,260 | 1,086 | ||||||||||
Total | 4,801 | 4,957 | 4,874 | ||||||||||
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Insecticides | 1,376 | 1,378 | 1,311 | ||||||||||
Fungicides | 1,168 | 1,277 | 1,248 | ||||||||||
Herbicides | 1,848 | 1,855 | 1,840 | ||||||||||
Seed Treatment | 409 | 447 | 475 | ||||||||||
Total | 4,801 | 4,957 | 4,874 | ||||||||||
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2003 | 2004 | 2005 | |||||||||||||||||||||||
Percentage of | Percentage of | Percentage of | |||||||||||||||||||||||
Product | Sales | Segment Sales | Sales | Segment Sales | Sales | Segment Sales | |||||||||||||||||||
(Euros in | (Euros in | (Euros in | |||||||||||||||||||||||
millions) | millions) | millions) | |||||||||||||||||||||||
Confidor®/ Gaucho®/Admire®(a)(b) (Insecticides/ Seed Treatment) | 467 | 9.7 | 455 | 9.2 | 444 | 9.1 | |||||||||||||||||||
Folicur®/ Raxil®(a) (Fungicides/ Seed Treatment) | 310 | 6.5 | 401 | 8.1 | 327 | 6.7 | |||||||||||||||||||
Basta®/ Liberty®(a)(Herbicides) | 153 | 3.2 | 189 | 3.8 | 212 | 4.3 | |||||||||||||||||||
Puma®(a)(Herbicides) | 226 | 4.7 | 226 | 4.6 | 202 | 4.1 | |||||||||||||||||||
Flint®/Stratego®/Sphere®(a) (Fungicides) | 190 | 4.0 | 235 | 4.7 | 188 | 3.9 | |||||||||||||||||||
Atlantis®/Mesomaxx® (Herbicides) | 58 | 1.2 | 97 | 2.0 | 142 | 2.9 | |||||||||||||||||||
Betanal®(a)(Herbicides) | 142 | 3.0 | 143 | 2.9 | 127 | 2.6 | |||||||||||||||||||
Poncho® (Seed Treatment) | 19 | 0.4 | 57 | 1.1 | 110 | 2.3 | |||||||||||||||||||
Temik® (Insecticides) | 90 | 1.9 | 109 | 2.2 | 104 | 2.1 | |||||||||||||||||||
Fenikan®(a)(Herbicides) | 105 | 2.2 | 104 | 2.1 | 101 | 2.1 | |||||||||||||||||||
Other | 3,041 | 63.2 | 2,941 | 59.3 | 2,917 | 59.9 | |||||||||||||||||||
Total | 4,801 | 4,957 | 4,874 | ||||||||||||||||||||||
(a) | The main active ingredients contained in these products are also used in products sold by the Environmental Science business group. | |
(b) | The active ingredient imidacloprid contained in these products is also used in the Animal Health segment’sAdvantage® product. These figures do not include sales by the Animal Health segment. |
(1) | The amounts shown represent sales by main active ingredient group; for the sake of clarity, however, only the principal brands are listed. |
(2) | This statement is based on 2004 and first half 2005 data published in AgriFutura, The newsletter of Phillips McDougall-Agriservice, No. 65 (March 2005) andNo. 70 (August 2005); data for the full year 2005 have not yet been published. |
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Insecticides |
Fungicides |
Herbicides |
Seed Treatment |
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New active ingredients | Product Family | Status | ||
Fluoxastrobin | Fungicides | Launched in 2004/2005(a) | ||
Spiromesifen | Insecticides | Launched in 2004/2005(a) | ||
Ethiprole | Insecticides | Launched in 2005 | ||
Fluopicolide | Fungicides | Launch expected in 2006 |
(a) | This active ingredient was first registered in a key market at the end of 2004, whereas its first significant sales were generated in 2005. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 963 | 989 | 1,022 | ||||||||||
Percentage of total sales | 4.3 | 4.2 | 3.7 | ||||||||||
Intersegment sales | 14 | 7 | 13 | ||||||||||
Operating result | 100 | 106 | 158 | ||||||||||
thereof special items(a) | (11 | ) | 12 | (2 | ) |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 351 | 340 | 340 | ||||||||||
North America | 420 | 433 | 452 | ||||||||||
Asia/Pacific | 100 | 107 | 122 | ||||||||||
Latin America/Africa/Middle East | 92 | 109 | 108 | ||||||||||
Total | 963 | 989 | 1,022 | ||||||||||
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Environmental Science | 692 | 678 | 694 | ||||||||||
BioScience | 271 | 311 | 328 | ||||||||||
Total | 963 | 989 | 1,022 | ||||||||||
(3) | The amounts shown represent sales by main active ingredient group; for the sake of clarity, however, only the principal brands are listed. |
(4) | This statement is based on 2004 data published in the Cropnosis reportIndustry performance Agchems&Agbiotech 2004-05 (September 2005). |
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Overview |
Major Products |
Markets and Distribution |
Research and Development |
45
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Overview |
Major Products |
Markets and Distribution |
Research and Development |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 2,777 | 3,248 | 4,086 | ||||||||||
Percentage of total sales | 12.4 | 13.9 | 14.9 | ||||||||||
Intersegment sales | 10 | 13 | 14 | ||||||||||
Operating result | 58 | 293 | 633 | ||||||||||
thereof special items(a) | (29 | ) | 0 | 27 |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 1,246 | 1,382 | 1,697 | ||||||||||
North America | 608 | 703 | 901 | ||||||||||
Asia/Pacific | 747 | 947 | 1,164 | ||||||||||
Latin America/ Africa/Middle East | 176 | 216 | 324 | ||||||||||
Total | 2,777 | 3,248 | 4,086 | ||||||||||
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Polycarbonates | 1,713 | 2,035 | 2,645 | ||||||||||
Thermoplastic Polyurethanes | 177 | 182 | 192 | ||||||||||
Wolff Walsrode | 323 | 328 | 329 | ||||||||||
H.C. Starck | 564 | 703 | 920 | ||||||||||
Total | 2,777 | 3,248 | 4,086 | ||||||||||
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Overview |
Major Products |
Polycarbonates (Makrolon®/APEC®) |
Polycarbonate Blends (Bayblend®/Makroblend®) |
48
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Polycarbonate Films |
Polycarbonate Sheets (Fabricated Products) |
Markets and Distribution |
49
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Research and Development |
Product/ Brand Name | Application | |
Surface-modifiedMakrolon® | Automotive | |
ImprovedMakrolon® ODS grade | New ODS formats, such as Blue Laser based disks | |
Extension ofBayblend® FR series | Business machines/ information technology | |
Diffusor sheets for LCD Screens | Electric/ Electronic |
Overview |
Major Products |
Markets and Distribution |
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Research and Development |
Overview |
Major Products |
Cellulose Derivatives |
• | Walocel®M is an additive that regulates water balance. It improves the workability and adhesion of building materials such as tile adhesives, plasters, mortars and dispersion paints. | |
• | Walsroder®NC serves in resin form in wood coatings and other industrial coatings as well as in printing inks for flexible packaging. It is also used as a component of nail polish and other specialty items. | |
• | Walocel®C is used primarily as a thickener and binder in water-based systems. It is used in pharmaceuticals, dairy products and toothpaste, as well as in ceramics compounding, textile and paper manufacture and oil drilling. |
Other |
• | Under the brand nameWalsroder®, we offer a wide range of sausage skins for industrial or handcraft usage. |
Markets and Distribution |
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Research and Development |
Overview |
Major Products |
Markets and Distribution |
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• | Metallic products and compounds (Kulite®,Molyform®,Ampersint® and other non-branded metallic and ceramic powders and part): Wolfram Bergbau- und Hütten GmbH, Cabot Group, Mitsui, MolymetOMG, Osram Sylvania, Japan New Metals, Plansee AG, Phelps Dodge; | |
• | Battery intermediates (Ampergy®): Tanaka Chemical, Kelong, Kansai Catalysts Co. Ltd, Jiangmen Chancsun Umicore Industry Co., Ltd.; | |
• | Chemical catalysts (Amerkat®): Johnson Matthey, Degussa, Grace-Davison, Engelhard; | |
• | Thermal spray powders (Amperit®): Praxair, Sulzer Metco, Fujimi; | |
• | Ceramic powders and parts: Denki Kagaku, SB Boron; GE Advanced Ceramics, Tokuyama. |
Research and Development |
Product/ Brand Name | Application | |
Powder and components for SOFC | SOFC (Solid Oxide Fuel Cells) | |
Tantalum 70/80, 100/120 and 150 K powder | Capacitors | |
Molybdenum plates for physical vapor disposition (PVD) | Flat panel displays | |
Tantalum plates for PVD | Microelectronic devices | |
HEM (High Energy Milled) and prealloyed binder powders | Powder metallurgy |
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
External net sales | 4,676 | 5,349 | 6,609 | ||||||||||
Percentage of total sales | 20.8 | 23.0 | 24.2 | ||||||||||
Intersegment sales | 103 | 116 | 142 | ||||||||||
Operating result | (455 | ) | 348 | 736 | |||||||||
thereof special items(a) | (715 | ) | (27 | ) | (62 | ) |
(a) | The significant special items are detailed in Item 5,Operating and Financial Review and Prospects — Operating Results 2003, 2004 and 2005 — Segment Data. |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Europe | 2,107 | 2,494 | 3,035 | ||||||||||
North America | 1,406 | 1,483 | 1,891 | ||||||||||
Asia/Pacific | 678 | 822 | 979 | ||||||||||
Latin America/ Africa/Middle East | 485 | 550 | 704 | ||||||||||
Total | 4,676 | 5,349 | 6,609 | ||||||||||
2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Polyurethanes | 3,228 | 3,872 | 4,792 | ||||||||||
Coatings Adhesives Sealants | 1,191 | 1,237 | 1,330 | ||||||||||
Inorganic Basic Chemicals | 218 | 218 | 380 | ||||||||||
Others | 39 | 22 | 107 | ||||||||||
Total | 4,676 | 5,349 | 6,609 | ||||||||||
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Overview |
Major Products |
Markets and Distribution |
55
Table of Contents
Production facilities |
Research and Development |
Overview |
Major Products |
Resins and Hardeners |
Special raw materials |
Adhesive raw materials |
Markets and Distribution |
56
Table of Contents
• | Resin components (RES):Cytec / UCB, Cray Valley, DIC (Dainippon Ink and Chemicals), DSM | |
• | Aliphatic isocyanates (BMI): Rhodia, Degussa, BASF, Asahi Kasei, NPU (Nippon Polyurethane Industry) | |
• | Aromatic isocyanates (BMI):Dow, Mitsui Takeda Chemicals, SAPICI |
Research and Development |
Overview |
Major Products |
Markets and Distribution |
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Research and Development |
• | individual active ingredients; | |
• | specific compounds, formulations and combinations containing active ingredients; | |
• | manufacturing processes; | |
• | intermediates useful in the manufacture of products; | |
• | genomic research; and | |
• | new uses for existing products. |
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Term and Expiration of Patents |
• | subsequently-granted patents on processes and intermediates used in manufacturing the active ingredient; | |
• | patents relating to specific uses for the active ingredient; | |
• | patents relating to novel compositions and formulations; and | |
• | in certain markets (including the United States), market exclusivity under laws other than patent laws. |
Market | |||||||||||||||||||||||||||||||||
Product | Germany | France | U.K. | Italy | Spain | Japan | U.S.A. | Canada | |||||||||||||||||||||||||
Adalat® | |||||||||||||||||||||||||||||||||
Crystal patent (Retard) | — | — | — | — | — | — | 2010 | — | |||||||||||||||||||||||||
Adalat® CC (Coat Core) | 2008 | 2008 | 2008 | 2008 | 2008 | 2008 | 2008 | 2009 | |||||||||||||||||||||||||
Avelox® | |||||||||||||||||||||||||||||||||
Compound | 2014 | 2014 | 2014 | 2014 | 2014 | 2009 | 2014 | 2015 | |||||||||||||||||||||||||
Hydrochloride-Monohydrate | 2016 | 2016 | 2016 | 2016 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||||||||||
Tablet formulation | 2019 | 2019 | 2019 | 2019 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||||||||||||
Ciprofloxacin | |||||||||||||||||||||||||||||||||
Active ingredient | — | — | — | 2009 | — | — | — | — | |||||||||||||||||||||||||
IV formulation | 2006 | 2006 | 2006 | 2006 | 2006 | 2011 | 2007 | 2008 | |||||||||||||||||||||||||
Tablet formulation | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | �� | 2011 | 2009 | ||||||||||||||||||||||||
Imidacloprid | 2006 | 2006 | 2006 | 2006 | 2007 | — | 2006 | 2007 | |||||||||||||||||||||||||
Vardenafil compound | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 |
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Pharmaceutical Products |
60
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Consumer Care Products |
Diagnostics Products |
61
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Diabetes Care Products |
Animal Health Products |
Crop Protection Products |
Environmental Science Products |
62
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BioScience Products |
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• | emissions into the air; | |
• | discharges of waste water; | |
• | incidental and other releases into the environment; | |
• | generation, handling, storage, transportation, treatment and disposal of hazardous and non-hazardous materials; and | |
• | construction and operation of facilities. |
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Bayer’s | ||||
Company Name and Place of Business | Interest | |||
(%) | ||||
Germany | ||||
Bayer Business Services GmbH, Leverkusen | 100 | |||
Bayer CropScience AG, Monheim | 100 | |||
Bayer CropScience Deutschland GmbH, Langenfeld | 100 | |||
Bayer HealthCare AG, Leverkusen | 100 | |||
Bayer Industry Services GmbH & Co. OHG, Leverkusen | 60 | |||
Bayer MaterialScience AG, Leverkusen | 100 | |||
Bayer Technology Services GmbH, Leverkusen | 100 | |||
Bayer Vital GmbH, Leverkusen | 100 | |||
H.C. Starck GmbH, Goslar | 100 | |||
Wolff Cellulosics GmbH & Co. KG, Walsrode | 100 | |||
Other European Countries | ||||
Bayer Antwerpen Comm.V, Belgium | 100 | |||
Bayer Consumer Care AG, Switzerland | 100 | |||
Bayer CropScience France S.A.S., France | 100 | |||
Bayer CropScience Limited, U.K | 100 | |||
Bayer CropScience S.r.l., Italy | 100 | |||
Bayer Diagnostics Europe Ltd., Ireland | 100 | |||
Bayer International S.A., Switzerland | 99.7 | |||
Bayer Pharma S.A.S., France | 99.9 | |||
Bayer Polyols S.N.C., France | 100 | |||
Bayer Public Limited Company, U.K | 100 | |||
Bayer S.p.A., Italy | 100 | |||
Bayer Santé Familiale S.A.S., France | 100 | |||
Bayer SP.Z.O.O., Poland | 100 | |||
Quimica Farmaceutica Bayer, S.A., Spain | 100 | |||
North America | ||||
Bayer CropScience Inc., Canada | 100 | |||
Bayer CropScience LP, USA | 100 | |||
Bayer HealthCare LLC, USA | 100 | |||
Bayer Inc., Canada | 100 | |||
Bayer MaterialScience LLC, USA | 100 | |||
Bayer Pharmaceuticals Corporation, USA | 100 | |||
H.C. Starck Inc., USA | 100 |
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Bayer’s | ||||
Company Name and Place of Business | Interest | |||
(%) | ||||
Asia/Pacific | ||||
Bayer Australia Limited, Australia | 99.9 | |||
Bayer CropScience K.K., Japan | 100 | |||
Bayer Korea Ltd., Republic of Korea | 100 | |||
Bayer MaterialScience Limited, Hong Kong | 100 | |||
Bayer Medical Ltd., Japan | 100 | |||
Bayer South East Asia Pte Ltd., Singapore | 100 | |||
Bayer Yakuhin, Ltd., Japan | 100 | |||
H.C. Starck Ltd., Japan | 100 | |||
Sumika Bayer Urethane Co., Ltd., Japan | 60 | |||
Latin America/ Africa/Middle East | ||||
Bayer (Proprietary) Limited, South Africa | 100 | |||
Bayer CropScience Ltda., Brazil | 100 | |||
Bayer de Mexico, S.A. de C.V., Mexico | 100 | |||
Bayer S.A., Argentina | 99.9 | |||
Bayer S.A., Brazil | 99.9 | |||
Bayer Türk Kimya Sanayi Limited Sirketi, Turkey | 100 |
Bayer’s | ||||
Company Name and Place of Business | Interest | |||
(%) | ||||
GE Bayer Silicones GmbH & Co. KG, Germany | 49.9 | |||
Lyondell Bayer Manufacturing Maasvlakte VOF, Netherlands | 50.0 | |||
Palthough Industries (1998) Ltd., Israel | 20.0 | |||
PO JV, LP, USA | 42.7 | |||
Polygal Plastics Industries Ltd., Israel | 25.8 |
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Size of developed | |||||||
property in | |||||||
thousand square | |||||||
Location | meters | Major use | |||||
Bayer HealthCare | |||||||
Leverkusen, Germany | 125 | Formulation and packaging of pharmaceutical products | |||||
Wuppertal, Germany | 448 | Production of active ingredients for ethical pharmaceutical products, research and development | |||||
Berkeley, California | 112 | Production of recombinant FVIII | |||||
Myerstown, Pennsylvania | 44 | Formulation and packaging of Consumer Care products | |||||
Mishawaka, Indiana | 32 | Production of instruments for Diabetes Care division | |||||
Bayer CropScience | |||||||
Monheim, Germany | 651 | Research and development for Crop Protection and Environmental Science, headquarters of Bayer CropScience | |||||
Frankfurt, Germany | 261 | Research and development as well as production and formulation for Crop Protection and Environmental Science | |||||
Dormagen, Germany | 140 | Production and formulation for Crop Protection and Environmental Science | |||||
Kansas City, Missouri | 732 | Production and formulation for Crop Protection and Environmental Science | |||||
Haelen, The Netherlands | 500 | Research and development as well as production for BioScience (Seeds) | |||||
Bayer MaterialScience | |||||||
Krefeld-Uerdingen, Germany | 208 | Production of polycarbonates, diphenylmethane diisocyanates, chlorine, caustic soda, hydrochloric acid and hydrogen | |||||
Baytown, Texas | 1,628 | Production of base- and modified isocyanates, polycarbonates, diphenylmethane diisocyanates, toluene diisocyanates, chlorine, caustic soda, hydrochloric acid and hydrogen | |||||
Dormagen, Germany | 264 | Production of modified isocyanates, resins, polycarbonate films, toluene diisocyanates, polyether, thermoplastic polyurethanes, chlorine, caustic soda, hydrochloric acid and hydrogen | |||||
Antwerp, Belgium | 639 | Production of polycarbonates, aniline, nitrobenzene and polyether | |||||
Brunsbüttel, Germany | 137 | Production of diphenylmethane diisocyanates, toluene diisocyanates, chlorine, hydrochloric acid and hydrogen |
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Plant Capacity | Start-Up | Status | ||||||
(in kt) | ||||||||
Coatings, Adhesives, Sealants (Desmodur®N) | 12 | April 2003 | In operation | |||||
Coatings, Adhesives, Sealants (Desmodur®L) | 11 | January 2005 | In operation | |||||
Polycarbonates (Compounding) | 40 | July 2005 | In operation | |||||
Polycarbonates (PCS Phase I) | 100 | expected: 2nd quarter 2006 | Under construction | |||||
Polyurethanes (MDI Phase I, MMDI-Splitter) | 80 | expected: 3rd quarter 2006 | Under construction | |||||
Coatings, Adhesives, Sealants (HDI-4) | 30 | expected: January 2007 | Under construction | |||||
Polyurethanes (MDI Phase II) | 350 | 2008 | ||||||
Polycarbonates (PCS Phase II) | 100 | 2008 | ||||||
Polyurethanes (TDI) | 160 | 2009 |
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70
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71
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72
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73
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Most significant drivers of our sales, results of operations and cash flows in 2005 |
• | The general economic situation and improvements in the business climates in the industries of some of our customers in the course of 2005; | |
• | Raw materials, pricing —i.e., the effects on our results of operations of the increased prices of petrochemical raw materials, other precursors and energy; | |
• | Effects on net sales from acquisitions and divestitures — particularly our acquisition of Roche’s Consumer Health business and our spin-off of LANXESS; | |
• | Our incurrence of other charges that we view as special, consisting primarily of provisions established and other expenses incurred in connection with legal matters (special charges did not affect our sales, results of operations and cash flows to the same extent as they did in 2003, when we incurred substantial impairment charges, unscheduled amortization expenses and other write-downs), which are discussed in —Reconciliation from operating result to operating result before special items. |
General Economic Situation |
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Raw Materials, Pricing |
Effects on net sales from acquisitions and divestitures |
Change in | ||||
2005 | ||||
from 2004 | ||||
(Euros in | ||||
millions) | ||||
Acquisitions | ||||
Roche | 1,061 | |||
Gustafson (remaining 50 percent acquired in 2004) | 25 | |||
BaySystems | 7 | |||
1,093 | ||||
Divestitures | ||||
Nutritions, Spain (divested in 2004) | (4 | ) | ||
Net sales to LANXESSafter the spin-off on January 31, 2005 (in 2004, sales to LANXESS were classified as internal sales) | 981 | |||
Net effects on sales | 2,070 | |||
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Change in | ||||
2004 | ||||
from 2003 | ||||
(Euros in | ||||
millions) | ||||
Acquisitions | ||||
Gustafson | 34 | |||
Other | 11 | |||
45 | ||||
Divestitures | ||||
Dispositions in compliance with antitrust conditions in connection with purchase of Aventis CropScience | (100 | ) | ||
PolymerLatex group (divested in 2003) | (62 | ) | ||
Walothen GmbH (divested in 2003) | (47 | ) | ||
Household insecticides business (divested in 2003) | (25 | ) | ||
Animal Health vaccines (divested in 2003) | (16 | ) | ||
Bayer Shell (divested in 2003) | (15 | ) | ||
Other | (4 | ) | ||
(269 | ) | |||
Net effects on sales | (224 | ) | ||
Reconciliation from operating result to operating result before special items |
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2003 | 2004 | 2005 | |||||||||||
(Euros in millions) | |||||||||||||
Operating result | 575 | 1,875 | 2,812 | ||||||||||
Impairment charges and write-downs | (622 | ) | 0 | 0 | |||||||||
Restructuring charges and unscheduled amortization | (405 | ) | (82 | ) | (127 | ) | |||||||
Portfolio changes | 458 | (40 | ) | (72 | ) | ||||||||
Other charges | (495 | ) | (120 | ) | (289 | ) | |||||||
Total special items | (1,064 | ) | (242 | ) | (488 | ) | |||||||
Operating result before special items | 1,639 | 2,117 | 3,300 | ||||||||||
Impairment charges and write-downs |
Restructuring charges and unscheduled amortization |
Severance | Unscheduled | Other | ||||||||||||||
Activity/ Business in 2005 | Payments | Amortization | Charges | Total | ||||||||||||
(Euros in millions) | ||||||||||||||||
Reorganization of the polyurethanes business | 0 | 0 | 33 | 33 | ||||||||||||
Restructuring measures relating to CropScience activities in France | 23 | 0 | 0 | 23 | ||||||||||||
Consolidation of smaller CropScience sites in the United States | 7 | 2 | 3 | 12 | ||||||||||||
Relocation of headquarters of the Diabetes Care division to Tarrytown, New York | 7 | 12 | 0 | 19 | ||||||||||||
Reduction in useful economic life of licenses and inventory write-down | 0 | 15 | 3 | 18 | ||||||||||||
Restructuring of pharmaceutical activities in West Haven, Connecticut and Wuppertal, Germany | 0 | 17 | 5 | 22 | ||||||||||||
Totals | 37 | 46 | 44 | 127 | ||||||||||||
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Severance | Unscheduled | Other | ||||||||||||||
Activity/ Business in 2004 | Payments | Amortization | Charges | Total | ||||||||||||
(Euros in millions) | ||||||||||||||||
Restructuring of the pharmaceutical research and development activities | 24 | 0 | 0 | 24 | ||||||||||||
Closure of major parts of a production facility in Hauxton, U.K. | 5 | 7 | 1 | 13 | ||||||||||||
Personnel reductions in connection with the Schering-Plough alliance | 32 | 0 | 13 | 45 | ||||||||||||
Totals | 61 | 7 | 14 | 82 | ||||||||||||
Severance | Unscheduled | Other | ||||||||||||||
Activity/ Business in 2003 | Payments | Amortization | Charges | Total | ||||||||||||
�� | ||||||||||||||||
(Euros in millions) | ||||||||||||||||
Closure of research facilities in Kyoto, Japan and Berkeley, California | 10 | 101 | 28 | 139 | ||||||||||||
Continued integration of businesses acquired in 2002 from Aventis CropScience | 100 | 2 | 0 | 102 | ||||||||||||
Personnel adjustments in Polymers area | 28 | 0 | 0 | 28 | ||||||||||||
Plant closure in West Haven, Connecticut | 8 | 21 | 3 | 32 | ||||||||||||
Closure of the polyether production site at Institute, West Virginia | 3 | 12 | 4 | 19 | ||||||||||||
Further ongoing restructuring programs to improve profitability | 0 | 5 | 36 | 41 | ||||||||||||
Totals | 149 | 141 | 71 | 361 | ||||||||||||
Write-downs on enterprise management systems | 0 | 44 | 0 | 44 | ||||||||||||
Totals | 149 | 185 | 71 | 405 | ||||||||||||
Portfolio changes |
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Other charges |
Changes in Exchange Rates |
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Units of Foreign Currency per Euro | ||||||||||||||||
Average For the | ||||||||||||||||
Year Ended | ||||||||||||||||
At December 31, | December 31, | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
Argentinean peso | 4.05 | 3.57 | 3.66 | 3.64 | ||||||||||||
Brazilian real | 3.62 | 2.76 | 3.64 | 3.04 | ||||||||||||
British pound | 0.71 | 0.69 | 0.68 | 0.68 | ||||||||||||
Canadian dollar | 1.64 | 1.37 | 1.62 | 1.51 | ||||||||||||
Japanese yen | 139.65 | 138.90 | 134.40 | 136.86 | ||||||||||||
Mexican peso | 15.23 | 12.59 | 14.04 | 13.58 | ||||||||||||
Swiss franc | 1.54 | 1.56 | 1.54 | 1.55 | ||||||||||||
U.S. dollar | 1.36 | 1.18 | 1.24 | 1.24 |
Reporting of Discontinued Operations |
LANXESS |
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Plasma activities |
82
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LANXESS | Plasma | Total Discontinued Operations | ||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||||
(Euros in millions) | (Euros in millions) | (Euros in millions) | ||||||||||||||||||||||||||||||||||
Net sales | 5,776 | 6,053 | 503 | 374 | 427 | 124 | 6,150 | 6,480 | 627 | |||||||||||||||||||||||||||
Operating result | (1,288 | ) | 78 | 62 | (392 | ) | (97 | ) | (2 | ) | (1,680 | ) | (19 | ) | 60 | |||||||||||||||||||||
Special items | (1,204 | ) | (99 | ) | — | (317 | ) | (95 | ) | — | (1,521 | ) | (194 | ) | — | |||||||||||||||||||||
Net income (loss) | (973 | ) | (4 | ) | 38 | (269 | ) | (63 | ) | (1 | ) | (1,242 | ) | (67 | ) | 37 | ||||||||||||||||||||
Affected segments | (LANXESS) | Pharmaceuticals, Biological Products |
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Change from | Change from | ||||||||||||||||||||
2003(a) | Previous Year | 2004(a) | Previous Year | 2005(b) | |||||||||||||||||
(%) | (%) | ||||||||||||||||||||
(Euros in millions) | |||||||||||||||||||||
Net sales | 22,417 | 3.8 | 23,278 | 17.6 | 27,383 | ||||||||||||||||
Gross profit | 10,638 | 2.1 | 10,857 | 13.8 | 12,356 | ||||||||||||||||
as percentage of sales (%) | 47.5 | 46.6 | 45.1 | ||||||||||||||||||
Selling expenses | (5,515 | ) | 5.0 | (5,240 | ) | (9.0 | ) | (5,713 | ) | ||||||||||||
Research and development expenses | (2,190 | ) | 12.0 | (1,927 | ) | 2.1 | (1,886 | ) | |||||||||||||
General and administrative expenses | (1,410 | ) | (0.8 | ) | (1,421 | ) | (1.6 | ) | (1,444 | ) | |||||||||||
Other operating income | 1,073 | (31.0 | ) | 740 | 7.3 | 794 | |||||||||||||||
Other operating expenses | (2,021 | ) | 43.9 | (1,134 | ) | (14.2 | ) | (1,295 | ) | ||||||||||||
Operating result | 575 | — | 1,875 | 50.0 | 2,812 | ||||||||||||||||
as percentage of sales (%) | 2.6 | 8.1 | 10.3 | ||||||||||||||||||
Non-operating result | (708 | ) | 7.8 | (653 | ) | 6.1 | (613 | ) | |||||||||||||
Income before income taxes | (133 | ) | — | 1,222 | 80.0 | 2,199 | |||||||||||||||
Income from continuing operations after taxes | (49 | ) | — | 749 | 108.0 | 1,558 | |||||||||||||||
Income from discontinued operations after taxes | (1,242 | ) | 94.6 | (67 | ) | — | 37 | ||||||||||||||
Group net income (total) | (1,303 | ) | — | 685 | 133.1 | 1,597 |
(a) | 2003 and 2004 data have been restated to give effect to a change in the reporting of funded pension obligations in accordance with revised IAS 19 (Employee Benefits) and adjusted to reflect the LANXESS spin-off and the sale of the U.S. plasma operations in accordance with IFRS 5 and other applicable IFRS standards. For further information on these restatements, see —Discontinued Operations and Note 7.2 to the consolidated financial statements appearing elsewhere in this annual report. |
(b) | The Consumer Health business acquired from Roche is reflected in the income statement with effect from January 1, 2005. |
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Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Europe | 9,110 | 7.3 | 9,775 | 22.0 | 11,930 | |||||||||||||||
North America | 6,981 | (6.7 | ) | 6,512 | 12.7 | 7,340 | ||||||||||||||
Asia/Pacific | 3,625 | 9.3 | 3,962 | 15.5 | 4,578 | |||||||||||||||
Latin America/ Africa/Middle East | 2,701 | 12.1 | 3,029 | 16.7 | 3,535 |
2005 compared with 2004 |
Net Sales |
Gross Profit |
Operating Result |
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Non-Operating Result |
Income Before Income Taxes |
Income Taxes |
Income from Discontinued Operations After Taxes |
Net Income |
86
Table of Contents
2004 compared with 2003 |
Net Sales |
Gross Profit |
Operating Result |
87
Table of Contents
Non-Operating Result |
Income Before Income Taxes |
Income Taxes |
Income from Discontinued Operations After Taxes |
Net Income |
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Pharmaceuticals, Biological Products |
Change from | Change from | |||||||||||||||||||
2003(1) | Previous Year | 2004(1) | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 4,371 | (9.4 | ) | 3,961 | 2.7 | 4,067 | ||||||||||||||
Intersegment sales | 42 | (9.5 | ) | 38 | 52.6 | 58 | ||||||||||||||
Operating result | (16 | ) | — | 399 | 19.0 | 475 | ||||||||||||||
Special items | (515 | ) | — | (53 | ) | — | (140 | ) | ||||||||||||
Operating result before special items | 499 | (9.4 | ) | 452 | 36.1 | 615 |
(1) | 2003 and 2004 data have been restated to reflect the sale of the U.S. plasma operations in accordance with IFRS 5. As explained above under —Discontinued Operations, only our U.S. plasma operations are classified as “discontinued operations”. Our non-U.S. plasma operations, which had previously been classified as “discontinuing operations”, are now included in “continuing operations”. For further information on these restatements, see —Discontinued Operations and Note 7.2 to the consolidated financial statements appearing elsewhere in this annual report. |
Year | Nature of special item | Income/ charge | ||||
(Euros in millions) | ||||||
2003 | Charges taken on the basis of the final agreement reached with the majority of insurers in connection withLipobay/ Baycol | (300 | ) | |||
Closure of research and production facilities | (171 | ) | ||||
2004 | Charges in connection with restructuring pharmaceuticals research and development | (24 | ) | |||
Gain on a sale of a license | 39 | |||||
Charges in connection withLipobay/ Baycol | (47 | ) | ||||
Restructuring charges in connection with the Schering-Plough alliance | (45 | ) | ||||
Pension curtailment in connection with the Schering-Plough alliance | 24 | |||||
2005 | Charges in connection with the termination of the co-promotion agreement with GlaxoSmithKline forLevitra® | (106 | ) | |||
Litigation-related expenses in connection withLipobay/ Baycol | (43 | ) | ||||
One-time non-cash gain due to changes to our pension plans in the United States and Germany | 49 | |||||
Restructuring of pharmaceutical activities in West Haven, Connecticut and Wuppertal, Germany | (22 | ) |
2005 compared with 2004 |
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2004 compared with 2003 |
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Consumer Care |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005(a) | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 1,403 | (4.8 | ) | 1,336 | 76.3 | 2,355 | ||||||||||||||
Intersegment sales | 7 | 128.6 | 16 | (12.5 | ) | 14 | ||||||||||||||
Operating result | 486 | (62.3 | ) | 183 | (4.9 | ) | 174 | |||||||||||||
Special items | 288 | — | (30 | ) | — | (118 | ) | |||||||||||||
Operating result before special items | 198 | 7.6 | 213 | 37.1 | 292 |
(a) | The consumer health business acquired from Roche is reflected in the income statement with effect from January 1, 2005. |
Year | Nature of special item | Income/ charge | ||||
(Euros in millions) | ||||||
2003 | Divestment of household insecticides business | 256 | ||||
2004 | Provision for litigation | (16 | ) | |||
Expenses relating to the integration of the Roche Consumer Health business | (14 | ) | ||||
2005 | Expenses relating to the integration of the Roche Consumer Health business | (71 | ) | |||
Provision for litigation | (62 | ) |
2005 compared with 2004 |
2004 compared with 2003 |
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Diabetes Care, Diagnostics |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 1,933 | 2.2 | 1,975 | 8.9 | 2,151 | |||||||||||||||
Intersegment sales | 0 | — | 1 | 0.0 | 1 | |||||||||||||||
Operating result | 115 | 88.7 | 217 | 26.3 | 274 | |||||||||||||||
Special items(a) | (20 | ) | — | 0 | — | 34 | ||||||||||||||
Operating result before special items | 135 | 60.7 | 217 | 10.6 | 240 |
(a) | The primary special items in 2003 were write-downs on enterprise management systems (minus€43 million) and a litigation settlement (€22 million). Special items in 2005 were charges of€19 million in connection with the reorganization of headquarters in the United States and a one-time non-cash gain of€53 million due to changes to our pension plans in the United States and Germany. |
2005 compared with 2004 |
2004 compared with 2003 |
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Animal Health |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 790 | (0.5 | ) | 786 | 8.9 | 856 | ||||||||||||||
Intersegment sales | 6 | (33.3 | ) | 4 | 100.0 | 8 | ||||||||||||||
Operating result | 172 | (8.7 | ) | 157 | 14.0 | 179 | ||||||||||||||
Special items(a) | 22 | — | 0 | — | 7 | |||||||||||||||
Operating result before special items | 150 | 4.7 | 157 | 9.6 | 172 |
(a) | Special items in 2003 primarily included gains from the disposal of the rights to theBayovac®/Baypamun® products. Special items in 2005 related to a one-time non-cash gain of€7 million due to changes to our pension plans in the United States and Germany. |
2005 compared with 2004 |
2004 compared with 2003 |
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Crop Protection |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 4,801 | 3.2 | 4,957 | (1.7 | ) | 4,874 | ||||||||||||||
Intersegment sales | 62 | 14.5 | 71 | (1.4 | ) | 70 | ||||||||||||||
Operating result | 242 | 59.5 | 386 | 37.8 | 532 | |||||||||||||||
Special items | (70 | ) | — | (42 | ) | — | 7 | |||||||||||||
Operating result before special items | 312 | 37.2 | 428 | 22.7 | 525 |
Year | Nature of special item | Income/ charge | ||||
(Euros in millions) | ||||||
2003 | Restructuring related to the Aventis CropScience acquisition | (91 | ) | |||
Gains from the divestment of former Bayer CropScience products in connection with the Aventis CropScience acquisition | 46 | |||||
2004 | Closure of major parts of a production facility in Hauxton, U.K. | (13 | ) | |||
Pension accruals in connection with divestiture to BASF | (14 | ) | ||||
2005 | Restructuring measures relating to CropScience activities in France | (20 | ) | |||
Termination of a research and development cooperation | (15 | ) | ||||
One-time non-cash gain due to changes to our pension plans in the United States and Germany | 46 |
2005 compared with 2004 |
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2004 compared with 2003 |
Environmental Science, BioScience |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 963 | 2.7 | 989 | 3.3 | 1,022 | |||||||||||||||
Intersegment sales | 14 | (50.0 | ) | 7 | 85.7 | 13 | ||||||||||||||
Operating result | 100 | 6.0 | 106 | 49.1 | 158 | |||||||||||||||
Special items(a) | (11 | ) | — | 12 | — | (2 | ) | |||||||||||||
Operating result before special items | 111 | (15.3 | ) | 94 | 70.2 | 160 |
(a) | Special items in 2003 comprise restructuring expenses related to the Aventis CropScience acquisition (€11 million) and in 2004 gains from the sale of biotechnology assets. Special items in 2005 primarily relate to the consolidation of smaller sites in the United States (charge of€8 million) and to an one-time non-cash gain due to changes to our pension plans in the United States and Germany (€9 million). |
2005 compared with 2004 |
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2004 compared with 2003 |
Materials |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 2,777 | 17.0 | 3,248 | 25.8 | 4,086 | |||||||||||||||
Intersegment sales | 10 | 30.0 | 13 | 7.7 | 14 | |||||||||||||||
Operating result | 58 | — | 293 | 116.0 | 633 | |||||||||||||||
Special items | (29 | ) | — | 0 | — | 27 | ||||||||||||||
Operating result before special items | 87 | — | 293 | 106.8 | 606 |
Year | Nature of special item | Income/charge | ||||
(Euros in millions) | ||||||
2003 | Restructuring charges in connection with headcount reductions | (16 | ) | |||
Expenses for achieving staff reductions through special early retirement | (9 | ) | ||||
2005 | One-time non-cash gain due to changes to our pension plans in the United States and Germany | 27 |
2005 compared with 2004 |
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2004 compared with 2003 |
Systems |
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Net sales (external) | 4,676 | 14.4 | 5,349 | 23.6 | 6,609 | |||||||||||||||
Intersegment sales | 103 | 12.6 | 116 | 22.4 | 142 | |||||||||||||||
Operating result | (455 | ) | — | 348 | 111.5 | 736 | ||||||||||||||
Special items | (715 | ) | — | (27 | ) | — | (62 | ) | ||||||||||||
Operating result before special items | 260 | 44.2 | 375 | 112.8 | 798 |
Year | Nature of special item | Income/ charge | ||||
(Euros in millions) | ||||||
2003 | Impairment charges | (622 | ) | |||
Shutdown and restructuring charges | (60 | ) | ||||
2004 | Legal provisions for agreement with U.S. authorities in the context of an investigation into prices for polymer products | (27 | ) | |||
2005 | One-time non-cash gain due to changes to our pension plans in the United States and Germany | 47 | ||||
Legal provisions in connection with antitrust litigation related to polymer products | (66 | ) | ||||
Charges relating to the reorganization of the polyurethanes business | (33 | ) |
2005 compared with 2004 |
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2004 compared with 2003 |
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Change from | Change from | |||||||||||||||||||
2003(a) | Previous Year | 2004(a) | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Gross operating cash flow | 2,741 | 5.3 | 2,885 | 20.5 | 3,477 | |||||||||||||||
Changes in working capital | 517 | — | (623 | ) | — | 65 | ||||||||||||||
Net cash provided by (used in) operating activities(net cash flow, continuing operations) | 3,258 | (30.6 | ) | 2,262 | 56.6 | 3,542 | ||||||||||||||
Net cash provided by (used in) operating activities(net cash flow, discontinued operations) | 35 | — | 188 | — | (40 | ) | ||||||||||||||
Net cash provided by (used in) operating activities (net cash flow, total) | 3,293 | (25.6 | ) | 2,450 | 42.9 | 3,502 | ||||||||||||||
Net cash provided by (used in) investing activities (total) | 460 | — | (814 | ) | (113.9 | ) | (1,741 | ) | ||||||||||||
Net cash provided by (used in) financing activities (total) | (1,761 | ) | 56.8 | (761 | ) | (147.2 | ) | (1,881 | ) | |||||||||||
Change in cash and cash equivalents | 1,992 | (56.1 | ) | 875 | — | (120 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 767 | — | 2,734 | 30.6 | 3,570 | |||||||||||||||
Change in scope of consolidation | 1 | — | 6 | — | (196 | ) | ||||||||||||||
Exchange rate movements | (26 | ) | (73.1 | ) | (45 | ) | — | 36 | ||||||||||||
Cash and cash equivalents at end of year | 2,734 | 30.6 | 3,570 | (7.8 | ) | 3,290 | ||||||||||||||
Marketable securities and other instruments | 129 | (77.5 | ) | 29 | — | 233 | ||||||||||||||
Liquid assets as per balance sheet | 2,863 | 25.7 | 3,599 | (2.1 | ) | 3,523 |
(a) | 2003 and 2004 data have been restated to account for a change in the reporting of funded pension obligations in accordance with revised IAS 19 (Employee Benefits) and to reflect the LANXESS spin-off and the sale of the U.S. plasma operations in accordance with IFRS 5. As explained above under —Operating Results 2003, 2004 and 2005 — Discontinued Operations, only our U.S. plasma operations are classified as “discontinued operations”. Our non-U.S. plasma operations, which had previously been classified as “discontinuing operations”, are now included in “continuing operations”. For further information on these restatements, see —Operating Results 2003, 2004 and 2005 — Discontinued Operations and Note 7.2 to the consolidated financial statements appearing elsewhere in this annual report. |
Cash from Operating Activities |
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Investing Activities |
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Financing Activities |
Dec. 31, 2003 | Dec. 31, 2004 | Dec. 31, 2005 | ||||||||||
(Euros in million) | ||||||||||||
Noncurrent financial liabilities as per balance sheet (including derivatives) | 6,772 | 7,025 | 7,185 | |||||||||
Current financial liabilities as per balance sheet (including derivatives) | 2,046 | 2,166 | 1,767 | |||||||||
Derivative receivables | (609 | ) | (701 | ) | (188 | ) | ||||||
Cash and cash equivalents as per balance sheet less cash earmarked for civil litigation settlements | (2,863 | ) | (3,599 | ) | (3,270 | )(a) | ||||||
Net debt* (continuing operations) | 5,346 | 4,891 | 5,494 | |||||||||
Net debt* (discontinued operations) | 606 | 531 | 0 | |||||||||
Net debt* (total) | 5,952 | 5,422 | 5,494 |
(a) | Liquid assets as per balance sheet (€3,523 million) minus cash deposited in escrow accounts (€253 million) equals€3,270 million. |
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Year | Segment | Description | ||||
2003 | Pharmaceuticals, | Addition to capacity solid dosage plant, Leverkusen, Germany | ||||
Biological Products | Construction of a sterile filling facility, Berkeley, California | |||||
Consumer Care | Construction of a lacquering (small-scale production), Greppin, Germany | |||||
Diabetes Care, Diagnostics | Elkhart site consolidation, Elkhart, Indiana | |||||
Animal Health | Good manufacturing practice upgrade, Panwol, South Korea | |||||
Crop Protection | Multi-purpose plant, Dormagen, Germany Fungicide plant extension, Muttenz, Switzerland | |||||
Environmental Science, BioScience | New research & development building, Gent, Belgium | |||||
Materials | Expansion of methylcellulose production, Bitterfeld, Germany | |||||
Systems | Expansion of isocyanate capacity including precursors, Brunsbüttel and Dormagen, Germany Expansion/ modification of electrolysis plant, Leverkusen, Germany | |||||
2004 | Pharmaceuticals, Biological Products | Construction of process development facility (Kogenate) in Berkeley, California | ||||
Crop Protection | Installation of a production line for the new fungicide Fandango, Kansas City, Kansas | |||||
Materials | Construction of production facility for polycarbonate in Caojing, PRC Expansion of capacities for tantalum powder in Goslar, Germany | |||||
Systems | Expansion of isocyanate capacities in Tarragona, Spain; Baytown, Texas, and Brunsbüttel, Germany Construction of production facility for methylene-diphenyl-diisocyanate in Caojing, PRC Expansion of polyisocyanate capacity in Caojing, PRC Construction of production facility for hexamethylene-diiisocyanate in Caojing, PRC | |||||
2005 | Pharmaceuticals, Biological Products | Construction of a clinical manufacturing facility for Kogenate in Berkeley, California | ||||
Consumer Care | Expansion of production facility in Jakarta, Indonesia | |||||
Crop Protection | Insourcing and relocation of products/ intermediates in Dormagen, Knapsack and Frankfurt, Germany | |||||
Product insourcing projects in Vapi and Ankleshwar, India | ||||||
Environmental Science, BioScience | Expansion of greenhouse facilities in Haelen, The Netherlands | |||||
Materials | Construction of a polycarbonate compounding facility in Caojing, PRC Expansion of the polycarbonate facility in Map Ta Phut, Thailand Start of capacity expansion projects for polycarbonate in Caojing, PRC | |||||
Systems | Construction of aDesmodur®-Lproduction facility in Caojing, PRC Start of construction of a world-scale MDI production facility in Caojing, PRC Installation of a new plant for MDI specialty products in Baytown, Texas Capacity increase of the chlorine production facility in Baytown, Texas |
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Off-Balance Sheet Arrangements |
Contractual Obligations and Commercial Commitments |
One Year to | Three Years to | |||||||||||||||||||
Under | Less than | Less than Five | After | |||||||||||||||||
Contractual Obligations | Total | One Year | Three Years | Years | 5 Years | |||||||||||||||
(Euros in millions) | ||||||||||||||||||||
Long-term debt, excluding capital leases | 8,484 | 1,706 | 2,346 | 471 | 3,961 | |||||||||||||||
Capital leases without interest portion | 468 | 61 | 68 | 51 | 288 | |||||||||||||||
Operating leases | 452 | 106 | 161 | 111 | 74 | |||||||||||||||
Purchase obligations | 294 | 292 | 2 | 0 | 0 | |||||||||||||||
Other long-term liabilities (collaboration agreements) | 562 | 109 | 193 | 178 | 82 | |||||||||||||||
Other liabilities(a) | 2,532 | 2,016 | 304 | 89 | 123 | |||||||||||||||
Total contractual obligations | 12,792 | 4,290 | 3,074 | 900 | 4,528 | |||||||||||||||
(a) | Other liabilities comprise primarily guarantees of bills and checks, payment guarantees and indirect financial guarantees; commissions to customers and expense reimbursements; as well as social security and payroll liabilities and other liabilities as set forth in Note 32 to the consolidated financial statements included elsewhere in this annual report. |
Other Commitments |
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Change from | Change from | ||||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | |||||||||||||||||
(%) | (%) | ||||||||||||||||||||
(Euros in million) | |||||||||||||||||||||
Research and development expenditures: | |||||||||||||||||||||
Bayer HealthCare | 1,201 | (17.1 | ) | 996 | (4.2 | ) | 954 | ||||||||||||||
Bayer CropScience | 725 | (6.3 | ) | 679 | (2.2 | ) | 664 | ||||||||||||||
Bayer MaterialScience | 249 | (5.2 | ) | 236 | 6.4 | 251 | |||||||||||||||
Reconciliation | 15 | 6.7 | 16 | 6.3 | 17 | ||||||||||||||||
Total from Continuing Operations | 2,190 | (12.0 | ) | 1,927 | (2.1 | ) | 1,886 | ||||||||||||||
As a percentage of sales | 9.8 | 8.3 | 6.9 |
Accounting standards applied for the first time in 2005 |
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Carrying | Carrying | ||||||||||||
amount before | Impact of | amount after | |||||||||||
the change | the change | the change | |||||||||||
(Euros in million) | |||||||||||||
Assets | |||||||||||||
Benefit plan assets in excess of obligations | 540 | (468 | ) | 72 | |||||||||
Deferred tax assets | 936 | 283 | 1,219 | ||||||||||
Assets held for sale and discontinued operations | 4,788 | (31 | ) | 4,757 | |||||||||
Stockholders’ Equity and Liabilities | |||||||||||||
Other reserves | 7,452 | (1,432 | ) | 6,020 | |||||||||
Provisions for pensions and other post-employment benefits | 4,581 | 1,638 | 6,219 | ||||||||||
Deferred tax liabilities | 1,171 | (527 | ) | 644 | |||||||||
Liabilities directly related to assets held for sale and discontinued operations | 2,282 | 105 | 2,387 |
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Newly issued accounting standards |
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Board of Management |
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Name and Age | Position | Current Term Expires | ||||||
Werner Wenning (59) | Chairman | 2007 | ||||||
* | Dr. Udo Oels (62) | Member | 2006 | |||||
Klaus Kühn (54) | Member | 2007 | ||||||
Dr. Richard Pott (52) | Member | 2007 | ||||||
** | Dr. Wolfgang Plischke (54) | Member | 2009 |
* | Until April 28, 2006 |
** | As of March 1, 2006 |
Supervisory Board |
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• | the acquisition or disposition of assets; | |
• | the acquisition, disposition or encumbrance of real property; | |
• | the creation of new business units or the disposition of existing units; and | |
• | the issuance of bonds, entering into of credit agreements, or grant of guaranties, sureties (Bürgschaften) and loans, except to subsidiaries. |
First | Membership on other | |||||||||
Name | Position | Principal Occupation | Elected | Supervisory Boards | ||||||
Dr. Manfred Schneider | Chairman | Former chairman of the Management Board | 2002 | Allianz AG, DaimlerChrysler AG, Linde AG, Metro AG, RWE AG, TUI AG | ||||||
*Erhard Gipperich(1) | Vice Chairman | Chairman of the Group and Central Works Councils of Bayer AG, Leverkusen | 1998 | Baywoge GmbH | ||||||
Dr. Paul Achleitner | Member | Member of the management board, Allianz AG | 2002 | Allianz Global Investors AG, Allianz Immobilien GmbH, MAN AG, RWE AG | ||||||
Dr. Josef Ackermann | Member | Chairman of the management board, Deutsche Bank AG | 2002 | Deutsche Lufthansa AG, Linde AG, Siemens AG | ||||||
*Andreas Becker(2) | Member | Chairman of the Works Council of H.C. Starck | 2005 | H.C. Starck GmbH | ||||||
*Karl-Josef Ellrich | Member | Chairman of the Works Council, Dormagen Site | 2000 | Bayer CropScience AG | ||||||
*Dr. Thomas Fischer(3) | Member | Head of Process and Plant Safety, Bayer MaterialScience | 2005 | Bayer MaterialScience AG | ||||||
*Thomas Hellmuth | Member | Agricultural Engineer | 2002 | — |
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First | Membership on other | |||||||||
Name | Position | Principal Occupation | Elected | Supervisory Boards | ||||||
Prof. Dr.-Ing. E.h. Hans-Olaf Henkel | Member | Honorary professor of the University of Mannheim | 2002 | Continental AG, DaimlerChrysler Aerospace AG, SMS GmbH, Brambles Industries, Orange SA, Ringier AG | ||||||
Gregor Jüsten(4) | Member | Member of the Works Councils, Leverkusen Site | 2006 | — | ||||||
Dr. rer. pol. Klaus Kleinfeld(5) | Member | Chairman of the management board, Siemens AG | 2005 | Alcoa Inc., Citigroup Inc. | ||||||
Dr.��h.c. Martin Kohlhaussen | Member | Chairman of the supervisory board, Commerzbank AG | 1992 | Heraeus Holding GmbH, Hochtief AG, Intermediate Capital Group, National Pensions Reserve Fund, Schering AG, ThyssenKrupp AG, Verlagsgruppe Georg von Holtzbrinck GmbH | ||||||
John Christian Kornblum | Member | Chairman of Lazard & Co. | 2002 | ThyssenKrupp Technologies AG, Motorola Inc. | ||||||
*Petra Kronen | Member | Chairwoman of the Works Council, Uerdingen Site | 2000 | Bayer MaterialScience AG | ||||||
Dr. Heinrich von Pierer(6) | Member | Chairman of the supervisory board, Siemens AG | 1993 | Deutsche Bank AG, Hochtief AG, Münchener Rückversicherungs- Gesellschaft AG, ThyssenKrupp AG, Volkswagen AG | ||||||
*Wolfgang Schenk(7) | Member | Engineer | 2002 | — | ||||||
*Hubertus Schmoldt | Member | Chairman of German Mine, Chemical and Power Workers’ Union | 1995 | BHW AG, Deutsche BP AG, DOW Olefinverbund GmbH, E.ON AG, RAG AG, RAG Coal International | ||||||
*Dieter Schulte | Member | Former Chairman of German Unions Federation | 1997 | — | ||||||
Dr.-Ing. Ekkehard D. Schulz(5) | Member | Chairman of the management board, ThyssenKrupp AG | 2005 | AXA Konzern AG, Commerzbank AG, Deutsche Bahn AG, MAN AG, RAG AG, TUI AG, ThyssenKrupp Automotive AG, ThyssenKrupp Elevator AG, ThyssenKrupp Services AG, ThyssenKrupp Steel Beteiligungen AG |
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First | Membership on other | |||||||||
Name | Position | Principal Occupation | Elected | Supervisory Boards | ||||||
Dr.-Ing. E.h. Jürgen Weber | Member | Chairman of the supervisory board, Deutsche Lufthansa AG | 2003 | Allianz Lebensversicherungs- AG, Deutsche Bank AG, Deutsche Post AG, Thomas Cook AG, Voith AG, Loyalty Partner GmbH, Tetra Laval Group | ||||||
*Siegfried Wendlandt | Member | North Rhine District Secretary of German Mine, Chemical and Power Workers’ Union | 2001 | Baywoge GmbH, HT Troplast AG, Rütgers AG | ||||||
*Reinhard Wendt(6) | Member | Chairman of the works council of Wolff Walsrode AG | 2002 | Wolff Walsrode AG | ||||||
*Thomas de Win | Member | Commercial Clerk(8) | 2002 | Bayer Material Science AG | ||||||
Prof. Dr. Dr. h.c Ernst- Ludwig Winnacker | Member | University Professor, Bonn; President of the German Research Association, Bonn | 1997 | MEDIGENE AG, KWS Saat AG, Wacker Chemie AG | ||||||
Dr. Hermann Wunderlich(6) | Member | Former Vice Chairman of the Management Board | 1996 | — |
(1) | Resigned January 31, 2006 |
(2) | First elected April 29, 2005 |
(3) | First elected September 30, 2005 |
(4) | Elected February 1, 2006. |
(5) | Elected April 29, 2005 to serve until the 2007 Annual Stockholders’ Meeting |
(6) | Resigned April 29, 2005 |
(7) | Resigned September 30, 2005 |
(8) | Chairman of the Group and Central Works Council of Bayer AG since February 1, 2006; Vice Chairman of the Supervisory Board since March 2, 2006 |
Supervisory Board Committees |
• | The Presidium was established pursuant to § 27 (3) of the Co-Determination Act and consists of the chairman and vice chairman of the Supervisory Board, as well as of one stockholder representative and one employee representative. It serves as our nomination committee (Vermittlungsausschuss). The purpose of this committee is to nominate members of the Board of Management for election by a simple majority of the votes of the Supervisory Board in the event that the Supervisory Board is unable to appoint members of the Board of Management with the votes of at least a two thirds majority of the Supervisory Board. Pursuant to § 9 (2) of the Standard Operating Procedures (Geschäftsordnung) of the Supervisory Board, the Presidium also prepares the general meetings of the full Supervisory Board. The current members of the Presidium are Mr. Schneider (chairman), Mr. Achleitner, Mr. Gipperich (until January 31, 2006) and Mr. Schmoldt. | |
• | The personnel committee (Personalausschuss) was established pursuant to § 10 of the Standard Operating Procedures of the Supervisory Board. The personnel committee consists of four members of the Supervisory Board. The chairman of the Supervisory Board acts as chairman of the personnel committee. The main responsibility of the personnel committee is the determination of the salary and further conditions of the employment of Board of Management members, the legal representation of the |
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Company in affairs with Board of Management members pursuant to § 112 of the German Stock Corporation Act, the approval of agreements with Supervisory Board members pursuant to § 114 of the German Stock Corporation Act and the approval of loans granted to Supervisory Board and Board of Management members and other persons pursuant to § 89 and § 115 of the German Stock Corporation Act. The current members of the personnel committee are Mr. Schneider (chairman), Mr. Kohlhaussen, Mr. Ellrich and Ms. Kronen. | ||
• | The audit committee (Prüfungsausschuss) was established pursuant to § 11 of the Standard Operating Procedures of the Supervisory Board. The audit committee consists of six members of the Supervisory Board. The main responsibilities of the audit committee are oversight of financial accounting, risk management, the preparation of the resolutions of the Supervisory Board with respect to the annual financial statements, the review of all non-audit services to be performed by the independent auditor, oversight over the independent auditors including scope of services, fees and schedules, the direct receipt of the audit reports, and the direct receipt of reports of accounting irregularities. The current members of the audit committee are Mr. Kohlhaussen (chairman), Mr. Schneider, Mr. Fischer, Mr. Henkel, Mr. Wendlandt and Mr. de Win. |
(5) | EBITDA is defined as operating result plus depreciation and amortization. |
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Remuneration of the Members of the Board of Management |
�� | Stock-based compensation | |||||||||||||||||||||||||||
Change in value | ||||||||||||||||||||||||||||
Remuneration in | Entitlements | of entitlements | ||||||||||||||||||||||||||
Fixed | Variable | kind and other | acquired in | acquired prior | ||||||||||||||||||||||||
Base salary | supplement | bonus | payments | Total | 2005 | to 2005 | ||||||||||||||||||||||
(In Euros) | ||||||||||||||||||||||||||||
Klaus Kühn | 412,236 | 170,647 | 843,713 | 35,266 | 1,461,862 | 285,748 | 99,693 | |||||||||||||||||||||
Dr. Udo Oels | 412,236 | 170,647 | 843,713 | 41,942 | 1,468,538 | 285,748 | 99,693 | |||||||||||||||||||||
Dr. Richard Pott | 412,236 | 170,647 | 843,713 | 39,044 | 1,465,640 | 284,248 | 98,055 | |||||||||||||||||||||
Werner Wenning | 748,872 | 325,132 | 1,554,615 | 40,169 | 2,668,788 | 495,504 | 169,289 | |||||||||||||||||||||
1,985,580 | 837,073 | 4,085,754 | 156,421 | 7,064,828 | 1,351,248 | 466,730 | ||||||||||||||||||||||
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Remuneration of the Members of the Supervisory Board |
Basic | Variable | |||||||||||
Remuneration | Remuneration | Totals | ||||||||||
(In Euros) | ||||||||||||
Dr. Paul Achleitner | 70,041.67 | 21,012.50 | 91,054.17 | |||||||||
Dr. Josef Ackermann | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
*Andreas Becker(1) | 40,167.00 | 12,050.00 | 52,217.00 | |||||||||
*Karl-Josef Ellrich | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
*Dr. Thomas Fischer(3) | 18,750.00 | 5,625.00 | 24,375.00 | |||||||||
*Erhard Gipperich(5) | 105,000.00 | 31,500.00 | 136,500.00 | |||||||||
*Thomas Hellmuth | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
Prof. Dr.-Ing. e.h. Hans-Olaf Henkel | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
Dr. rer. pol. Klaus Kleinfeld(1) | 40,167.00 | 12,050.00 | 52,217.00 | |||||||||
Dr. h.c. Martin Kohlhaussen | 105,000.00 | 31,500.00 | 136,500.00 | |||||||||
John Christian Kornblum | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
*Petra Kronen | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
Dr. Heinrich von Pierer(2) | 24,791.33 | 7,437.50 | 32,228.83 | |||||||||
*Wolfgang Schenk(4) | 56,250.00 | 16,875.00 | 73,125.00 | |||||||||
*Hubertus Schmoldt | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
Dr. Manfred Schneider | 180,000.00 | 54,000.00 | 234,000.00 | |||||||||
*Dieter Schulte | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
Dr.-Ing. Ekkehard D. Schulz(1) | 40,167.00 | 12,050.00 | 52,217.00 | |||||||||
Dr.-Ing. e.h. Jürgen Weber | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
*Siegfried Wendlandt | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
*Reinhard Wendt(2) | 19,833.00 | 5,950.00 | 25,783.00 | |||||||||
*Thomas de Win | 75,000.00 | 22,500.00 | 97,500.00 | |||||||||
Prof. Dr. Dr. h.c. Ernst-Ludwig Winnacker | 60,000.00 | 18,000.00 | 78,000.00 | |||||||||
Dr. Hermann Wunderlich(2) | 19,833.00 | 5,950.00 | 25,783.00 |
(1) | First elected April 29, 2005. |
(2) | Resigned April 29, 2005. |
(3) | First elected September 30, 2005. |
(4) | Resigned September 30, 2005. |
(5) | Resigned January 31, 2006. |
Employee Stock-Based Compensation Programs |
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Stock option | Stock incentive | Stock participation | ||||||||||
program | program | program | ||||||||||
(Euros in million) | ||||||||||||
Intrinsic value as of December 31, 2004 | 2 | 1 | 1 | |||||||||
One-time remeasurement effect | 1 | 1 | 5 | |||||||||
Fair value as of January 1, 2005 | 3 | 2 | 6 | |||||||||
Stock option | Stock incentive | Stock participation | ||||||||||||||||||
program | program | program | Aspire I | Aspire II | ||||||||||||||||
(Euros in million) | ||||||||||||||||||||
January 1, 2005 | 3 | 2 | 6 | 0 | 0 | |||||||||||||||
Allocations | 10 | 1 | 6 | 11 | 23 | |||||||||||||||
Utilization | — | 0 | 0 | 0 | 0 | |||||||||||||||
Reversal | 0 | 0 | (1 | ) | 0 | 0 | ||||||||||||||
December 31, 2005 | 13 | 3 | 11 | 11 | 23 | |||||||||||||||
Dividend yield | 2.27 percent | |
Risk-free interest rate | 2.92 percent | |
Volatility of Bayer stock | 38.00 percent | |
Volatility of the EURO STOXX 50sm | 19.55 percent | |
Correlation between Bayer stock price and the EURO STOXX 50sm | 0.56 |
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Long-term incentive program for members of the Board of Management and other senior executives (Aspire I) |
Long-term incentive program for middle management (Aspire II) |
• | No personal investment in Bayer shares is required. | |
• | The amount of the award in relation to the employee’s personal Aspire target opportunity is based entirely on the absolute performance of Bayer stock during the performance period. | |
• | The award varies between 0 percent and 150 percent of the Aspire target opportunity. |
Stock Participation Program (2005) for other managers and non-managerial employees |
• | up to 30 Bayer shares at a discount of€6.75 per share and | |
• | additional Bayer shares at a 15 percent discount up to a maximum total value of€2,500. |
Stock-based compensation programs 2000-2004 |
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Stock option | Stock incentive | Stock participation | ||||||||||
program | program | program | ||||||||||
Year of issue | 2000-2004 | 2000-2004 | 2000-2004 | |||||||||
Original term in years | 5 | 10 | 10 | |||||||||
Retention period/distribution date in years from issue date | 3 | 2/6/10 | 2/6/10 | |||||||||
Reference price | 0 | 0 | 0 | |||||||||
Performance criteria | Yes | Yes | No |
Stock Option Program (2000-2004) |
Stock Incentive Program (2000-2004) |
Stock Participation Program (2000-2004) |
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Employee Pension Plan |
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Employees by Activity Average for | ||||||||||||||||||||
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
Technology/ Manufacturing | 46,441 | (5.19 | ) | 44,033 | (0.05 | ) | 44,011 | |||||||||||||
Marketing | 30,254 | (2.24 | ) | 29,576 | 3.32 | 30,558 | ||||||||||||||
Administration | 9,073 | (0.61 | ) | 9,018 | 4.33 | 9,409 | ||||||||||||||
Research | 10,544 | (9.33 | ) | 9,560 | (3.92 | ) | 9,185 | |||||||||||||
Total | 96,312 | (4.28 | ) | 92,187 | 1.06 | 93,163 | ||||||||||||||
Breakdown by Region As of December 31, | ||||||||||||||||||||
Change from | Change from | |||||||||||||||||||
2003 | Previous Year | 2004 | Previous Year | 2005 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
Europe | 51,900 | (1.93 | ) | 50,900 | 1.96 | 51,900 | ||||||||||||||
North America | 18,700 | (4.81 | ) | 17,800 | (8.99 | ) | 16,200 | |||||||||||||
Asia/Pacific | 12,200 | 0.0 | 12,200 | 13.93 | 13,900 | |||||||||||||||
Latin America/ Africa/Middle East | 10,000 | 3.00 | 10,300 | 8.74 | 11,200 | |||||||||||||||
Corporate | 500 | 0.0 | 500 | 0.0 | 500 |
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• | working hours (namely, beginning and end of daily working hours); | |
• | vacation guidelines; | |
• | social services (e.g., subsidized cafeterias); and | |
• | distribution guidelines for performance-related bonuses. |
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• | enterprises that, directly or indirectly, control or are controlled by, or are under common control with, us (except at arm’s length conditions in the ordinary course of business); | |
• | enterprises in which we have significant influence or which have significant influence over us (except at arm’s length conditions in the ordinary course of business); | |
• | shareholders beneficially owning a 10 percent or greater interest in our voting power; | |
• | key management personnel; or | |
• | enterprises in which persons described above own, directly or indirectly, a substantial interest in the voting power. |
• | product liability; | |
• | competition and antitrust; | |
• | patent validity and infringement; | |
• | tax assessments; and | |
• | past waste disposal practices and release of chemicals into the environment. |
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Product liability proceedings |
Cerivastatin litigation |
126
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Blood plasma products litigation |
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Phenylpropanolamine (PPA) litigation |
Thimerosal litigation |
Isocyanate litigation |
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Proceedings involving Imidacloprid |
Antitrust proceedings |
Proceedings involving former rubber-related lines of business |
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Proceedings involving polyester polyols, urethanes and urethane chemicals |
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Proceedings involving polyether polyols and other precursors for urethane end-use products |
Impact of rubber-related and urethane-related antitrust proceedings on Bayer |
Proceedings involving Ciprofloxacin |
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Proceedings involving Premise® |
Average wholesale price manipulation proceedings |
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Patent validity challenges and infringement proceedings |
Proceedings involving Moxifloxacin |
Proceedings involving Kogenate |
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Proceeding involving blood glucose monitors |
Advia Centaur®-related actions |
Securities litigation |
Asbestos litigation |
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Other commercial proceedings |
Proceedings involving Everest |
Lyondell Arbitration |
Proceedings involving Limagrain Genetics Corporation |
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Frankfurt Stock | New York Stock | ||||||||||||||||
Exchange(2) | Exchange(2) | ||||||||||||||||
High | Low | High | Low | ||||||||||||||
(In Euros) | (In U.S. dollars) | ||||||||||||||||
2001 | 53.51 | 24.57 | |||||||||||||||
2002(1) | 38.37 | 16.41 | 36.00 | 17.30 | |||||||||||||
2003 | 22.17 | 9.67 | 29.41 | 11.24 | |||||||||||||
2004: | |||||||||||||||||
First quarter | 23.88 | 18.33 | 32.15 | 23.52 | |||||||||||||
Second quarter | 22.33 | 18.88 | 29.09 | 24.52 | |||||||||||||
Third quarter | 22.27 | 18.68 | 29.17 | 24.33 | |||||||||||||
Fourth quarter | 23.92 | 20.44 | 34.12 | 27.00 | |||||||||||||
Full year 2004 | 23.92 | 18.33 | 34.12 | 23.52 | |||||||||||||
2005: | |||||||||||||||||
First quarter | 26.82 | 22.11 | 35.61 | 30.84 | |||||||||||||
Second quarter | 28.62 | 24.79 | 34.94 | 31.16 | |||||||||||||
Third quarter | 30.84 | 26.78 | 38.50 | 31.85 | |||||||||||||
Fourth quarter | 35.92 | 27.86 | 42.87 | 33.70 | |||||||||||||
Full year 2005 | 35.92 | 22.11 | 42.87 | 30.84 | |||||||||||||
Previous six months | |||||||||||||||||
September 2005 | 30.84 | 28.70 | 38.50 | 35.23 | |||||||||||||
October 2005 | 31.23 | 27.86 | 37.35 | 33.70 | |||||||||||||
November 2005 | 33.95 | 28.86 | 40.32 | 34.34 | |||||||||||||
December 2005 | 35.92 | 33.73 | 42.87 | 39.83 | |||||||||||||
January 2006 | 36.37 | 33.61 | 44.31 | 40.80 | |||||||||||||
February 2006 | 35.07 | 33.50 | 41.95 | 40.07 |
(1) | From January 24, 2002 for New York Stock Exchange. |
(2) | The spin-off of LANXESS from Bayer became legally effective on January 28, 2005 and trading in the shares of LANXESS on the Frankfurt Stock Exchange commenced on January 31, 2005. Since January 31, 2005, Bayer shares have been traded ex LANXESS on the Frankfurt Stock Exchange and since February 8, 2005, Bayer ADSs have been traded ex LANXESS on the New York Stock Exchange. The share prices presented here for the New York Stock Exchange have not been retroactively adjusted for the spin-off. |
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Registration |
Object and Purposes |
Members of the Board of Management and the Supervisory Board |
Rights, Preferences and Restrictions Attaching to our Shares |
Information Rights |
138
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Dividend Rights and Other Distributions |
Voting Rights |
Liquidation Rights |
Pre-emptive Rights |
Derivative suits |
139
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Stockholders’ Meetings — Convocation and Participation |
Repurchase of Shares |
Anti-takeover Defenses |
140
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Disclosure Requirements |
Relating to LANXESS |
141
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Relating to Roche |
142
Table of Contents
Taxation of Dividends |
Refund Procedures |
143
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Taxation of Capital Gains |
144
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German Gift and Inheritance Taxes |
German Capital Tax (Vermögensteuer) |
Other German Taxes |
U.S. Information Reporting and Backup Withholding |
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• | Currency exchange rate fluctuations.We are exposed to fluctuations between the euro and other major world currencies. The majority of our currency fluctuation risks are between the euro and the U.S. dollar, between the euro and the Japanese yen, between the euro and the Canadian dollar and between the U.S. dollar and the Brazilian real. | |
• | Interest rate fluctuations.We are exposed to changes in interest rates. Our primary interest rate exposure is to fluctuations in short-and long-term European and U.S. interest rates. | |
• | Credit risk.We are exposed to credit risk with respect to the counterparties in our transactions. | |
• | Raw material, commodity and energy price fluctuations. We are exposed to possible increases in raw material, commodity and energy prices. We may not be able to pass any such increases on to our customers. |
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Sensitivity Analysis |
• | a simultaneous, parallel foreign exchange rates shift in which the euro depreciates against all currencies by 10 percent, | |
• | a simultaneous, parallel commodity price increase of 20 percent in all relevant commodities with respect to which we hold derivatives; and | |
• | a parallel shift of 100 basis points of the interest rate yield curves in all currencies. |
• | The risk-mitigating effects caused by correlation and diversification among different currencies, commodity prices and interest rate areas or between these different risk exposures are not taken into account. This may lead to an overestimation of risk, since a simultaneous adverse shift in all currencies, commodity prices and yield curves is highly unlikely. | |
• | Unlike other more complex risk modeling concepts, it applies only two shifts (up or down) in each risk category with the direction causing the adverse outcome chosen. While it is possible to apply more sophisticated risk measurement techniques, it is our view that sensitivity analysis gives decision makers in our non-financial businesses a sufficient warning of potential losses. We may apply further detailed analyses using the specific facts of a given situation to determine if appropriate corrective actions are needed. | |
• | Sensitivity analyses offer a “snapshot” of exposures at and between specific dates in time. However, there is continuous change in the Other Than Trading Portfolio. For example, positions are continually being opened and closed, assets and liabilities mature and new interest rates take effect. We accept this limitation and whenever we believe that more current information is required, produce either updated sensitivity analyses or utilize other management reporting options to understand in detail the effects of changing market conditions. | |
• | Sensitivity analyses do not provide an answer to the question of “how long” a sharp rise or fall of market rates will continue. Accordingly, we develop our own market direction projections and obtain other professional predictions that we then use in our financial planning and in modeling earnings impacts. |
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Interest Rate Risk |
Derivative financial instruments |
Notional Amount | Fair value | |||||||||||||||
As of | As of | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(Euros in millions) | ||||||||||||||||
Interest rate hedging contracts | 5,791 | 11,327 | 149 | 109 |
Sensitivity Analysis |
Currency Risk |
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Transaction Risk |
Translation Risk |
Derivative financial instruments |
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Notional Amount | Fair Value | |||||||||||||||
As of | As of | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(Euros in millions) | ||||||||||||||||
Forward exchange contracts, currency swaps and interest and principal currency swaps | 6,210 | 5,533 | 480 | (116 | ) | |||||||||||
Currency options | 123 | 169 | 10 | (2 | ) |
Sensitivity Analysis |
Credit Risk |
Raw Materials, Commodity and Energy Price Risks |
• | Benzene; | |
• | Phenol; | |
• | Acetone; | |
• | Propylene oxide; | |
• | Ethylene; | |
• | Toluene; |
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• | Electric power; and | |
• | Steam. |
• | coverage of recurrent requirements with long-term contracts to reduce the price volatility of purchases on the spot markets; | |
• | incorporating pricing formulas linked to economic indices and pre-products into our contracts, rather than using published prices; | |
• | stock-keeping, flexibility in supply sources and, wherever possible, other alternative production plants to limit risks from raw material availability (only applicable to raw materials); and | |
• | hedging. |
Derivative financial instruments |
Notional | ||||||||||||||||
Amount | Fair Value | |||||||||||||||
As of | As of | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(Euros in millions) | ||||||||||||||||
Commodity hedging contracts | 802 | 416 | 28 | 85 | ||||||||||||
Commodity option hedging contracts | 49 | (13 | ) |
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Sensitivity Analysis |
Item 12. | Description of Securities Other Than Equity Securities |
152
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Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15. | Controls and Procedures |
Item 16. | [Reserved] |
Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
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Item 16C. | Principal Accountant Fees and Services |
Type of fees | 2003 | 2004 | 2005 | ||||||||||
(Euros in millions) | |||||||||||||
Audit fees | 23 | 18 | 16 | ||||||||||
Audit-related fees | 3 | 8 | 5 | ||||||||||
Tax fees | 1 | 1 | 1 | ||||||||||
Fees for other services | * | * | 1 | ||||||||||
Total | 27 | 27 | 23 | ||||||||||
* | All other fees amounted to less than€500,000 in 2003 and 2004 |
Audit Committee Pre-Approval Policies |
• | Audit services up to an annual aggregate, which was€23 million in 2003,€18 million in 2004 and€16 million in 2005 for Bayer Group and Bayer AG and which include the audit of the consolidated financial statements of Bayer and its affiliates; services necessary to provide audit opinions; services in connection with the submission of reports to the SEC; attest services for reports prepared on Bayer’s internal control system and review of Bayer’s information systems; accounting and disclosure advice in connection with the annual audit; and audit services relating to the audit of restated prior-year figures, if any. | |
• | Audit-related services, which include acquisition/ disposition due diligence; audits of material companies acquired or to be acquired, of carve-out statements relating to acquisitions or dispositions, of closing balances for dispositions and of employee benefit plans; procedures necessary to meet finance, accounting or other regulatory reporting requirements; advice on internal control systems; reviews of Bayer’s information systems unrelated to audit; assistance in interpreting SEC requirements; and evaluation of risk management. | |
• | Tax advisory services, provided that the auditor or affiliate does not act as a representative of Bayer and did not recommend the transaction to which the tax advisory services relate; these include tax planning and advice; assistance with tax compliance; reviewing tax declarations; assistance in tax audits and appeals; and tax appraisals. | |
• | Other services, which include other risk management advice; audits of valuations performed by other advisors; analysis or review of business plans or planning processes (but not design or implementation thereof); and other financial related advice. |
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Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Maximum Number | ||||||||||||||||
(or Approximate | ||||||||||||||||
Total Number of | Dollar Value) of | |||||||||||||||
Shares Purchased | Shares (or Units) | |||||||||||||||
Total Number | Average Price | as Part of Publicly | that May Yet Be | |||||||||||||
of Shares | Paid per Share | Announced Plans | Purchased Under the | |||||||||||||
Period (2005) | Purchased(a) | in Euro(b) | or Programs | Plans or Programs | ||||||||||||
January | 29,671 | 26.67 | [N/A] | [N/A] | ||||||||||||
February | 33,916 | 26.42 | [N/A] | [N/A] | ||||||||||||
March | 36,633 | 29.32 | [N/A] | [N/A] | ||||||||||||
April | 52,284 | 25.61 | [N/A] | [N/A] | ||||||||||||
May | 69,290 | 25.51 | [N/A] | [N/A] | ||||||||||||
June | 30,521 | 28.64 | [N/A] | [N/A] | ||||||||||||
July | 31,236 | 27.60 | [N/A] | [N/A] | ||||||||||||
August | 30,933 | 29.74 | [N/A] | [N/A] | ||||||||||||
September | 150,338 | 29.84 | [N/A] | [N/A] | ||||||||||||
October | 371,323 | 28.88 | [N/A] | [N/A] | ||||||||||||
November | 95,250 | 28.59 | [N/A] | [N/A] | ||||||||||||
December | 33,482 | 34.17 | [N/A] | [N/A] |
(a) | Relates to purchases of Bayer AG ordinary shares of no par value made by Bayer to accommodate its employee stock participation programs in Germany, the United States and Canada. Purchases made by Bayer under the remaining employee stock participation programs represent an amount that is immaterial in the aggregate. Our Board of Management is authorized until October 28, 2006 to purchase Bayer AG ordinary shares representing up to 10 percent of Bayer’s capital stock, including for the purpose of accommodating Bayer’s Stock Participation Program. For further information on our Stock Participation Program, see Item 6,Directors, Senior Management and Employees — Employee Stock-Based Compensation Program. |
(b) | Average price paid per share includes commissions. |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
Item 19. | Exhibits |
Exhibit 1.1 | Articles of Association (Satzung) of Bayer AG, as amended to date, in English translation. | |
Exhibit 2.1 | The total amount of long-term debt securities Bayer AG authorized under any instrument does not exceed 10 percent of the total assets of the Company. Bayer AG agrees to furnish to the Securities and Exchange Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of Bayer AG or its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. | |
Exhibit 4.1 | Spin-Off and Acquisition Agreement, dated September 22, 2004, between Bayer AG and Lanxess AG, in English translation, is incorporated by reference to Exhibit 4.1 to Bayer AG’s Annual Report on Form 20-F for the Year Ended December 31, 2004. | |
Exhibit 4.2 | Master Agreement, dated September 22, 2004, between Bayer AG and LANXESS AG, in English translation, is incorporated by reference to Exhibit 4.2 to Bayer AG’s Annual Report on Form 20-F for the Year Ended December 31, 2004. | |
Exhibit 4.3 | Share and Asset Purchase Agreement, dated as of July 16, 2004, by and among Roche Holding AG, Roche Finanz AG, Roche Pharmholding B.V., Roche Deutschland Holding GmbH, Hoffmann-La Roche France SAS and Bayer HealthCare AG, and the amendment thereto dated as of December 28, 2004, in English translation, is incorporated by reference to Exhibit 4.3 to Bayer AG’s Annual Report on Form 20-F for the Year Ended December 31, 2004. | |
Exhibit 4.4 | Summary of Employment Arrangements between Bayer AG and Werner Wenning. | |
Exhibit 4.5 | Summary of Employment Arrangements between Bayer AG and Dr. Udo Oels. | |
Exhibit 4.6 | Summary of Employment Arrangements between Bayer AG and Klaus Kühn. | |
Exhibit 4.7 | Summary of Employment Arrangements between Bayer AG and Dr. Richard Pott. | |
Exhibit 8.1 | Significant subsidiaries as of the end of the year covered by this report as defined in rule 1-02(w) of Regulation S-X: See Item 4,Information on the Company — Organizational Structure. | |
Exhibit 12.1 | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Exhibit 12.2 | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Exhibit 13.1 | Certification in accordance with 18 U.S.C. § 1350 as adopted by § 906 of the Sarbanes-Oxley Act of 2002. |
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Page | |||||
Independent Auditors’ Report | F-2 | ||||
Consolidated Financial Statements: | |||||
Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003 | F-3 | ||||
Consolidated Balance Sheets as of December 31, 2005 and 2004 | F-4 | ||||
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003 | F-5 | ||||
Consolidated Statements of Recognized Income and Expense for the years ended December 31, 2005, 2004 and 2003 | F-6 | ||||
Notes to the Consolidated Financial Statements | F-7 |
F-1
Table of Contents
/s/ ALBRECHT P. Albrecht Wirtschaftsprüfer (German Public Accountant) | /s/ LINKE V. Linke Wirtschaftsprüfer (German Public Accountant) |
F-2
Table of Contents
Note | 2003 | 2004 | 2005 | ||||||||||||||
(€ million) | |||||||||||||||||
Net sales | [8] | 22,417 | 23,278 | 27,383 | |||||||||||||
Cost of goods sold | (11,779 | ) | (12,421 | ) | (15,027 | ) | |||||||||||
Gross profit | 10,638 | 10,857 | 12,356 | ||||||||||||||
Selling expenses | [9] | (5,515 | ) | (5,240 | ) | (5,713 | ) | ||||||||||
Research and development expenses | [10] | (2,190 | ) | (1,927 | ) | (1,886 | ) | ||||||||||
General administration expenses | (1,410 | ) | (1,421 | ) | (1,444 | ) | |||||||||||
Other operating income | [11] | 1,073 | 740 | 794 | |||||||||||||
Other operating expenses | [12] | (2,021 | ) | (1,134 | ) | (1,295 | ) | ||||||||||
Operating result | [14] | 575 | 1,875 | 2,812 | |||||||||||||
Equity-method loss | [15.1] | (165 | ) | (139 | ) | (10 | ) | ||||||||||
Non-operating income | 750 | 483 | 634 | ||||||||||||||
Non-operating expenses | (1,293 | ) | (997 | ) | (1,237 | ) | |||||||||||
Non-operating result | [15] | (708 | ) | (653 | ) | (613 | ) | ||||||||||
Income (loss) before income taxes | (133 | ) | 1,222 | 2,199 | |||||||||||||
Income taxes | [16] | 84 | (473 | ) | (641 | ) | |||||||||||
Income (loss) from continuing operations after taxes | (49 | ) | 749 | 1,558 | |||||||||||||
Income (loss) from discontinued operations after taxes | [7.2] | (1,242 | ) | (67 | ) | 37 | |||||||||||
Income (loss) after taxes | (1,291 | ) | 682 | 1,595 | |||||||||||||
of which | |||||||||||||||||
attributable to minority interest | [17] | 12 | (3 | ) | (2 | ) | |||||||||||
attributable to Bayer AG stockholders (net income (loss)) | (1,303 | ) | 685 | 1,597 | |||||||||||||
Earnings (loss) per share (€) | |||||||||||||||||
From continuing operations | [18] | (0.08 | ) | 1.03 | 2.14 | ||||||||||||
Basic | (0.08 | ) | 1.03 | 2.14 | |||||||||||||
Diluted | (0.08 | ) | 1.03 | 2.14 | |||||||||||||
From continuing and discontinued operations | [18] | (1.78 | ) | 0.94 | 2.19 | ||||||||||||
Basic | (1.78 | ) | 0.94 | 2.19 | |||||||||||||
Diluted | (1.78 | ) | 0.94 | 2.19 | |||||||||||||
F-3
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Note | Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||
(€ million) | |||||||||||||
Noncurrent assets | |||||||||||||
Goodwill and other intangible assets | [19] | 5,952 | 7,688 | ||||||||||
Property, plant and equipment | [20] | 7,662 | 8,321 | ||||||||||
Investments in associates | [21] | 744 | 795 | ||||||||||
Other financial assets | [22] | 1,169 | 1,429 | ||||||||||
Other receivables | [23] | 113 | 199 | ||||||||||
Deferred taxes | [16] | 1,219 | 1,698 | ||||||||||
16,859 | 20,130 | ||||||||||||
Current assets | |||||||||||||
Inventories | [24] | 4,738 | 5,504 | ||||||||||
Trade accounts receivable | [25] | 4,475 | 5,204 | ||||||||||
Other financial assets | [22] | 794 | 214 | ||||||||||
Other receivables | [23] | 1,543 | 1,421 | ||||||||||
Claims for tax refunds | [16] | 823 | 726 | ||||||||||
Liquid assets | [26] | ||||||||||||
Marketable securities and other instruments | 29 | 233 | |||||||||||
Cash and cash equivalents | 3,570 | 3,290 | |||||||||||
15,972 | 16,592 | ||||||||||||
Assets held for sale and discontinued operations | [7.2] | 4,757 | — | ||||||||||
Total current assets | 20,729 | 16,592 | |||||||||||
Assets | 37,588 | 36,722 | |||||||||||
Equity attributable to Bayer AG stockholders | |||||||||||||
Capital stock of Bayer AG | 1,870 | 1,870 | |||||||||||
Capital reserves of Bayer AG | 2,942 | 2,942 | |||||||||||
Other reserves | 6,399 | 6,265 | |||||||||||
Accumulated other comprehensive income (loss) from discontinued operations | (379 | ) | — | ||||||||||
10,832 | 11,077 | ||||||||||||
Equity attributable to minority interest | 111 | 80 | |||||||||||
Stockholders’ equity | [27] | 10,943 | 11,157 | ||||||||||
Noncurrent liabilities | |||||||||||||
Provisions for pensions and other post-employment benefits | [28] | 6,219 | 7,174 | ||||||||||
Other provisions | [29] | 1,204 | 1,340 | ||||||||||
Financial liabilities | [30] | 7,025 | 7,185 | ||||||||||
Miscellaneous liabilities | [32] | 203 | 516 | ||||||||||
Deferred taxes | [16] | 644 | 280 | ||||||||||
15,295 | 16,495 | ||||||||||||
Current liabilities | |||||||||||||
Other provisions | [29] | 2,707 | 3,009 | ||||||||||
Financial liabilities | [30] | 2,166 | 1,767 | ||||||||||
Trade accounts payable | [31] | 1,759 | 1,974 | ||||||||||
Tax liabilities | [16] | 413 | 304 | ||||||||||
Miscellaneous liabilities | [32] | 1,918 | 2,016 | ||||||||||
8,963 | 9,070 | ||||||||||||
Liabilities directly related to assets held for sale and discontinued operations | [7.2] | 2,387 | — | ||||||||||
Total current liabilities | 11,350 | 9,070 | |||||||||||
Liabilities | 26,645 | 25,565 | |||||||||||
Stockholders’ equity and liabilities | 37,588 | 36,722 | |||||||||||
F-4
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Note | 2003 | 2004 | 2005 | |||||||||||||
(€ million) | ||||||||||||||||
Operating result | 575 | 1,875 | 2,812 | |||||||||||||
Income taxes | (728 | ) | (490 | ) | (541 | ) | ||||||||||
Depreciation and amortization | 3,050 | 1,959 | 1,835 | |||||||||||||
Change in pension provisions | (51 | ) | (424 | ) | (586 | ) | ||||||||||
(Gains) Losses on retirements of noncurrent assets | (105 | ) | (35 | ) | (43 | ) | ||||||||||
Gross cash flow | 2,741 | 2,885 | 3,477 | |||||||||||||
Decrease (Increase) in inventories | (127 | ) | (425 | ) | (181 | ) | ||||||||||
Decrease (Increase) in trade accounts receivable | 116 | (404 | ) | 156 | ||||||||||||
(Decrease) Increase in trade accounts payable | (90 | ) | (5 | ) | (115 | ) | ||||||||||
Changes in other working capital, other non-cash items | 618 | 211 | 205 | |||||||||||||
Net cash provided by (used in) operating activities (net cash flow, continuing operations) | [36] | 3,258 | 2,262 | 3,542 | ||||||||||||
Net cash provided by (used in) operating activities (net cash flow, discontinued operations) | [7.2] | 35 | 188 | (40 | ) | |||||||||||
Net cash provided by (used in) operating activities (net cash flow, total) | 3,293 | 2,450 | 3,502 | |||||||||||||
Cash outflows for additions to property, plant, equipment and intangible assets | (1,653 | ) | (1,251 | ) | (1,389 | ) | ||||||||||
Cash inflows from sales of property, plant, equipment and other assets | 1,644 | 200 | 398 | |||||||||||||
Cash inflows from sales of investments | 258 | 90 | 1,189 | |||||||||||||
Cash outflows for acquisitions less acquired cash | (72 | ) | (358 | ) | (2,188 | ) | ||||||||||
Interest and dividends received | 366 | 400 | 451 | |||||||||||||
Cash inflows from (outflows for) marketable securities | (83 | ) | 105 | (202 | ) | |||||||||||
Net cash provided by (used in) investing activities (total) | [37] | 460 | (814 | ) | (1,741 | ) | ||||||||||
Capital contributions | — | 10 | — | |||||||||||||
Bayer AG dividend and dividend payments to minority stockholders | (664 | ) | (559 | ) | (440 | ) | ||||||||||
Issuances of debt | 1,621 | 1,393 | 2,005 | |||||||||||||
Retirements of debt | (1,936 | ) | (881 | ) | (2,659 | ) | ||||||||||
Interest paid | (782 | ) | (724 | ) | (787 | ) | ||||||||||
Net cash provided by (used in) financing activities (total) | [38] | (1,761 | ) | (761 | ) | (1,881 | ) | |||||||||
Change in cash and cash equivalents due to business activities (total) | 1,992 | 875 | (120 | ) | ||||||||||||
Cash and cash equivalents at beginning of year | 767 | 2,734 | 3,570 | |||||||||||||
Change in cash and cash equivalents due to changes in scope of consolidation | 1 | 6 | (196 | ) | ||||||||||||
Change in cash and cash equivalents due to exchange rate movements | (26 | ) | (45 | ) | 36 | |||||||||||
Cash and cash equivalents at end of year | [39] | 2,734 | 3,570 | 3,290 | ||||||||||||
Marketable securities and other instruments | 129 | 29 | 233 | |||||||||||||
Liquid assets as per balance sheets | 2,863 | 3,599 | 3,523 | |||||||||||||
F-5
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Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||
2003 | 2004 | 2005 | |||||||||||
(€ million) | |||||||||||||
Changes in fair values of hedging instruments, recognized in stockholders’ equity | (15 | ) | 64 | (15 | ) | ||||||||
Gains (losses) on hedging instruments, recognized in the income statement | 3 | 4 | 3 | ||||||||||
Changes in fair values of available-for-sale securities, recognized in stockholders’ equity | 19 | 12 | 9 | ||||||||||
Gains (losses) on available-for-sale securities, recognized in the income statement | 1 | (6 | ) | — | |||||||||
Revaluation surplus (IFRS 3) | — | 66 | — | ||||||||||
Actuarial gains (losses) relating to pensions and other post-employment benefits | (519 | ) | (740 | ) | (1,207 | ) | |||||||
Exchange differences on translation of operations outside the euro zone | (1,106 | ) | (304 | ) | 857 | ||||||||
Deferred taxes on valuation adjustments, recognized directly in stockholders’ equity | 229 | 251 | 470 | ||||||||||
Deferred taxes on valuation adjustments, removed from stockholders’ equity and recognized in the income statement | (1 | ) | (2 | ) | — | ||||||||
Valuation adjustments recognized directly in stockholders’ equity | (1,389 | ) | (655 | ) | 117 | ||||||||
Income (loss) after taxes | (1,291 | ) | 682 | 1,595 | |||||||||
Total income and expense recognized in the financial statements | (2,680 | ) | 27 | 1,712 | |||||||||
• of which attributable to minority interest | 12 | (3 | ) | 6 | |||||||||
• of which attributable to Bayer AG stockholders | (2,692 | ) | 30 | 1,706 |
F-6
Table of Contents
HealthCare | CropScience | |||||||||||||||||||||||||||||||||||||||||||||||
Pharmaceuticals, | Environmental | |||||||||||||||||||||||||||||||||||||||||||||||
Biological | Diabetes Care, | Science, | ||||||||||||||||||||||||||||||||||||||||||||||
Products | Consumer Care | Diagnostics | Animal Health | Crop Protection | BioScience | |||||||||||||||||||||||||||||||||||||||||||
Business Segments | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | ||||||||||||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net sales (external) | 3,961 | 4,067 | 1,336 | 2,355 | 1,975 | 2,151 | 786 | 856 | 4,957 | 4,874 | 989 | 1,022 | ||||||||||||||||||||||||||||||||||||
— Change | (9.4 | )% | 2.7 | % | (4.8 | )% | 76.3 | % | 2.2 | % | 8.9 | % | (0.5 | )% | 8.9 | % | 3.2 | % | (1.7 | )% | 2.7 | % | 3.3 | % | ||||||||||||||||||||||||
— Change currency adjusted | (5.9 | )% | 1.7 | % | 1.4 | % | 75.2 | % | 6.9 | % | 8.1 | % | 4.5 | % | 7.1 | % | 7.0 | % | (4.3 | )% | 7.5 | % | 2.1 | % | ||||||||||||||||||||||||
Intersegment sales | 38 | 58 | 16 | 14 | 1 | 1 | 4 | 8 | 71 | 70 | 7 | 13 | ||||||||||||||||||||||||||||||||||||
Other operating income | 128 | 49 | 20 | 38 | 6 | 67 | 12 | 5 | 134 | 217 | 37 | 33 | ||||||||||||||||||||||||||||||||||||
Operating result | 399 | 475 | 183 | 174 | 217 | 274 | 157 | 179 | 386 | 532 | 106 | 158 | ||||||||||||||||||||||||||||||||||||
Return on sales | 10.1 | % | 11.7 | % | 13.7 | % | 7.4 | % | 11.0 | % | 12.7 | % | 20.0 | % | 20.9 | % | 7.8 | % | 10.9 | % | 10.7 | % | 15.5 | % | ||||||||||||||||||||||||
Gross cash flow | 386 | 449 | 161 | 223 | 287 | 320 | 109 | 146 | 739 | 762 | 154 | 202 | ||||||||||||||||||||||||||||||||||||
Capital invested | 2,305 | 2,501 | 792 | 2,860 | 1,817 | 1,978 | 392 | 408 | 6,932 | 7,372 | 1,454 | 1,477 | ||||||||||||||||||||||||||||||||||||
CFRoI | 16.8 | % | 18.7 | % | 20.1 | % | 7.6 | % | 14.7 | % | 16.9 | % | 27.2 | % | 36.5 | % | 10.9 | % | 10.7 | % | 10.6 | % | 13.8 | % | ||||||||||||||||||||||||
Net cash flow | 261 | 481 | 279 | 323 | 388 | 373 | 125 | 174 | 637 | 699 | 141 | 205 | ||||||||||||||||||||||||||||||||||||
Equity-method income (loss) | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Equity-method investments | 4 | 4 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total assets | 4,052 | 3,489 | 1,287 | 3,621 | 1,809 | 1,955 | 554 | 642 | 9,117 | 8,836 | 1,703 | 1,591 | ||||||||||||||||||||||||||||||||||||
Capital expenditures | 115 | 142 | 40 | 59 | 121 | 108 | 25 | 21 | 181 | 175 | 28 | 26 | ||||||||||||||||||||||||||||||||||||
Amortization and depreciation | 174 | 188 | 69 | 120 | 170 | 178 | 23 | 24 | 592 | 494 | 135 | 100 | ||||||||||||||||||||||||||||||||||||
Liabilities | 2,138 | 2,086 | 505 | 816 | 687 | 748 | 202 | 341 | 2,450 | 2,668 | 360 | 369 | ||||||||||||||||||||||||||||||||||||
Research and development expenses | 740 | 680 | 45 | 57 | 144 | 148 | 67 | 69 | 571 | 548 | 108 | 116 | ||||||||||||||||||||||||||||||||||||
Number of employees (as of Dec. 31) | 18,400 | 16,900 | 3,800 | 6,800 | 7,000 | 7,100 | 2,900 | 3,000 | 16,500 | 16,000 | 2,900 | 2,800 |
MaterialScience | ||||||||||||||||||||||||||||||||
Continuing | ||||||||||||||||||||||||||||||||
Materials | Systems | Reconciliation | Operations | |||||||||||||||||||||||||||||
Business Segments | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | ||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||
Net sales (external) | 3,248 | 4,086 | 5,349 | 6,609 | 677 | 1,363 | 23,278 | 27,383 | ||||||||||||||||||||||||
— Change | 17.0 | % | 25.8 | % | 14.4 | % | 23.6 | % | — | — | 3.8 | % | 17.6 | % | ||||||||||||||||||
— Change currency adjusted | 22.1 | % | 25.5 | % | 18.8 | % | 22.8 | % | — | — | 8.0 | % | 16.4 | % | ||||||||||||||||||
Intersegment sales | 13 | 14 | 116 | 142 | (266 | ) | (320 | ) | — | — | ||||||||||||||||||||||
Other operating income | 32 | 19 | 96 | 26 | 275 | 340 | 740 | 794 | ||||||||||||||||||||||||
Operating result | 293 | 633 | 348 | 736 | (214 | ) | (349 | ) | 1,875 | 2,812 | ||||||||||||||||||||||
Return on sales | 9.0 | % | 15.5 | % | 6.5 | % | 11.1 | % | — | — | 8.1 | % | 10.3 | % | ||||||||||||||||||
Gross cash flow | 400 | 621 | 484 | 781 | 165 | (27 | ) | 2,885 | 3,477 | |||||||||||||||||||||||
Capital invested | 3,645 | 4,325 | 4,344 | 4,791 | 3,684 | 2,848 | 25,365 | 28,560 | ||||||||||||||||||||||||
CFRoI | 11.1 | % | 15.6 | % | 9.8 | % | 17.1 | % | — | — | 10.8 | % | 12.4 | % | ||||||||||||||||||
Net cash flow | 209 | 517 | 289 | 871 | (67 | ) | (101 | ) | 2,262 | 3,542 | ||||||||||||||||||||||
Equity-method income (loss) | 4 | 37 | (131 | ) | (47 | ) | (12 | ) | — | (139 | ) | (10 | ) | |||||||||||||||||||
Equity-method investments | 178 | 211 | 562 | 580 | — | — | 744 | 795 | ||||||||||||||||||||||||
Total assets | 3,789 | 4,314 | 4,724 | 5,125 | 5,796 | 7,149 | 32,831 | 36,722 | ||||||||||||||||||||||||
Capital expenditures | 147 | 377 | 185 | 338 | 135 | 142 | 977 | 1,388 | ||||||||||||||||||||||||
Amortization and depreciation | 249 | 225 | 326 | 320 | 221 | 186 | 1,959 | 1,835 | ||||||||||||||||||||||||
Liabilities | 964 | 1,090 | 1,475 | 1,632 | 15,477 | 15,815 | 24,258 | 25,565 | ||||||||||||||||||||||||
Research and development expenses | 97 | 107 | 139 | 144 | 16 | 17 | 1,927 | 1,886 | ||||||||||||||||||||||||
Number of employees (as of Dec. 31) | 9,100 | 9,300 | 8,800 | 9,500 | 22,300 | 22,300 | 91,700 | 93,700 |
F-7
Table of Contents
HealthCare | CropScience | |||||||||||||||||||||||||||||||||||||||||||||||
Pharmaceuticals, | Environmental | |||||||||||||||||||||||||||||||||||||||||||||||
Biological | Diabetes Care, | Science, | ||||||||||||||||||||||||||||||||||||||||||||||
Products | Consumer Care | Diagnostics | Animal Health | Crop Protection | BioScience | |||||||||||||||||||||||||||||||||||||||||||
Business Segments | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net sales (external) | 4,371 | 3,961 | 1,403 | 1,336 | 1,933 | 1,975 | 790 | 786 | 4,801 | 4,957 | 963 | 989 | ||||||||||||||||||||||||||||||||||||
— Change | 0.9 | % | (9.4 | )% | (18.2 | )% | (4.8 | )% | (5.2 | )% | 2.2 | % | (7.1 | )% | (0.5 | )% | 20.0 | % | 3.2 | % | 38.6 | % | 2.7 | % | ||||||||||||||||||||||||
— Change currency adjusted | 12.2 | % | (5.9 | )% | (5.8 | )% | 1.4 | % | 5.1 | % | 6.9 | % | 4.7 | % | 4.5 | % | 32.1 | % | 7.0 | % | 56.1 | % | 7.5 | % | ||||||||||||||||||||||||
Intersegment sales | 42 | 38 | 7 | 16 | — | 1 | 6 | 4 | 62 | 71 | 14 | 7 | ||||||||||||||||||||||||||||||||||||
Other operating income | 100 | 128 | 347 | 20 | 36 | 6 | 25 | 12 | 278 | 134 | 51 | 37 | ||||||||||||||||||||||||||||||||||||
Operating result | (16 | ) | 399 | 486 | 183 | 115 | 217 | 172 | 157 | 242 | 386 | 100 | 106 | |||||||||||||||||||||||||||||||||||
Return on sales | (0.4 | )% | 10.1 | % | 34.6 | % | 13.7 | % | 5.9 | % | 11.0 | % | 21.8 | % | 20.0 | % | 5.0 | % | 7.8 | % | 10.4 | % | 10.7 | % | ||||||||||||||||||||||||
Gross cash flow | 180 | 386 | 371 | 161 | 277 | 287 | 144 | 109 | 692 | 739 | 168 | 154 | ||||||||||||||||||||||||||||||||||||
Capital invested | 2,287 | 2,305 | 808 | 792 | 2,083 | 1,817 | 409 | 392 | 6,575 | 6,932 | 1,458 | 1,454 | ||||||||||||||||||||||||||||||||||||
CFRoI | 5.8 | % | 16.8 | % | 39.7 | % | 20.1 | % | 12.8 | % | 14.7 | % | 27.1 | % | 27.2 | % | 9.3 | % | 10.9 | % | 11.0 | % | 10.6 | % | ||||||||||||||||||||||||
Net cash flow | (67 | ) | 261 | 444 | 279 | 275 | 388 | 226 | 125 | 847 | 637 | 318 | 141 | |||||||||||||||||||||||||||||||||||
Equity-method income (loss) | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Equity-method investments | 4 | 4 | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total assets | 4,089 | 4,052 | 1,078 | 1,287 | 2,129 | 1,809 | 575 | 554 | 8,921 | 9,117 | 1,824 | 1,703 | ||||||||||||||||||||||||||||||||||||
Capital expenditures | 158 | 115 | 46 | 40 | 155 | 121 | 21 | 25 | 236 | 181 | 177 | 28 | ||||||||||||||||||||||||||||||||||||
Amortization and depreciation | 328 | 174 | 69 | 69 | 231 | 170 | 32 | 23 | 600 | 592 | 149 | 135 | ||||||||||||||||||||||||||||||||||||
Liabilities | 2,418 | 2,138 | 512 | 505 | 614 | 687 | 229 | 202 | 2,556 | 2,450 | 412 | 360 | ||||||||||||||||||||||||||||||||||||
Research and development expenses | 920 | 740 | 46 | 45 | 163 | 144 | 72 | 67 | 630 | 571 | 95 | 108 | ||||||||||||||||||||||||||||||||||||
Number of employees (as of Dec. 31) | 19,100 | 18,400 | 3,800 | 3,800 | 7,200 | 7,000 | 2,900 | 2,900 | 16,300 | 16,500 | 3,100 | 2,900 |
MaterialScience | ||||||||||||||||||||||||||||||||
Continuing | ||||||||||||||||||||||||||||||||
Materials | Systems | Reconciliation | Operations | |||||||||||||||||||||||||||||
Business Segments | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||
Net sales (external) | 2,777 | 3,248 | 4,676 | 5,349 | 703 | 677 | 22,417 | 23,278 | ||||||||||||||||||||||||
— Change | (3.4 | )% | 17.0 | % | (2.3 | )% | 14.4 | % | — | — | 0.6 | % | 3.8 | % | ||||||||||||||||||
— Change currency adjusted | 5.1 | % | 22.1 | % | 6.5 | % | 18.8 | % | — | — | 10.9 | % | 8.0 | % | ||||||||||||||||||
Intersegment sales | 10 | 13 | 103 | 116 | (244 | ) | (266 | ) | — | — | ||||||||||||||||||||||
Other operating income | 21 | 32 | 44 | 96 | 171 | 275 | 1,073 | 740 | ||||||||||||||||||||||||
Operating result | 58 | 293 | (455 | ) | 348 | (127 | ) | (214 | ) | 575 | 1,875 | |||||||||||||||||||||
Return on sales | 2.1 | % | 9.0 | % | (9.7 | )% | 6.5 | % | — | — | 2.6 | % | 8.1 | % | ||||||||||||||||||
Gross cash flow | 312 | 400 | 623 | 484 | (26 | ) | 165 | 2,741 | 2,885 | |||||||||||||||||||||||
Capital invested | 3,557 | 3,645 | 5,551 | 4,344 | 5,297 | 3,684 | 28,025 | 25,365 | ||||||||||||||||||||||||
CFRoI | 8.0 | % | 11.1 | % | 10.3 | % | 9.8 | % | — | — | 9.6 | % | 10.8 | % | ||||||||||||||||||
Net cash flow | 332 | 209 | 781 | 289 | 102 | (67 | ) | 3,258 | 2,262 | |||||||||||||||||||||||
Equity-method income (loss) | (11 | ) | 4 | (23 | ) | (131 | ) | (131 | ) | (12 | ) | (165 | ) | (139 | ) | |||||||||||||||||
Equity-method investments | 163 | 178 | 703 | 562 | — | — | 870 | 744 | ||||||||||||||||||||||||
Total assets | 3,861 | 3,789 | 3,957 | 4,724 | 6,589 | 5,796 | 33,023 | 32,831 | ||||||||||||||||||||||||
Capital expenditures | 169 | 147 | 295 | 185 | 143 | 135 | 1,400 | 977 | ||||||||||||||||||||||||
Amortization and depreciation | 269 | 249 | 1,108 | 326 | 264 | 221 | 3,050 | 1,959 | ||||||||||||||||||||||||
Liabilities | 829 | 964 | 1,494 | 1,475 | 14,969 | 15,477 | 24,033 | 24,258 | ||||||||||||||||||||||||
Research and development expenses | 116 | 97 | 133 | 139 | 15 | 16 | 2,190 | 1,927 | ||||||||||||||||||||||||
Number of employees (as of Dec. 31) | 9,100 | 9,100 | 9,200 | 8,800 | 22,600 | 22,300 | 93,300 | 91,700 |
F-8
Table of Contents
Latin America/ | ||||||||||||||||||||||||||||||||||||||||||||||||
Europe | North America | Asia/Pacific | Africa/Middle East | |||||||||||||||||||||||||||||||||||||||||||||
Regions | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net sales (external) — by market | 9,110 | 9,775 | 11,930 | 6,981 | 6,512 | 7,340 | 3,625 | 3,962 | 4,578 | 2,701 | 3,029 | 3,535 | ||||||||||||||||||||||||||||||||||||
— Change | 2.6 | % | 7.3 | % | 22.0 | % | 0.8 | % | (6.7 | )% | 12.7 | % | (3.5 | )% | 9.3 | % | 15.5 | % | (1.0 | )% | 12.1 | % | 16.7 | % | ||||||||||||||||||||||||
— Change currency adjusted | 3.6 | % | 7.4 | % | 21.9 | % | 19.0 | % | 1.6 | % | 11.9 | % | 8.5 | % | 14.7 | % | 14.8 | % | 17.2 | % | 18.4 | % | 10.4 | % | ||||||||||||||||||||||||
Net sales (external) — by point of origin | 9,873 | 10,646 | 12,912 | 7,027 | 6,570 | 7,386 | 3,398 | 3,708 | 4,383 | 2,119 | 2,354 | 2,702 | ||||||||||||||||||||||||||||||||||||
— Change | 6.3 | % | 7.8 | % | 21.3 | % | (2.8 | )% | (6.5 | )% | 12.4 | % | (1.6 | )% | 9.1 | % | 18.2 | % | (8.3 | )% | 11.1 | % | 14.8 | % | ||||||||||||||||||||||||
— Change currency adjusted | 7.1 | % | 7.8 | % | 21.1 | % | 15.0 | % | 1.9 | % | 11.6 | % | 11.3 | % | 14.9 | % | 17.4 | % | 12.3 | % | 18.6 | % | 6.7 | % | ||||||||||||||||||||||||
Interregional sales | 3,333 | 3,512 | 3,933 | 1,705 | 1,690 | 1,913 | 233 | 193 | 198 | 113 | 119 | 176 | ||||||||||||||||||||||||||||||||||||
Other operating income | 748 | 492 | 348 | 53 | 130 | 295 | 79 | 57 | 49 | 193 | 61 | 102 | ||||||||||||||||||||||||||||||||||||
Operating result | 602 | 953 | 1,285 | (400 | ) | 396 | 924 | 119 | 362 | 455 | 421 | 395 | 314 | |||||||||||||||||||||||||||||||||||
Return on sales | 6.1 | % | 9.0 | % | 10.0 | % | (5.7 | )% | 6.0 | % | 12.5 | % | 3.5 | % | 9.8 | % | 10.4 | % | 19.9 | % | 16.8 | % | 11.6 | % | ||||||||||||||||||||||||
Gross cash flow | 1,388 | 1,503 | 1,733 | 803 | 770 | 1,126 | 268 | 376 | 459 | 368 | 346 | 276 | ||||||||||||||||||||||||||||||||||||
Equity-method income (loss) | (166 | ) | (39 | ) | 6 | — | (100 | ) | (17 | ) | 1 | — | 1 | — | — | — | ||||||||||||||||||||||||||||||||
Equity-method investments | 452 | 431 | 443 | 412 | 307 | 345 | 2 | 2 | 3 | 4 | 4 | 4 | ||||||||||||||||||||||||||||||||||||
Total assets | 19,659 | 19,118 | 20,294 | 7,770 | 7,684 | 8,199 | 2,521 | 2,754 | 3,904 | 1,466 | 1,885 | 2,423 | ||||||||||||||||||||||||||||||||||||
Capital expenditures | 805 | 550 | 606 | 422 | 231 | 284 | 119 | 140 | 400 | 54 | 56 | 98 | ||||||||||||||||||||||||||||||||||||
Amortization and depreciation | 1,376 | 1,173 | 1,077 | 1,360 | 542 | 526 | 239 | 132 | 113 | 56 | 50 | 65 | ||||||||||||||||||||||||||||||||||||
Liabilities | 15,097 | 16,058 | 17,638 | 5,543 | 5,328 | 5,040 | 1,122 | 987 | 1,088 | 634 | 742 | 1,007 | ||||||||||||||||||||||||||||||||||||
Research and development expenses | 1,521 | 1,322 | 1,228 | 580 | 515 | 565 | 74 | 70 | 68 | 15 | 20 | 25 | ||||||||||||||||||||||||||||||||||||
Number of employees (as of Dec. 31) | 52,400 | 51,400 | 52,400 | 18,700 | 17,800 | 16,200 | 12,200 | 12,200 | 13,900 | 10,000 | 10,300 | 11,200 |
Reconciliation | Continuing Operations | |||||||||||||||||||||||
Regions | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Net sales (external) — by market | — | — | — | 22,417 | 23,278 | 27,383 | ||||||||||||||||||
— Change | — | — | — | 0.6 | % | 3.8 | % | 17.6 | % | |||||||||||||||
— Change currency adjusted | — | — | — | 10.9 | % | 8.0 | % | 16.4 | % | |||||||||||||||
Net sales (external) — by point of origin | — | — | — | 22,417 | 23,278 | 27,383 | ||||||||||||||||||
— Change | — | — | — | 0.6 | % | 3.8 | % | 17.6 | % | |||||||||||||||
— Change currency adjusted | — | — | — | 10.9 | % | 8.0 | % | 16.4 | % | |||||||||||||||
Interregional sales | (5,384 | ) | (5,514 | ) | (6,220 | ) | — | — | — | |||||||||||||||
Other operating income | — | — | — | 1,073 | 740 | 794 | ||||||||||||||||||
Operating result | (167 | ) | (231 | ) | (166 | ) | 575 | 1,875 | 2,812 | |||||||||||||||
Return on sales | — | — | — | 2.6 | % | 8.1 | % | 10.3 | % | |||||||||||||||
Gross cash flow | (86 | ) | (110 | ) | (117 | ) | 2,741 | 2,885 | 3,477 | |||||||||||||||
Equity-method income (loss) | — | — | — | (165 | ) | (139 | ) | (10 | ) | |||||||||||||||
Equity-method investments | — | — | — | 870 | 744 | 795 | ||||||||||||||||||
Total assets | 1,607 | 1,390 | 1,902 | 33,023 | 32,831 | 36,722 | ||||||||||||||||||
Capital expenditures | — | — | — | 1,400 | 977 | 1,388 | ||||||||||||||||||
Amortization and depreciation | 19 | 62 | 54 | 3,050 | 1,959 | 1,835 | ||||||||||||||||||
Liabilities | 1,637 | 1,143 | 792 | 24,033 | 24,258 | 25,565 | ||||||||||||||||||
Research and development expenses | — | — | — | 2,190 | 1,927 | 1,886 | ||||||||||||||||||
Number of employees (as of Dec. 31) | — | — | — | 93,300 | 91,700 | 93,700 |
F-9
Table of Contents
F-10
Table of Contents
Accounting standards applied for the first time in 2005 |
F-11
Table of Contents
F-12
Table of Contents
Carrying amount | Impact of the | Carrying amount | ||||||||||
before the change | change | after the change | ||||||||||
(€ million) | ||||||||||||
Assets | ||||||||||||
Benefit plan assets in excess of obligations | 540 | (468 | ) | 72 | ||||||||
Deferred tax assets | 936 | 283 | 1,219 | |||||||||
Assets held for sale and discontinued operations | 4,788 | (31 | ) | 4,757 | ||||||||
Stockholders’ equity and liabilities | ||||||||||||
Other reserves | 7,452 | (1,432 | ) | 6,020 | ||||||||
Provisions for pensions and other post-employment benefits | 4,581 | 1,638 | 6,219 | |||||||||
Deferred tax liabilities | 1,171 | (527 | ) | 644 | ||||||||
Liabilities directly related to assets held for sale and discontinued operations | 2,282 | 105 | 2,387 |
Newly issued accounting standards |
F-13
Table of Contents
[4.1] Consolidation methods |
F-14
Table of Contents
[4.2] Foreign currency translation |
Closing rate | Average rate | |||||||||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||||
(€1) | (€1) | |||||||||||||||||||||||||
Argentina | ARS | 3.70 | 4.05 | 3.57 | 3.33 | 3.66 | 3.64 | |||||||||||||||||||
Brazil | BRL | 3.66 | 3.62 | 2.76 | 3.47 | 3.64 | 3.04 | |||||||||||||||||||
U.K. | GBP | 0.70 | 0.71 | 0.69 | 0.69 | 0.68 | 0.68 | |||||||||||||||||||
Japan | JPY | 135.05 | 139.65 | 138.90 | 130.96 | 134.40 | 136.86 | |||||||||||||||||||
Canada | CAD | 1.62 | 1.64 | 1.37 | 1.58 | 1.62 | 1.51 | |||||||||||||||||||
Mexico | MXN | 14.18 | 15.23 | 12.59 | 12.22 | 14.04 | 13.58 | |||||||||||||||||||
Switzerland | CHF | 1.56 | 1.54 | 1.56 | 1.52 | 1.54 | 1.55 | |||||||||||||||||||
U.S.A. | USD | 1.26 | 1.36 | 1.18 | 1.13 | 1.24 | 1.24 |
F-15
Table of Contents
[4.3] Recognition and valuation principles |
Net sales and other operating income |
Research and development expenses |
F-16
Table of Contents
Goodwill and other intangible assets |
Property, plant and equipment |
F-17
Table of Contents
Buildings | 20 to 50 years | |||
Outdoor infrastructure | 10 to 20 years | |||
Plant installations | 6 to 20 years | |||
Machinery and equipment | 6 to 12 years | |||
Laboratory and research facilities | 3 to 5 years | |||
Storage tanks and pipelines | 10 to 20 years | |||
Vehicles | 5 to 8 years | |||
Computer equipment | 3 to 5 years | |||
Furniture and fixtures | 4 to 10 years |
Investments in associates |
Financial assets |
F-18
Table of Contents
Inventories |
F-19
Table of Contents
Taxes |
Provisions |
Financial liabilities |
F-20
Table of Contents
Miscellaneous receivables and liabilities |
F-21
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Pharmaceuticals, | Environmental | |||||||||||||||||||||||||||
Biological | Consumer | Diabetes Care, | Animal | Crop | Science, | |||||||||||||||||||||||
Products | Care | Diagnostics | Health | Health Care | Protection | BioScience | ||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||
Net carrying amounts, Jan. 1, 2004 | 2 | 99 | 13 | — | 114 | 1,168 | 459 | |||||||||||||||||||||
Amortization in 2004 | — | (13 | ) | (2 | ) | — | (15 | ) | (98 | ) | (36 | ) | ||||||||||||||||
Acquisitions | — | 113 | — | — | 113 | 101 | — | |||||||||||||||||||||
Retirements | — | (22 | ) | — | — | (22 | ) | (1 | ) | — | ||||||||||||||||||
Exchange differences | — | (14 | ) | — | — | (14 | ) | (27 | ) | (8 | ) | |||||||||||||||||
Changes in scope of consolidation | — | — | — | — | — | 2 | — | |||||||||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 2 | 163 | 11 | — | 176 | 1,145 | 415 | |||||||||||||||||||||
Amortization in 2005 | — | — | — | — | — | — | — | |||||||||||||||||||||
Acquisitions | — | 644 | — | — | 644 | 5 | 3 | |||||||||||||||||||||
Retirements | (1 | ) | — | — | (1 | ) | (30 | ) | (13 | ) | ||||||||||||||||||
Exchange differences | — | 77 | 1 | — | 78 | 45 | 10 | |||||||||||||||||||||
Net carrying amounts, Dec. 31, 2005 | 2 | 883 | 12 | — | 897 | 1,165 | 415 | |||||||||||||||||||||
CropScience | Materials | Systems | Material Science | Reconciliation | Bayer Group | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Net carrying amounts, Jan. 1, 2004 | 1,627 | 144 | 13 | 157 | — | 1,898 | ||||||||||||||||||
Amortization in 2004 | (134 | ) | (24 | ) | (1 | ) | (25 | ) | — | (174 | ) | |||||||||||||
Acquisitions | 101 | — | — | — | — | 214 | ||||||||||||||||||
Retirements | (1 | ) | — | — | — | — | (23 | ) | ||||||||||||||||
Exchange differences | (35 | ) | (2 | ) | — | (2 | ) | — | (51 | ) | ||||||||||||||
Changes in scope of consolidation | 2 | — | — | — | — | 2 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 1,560 | 118 | 12 | 130 | — | 1,866 | ||||||||||||||||||
Amortization in 2005 | — | — | — | — | — | — | ||||||||||||||||||
Acquisitions | 8 | — | 9 | 9 | — | 661 | ||||||||||||||||||
Retirements | (43 | ) | — | — | — | — | (44 | ) | ||||||||||||||||
Exchange differences | 55 | 6 | 1 | 7 | — | 140 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2005 | 1,580 | 124 | 22 | 146 | — | 2,623 | ||||||||||||||||||
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Intangible assets and property, plant and equipment |
F-24
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Research and development |
Net sales |
F-25
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Pensions and other post-employment benefits |
Doubtful accounts |
F-26
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Environmental provisions |
Litigation provisions |
F-27
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Income taxes |
Subgroup / Segment | Activities | ||
HealthCare | |||
Pharmaceuticals, Biological Products | Development and marketing of prescription pharmaceuticals | ||
Consumer Care | Development and marketing of over-the-counter medications and nutritional supplements | ||
Diabetes Care, Diagnostics | Development and marketing of diagnostic products for laboratory testing, near-patient testing and self-testing applications | ||
Animal Health | Development and marketing of veterinary medicines, nutritionals and grooming products for companion animals and livestock | ||
CropScience | |||
Crop Protection | Development and marketing of a comprehensive portfolio of fungicides, herbicides, insecticides and seed treatment products to meet a wide range of regional requirements | ||
Environmental Science, BioScience | Development and marketing of a wide range of products for the green industry, garden care, non-agricultural pest and weed control and conventional seeds, and plant biotechnology |
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Subgroup / Segment | Activities | ||
MaterialScience | |||
Materials | Production and marketing of high-quality plastics granules, methylcellulose, metallic and ceramic powders and semi-finished products | ||
Systems | Development, manufacturing and marketing of polyurethanes for a wide variety of applications as well as coating and adhesive raw materials; production and marketing of basic inorganic chemicals |
• | The intersegment sales reflect intragroup transactions effected at transfer prices fixed on an arm’s-length basis. | |
• | The return on sales is the ratio of the operating result to external net sales. | |
• | The gross cash flow comprises the operating result plus depreciation, amortization and write-downs, minus income taxes, minus gains/plus losses on retirements of noncurrent assets, plus/minus changes in pension provisions. The latter item includes the elimination of non-cash components of the operating result. It also contains benefit payments during the year. | |
• | The net cash flow is the cash flow from operating activities as defined in IAS 7. | |
• | The capital invested comprises all assets serving the respective segment that are required to yield a return on their cost of acquisition. Noncurrent assets are included at cost of acquisition or construction throughout their useful lives because the calculation of cash flow return on investment (CFRoI) requires that depreciation and amortization be excluded. Interest-free liabilities are deducted. The capital invested is stated as of December 31. | |
• | The CFRoI is the ratio of the gross cash flow to the average capital invested for the year and is thus a measure of the return on capital employed. | |
• | The equity items are those reflected in the balance sheet and income statement. They are allocated to the segments where possible. | |
• | Capital expenditures, amortization and depreciation relate to intangible assets, property, plant and equipment. |
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• | Since financial management of Group companies is carried out centrally by Bayer AG, financial liabilities are not allocated directly to the respective segments. Consequently, the liabilities shown for the individual segments do not include financial liabilities. |
[7.1] Scope of consolidation |
Other | ||||||||||||
Germany | Countries | Total | ||||||||||
Bayer AG and consolidated companies | ||||||||||||
January 1, 2005 | 69 | 280 | 349 | |||||||||
Additions | — | 7 | 7 | |||||||||
Retirements | (17 | ) | (59 | ) | (76 | ) | ||||||
Reclassifications | 2 | 1 | 3 | |||||||||
December 31, 2005 | 54 | 229 | 283 | |||||||||
Companies included at equity (associates) | ||||||||||||
January 1, 2005 | 3 | 8 | 11 | |||||||||
Additions | — | — | — | |||||||||
Retirements | — | — | — | |||||||||
Reclassifications | — | — | — | |||||||||
December 31, 2005 | 3 | 8 | 11 | |||||||||
Non-consolidated subsidiaries | ||||||||||||
January 1, 2005 | 37 | 90 | 127 | |||||||||
Additions | 5 | 6 | 11 | |||||||||
Retirements | (8 | ) | (22 | ) | (30 | ) | ||||||
Reclassifications | — | — | — | |||||||||
December 31, 2005 | 34 | 74 | 108 | |||||||||
Other affiliated companies (Bayer’s interest >5%) | 31 | 35 | 66 | |||||||||
Additions | 6 | 3 | 9 | |||||||||
Retirements | (4 | ) | (12 | ) | (16 | ) |
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2005 | ||||
(€ million) | ||||
Current assets | 15 | |||
Noncurrent assets | 62 | |||
Current liabilities | (23 | ) | ||
Noncurrent liabilities | (10 | ) | ||
Net assets | 44 | |||
Income | 50 | |||
Expenses | (47 | ) | ||
Income after taxes | 3 | |||
Bayer’s | ||||
Company Name and Place of Business | Interest (%) | |||
Germany | ||||
Bayer Business Services GmbH, Leverkusen | 100 | |||
Bayer CropScience AG, Monheim | 100 | |||
Bayer CropScience Deutschland GmbH, Langenfeld | 100 | |||
Bayer HealthCare AG, Leverkusen | 100 | |||
Bayer Industry Services GmbH & Co. OHG, Leverkusen | 60 | |||
Bayer MaterialScience AG, Leverkusen | 100 | |||
Bayer Technology Services GmbH, Leverkusen | 100 | |||
Bayer Vital GmbH, Leverkusen | 100 | |||
H. C. Starck GmbH, Goslar | 100 | |||
Wolff Cellulosics GmbH & Co. KG, Walsrode | 100 |
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Bayer’s | ||||
Company Name and Place of Business | Interest (%) | |||
Other European Countries | ||||
Bayer Antwerpen Comm.V, Belgium | 100 | |||
Bayer Consumer Care AG, Switzerland | 100 | |||
Bayer CropScience France S.A.S., France | 100 | |||
Bayer CropScience Limited, U.K. | 100 | |||
Bayer CropScience S.r.l., Italy | 100 | |||
Bayer Diagnostics Europe Ltd., Ireland | 100 | |||
Bayer International S.A., Switzerland | 99.7 | |||
Bayer Pharma S.A.S., France | 99.9 | |||
Bayer Polyols S.N.C., France | 100 | |||
Bayer Public Limited Company, U.K. | 100 | |||
Bayer S.p.A., Italy | 100 | |||
Bayer Santé Familiale S.A.S., France | 100 | |||
Bayer SP.Z.O.O., Poland | 100 | |||
Quimica Farmaceutica Bayer, S.A., Spain | 100 | |||
North America | ||||
Bayer CropScience Inc., Canada | 100 | |||
Bayer CropScience LP, U.S.A. | 100 | |||
Bayer HealthCare LLC, U.S.A. | 100 | |||
Bayer Inc., Canada | 100 | |||
Bayer MaterialScience LLC, U.S.A. | 100 | |||
Bayer Pharmaceuticals Corporation, U.S.A. | 100 | |||
H.C. Starck Inc., U.S.A. | 100 | |||
Asia/Pacific | ||||
Bayer Australia Limited, Australia | 99.9 | |||
Bayer CropScience K.K., Japan | 100 | |||
Bayer Korea Ltd., Republic of Korea | 100 | |||
Bayer MaterialScience Limited, Hong Kong | 100 | |||
Bayer Medical Ltd., Japan | 100 | |||
Bayer South East Asia Pte Ltd., Singapore | 100 | |||
Bayer Yakuhin, Ltd., Japan | 100 | |||
H.C. Starck Ltd., Japan | 100 | |||
Sumika Bayer Urethane Co., Ltd., Japan | 60 | |||
Latin America/ Africa/Middle East | ||||
Bayer (Proprietary) Limited, South Africa | 100 | |||
Bayer CropScience Ltda., Brazil | 100 | |||
Bayer de Mexico, S.A. de C.V., Mexico | 100 | |||
Bayer S.A., Argentina | 99.9 | |||
Bayer S.A., Brazil | 99.9 | |||
Bayer Türk Kimya Sanayi Limited Sirketi, Turkey | 100 |
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Bayer’s | ||||
Company Name and Place of Business | Interest (%) | |||
GE Bayer Silicones GmbH & Co. KG, Germany | 49.9 | |||
Lyondell Bayer Manufacturing Maasvlakte VOF, Netherlands | 50 | |||
Palthough Industries (1998) Ltd., Israel | 20 | |||
PO JV, LP, U.S.A. | 42.7 | |||
Polygal Plastics Industries Ltd., Israel | 25.8 |
Company Name | Place of Business | |
Bayer 04 Immobilien GmbH | Leverkusen | |
Bayer 04 Leverkusen Fußball GmbH | Leverkusen | |
Bayer 04 Mobilien GmbH | Leverkusen | |
Bayer Beteiligungsverwaltungsgesellschaft mbH | Leverkusen | |
Bayer Bitterfeld GmbH | Greppin | |
Bayer Business Services GmbH | Leverkusen | |
Bayer Chemicals AG | Leverkusen | |
Bayer CropScience AG | Monheim | |
Bayer Gastronomie GmbH | Leverkusen | |
Bayer Gesellschaft für Beteiligungen mbH | Greppin | |
Bayer HealthCare AG | Leverkusen | |
Bayer Industry Services GmbH & Co. OHG | Leverkusen | |
Bayer Innovation GmbH | Leverkusen | |
Bayer MaterialScience AG | Leverkusen | |
Bayer MaterialScience Customer Services GmbH | Leverkusen | |
Bayer Technology Services GmbH | Leverkusen | |
Bayer Vital GmbH | Leverkusen | |
Bayer-Handelsgesellschaft mbH | Leverkusen | |
Bayer-Kaufhaus GmbH | Leverkusen | |
Case Tech GmbH & Co. KG | Bomlitz | |
Chemion Logistik GmbH | Leverkusen | |
Drugofa GmbH | Köln | |
DYNEVO GmbH | Leverkusen | |
EPUREX Films GmbH & Co. KG | Bomlitz | |
Erste K-W-A Beteiligungsgesellschaft mbH | Leverkusen | |
Euroservices Bayer GmbH | Leverkusen | |
Generics Holding GmbH | Leverkusen | |
Gesellschaft für Wohnen und Gebäudemanagement mbH | Leverkusen | |
GP Grenzach Produktions GmbH | Grenzach | |
KVP Pharma+Veterinär-Produkte GmbH | Kiel |
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Company Name | Place of Business | |
Probis GmbH | Bomlitz | |
Sportrechte Vermarktungs- und Verwertungs-GmbH & Co. oHG | Leverkusen | |
Travel Board GmbH | Leverkusen | |
Wolff Cellulosics GmbH & Co. KG | Bomlitz | |
Wolff Walsrode AG | Walsrode | |
Zweite K-W-A Beteiligungsgesellschaft mbH | Leverkusen |
[7.2] Business combinations and other acquisitions; divestments; discontinued operations |
(€ million) | ||||
Acquisition costs excluding assumption of debt | 2,056 | |||
Ancillary acquisition costs | 28 | |||
Purchase price | 2,084 | |||
Fair value of acquired net assets | 1,440 | |||
Goodwill | 644 |
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Net Carrying Amount | |||||||||||||
Prior to the | Fair Value | Net Carrying Amount | |||||||||||
Acquisition | Adjustments | After the Acquisition | |||||||||||
(€ million) | |||||||||||||
Acquired assets and assumed liabilities | |||||||||||||
Other intangible assets | — | 1,142 | 1,142 | ||||||||||
Goodwill | — | 644 | 644 | ||||||||||
Property, plant and equipment | 142 | 9 | 151 | ||||||||||
Inventories | 97 | 57 | 154 | ||||||||||
Other current assets (excluding liquid assets) | 255 | 9 | 264 | ||||||||||
Liquid assets | 28 | — | 28 | ||||||||||
Financial liabilities | (74 | ) | — | (74 | ) | ||||||||
Miscellaneous liabilities | (129 | ) | — | (129 | ) | ||||||||
Pensions and other post-employment benefits | (25 | ) | — | (25 | ) | ||||||||
Other provisions | (9 | ) | — | (9 | ) | ||||||||
Deferred taxes | 6 | (68 | ) | (62 | ) | ||||||||
Purchase price | 2,084 | ||||||||||||
of which are ancillary acquisition costs | 28 | ||||||||||||
Assumed net financial liabilities | (46 | ) | |||||||||||
Net cash outflow for the acquisition | 2,130 | ||||||||||||
Fair | ||||||||
Value | Useful Life | |||||||
(€ million) | (Years) | |||||||
Trademarks | 1,055 | 20-30 | ||||||
Marketing and customer-related rights | 41 | 20-30 | ||||||
Software and technologies | 46 | 5-8 |
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(€ million) | ||||
Acquisition costs | 276 | |||
Ancillary acquisition costs | — | |||
Purchase price | 276 | |||
Fair value of acquired net assets | 259 | |||
Goodwill | 17 |
2005 | |||||
(€ million) | |||||
Acquired assets and assumed liabilities | |||||
Other intangible assets | 242 | ||||
Goodwill | 17 | ||||
Property, plant and equipment | 4 | ||||
Other financial assets | 3 | ||||
Other current assets | 10 | ||||
Purchase price | 276 | ||||
of which are ancillary acquisition costs | — | ||||
Assumed net financial liabilities | — | ||||
Net cash outflow for the business combinations and other acquisitions | 276 | ||||
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2005 | ||||
(€ million) | ||||
Divested assets and liabilities | ||||
Other intangible assets | 5 | |||
Property, plant and equipment | 13 | |||
Other financial assets | 7 | |||
Other current assets | 3 | |||
Pensions and other post-employment benefits | (7 | ) | ||
Other provisions | (1 | ) | ||
Net gain on divestitures | 67 | |||
Total selling price | 87 | |||
Net divested financial liabilities | — | |||
Net cash inflow from the divestitures | 87 |
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2004 | Acquisitions | Divestitures | ||||||
(€ million) | ||||||||
Noncurrent assets | 358 | 79 | ||||||
Current assets (excluding liquid assets) | 98 | — | ||||||
Liquid assets | — | 2 | ||||||
Assets | 456 | 81 | ||||||
Pension provisions | (1 | ) | — | |||||
Other provisions | (2 | ) | — | |||||
Financial obligations | — | — | ||||||
Remaining liabilities | (41 | ) | (2 | ) | ||||
Liabilities | (44 | ) | (2 | ) | ||||
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F-39
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LANXESS | Plasma Business | Total | ||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||||
(€ million) | (€ million) | (€ million) | ||||||||||||||||||||||||||||||||||
Net sales | 5,776 | 6,053 | 503 | 374 | 427 | 124 | 6,150 | 6,480 | 627 | |||||||||||||||||||||||||||
Cost of goods sold | (4,701 | ) | (4,635 | ) | (345 | ) | (314 | ) | (309 | ) | (91 | ) | (5,015 | ) | (4,944 | ) | (436 | ) | ||||||||||||||||||
Selling expenses | (881 | ) | (846 | ) | (62 | ) | (62 | ) | (56 | ) | (14 | ) | (943 | ) | (902 | ) | (76 | ) | ||||||||||||||||||
Research and development expenses | (168 | ) | (126 | ) | (8 | ) | (44 | ) | (48 | ) | (11 | ) | (212 | ) | (174 | ) | (19 | ) | ||||||||||||||||||
General administration expenses | (242 | ) | (263 | ) | (20 | ) | (18 | ) | (18 | ) | (11 | ) | (260 | ) | (281 | ) | (31 | ) | ||||||||||||||||||
Other operating income (expenses) — net | (1,072 | ) | (105 | ) | (6 | ) | (328 | ) | (93 | ) | 1 | (1,400 | ) | (198 | ) | (5 | ) | |||||||||||||||||||
Operating result from discontinued operations | (1,288 | ) | 78 | 62 | (392 | ) | (97 | ) | (2 | ) | (1,680 | ) | (19 | ) | 60 | |||||||||||||||||||||
Non-operating result | (87 | ) | (84 | ) | (4 | ) | — | — | — | (87 | ) | (84 | ) | (4 | ) | |||||||||||||||||||||
Net income (loss) before income taxes | (1,375 | ) | (6 | ) | 58 | (392 | ) | (97 | ) | (2 | ) | (1,767 | ) | (103 | ) | 56 | ||||||||||||||||||||
Income taxes | 402 | 2 | (20 | ) | 123 | 34 | 1 | 525 | 36 | (19 | ) | |||||||||||||||||||||||||
Income (loss) after taxes | (973 | ) | (4 | ) | 38 | (269 | ) | (63 | ) | (1 | ) | (1,242 | ) | (67 | ) | 37 | ||||||||||||||||||||
Of which: | ||||||||||||||||||||||||||||||||||||
Current income (loss) from discontinued operations (before taxes) | (1,375 | ) | (6 | ) | 58 | (72 | ) | (7 | ) | 22 | (1,447 | ) | (13 | ) | 80 | |||||||||||||||||||||
Income taxes | 402 | 2 | (20 | ) | — | 3 | (7 | ) | 402 | 5 | (27 | ) | ||||||||||||||||||||||||
Current income (loss) from discontinued operations (after taxes) | (973 | ) | (4 | ) | 38 | (72 | ) | (4 | ) | 15 | (1,045 | ) | (8 | ) | 53 | |||||||||||||||||||||
Income (loss) from the sale of discontinued operations (before taxes) | — | — | — | (320 | ) | (90 | ) | (24 | ) | (320 | ) | (90 | ) | (24 | ) | |||||||||||||||||||||
Income taxes | — | — | — | 123 | 31 | 8 | 123 | 31 | 8 | |||||||||||||||||||||||||||
Income (loss) from the sale of discontinued operations (after taxes) | — | — | — | (197 | ) | (59 | ) | (16 | ) | (197 | ) | (59 | ) | (16 | ) | |||||||||||||||||||||
Total income (loss) from discontinued operations after taxes | (973 | ) | (4 | ) | 38 | (269 | ) | (63 | ) | (1 | ) | (1,242 | ) | (67 | ) | 37 |
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Plasma | ||||||||||||||||||||||||
LANXESS | Business | Total | ||||||||||||||||||||||
2004 | 2005 | 2004 | 2005 | 2004 | 2005 | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Noncurrent assets | 1,900 | — | 124 | — | 2,024 | — | ||||||||||||||||||
Goodwill and other intangible assets | 65 | — | — | — | 65 | — | ||||||||||||||||||
Property, plant and equipment | 1,521 | — | 1 | — | 1,522 | — | ||||||||||||||||||
Other noncurrent assets | 106 | — | — | — | 106 | — | ||||||||||||||||||
Deferred taxes | 208 | — | 123 | — | 331 | — | ||||||||||||||||||
Current assets | 2,328 | — | 405 | — | 2,733 | — | ||||||||||||||||||
Inventories | 1,151 | — | 326 | — | 1,477 | — | ||||||||||||||||||
Trade accounts receivable | 1,029 | — | 76 | — | 1,105 | — | ||||||||||||||||||
Other current assets | 148 | — | 3 | — | 151 | — | ||||||||||||||||||
Assets held for sale and discontinued operations | 4,228 | — | 529 | — | 4,757 | — | ||||||||||||||||||
Noncurrent liabilities | 968 | — | — | — | 968 | — | ||||||||||||||||||
Provisions for pensions and other post-employment benefits | 573 | — | — | — | 573 | — | ||||||||||||||||||
Other provisions | 238 | — | — | — | 238 | — | ||||||||||||||||||
Financial liabilities | 92 | — | — | — | 92 | — | ||||||||||||||||||
Miscellaneous noncurrent liabilities | 42 | — | — | — | 42 | — | ||||||||||||||||||
Deferred taxes | 23 | — | — | — | 23 | — | ||||||||||||||||||
Current liabilities | 1,299 | — | 120 | — | 1,419 | — | ||||||||||||||||||
Other provisions | 207 | — | 20 | — | 227 | — | ||||||||||||||||||
Financial liabilities | 439 | — | — | — | 439 | — | ||||||||||||||||||
Trade accounts payable | 494 | — | 23 | — | 517 | — | ||||||||||||||||||
Miscellaneous current liabilities | 159 | — | 77 | — | 236 | — | ||||||||||||||||||
Liabilities directly related to assets held for sale and discontinued operations | 2,267 | — | 120 | — | 2,387 | — | ||||||||||||||||||
LANXESS | Plasma Business | Total | ||||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | 131 | 234 | (80 | ) | (96 | ) | (46 | ) | 40 | 35 | 188 | (40 | ) | |||||||||||||||||||||||
Net cash provided by (used in) investing activities | (247 | ) | (253 | ) | (19 | ) | (31 | ) | (30 | ) | 206 | (278 | ) | (283 | ) | 187 | ||||||||||||||||||||
Net cash provided by (used in) financing activities | 116 | 19 | 99 | 127 | 76 | (246 | ) | 243 | 95 | (147 | ) | |||||||||||||||||||||||||
Change in cash and cash equivalents | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
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2005 | € million | |||
Acquisitions | ||||
Roche Consumer Health business | 1,061 | |||
Gustafson (remaining 50 percent acquired in 2004) | 25 | |||
Other | 7 | |||
1,093 | ||||
Divestitures | (4 | ) | ||
Net sales to LANXESS after the spin-off on January 31, 2005(1) | 981 | |||
Net effect of portfolio changes | 2,070 | |||
(1) | A trading relationship now exists between the Bayer Group and the LANXESS Group as separate enterprises following the spin-off of what was previously the LANXESS subgroup of Bayer. The relevant agreements are concluded on an arm’s-length basis. Under these agreements, the Bayer Group supplies goods and services to the LANXESS Group. Some of the transactions relate to products, such as chlorine or caustic soda solution, that are supplied to LANXESS by the MaterialScience subgroup. Others are service transactions in the areas of IT systems development and application support, IT infrastructure, site services and engineering services. Prior to the spin-off, the resulting revenues were recorded as intragroup sales and eliminated in the consolidation. |
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2004 | € million | |||
Acquisitions | ||||
Gustafson (50 percent acquired in 2004) | 34 | |||
Other | 11 | |||
45 | ||||
Divestitures | ||||
Compliance with antitrust conditions by Bayer CropScience | (100 | ) | ||
PolymerLatex (divested in 2003) | (62 | ) | ||
Walothen GmbH (divested in 2003) | (47 | ) | ||
Household insecticides business of Bayer HealthCare (divested in 2003) | (25 | ) | ||
Animal vaccine at Bayer HealthCare (divested in 2003) | (16 | ) | ||
Bayer Shell, Belgium | (15 | ) | ||
Other | (4 | ) | ||
(269 | ) | |||
Net effect of portfolio changes | (224 | ) | ||
2003 | € million | |||
Acquisitions | ||||
Aventis CropScience Holding S.A., Lyon, France (acquired in 2002) | 1,450 | |||
Visible Genetics Inc., Canada (acquired in 2002) | 9 | |||
Tectrade A/S, Copenhagen, Denmark (acquired in 2002) | 6 | |||
Other | 1 | |||
1,466 | ||||
Divestitures | ||||
Compliance with antitrust conditions by Bayer CropScience | (435 | ) | ||
Household insecticides business of Bayer HealthCare | (272 | ) | ||
PolymerLatex Group | (117 | ) | ||
Walothen GmbH | (10 | ) | ||
Other | (7 | ) | ||
(841 | ) | |||
Net effect of portfolio changes | 625 | |||
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2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Gains from sales of property, plant and equipment/ portfolio adjustments | 643 | 184 | 151 | |||||||||
Reversals of unutilized provisions | 104 | 61 | 27 | |||||||||
Write-backs of receivables and other assets | 67 | 48 | 79 | |||||||||
Recognition of exchange rate hedges | 103 | — | 47 | |||||||||
Miscellaneous operating income | 156 | 447 | 490 | |||||||||
1,073 | 740 | 794 | ||||||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Amortization and write-downs of acquired goodwill | (269 | ) | (174 | ) | — | |||||||
Write-downs of trade accounts receivable | (103 | ) | (88 | ) | (168 | ) | ||||||
Losses from sales of property, plant and equipment | (103 | ) | (127 | ) | (128 | ) | ||||||
Impairment write-downs, excluding goodwill | (535 | ) | — | — | ||||||||
Litigation-related expenses | (372 | ) | (149 | ) | (451 | ) | ||||||
Miscellaneous operating expenses | (639 | ) | (596 | ) | (548 | ) | ||||||
(2,021 | ) | (1,134 | ) | (1,295 | ) | |||||||
F-44
Table of Contents
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Wages and salaries | 4,982 | 4,822 | 4,803 | |||||||||
Social expenses and expenses for pensions and other benefits | 1,501 | 1,204 | 1,109 | |||||||||
• of which for defined-contribution pension plans | 283 | 284 | 341 | |||||||||
• of which for defined-benefit pension plans | 497 | 146 | (21 | ) | ||||||||
6,483 | 6,026 | 5,912 | ||||||||||
2003 | 2004 | 2005 | ||||||||||
Marketing | 30,254 | 29,576 | 30,558 | |||||||||
Technology | 46,441 | 44,033 | 44,011 | |||||||||
Research and development | 10,544 | 9,560 | 9,185 | |||||||||
Administration | 9,073 | 9,018 | 9,409 | |||||||||
96,312 | 92,187 | 93,163 | ||||||||||
of which trainees | 2,485 | 2,545 | 2,547 |
F-45
Table of Contents
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Equity-method loss(1) | (165 | ) | (139 | ) | (10 | ) | ||||||
Non-operating income(2) | 750 | 483 | 634 | |||||||||
Non-operating expenses(3) | (1,293 | ) | (997 | ) | (1,237 | ) | ||||||
(708 | ) | (653 | ) | (613 | ) | |||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Equity-method loss(1) | (165 | ) | (139 | ) | (10 | ) | ||||||
Write-downs of investments in affiliated companies(3) | (124 | ) | (11 | ) | (28 | ) | ||||||
Dividends from affiliated companies and income from profit and loss transfer agreements(2) | 5 | — | 10 | |||||||||
• of which€1 million (2004:€nil; 2003:€3 million) from subsidiaries | ||||||||||||
Gains from the sale of investments in affiliated companies(2) | 191 | 11 | 6 | |||||||||
Losses from the sale of investments in affiliated companies(3) | (2 | ) | (4 | ) | 0 | |||||||
(95 | ) | (143 | ) | (22 | ) | |||||||
F-46
Table of Contents
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Income from other securities and loans(2) | 17 | 13 | 7 | |||||||||
Other interest and similar income(2) | 501 | 414 | 565 | |||||||||
• of which€1 million (2004:€1 million; 2003:€2 million) from subsidiaries | ||||||||||||
Interest and similar expenses(3) | (817 | ) | (656 | ) | (913 | ) | ||||||
• of which€1 million (2004:€9 million; 2003:€6 million) to subsidiaries | ||||||||||||
(299 | ) | (229 | ) | (341 | ) | |||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Interest portion of interest-bearing provisions(3) | (270 | ) | (231 | ) | (246 | ) | ||||||
Net exchange loss(3) | (13 | ) | (24 | ) | (14 | ) | ||||||
Miscellaneous non-operating expenses(3) | (67 | ) | (71 | ) | (36 | ) | ||||||
Miscellaneous non-operating income(2) | 36 | 45 | 46 | |||||||||
(314 | ) | (281 | ) | (250 | ) | |||||||
F-47
Table of Contents
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Income taxes paid or accrued | ||||||||||||
— Germany | (276 | ) | (115 | ) | (161 | ) | ||||||
— Other countries | (452 | ) | (375 | ) | (380 | ) | ||||||
(728 | ) | (490 | ) | (541 | ) | |||||||
Deferred taxes | ||||||||||||
— from temporary differences | 717 | (150 | ) | (205 | ) | |||||||
— from tax loss carryforwards | 95 | 167 | 105 | |||||||||
812 | 17 | (100 | ) | |||||||||
Income taxes | 84 | (473 | ) | (641 | ) | |||||||
Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
Deferred Tax | Deferred Tax | Deferred Tax | Deferred Tax | |||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(€ million) | (€ million) | |||||||||||||||
Intangible assets | 149 | 1,029 | 159 | 983 | ||||||||||||
Property, plant and equipment | 80 | 820 | 184 | 780 | ||||||||||||
Financial assets | 43 | 174 | 26 | 235 | ||||||||||||
Inventories | 275 | 73 | 377 | 66 | ||||||||||||
Receivables | 77 | 168 | 123 | 344 | ||||||||||||
Other assets | 10 | 389 | 34 | 253 | ||||||||||||
Pension provisions | 1,102 | 209 | 1,522 | 436 | ||||||||||||
Other provisions | 767 | 131 | 666 | 68 | ||||||||||||
Other liabilities | 644 | 78 | 726 | 20 | ||||||||||||
Tax loss carryforwards | 584 | — | 1,047 | — | ||||||||||||
Valuation allowance for tax loss carryforwards | (85 | ) | — | (261 | ) | — | ||||||||||
3,646 | 3,071 | 4,603 | 3,185 | |||||||||||||
Set-off | (2,427 | ) | (2,427 | ) | (2,905 | ) | (2,905 | ) | ||||||||
1,219 | 644 | 1,698 | 280 | |||||||||||||
F-48
Table of Contents
Total as at | of which | Total as at | of which | |||||||||||||
Dec. 31, 2004 | current | Dec. 31, 2005 | current | |||||||||||||
(€ million) | ||||||||||||||||
Deferred tax assets | 1,219 | 509 | 1,698 | 709 | ||||||||||||
Claims for tax refunds | 823 | 815 | 726 | 719 | ||||||||||||
2,042 | 1,324 | 2,424 | 1,428 | |||||||||||||
Total as at | of which | Total as at | of which | |||||||||||||
Dec. 31, 2004 | current | Dec. 31, 2005 | current | |||||||||||||
(€ million) | ||||||||||||||||
Deferred tax liabilities | 644 | 430 | 280 | 187 | ||||||||||||
Provisions for income taxes | 997 | 648 | 803 | 431 | ||||||||||||
Tax liabilities | 413 | 413 | 304 | 302 | ||||||||||||
2,054 | 1,491 | 1,387 | 920 | |||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
One year | 19 | 4 | — | |||||||||
Two years | 7 | 2 | — | |||||||||
Three years | 41 | — | — | |||||||||
Four years | 104 | — | 4 | |||||||||
Five years and thereafter | 1,258 | 1,494 | 2,714 | |||||||||
1,429 | 1,500 | 2,718 | ||||||||||
F-49
Table of Contents
F-50
Table of Contents
2003 | 2004 | 2005 | ||||||||||||||||||||||
(€ million) | % | (€ million) | % | (€ million) | % | |||||||||||||||||||
Theoretical income tax expense (income) | (50 | ) | 100 | 428 | 100 | 774 | 100 | |||||||||||||||||
Reduction in taxes due to tax-free income | ||||||||||||||||||||||||
— Relating to the divestiture of Millennium | (76 | ) | 152 | — | — | — | — | |||||||||||||||||
— Tax-free income from affiliated companies and divestiture proceeds | (34 | ) | 68 | (4 | ) | (1 | ) | (6 | ) | (1 | ) | |||||||||||||
— Other | (66 | ) | 132 | (84 | ) | (20 | ) | (99 | ) | (13 | ) | |||||||||||||
Utilization of off-balance-sheet loss carryforwards | (3 | ) | 6 | (30 | ) | (7 | ) | (34 | ) | (4 | ) | |||||||||||||
Tax provision reversal in the U.S. | — | — | — | — | (104 | ) | (13 | ) | ||||||||||||||||
Increase in taxes due to non-tax-deductible expenses | ||||||||||||||||||||||||
— Write-downs on investments | 49 | (98 | ) | 13 | 3 | 10 | 1 | |||||||||||||||||
— Amortization of goodwill | 56 | (112 | ) | 63 | 15 | — | — | |||||||||||||||||
— Impairment charges | 38 | (76 | ) | — | — | — | — | |||||||||||||||||
— Expenses for litigation | 24 | (48 | ) | 31 | 7 | 17 | 2 | |||||||||||||||||
— Other | 14 | (28 | ) | 30 | 7 | 53 | 7 | |||||||||||||||||
Other tax effects | (36 | ) | 72 | 26 | 6 | 30 | 4 | |||||||||||||||||
Actual tax expense (income) | (84 | ) | 168 | 473 | 111 | 641 | 83 | |||||||||||||||||
Effective tax rate in % | 63.2 | 38.7 | 29.1 |
2003 | 2004 | 2005 | ||||||||||
Number of shares | ||||||||||||
Weighted average number of shares outstanding | ||||||||||||
— basic | 730,341,920 | 730,341,920 | 730,341,920 | |||||||||
Dilutive potential ordinary shares | — | — | — | |||||||||
Weighted average number of shares outstanding | ||||||||||||
— diluted | 730,341,920 | 730,341,920 | 730,341,920 |
F-51
Table of Contents
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Income (loss) after taxes | (1,291 | ) | 682 | 1,595 | ||||||||
— attributable to minority interest | (12 | ) | (3 | ) | (2 | ) | ||||||
— attributable to Bayer AG stockholders (net income) | (1,303 | ) | 685 | 1,597 | ||||||||
Income (loss) after taxes from discontinued operations | (1,242 | ) | (67 | ) | 37 | |||||||
Weighted average number of shares | 730,341,920 | 730,341,920 | 730,341,920 | |||||||||
Basic earnings (loss) per share (€) | ||||||||||||
— from continuing operations | (0.08 | ) | 1.03 | 2.14 | ||||||||
— from continuing and discontinued operations | (1.78 | ) | 0.94 | 2.19 | ||||||||
Diluted earnings (loss) per share (€) | ||||||||||||
— from continuing operations | (0.08 | ) | 1.03 | 2.14 | ||||||||
— from continuing and discontinued operations | (1.78 | ) | 0.94 | 2.19 |
Effect on Earnings | ||||||||||||
Per Share | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Cessation of amortization of goodwill and other intangible assets with indefinite useful lives in accordance with IFRS 3, IAS 36 and IAS 38 | 0.28 | 0.26 | — | |||||||||
Offsetting of unrealized actuarial gains and losses in benefit accounting against equity in accordance with IAS 19, amended 2004 | 0.08 | 0.12 | — | |||||||||
Total effect of accounting changes on earnings per share | 0.36 | 0.38 | — | |||||||||
F-52
Table of Contents
Acquired | �� | |||||||||||||||
Concessions, | ||||||||||||||||
Industrial Property | ||||||||||||||||
Rights, Similar | ||||||||||||||||
Rights and Assets, | ||||||||||||||||
and Licenses | Acquired | Advance | ||||||||||||||
Thereunder | Goodwill | Payments | Total | |||||||||||||
(€ million) | ||||||||||||||||
Gross carrying amounts, Dec. 31, 2004 | 7,137 | 2,470 | 38 | 9,645 | ||||||||||||
Exchange differences | 395 | 179 | 2 | 576 | ||||||||||||
Elimination of accumulated amortization prior to the application of IFRS 3 | — | (643 | ) | — | (643 | ) | ||||||||||
Changes in scope of consolidation | — | — | — | — | ||||||||||||
Acquisitions | 1,384 | 661 | — | 2,045 | ||||||||||||
Capital expenditures | 82 | — | 14 | 96 | ||||||||||||
Retirements | (217 | ) | (44 | ) | (23 | ) | (284 | ) | ||||||||
Transfers | 15 | — | (17 | ) | (2 | ) | ||||||||||
Gross carrying amounts, Dec. 31, 2005 | 8,796 | 2,623 | 14 | 11,433 | ||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2004 | 3,088 | 604 | 1 | 3,693 | ||||||||||||
Exchange differences | 222 | 39 | — | 261 | ||||||||||||
Elimination of accumulated amortization prior to the application of IFRS 3 | — | (643 | ) | — | (643 | ) | ||||||||||
Changes in scope of consolidation | — | — | — | — | ||||||||||||
Amortization and write-downs in 2005 | 622 | — | — | 622 | ||||||||||||
• of which write-downs | 22 | — | — | 22 | ||||||||||||
Write-backs | — | — | — | — | ||||||||||||
Retirements | (187 | ) | — | — | (187 | ) | ||||||||||
Transfers | (1 | ) | — | — | (1 | ) | ||||||||||
Accumulated amortization and write-downs, Dec. 31, 2005 | 3,744 | — | 1 | 3,745 | ||||||||||||
Net carrying amounts, Dec. 31, 2005 | 5,052 | 2,623 | 13 | 7,688 | ||||||||||||
Net carrying amounts, Dec. 31, 2004 | 4,049 | 1,866 | 37 | 5,952 |
F-53
Table of Contents
Marketing | ||||||||||||||||||||||||
and | ||||||||||||||||||||||||
Distribution | Production | Other | ||||||||||||||||||||||
Patents | Trademarks | Rights | Rights | Rights | Total | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Gross carrying amounts, Dec. 31, 2004 | 1,634 | 1,029 | 626 | 1,933 | 1,915 | 7,137 | ||||||||||||||||||
Exchange differences | 73 | 41 | 91 | 5 | 185 | 395 | ||||||||||||||||||
Changes in scope of consolidation | — | — | — | — | — | — | ||||||||||||||||||
Acquisitions | 13 | 1,068 | 160 | 74 | 69 | 1,384 | ||||||||||||||||||
Capital expenditures | 12 | — | 6 | — | 64 | 82 | ||||||||||||||||||
Retirements | (68 | ) | (7 | ) | — | (11 | ) | (131 | ) | (217 | ) | |||||||||||||
Transfers | 41 | (4 | ) | (3 | ) | (11 | ) | (8 | ) | 15 | ||||||||||||||
Gross carrying amounts, Dec. 31, 2005 | 1,705 | 2,127 | 880 | 1,990 | 2,094 | 8,796 | ||||||||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2004 | 602 | 331 | 205 | 510 | 1,440 | 3,088 | ||||||||||||||||||
Exchange differences | 30 | 15 | 31 | 2 | 144 | 222 | ||||||||||||||||||
Changes in scope of consolidation | — | — | — | — | — | — | ||||||||||||||||||
Amortization and write-downs in 2005 | 155 | 92 | 76 | 164 | 135 | 622 | ||||||||||||||||||
• of which write-downs | 4 | 1 | 15 | — | 2 | 22 | ||||||||||||||||||
Write-backs | — | — | — | — | — | — | ||||||||||||||||||
Retirements | (53 | ) | (1 | ) | — | (4 | ) | (129 | ) | (187 | ) | |||||||||||||
Transfers | 1 | (1 | ) | — | (5 | ) | 4 | (1 | ) | |||||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2005 | 735 | 436 | 312 | 667 | 1,594 | 3,744 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2005 | 970 | 1,691 | 568 | 1,323 | 500 | 5,052 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 1,032 | 698 | 421 | 1,423 | 475 | 4,049 |
Estimated Amortization of Intangible Assets | (€ million) | |||
2006 | 575 | |||
2007 | 446 | |||
2008 | 418 | |||
2009 | 378 | |||
2010 | 367 |
F-54
Table of Contents
Acquired | ||||||||||||||||
Concessions, | ||||||||||||||||
Industrial Property | ||||||||||||||||
Rights, Similar | ||||||||||||||||
Rights and Assets, | ||||||||||||||||
and Licenses | Acquired | Advance | ||||||||||||||
Thereunder | Goodwill | Payments | Total | |||||||||||||
(€ million) | ||||||||||||||||
Gross carrying amounts, Dec. 31, 2003 | 7,110 | 2,522 | 45 | 9,677 | ||||||||||||
Exchange differences | (175 | ) | (66 | ) | — | (241 | ) | |||||||||
Changes in scope of consolidation | 1 | 2 | — | 3 | ||||||||||||
Acquisitions | 140 | 214 | — | 354 | ||||||||||||
Capital expenditures | 52 | — | 35 | 87 | ||||||||||||
Retirements | (44 | ) | (202 | ) | (6 | ) | (252 | ) | ||||||||
Transfers | 53 | — | (36 | ) | 17 | |||||||||||
Gross carrying amounts, Dec. 31, 2004 | 7,137 | 2,470 | 38 | 9,645 | ||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2003 | 2,637 | 624 | 5 | 3,266 | ||||||||||||
Exchange differences | (111 | ) | (15 | ) | — | (126 | ) | |||||||||
Changes in scope of consolidation | 1 | — | — | 1 | ||||||||||||
Amortization and write-downs in 2004 | 577 | 174 | — | 751 | ||||||||||||
• of which write-downs | 4 | — | — | 4 | ||||||||||||
Write-backs | — | — | — | — | ||||||||||||
Retirements | (31 | ) | (179 | ) | — | (210 | ) | |||||||||
Transfers | 15 | — | (4 | ) | 11 | |||||||||||
Accumulated amortization and write-downs, Dec. 31, 2004 | 3,088 | 604 | 1 | 3,693 | ||||||||||||
Net carrying amounts, Dec. 31, 2004 | 4,049 | 1,866 | 37 | 5,952 | ||||||||||||
F-55
Table of Contents
Marketing | ||||||||||||||||||||||||
and | ||||||||||||||||||||||||
Distribution | Production | Other | ||||||||||||||||||||||
Patents | Trademarks | Rights | Rights | Rights | Total | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Gross carrying amounts, Dec. 31, 2003 | 1,745 | 886 | 654 | 1,931 | 1,894 | 7,110 | ||||||||||||||||||
Exchange differences | (33 | ) | (15 | ) | (39 | ) | (1 | ) | (87 | ) | (175 | ) | ||||||||||||
Changes in scope of consolidation | — | — | — | — | 1 | 1 | ||||||||||||||||||
Acquisitions | — | 138 | 1 | — | 1 | 140 | ||||||||||||||||||
Capital expenditures | 15 | — | 6 | — | 31 | 52 | ||||||||||||||||||
Retirements | (44 | ) | — | — | — | — | (44 | ) | ||||||||||||||||
Transfers | (49 | ) | 20 | 4 | 3 | 75 | 53 | |||||||||||||||||
Gross carrying amounts, Dec. 31, 2004 | 1,634 | 1,029 | 626 | 1,933 | 1,915 | 7,137 | ||||||||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2003 | 503 | 275 | 162 | 351 | 1,346 | 2,637 | ||||||||||||||||||
Exchange differences | (18 | ) | (8 | ) | (13 | ) | — | (72 | ) | (111 | ) | |||||||||||||
Changes in scope of consolidation | — | — | — | — | 1 | 1 | ||||||||||||||||||
Amortization and write-downs in 2004 | 148 | 56 | 56 | 159 | 158 | 577 | ||||||||||||||||||
• of which write-downs | — | — | — | — | 4 | 4 | ||||||||||||||||||
Write-backs | — | — | — | — | — | — | ||||||||||||||||||
Retirements | (31 | ) | — | — | — | — | (31 | ) | ||||||||||||||||
Transfers | — | 8 | — | — | 7 | 15 | ||||||||||||||||||
Accumulated amortization and write-downs, Dec. 31, 2004 | 602 | 331 | 205 | 510 | 1,440 | 3,088 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 1,032 | 698 | 421 | 1,423 | 475 | 4,049 | ||||||||||||||||||
Net carrying amounts, Dec. 31, 2003 | 1,242 | 611 | 492 | 1,580 | 548 | 4,473 |
F-56
Table of Contents
Construction in | ||||||||||||||||||||
Progress and | ||||||||||||||||||||
Furniture, | Advance | |||||||||||||||||||
Land | Plant | Fixtures | Payments to | |||||||||||||||||
and | Installations | and Other | Vendors and | |||||||||||||||||
Buildings | and Machinery | Equipment | Contractors | Total | ||||||||||||||||
(€ million) | ||||||||||||||||||||
Gross carrying amounts, Dec. 31, 2004 | 6,562 | 12,021 | 1,873 | 505 | 20,961 | |||||||||||||||
Exchange differences | 322 | 623 | 92 | 67 | 1,104 | |||||||||||||||
Changes in scope of consolidation | 5 | 3 | 3 | — | 11 | |||||||||||||||
Acquisitions | 73 | 63 | 8 | 11 | 155 | |||||||||||||||
Capital Expenditures | 81 | 223 | 103 | 885 | 1,292 | |||||||||||||||
Retirements | (176 | ) | (304 | ) | (239 | ) | (9 | ) | (728 | ) | ||||||||||
Transfers | 147 | 284 | 120 | (549 | ) | 2 | ||||||||||||||
Gross carrying amounts, Dec. 31, 2005 | 7,014 | 12,913 | 1,960 | 910 | 22,797 | |||||||||||||||
Accumulated depreciation and write-downs, Dec. 31, 2004 | 3,610 | 8,292 | 1,397 | — | 13,299 | |||||||||||||||
Exchange differences | 134 | 392 | 66 | — | 592 | |||||||||||||||
Changes in scope of consolidation | 1 | 1 | 3 | — | 5 | |||||||||||||||
Depreciation and write-downs in 2005 | 244 | 757 | 207 | 5 | 1,213 | |||||||||||||||
• of which write-downs | 37 | 12 | 1 | 5 | 55 | |||||||||||||||
Write-backs | — | — | — | — | — | |||||||||||||||
Retirements | (148 | ) | (270 | ) | (211 | ) | (5 | ) | (634 | ) | ||||||||||
Transfers | 16 | (16 | ) | 1 | — | 1 | ||||||||||||||
Accumulated depreciation and write-downs, Dec. 31, 2005 | 3,857 | 9,156 | 1,463 | — | 14,476 | |||||||||||||||
Net carrying amounts, Dec. 31, 2005 | 3,157 | 3,757 | 497 | 910 | 8,321 | |||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 2,952 | 3,729 | 476 | (505 | ) | 7,662 |
F-57
Table of Contents
Construction in | ||||||||||||||||||||
Progress and | ||||||||||||||||||||
Furniture, | Advance | |||||||||||||||||||
Land | Plant | Fixtures | Payments to | |||||||||||||||||
and | Installations | and Other | Vendors and | |||||||||||||||||
Buildings | and Machinery | Equipment | Contractors | Total | ||||||||||||||||
(€ million) | ||||||||||||||||||||
Gross carrying amounts, Dec. 31, 2003 | 6,362 | 12,309 | 1,897 | 690 | 21,258 | |||||||||||||||
Exchange differences | (134 | ) | (261 | ) | (25 | ) | (24 | ) | (444 | ) | ||||||||||
Changes in scope of consolidation | 7 | 36 | 27 | (1 | ) | 69 | ||||||||||||||
Acquisitions | — | 4 | — | — | 4 | |||||||||||||||
Capital Expenditures | 93 | 191 | 104 | 502 | 890 | |||||||||||||||
Retirements | (12 | ) | (466 | ) | (299 | ) | (22 | ) | (799 | ) | ||||||||||
Transfers | 246 | 208 | 169 | (640 | ) | (17 | ) | |||||||||||||
Gross carrying amounts, Dec. 31, 2004 | 6,562 | 12,021 | 1,873 | 505 | 20,961 | |||||||||||||||
Accumulated depreciation and write-downs, Dec. 31, 2003 | 3,344 | 8,111 | 1,388 | 14 | 12,857 | |||||||||||||||
Exchange differences | (28 | ) | (160 | ) | (20 | ) | — | (208 | ) | |||||||||||
Changes in scope of consolidation | 5 | 8 | 25 | — | 38 | |||||||||||||||
Depreciation and write-downs in 2004 | 213 | 785 | 210 | — | 1,208 | |||||||||||||||
• of which write-downs | 14 | 8 | — | — | 22 | |||||||||||||||
Write-backs | (1 | ) | (2 | ) | — | — | (3 | ) | ||||||||||||
Retirements | — | (340 | ) | (242 | ) | — | (582 | ) | ||||||||||||
Transfers | 77 | (110 | ) | 36 | (14 | ) | (11 | ) | ||||||||||||
Accumulated depreciation and write-downs, Dec. 31, 2004 | 3,610 | 8,292 | 1,397 | — | 13,299 | |||||||||||||||
Net carrying amounts, Dec. 31, 2004 | 2,952 | 3,729 | 476 | 505 | 7,662 | |||||||||||||||
2004 | 2005 | |||||||
(€ million) | ||||||||
Net carrying amount, Jan. 1 | 870 | 744 | ||||||
Acquisitions | — | — | ||||||
Equity-method loss | (139 | ) | (10 | ) | ||||
Exchange differences | 8 | 48 | ||||||
Other additions | — | 17 | ||||||
Miscellaneous | 5 | (4 | ) | |||||
Net carrying amount, Dec. 31 | 744 | 795 | ||||||
F-58
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2004 | 2005 | |||||||
(€ million) | ||||||||
Net sales | 1,236 | 1,335 | ||||||
Gross profit | 119 | 151 | ||||||
Net loss | (74 | ) | (47 | ) | ||||
Bayer’s share of net loss | (38 | ) | (22 | ) | ||||
Other(1) | (101 | ) | 12 | |||||
Net loss from investments in associates (equity-method loss) | (139 | ) | (10 | ) | ||||
F-59
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||
(€ million) | ||||||||
Noncurrent assets | 1,468 | 1,478 | ||||||
Current assets | 359 | 469 | ||||||
Noncurrent liabilities | 29 | 33 | ||||||
Current liabilities | 257 | 295 | ||||||
Stockholders’ equity | 1,541 | 1,619 | ||||||
Bayer’s share of stockholders’ equity | 709 | 742 | ||||||
Other(1) | 35 | 53 | ||||||
Net carrying amount of associates | 744 | 795 | ||||||
(1) | The category “other” mainly comprises differences arising from adjustments of data to Bayer’s accounting policies, purchase price allocations and their amortization in income, and impairment losses. |
Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Equity investments | 69 | — | 52 | — | ||||||||||||
Loans | 484 | 24 | 509 | 25 | ||||||||||||
Available-for-sale financial instruments | 203 | — | 215 | — | ||||||||||||
Held-to-maturity financial instruments | 113 | 26 | 150 | 35 | ||||||||||||
Miscellaneous financial assets | 1,094 | 744 | 717 | 154 | ||||||||||||
1,963 | 794 | 1,643 | 214 | |||||||||||||
Dec. 31, 2004 | Dec. 31, 2005 | |||||||
(€ million) | ||||||||
Investments in subsidiaries | 48 | 39 | ||||||
Investments in associates | 21 | 13 | ||||||
69 | 52 | |||||||
F-60
Table of Contents
Dec. 31, 2004 | Dec. 31, 2005 | ||||||||||||||||
of which | of which | ||||||||||||||||
Total | current | Total | current | ||||||||||||||
(€ million) | |||||||||||||||||
Loans | |||||||||||||||||
of which to subsidiaries | — | — | — | — | |||||||||||||
of which to other affiliated companies | 2 | — | 1 | — | |||||||||||||
of which to third parties | 482 | 24 | 508 | 25 | |||||||||||||
484 | 24 | 509 | 25 | ||||||||||||||
Dec. 31, 2004 | Dec. 31, 2005 | ||||||||||||||||
of which | of which | ||||||||||||||||
Total | current | Total | current | ||||||||||||||
(€ million) | |||||||||||||||||
Available-for-sale financial instruments | |||||||||||||||||
of which equity instruments | 189 | — | 206 | — | |||||||||||||
of which debt instruments | 14 | — | 9 | — | |||||||||||||
203 | — | 215 | — | ||||||||||||||
Held-to-maturity financial instruments | 113 | 26 | 150 | 35 | |||||||||||||
316 | 26 | 365 | 35 | ||||||||||||||
2004 | 2005 | |||||||
(€ million) | ||||||||
Gross carrying amounts, Jan. 1 | 447 | 412 | ||||||
Exchange differences | (6 | ) | 10 | |||||
Changes in scope of consolidation | 32 | — | ||||||
Changes in fair value (gains) | 18 | 16 | ||||||
Changes in fair value (losses) | (6 | ) | (7 | ) | ||||
Acquisitions | — | 2 | ||||||
Other additions | 190 | 103 | ||||||
Retirements | (263 | ) | (84 | ) | ||||
Gross carrying amounts, Dec. 31 | 412 | 452 | ||||||
Accumulated write-downs, Jan. 1 | 218 | 209 | ||||||
Exchange differences | — | 3 | ||||||
Changes in scope of consolidation | — | — | ||||||
Write-downs during the year | 23 | 26 | ||||||
Write-backs | (10 | ) | (1 | ) | ||||
Retirements | (22 | ) | — | |||||
Accumulated write-downs, Dec. 31 | 209 | 237 | ||||||
Net carrying amounts, Dec. 31 | 203 | 215 | ||||||
F-61
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Receivables from short-term loans | 53 | 25 | 74 | 13 | ||||||||||||
Receivables from commodity futures contracts | 59 | 33 | 280 | 87 | ||||||||||||
Receivables from other derivative financial instruments | 724 | 517 | 242 | 14 | ||||||||||||
Lease payments receivable | 58 | 20 | 109 | 28 | ||||||||||||
Remaining miscellaneous financial assets | 200 | 149 | 12 | 12 | ||||||||||||
1,094 | 744 | 717 | 154 | |||||||||||||
F-62
Table of Contents
Dec. 31, 2004 | |||||
(€ million) | |||||
Lease payments | |||||
Maturing in | |||||
2005 | 22 | ||||
2006 | 16 | ||||
2007 | 12 | ||||
2008 | 8 | ||||
2009 | 4 | ||||
2010 or later | 1 | ||||
63 | |||||
(€ million) | |||||
Interest component | |||||
Maturing in | |||||
2005 | 2 | ||||
2006 | 1 | ||||
2007 | 1 | ||||
2008 | 1 | ||||
2009 | — | ||||
2010 or later | — | ||||
5 | |||||
(€ million) | |||||
Receivables under finance leases | |||||
Maturing in | |||||
2005 | 20 | ||||
2006 | 15 | ||||
2007 | 11 | ||||
2008 | 7 | ||||
2009 | 4 | ||||
2010 or later | 1 | ||||
58 | |||||
Dec. 31, 2005 | |||||
(€ million) | |||||
Lease payments | |||||
Maturing in | |||||
2006 | 32 | ||||
2007 | 28 | ||||
2008 | 17 | ||||
2009 | 10 | ||||
2010 | 6 | ||||
2011 or later | 34 | ||||
127 | |||||
(€ million) | |||||
Interest component | |||||
Maturing in | |||||
2006 | 4 | ||||
2007 | 3 | ||||
2008 | 3 | ||||
2009 | 2 | ||||
2010 | 2 | ||||
2011 or later | 4 | ||||
18 | |||||
(€ million) | |||||
Receivables under finance leases | |||||
Maturing in | |||||
2006 | 28 | ||||
2007 | 25 | ||||
2008 | 14 | ||||
2009 | 8 | ||||
2010 | 4 | ||||
2011 or later | 30 | ||||
109 | |||||
F-63
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Benefit plan assets in excess of obligations | 72 | — | 37 | — | ||||||||||||
Payroll receivables | 39 | 39 | 29 | 29 | ||||||||||||
Deferred charges | 159 | 142 | 210 | 193 | ||||||||||||
Royalties receivable | 249 | 249 | 51 | 48 | ||||||||||||
Interest receivable on loans | 190 | 190 | 310 | 305 | ||||||||||||
Miscellaneous receivables | 947 | 923 | 983 | 846 | ||||||||||||
1,656 | 1,543 | 1,620 | 1,421 | |||||||||||||
Dec. 31, 2004 | Dec. 31, 2005 | |||||||
(€ million) | ||||||||
Raw materials and supplies | 920 | 902 | ||||||
Work in process, finished goods and goods purchased for resale | 3,811 | 4,595 | ||||||
Advance payments | 7 | 7 | ||||||
4,738 | 5,504 | |||||||
2004 | 2005 | |||||||
(€ million) | ||||||||
Balance at beginning of year | (304 | ) | (311 | ) | ||||
Additions charged to expense | (171 | ) | (166 | ) | ||||
Exchange differences | 10 | (16 | ) | |||||
Changes in scope of consolidation | (1 | ) | (3 | ) | ||||
Deductions due to utilization | 155 | 156 | ||||||
Balance at end of year | (311 | ) | (340 | ) | ||||
F-64
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2004 | 2005 | |||||||
(€ million) | ||||||||
Balance at beginning of year | (280 | ) | (273 | ) | ||||
Additions charged to expense | (88 | ) | (158 | ) | ||||
Exchange differences | 1 | (22 | ) | |||||
Changes in scope of consolidation | (1 | ) | 1 | |||||
Deductions due to utilization | 95 | 118 | ||||||
Balance at end of year | (273 | ) | (334 | ) | ||||
Dec. 31, 2004 | Dec. 31, 2005 | |||||||
(€ million) | ||||||||
Marketable securities and other instruments | 29 | 233 | ||||||
Cash and cash equivalents | 3,570 | 3,290 | ||||||
3,599 | 3,523 | |||||||
of which earmarked for antitrust payments | — | 253 |
Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
Equity | Debt | Equity | Debt | |||||||||||||
Instruments | Instruments | Instruments | Instruments | |||||||||||||
(€ million) | ||||||||||||||||
Cost | 2 | 27 | 3 | 230 | ||||||||||||
Fair-value losses recognized in equity | — | — | — | — | ||||||||||||
Fair-value gains recognized in equity | — | — | — | — | ||||||||||||
2 | 27 | 3 | 230 | |||||||||||||
F-65
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Equity | Equity | |||||||||||||||||||||||
Capital | Capital | Attributable to | Attributable to | |||||||||||||||||||||
Stock of | Reserves of | Other | Bayer AG | Minority | Stockholders’ | |||||||||||||||||||
Bayer AG | Bayer AG | Reserves | Stockholders | Interest | Equity | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Dec. 31, 2003 | 1,870 | 2,942 | 6,355 | 11,167 | 123 | 11,290 | ||||||||||||||||||
Capital contributions | — | — | — | — | — | — | ||||||||||||||||||
Other changes | — | — | (335 | ) | (335 | ) | (12 | ) | (347 | ) | ||||||||||||||
Dec. 31, 2004 | 1,870 | 2,942 | 6,020 | 10,832 | 111 | 10,943 | ||||||||||||||||||
Spin-off of LANXESS | — | — | (1,059 | ) | (1,059 | ) | (19 | ) | (1,078 | ) | ||||||||||||||
Capital contributions | — | — | — | — | — | — | ||||||||||||||||||
Other changes | — | — | 1,304 | 1,304 | (12 | ) | 1,292 | |||||||||||||||||
Dec. 31, 2005 | 1,870 | 2,942 | 6,265 | 11,077 | 80 | 11,157 | ||||||||||||||||||
F-66
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Retained Earnings | Accumulated Other Comprehensive Income | |||||||||||||||||||||||||||
Currency | Fair-Value | |||||||||||||||||||||||||||
Revaluation | Other Retained | Net Income | Translation | Remeasurement | Cash Flow | Other | ||||||||||||||||||||||
Surplus | Earnings | (Loss) | Adjustment | of Securities | Hedges | Reserves | ||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||
Dec. 31, 2003 | — | 9,375 | (1,303 | ) | (1,699 | ) | 13 | (31 | ) | 6,355 | ||||||||||||||||||
Changes in stockholders’ equity not recognized in net income | ||||||||||||||||||||||||||||
Fair value remeasurement of securities and cash flow hedges | 12 | 64 | 76 | |||||||||||||||||||||||||
Changes in accumulated actuarial gains and losses relating to pensions and other post-employment benefits | (740 | ) | (740 | ) | ||||||||||||||||||||||||
Exchange differences on translation of operations outside the euro zone | (304 | ) | (304 | ) | ||||||||||||||||||||||||
Deferred taxes on valuation adjustments offset directly against stockholders’ equity | 268 | 1 | (18 | ) | 251 | |||||||||||||||||||||||
Other changes in stockholders’ equity | 66 | 66 | ||||||||||||||||||||||||||
Transfer of changes recognized in income | (6 | ) | 2 | (4 | ) | |||||||||||||||||||||||
66 | 8,903 | (1,303 | ) | (2,003 | ) | 20 | 17 | 5,700 | ||||||||||||||||||||
Dividend payments | (365 | ) | (365 | ) | ||||||||||||||||||||||||
Allocation to retained earnings | (1,668 | ) | 1,668 | — | ||||||||||||||||||||||||
— | (1,668 | ) | 1,303 | — | — | — | (365 | ) | ||||||||||||||||||||
Changes in stockholders’ equity recognized in net income | ||||||||||||||||||||||||||||
Net income 2004 | 685 | 685 | ||||||||||||||||||||||||||
— | — | 685 | — | — | — | 685 | ||||||||||||||||||||||
Dec. 31, 2004 | 66 | 7,235 | 685 | (2,003 | ) | 20 | 17 | 6,020 | ||||||||||||||||||||
Spin-off of LANXESS | (1,438 | ) | 379 | (1,059 | ) | |||||||||||||||||||||||
Changes in stockholders’ equity not recognized in net income | ||||||||||||||||||||||||||||
Fair value remeasurement of securities and cash flow hedges | 9 | (15 | ) | (6 | ) | |||||||||||||||||||||||
Changes in accumulated actuarial gains and losses relating to pensions and other post-employment benefits | (1,207 | ) | (1,207 | ) | ||||||||||||||||||||||||
Exchange differences on translation of operations outside the euro zone | 849 | 849 | ||||||||||||||||||||||||||
Deferred taxes on valuation adjustments offset directly against stockholders’ equity | 470 | (6 | ) | 6 | 470 | |||||||||||||||||||||||
Other changes in stockholders’ equity | (4 | ) | 4 | — | ||||||||||||||||||||||||
Transfer of changes recognized in income | — | 3 | 3 | |||||||||||||||||||||||||
62 | 5,064 | 685 | (775 | ) | 23 | 11 | 5,070 | |||||||||||||||||||||
Dividend payments | (402 | ) | (402 | ) | ||||||||||||||||||||||||
Allocation to retained earnings | 283 | (283 | ) | — | ||||||||||||||||||||||||
— | 283 | (685 | ) | — | — | — | (402 | ) | ||||||||||||||||||||
Changes in stockholders’ equity recognized in net income | ||||||||||||||||||||||||||||
Net income 2005 | 1,597 | 1,597 | ||||||||||||||||||||||||||
— | — | 1,597 | — | — | — | 1,597 | ||||||||||||||||||||||
Dec. 31, 2005 | 62 | 5,347 | 1,597 | (775 | ) | 23 | 11 | 6,265 | ||||||||||||||||||||
F-67
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F-68
Table of Contents
Equity | ||||||||
Attributable | ||||||||
to Minority | ||||||||
Interest | ||||||||
2004 | 2005 | |||||||
(€ million) | ||||||||
Jan. 01, | 123 | 111 | ||||||
Spin-off of LANXESS | — | (19 | ) | |||||
Changes in stockholders’ equity not recognized in net income | ||||||||
Fair value remeasurement of securities and cash flow hedges | — | — | ||||||
Changes in accumulated actuarial gains and losses relating to pensions and other post-employment benefits | — | — | ||||||
Exchange differences on translation of operations outside the euro zone | — | 8 | ||||||
Deferred taxes on valuation adjustments offset directly against stockholders’ equity | — | — | ||||||
Other changes in stockholders’ equity | 2 | 20 | ||||||
125 | 120 | |||||||
Dividend payments | (11 | ) | (38 | ) | ||||
Allocation to/from retained earnings | — | — | ||||||
(11 | ) | (38 | ) | |||||
Changes in stockholders’ equity recognized in net income | ||||||||
Net income | (3 | ) | (2 | ) | ||||
(3 | ) | (2 | ) | |||||
Dec. 12, | 111 | 80 | ||||||
Other Post-Employment | ||||||||||||||||||||||||
Pensions | Benefits | Total | ||||||||||||||||||||||
Dec. 31, 2004 | Dec. 31, 2005 | Dec. 31, 2004 | Dec. 31, 2005 | Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Germany | 4,531 | 5,657 | 184 | 158 | 4,715 | 5,815 | ||||||||||||||||||
Other countries | 1,003 | 832 | 501 | 527 | 1,504 | 1,359 | ||||||||||||||||||
Total | 5,534 | 6,489 | 685 | 685 | 6,219 | 7,174 | ||||||||||||||||||
F-69
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F-70
Table of Contents
Carrying | ||||||||||||
Carrying Amount | Impact of the | Amount After | ||||||||||
Before the Change | Change | the Change | ||||||||||
(€ million) | ||||||||||||
Assets | ||||||||||||
Benefit plan assets in excess of obligations | 540 | (468 | ) | 72 | ||||||||
Deferred tax assets | 936 | 283 | 1,219 | |||||||||
Assets held for sale and discontinued operations | 4,788 | (31 | ) | 4,757 | ||||||||
Stockholders’ equity and liabilities | ||||||||||||
Other reserves | 7,452 | (1,432 | ) | 6,020 | ||||||||
Provisions for pensions and other post-employment benefits | 4,581 | 1,638 | 6,219 | |||||||||
Deferred tax liabilities | 1,171 | (527 | ) | 644 | ||||||||
Liabilities directly related to assets held for sale and discontinued operations | 2,282 | 105 | 2,387 |
F-71
Table of Contents
Increase of One | Decrease of One | |||||||
Percentage Point | Percentage Point | |||||||
(€ million) | ||||||||
Impact on pension expense | 4 | (4 | ) | |||||
Impact on other post-employment benefit obligations | 76 | (76 | ) |
Other Post-Employment | ||||||||||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||
(€ million) | (€ million) | |||||||||||||||||||||||
Current service cost | 115 | 135 | 138 | 104 | 29 | 17 | ||||||||||||||||||
Past service cost | 18 | 18 | 56 | — | — | — | ||||||||||||||||||
Interest cost | 439 | 451 | 432 | 4 | 5 | 5 | ||||||||||||||||||
Expected return on plan assets | (252 | ) | (262 | ) | (237 | ) | — | — | — | |||||||||||||||
Plan curtailments | — | — | — | — | — | — | ||||||||||||||||||
Plan settlements | — | — | — | — | — | — | ||||||||||||||||||
320 | 342 | 389 | 108 | 34 | 22 | |||||||||||||||||||
Other Post-Employment | ||||||||||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||
(€ million) | (€ million) | |||||||||||||||||||||||
Current service cost | 182 | 135 | 122 | 12 | 31 | 30 | ||||||||||||||||||
Past service cost | 12 | 3 | 4 | (5 | ) | (139 | ) | (61 | ) | |||||||||||||||
Interest cost | 235 | 223 | 222 | 48 | 51 | 51 | ||||||||||||||||||
Expected return on plan assets | (202 | ) | (222 | ) | (237 | ) | (20 | ) | (24 | ) | (27 | ) | ||||||||||||
Plan curtailments | — | (58 | ) | (317 | ) | — | (5 | ) | (10 | ) | ||||||||||||||
Plan settlements | 59 | (3 | ) | — | — | — | — | |||||||||||||||||
286 | 78 | (206 | ) | 35 | (86 | ) | (17 | ) | ||||||||||||||||
F-72
Table of Contents
Other Post-Employment | ||||||||||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||
(€ million) | (€ million) | |||||||||||||||||||||||
Current service cost | 297 | 270 | 260 | 116 | 60 | 47 | ||||||||||||||||||
Past service cost | 30 | 21 | 60 | (5 | ) | (139 | ) | (61 | ) | |||||||||||||||
Interest cost | 674 | 674 | 654 | 52 | 56 | 56 | ||||||||||||||||||
Expected return on plan assets | (454 | ) | (484 | ) | (474 | ) | (20 | ) | (24 | ) | (27 | ) | ||||||||||||
Plan curtailments | — | (58 | ) | (317 | ) | — | (5 | ) | (10 | ) | ||||||||||||||
Plan settlements | 59 | (3 | ) | — | — | — | — | |||||||||||||||||
606 | 420 | 183 | 143 | (52 | ) | 5 | ||||||||||||||||||
F-73
Table of Contents
Plan Assets as of December 31 | ||||||||||||||||
Germany | Other Countries | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
In % | In % | In % | In % | |||||||||||||
Equity securities (directly held) | 0.04 | 0.04 | 59.01 | 50.98 | ||||||||||||
Debt securities | 52.50 | 53.75 | 33.04 | 41.26 | ||||||||||||
Special securities funds | 22.38 | 25.65 | 0.39 | — | ||||||||||||
Real estate and special real estate funds | 12.65 | 12.13 | 0.22 | 1.58 | ||||||||||||
Other | 12.43 | 8.43 | 7.34 | 6.18 | ||||||||||||
100.00 | 100.00 | 100.00 | 100.00 | |||||||||||||
Target Structure 2006 | ||||||||
Germany | Other Countries | |||||||
In % | In % | |||||||
Equity securities (directly held) | — | 48.57 | ||||||
Debt securities | 40-60 | 40.54 | ||||||
Special securities funds | 10-30 | — | ||||||
Real estate and special real estate funds | 10-25 | 3.24 | ||||||
Other | 5-15 | 7.65 | ||||||
100.00 | ||||||||
Plan Assets as of December 31 | ||||||||||||||||
Germany | Other Countries | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
In % | In % | In % | In % | |||||||||||||
Equity securities (directly held) | — | — | 55.20 | 56.10 | ||||||||||||
Debt securities | — | — | 35.00 | 35.40 | ||||||||||||
Special securities funds | — | — | — | — | ||||||||||||
Real estate and special real estate funds | — | — | — | — | ||||||||||||
Other | — | — | 9.80 | 8.50 | ||||||||||||
— | — | 100.00 | 100.00 | |||||||||||||
F-74
Table of Contents
Target Structure 2006 | ||||||||
Germany | Other Countries | |||||||
In % | In % | |||||||
Equity securities (directly held) | — | 53.00 | ||||||
Debt securities | — | 35.00 | ||||||
Special securities funds | — | — | ||||||
Real estate and special real estate funds | — | — | ||||||
Other | — | 12.00 | ||||||
— | 100.00 | |||||||
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pensions | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
Discount rate | ||||||||||||||||
• used to determine benefit expense | 5.50% | 5.00% | 3.50 | % | 3.25 | % | ||||||||||
• used to determine benefit obligation | 5.00% | 4.25% | 3.25 | % | 3.25 | % | ||||||||||
Projected future remuneration increases | ||||||||||||||||
• used to determine benefit expense | 2.50% | 2.50% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 2.50% | 2.50% | N/A | N/A | ||||||||||||
Projected future benefit increases | ||||||||||||||||
• used to determine benefit expense | 1.25% | 1.25% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 1.25% | 1.25% | N/A | N/A | ||||||||||||
Projected employee turnover (according to age and gender) | Empirical data | Empirical data | ||||||||||||||
Expected return on plan assets | ||||||||||||||||
• used to determine benefit expense | 6.00% | 5.50% | N/A | N/A |
F-75
Table of Contents
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pensions | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
Discount rate | ||||||||||||||||
• used to determine benefit expense | 6.10% | 5.75% | 6.25 | % | 6.00 | % | ||||||||||
• used to determine benefit obligation | 5.75% | 5.50% | 6.00 | % | 6.00 | % | ||||||||||
Projected future remuneration increases | ||||||||||||||||
• used to determine benefit expense | 4.20% | 4.10% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 4.10% | 4.00% | N/A | N/A | ||||||||||||
Projected future benefit increases | ||||||||||||||||
• used to determine benefit expense | 2.90% | 2.70% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 2.70% | 2.75% | N/A | N/A | ||||||||||||
Projected employee turnover (according to age and gender) | Empirical data | Empirical data | ||||||||||||||
Expected return on plan assets | ||||||||||||||||
• used to determine benefit expense | 7.70% | 7.50% | 8.25 | % | 8.25 | % |
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pensions | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
Discount rate | ||||||||||||||||
• used to determine benefit expense | 5.90% | 5.20% | 5.70 | % | 5.40 | % | ||||||||||
• used to determine benefit obligation | 5.20% | 4.60% | 5.40 | % | 5.65 | % | ||||||||||
Projected future remuneration increases | ||||||||||||||||
• used to determine benefit expense | 3.00% | 2.95% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 2.95% | 2.75% | N/A | N/A | ||||||||||||
Projected future benefit increases | ||||||||||||||||
• used to determine benefit expense | 1.45% | 1.40% | N/A | N/A | ||||||||||||
• used to determine benefit obligation | 1.40% | 1.45% | N/A | N/A | ||||||||||||
Projected employee turnover (according to age and gender) | Empirical data | Empirical data | ||||||||||||||
Expected return on plan assets | ||||||||||||||||
• used to determine benefit expense | 6.35% | 6.35% | 8.25 | % | 8.25 | % |
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Germany | ||||||||||||||||
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pension | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(€ million) | ||||||||||||||||
Defined benefit obligation | ||||||||||||||||
At beginning of year | 8,099 | 8,866 | 202 | 184 | ||||||||||||
Current service cost | 135 | 138 | 29 | 17 | ||||||||||||
Interest cost | 451 | 432 | 5 | 5 | ||||||||||||
Employee contributions | 32 | 26 | — | — | ||||||||||||
Plan changes | 18 | 56 | — | — | ||||||||||||
Plan settlements | — | — | — | — | ||||||||||||
Net actuarial (gain) loss | 563 | 1,160 | — | — | ||||||||||||
Translation differences | — | — | — | — | ||||||||||||
Benefits paid | (432 | ) | (436 | ) | (52 | ) | (48 | ) | ||||||||
Mergers/ acquisitions | — | 14 | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan curtailments | — | — | — | — | ||||||||||||
At year end | 8,866 | 10,256 | 184 | 158 | ||||||||||||
Fair value of plan assets | ||||||||||||||||
At beginning of year | 4,240 | 4,373 | — | — | ||||||||||||
Actual return on plan assets | 211 | 330 | — | — | ||||||||||||
Mergers/acquisitions | — | — | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan settlements | — | — | — | — | ||||||||||||
Translation differences | — | — | — | — | ||||||||||||
Employer contributions | 322 | 306 | 52 | 48 | ||||||||||||
Employee contributions | 32 | 26 | — | — | ||||||||||||
Benefits paid | (432 | ) | (436 | ) | (52 | ) | (48 | ) | ||||||||
At year end | 4,373 | 4,599 | — | — | ||||||||||||
Funded status at year end | (4,493 | ) | (5,657 | ) | (184 | ) | (158 | ) | ||||||||
Unrecognized past service cost | — | — | — | — | ||||||||||||
Unrecognized transition obligation | — | — | — | — | ||||||||||||
Asset limitation due to uncertainty of obtaining future benefits | — | — | — | — | ||||||||||||
Net recognized liability | (4,493 | ) | (5,657 | ) | (184 | ) | (158 | ) | ||||||||
Amounts recognized in the balance sheet | ||||||||||||||||
Prepaid benefit assets | 38 | — | — | — | ||||||||||||
Provisions for pensions and other post-employment benefits | (4,531 | ) | (5,657 | ) | (184 | ) | (158 | ) | ||||||||
Net recognized liability | (4,493 | ) | (5,657 | ) | (184 | ) | (158 | ) | ||||||||
F-77
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Other Countries | ||||||||||||||||
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pension | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(€ million) | ||||||||||||||||
Defined benefit obligation | ||||||||||||||||
At beginning of year | 3,746 | 3,807 | 886 | 724 | ||||||||||||
Current service cost | 135 | 122 | 31 | 30 | ||||||||||||
Interest cost | 223 | 222 | 51 | 51 | ||||||||||||
Employee contributions | 4 | 5 | — | — | ||||||||||||
Plan changes | (3 | ) | 4 | (196 | ) | — | ||||||||||
Plan settlements | (3 | ) | (52 | ) | — | — | ||||||||||
Net actuarial (gain) loss | 142 | 262 | 55 | — | ||||||||||||
Translation differences | (200 | ) | 403 | (51 | ) | 130 | ||||||||||
Benefits paid | (182 | ) | (198 | ) | (46 | ) | (47 | ) | ||||||||
Mergers/ acquisitions | — | 11 | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan curtailments | (55 | ) | (317 | ) | (6 | ) | (10 | ) | ||||||||
At year end | 3,807 | 4,269 | 724 | 878 | ||||||||||||
Fair value of plan assets | ||||||||||||||||
At beginning of year | 2,675 | 2,841 | 263 | 286 | ||||||||||||
Actual return on plan assets | 322 | 321 | 35 | 22 | ||||||||||||
Mergers/acquisitions | — | — | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan settlements | (1 | ) | (32 | ) | — | — | ||||||||||
Translation differences | (149 | ) | 372 | (22 | ) | 45 | ||||||||||
Employer contributions | 172 | 176 | 56 | 53 | ||||||||||||
Employee contributions | 4 | 5 | — | — | ||||||||||||
Benefits paid | (182 | ) | (198 | ) | (46 | ) | (47 | ) | ||||||||
At year end | 2,841 | 3,485 | 286 | 359 | ||||||||||||
Funded status at year end | (966 | ) | (784 | ) | (438 | ) | (519 | ) | ||||||||
Unrecognized past service cost | (3 | ) | (3 | ) | (63 | ) | (8 | ) | ||||||||
Unrecognized transition obligation | — | — | — | — | ||||||||||||
Asset limitation due to uncertainty of obtaining future benefits | — | (8 | ) | — | — | |||||||||||
Net recognized liability | (969 | ) | (795 | ) | (501 | ) | (527 | ) | ||||||||
Amounts recognized in the balance sheet | ||||||||||||||||
Prepaid benefit assets | 34 | 37 | — | — | ||||||||||||
Provisions for pensions and other post-employment benefits | (1,003 | ) | (832 | ) | (501 | ) | (527 | ) | ||||||||
Net recognized liability | (969 | ) | (795 | ) | (501 | ) | (527 | ) | ||||||||
F-78
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Total | ||||||||||||||||
Other Post- | ||||||||||||||||
Employment | ||||||||||||||||
Pension | Benefit | |||||||||||||||
Obligations | Obligations | |||||||||||||||
2004 | 2005 | 2004 | 2005 | |||||||||||||
(€ million) | ||||||||||||||||
Defined benefit obligation | ||||||||||||||||
At beginning of year | 11,845 | 12,673 | 1,088 | 908 | ||||||||||||
Current service cost | 270 | 260 | 60 | 47 | ||||||||||||
Interest cost | 674 | 654 | 56 | 56 | ||||||||||||
Employee contributions | 36 | 31 | — | — | ||||||||||||
Plan changes | 15 | 60 | (196 | ) | — | |||||||||||
Plan settlements | (3 | ) | (52 | ) | — | — | ||||||||||
Net actuarial (gain) loss | 705 | 1,422 | 55 | — | ||||||||||||
Translation differences | (200 | ) | 403 | (51 | ) | 130 | ||||||||||
Benefits paid | (614 | ) | (634 | ) | (98 | ) | (95 | ) | ||||||||
Mergers/ acquisitions | — | 25 | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan curtailments | (55 | ) | (317 | ) | (6 | ) | (10 | ) | ||||||||
At year end | 12,673 | 14,525 | 908 | 1,036 | ||||||||||||
Fair value of plan assets | ||||||||||||||||
At beginning of year | 6,915 | 7,214 | 263 | 286 | ||||||||||||
Actual return on plan assets | 533 | 651 | 35 | 22 | ||||||||||||
Mergers/ acquisitions | — | — | — | — | ||||||||||||
Divestitures | — | — | — | — | ||||||||||||
Plan settlements | (1 | ) | (32 | ) | — | — | ||||||||||
Translation differences | (149 | ) | 372 | (22 | ) | 45 | ||||||||||
Employer contributions | 494 | 482 | 108 | 101 | ||||||||||||
Employee contributions | 36 | 31 | — | — | ||||||||||||
Benefits paid | (614 | ) | (634 | ) | (98 | ) | (95 | ) | ||||||||
At year end | 7,214 | 8,084 | 286 | 359 | ||||||||||||
Funded status at year end | (5,459 | ) | (6,441 | ) | (622 | ) | (677 | ) | ||||||||
Unrecognized past service cost | (3 | ) | (3 | ) | (63 | ) | (8 | ) | ||||||||
Unrecognized transition obligation | — | — | — | — | ||||||||||||
Asset limitation due to uncertainty of obtaining future benefits | — | (8 | ) | — | — | |||||||||||
Net recognized liability | (5,462 | ) | (6,452 | ) | (685 | ) | (685 | ) | ||||||||
Amounts recognized in the balance sheet | ||||||||||||||||
Prepaid benefit assets | 72 | 37 | — | — | ||||||||||||
Provisions for pensions and other post-employment benefits | (5,534 | ) | (6,489 | ) | (685 | ) | (685 | ) | ||||||||
Net recognized liability | (5,462 | ) | (6,452 | ) | (685 | ) | (685 | ) | ||||||||
F-79
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Other Post-Employment | ||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||
0.5 Percentage | 0.5 Percentage | 0.5 Percentage | 0.5 Percentage | |||||||||||||
Point Increase | Point Decrease | Point Increase | Point Decrease | |||||||||||||
(€ million) | ||||||||||||||||
Change in discount rate | ||||||||||||||||
• Benefit obligation 2005 | (730 | ) | 827 | (1 | ) | 1 | ||||||||||
• Benefit expense 2006 | 7 | (7 | ) | |||||||||||||
Change in projected future remuneration increases | ||||||||||||||||
• Benefit obligation 2005 | 89 | (81 | ) | |||||||||||||
• Benefit expense 2006 | 10 | (9 | ) | |||||||||||||
Change in projected future benefit increases | ||||||||||||||||
• Benefit obligation 2005 | 549 | (504 | ) | |||||||||||||
• Benefit expense 2006 | 34 | (31 | ) | |||||||||||||
Change in expected return on plan assets | ||||||||||||||||
• Benefit expense 2006 | (23 | ) | 23 |
Other Post-Employment | ||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||
0.5 Percentage | 0.5 Percentage | 0.5 Percentage | 0.5 Percentage | |||||||||||||
Point Increase | Point Decrease | Point Increase | Point Decrease | |||||||||||||
(€ million) | ||||||||||||||||
Change in discount rate | ||||||||||||||||
• Benefit obligation 2005 | (292 | ) | 328 | (58 | ) | 46 | ||||||||||
• Benefit expense 2006 | 5 | (6 | ) | 3 | (4 | ) | ||||||||||
Change in projected future remuneration increases | ||||||||||||||||
• Benefit obligation 2005 | 42 | (39 | ) | |||||||||||||
• Benefit expense 2006 | 5 | (5 | ) | |||||||||||||
Change in projected future benefit increases | ||||||||||||||||
• Benefit obligation 2005 | 71 | (45 | ) | |||||||||||||
• Benefit expense 2006 | 4 | (3 | ) | |||||||||||||
Change in expected return on plan assets | ||||||||||||||||
• Benefit expense 2006 | (17 | ) | 17 | (2 | ) | 2 |
F-80
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Other Post-Employment | |||||||||||||||||
Pensions Obligations | Benefit Obligations | ||||||||||||||||
0.5 Percentage | 0.5 Percentage | 0.5 Percentage | 0.5 Percentage | ||||||||||||||
Point Increase | Point Decrease | Point Increase | Point Decrease | ||||||||||||||
(€ million) | |||||||||||||||||
Change in discount rate | |||||||||||||||||
• Benefit obligation 2005 | (1,022 | ) | 1,155 | (59 | ) | 47 | |||||||||||
• Benefit expense 2006 | 12 | (13 | ) | 3 | (4 | ) | |||||||||||
Change in projected future remuneration increases | |||||||||||||||||
• Benefit obligation 2005 | 131 | (120 | ) | ||||||||||||||
• Benefit expense 2006 | 15 | (14 | ) | ||||||||||||||
Change in projected future benefit increases | |||||||||||||||||
• Benefit obligation 2005 | 620 | (549 | ) | ||||||||||||||
• Benefit expense 2006 | 38 | (34 | ) | ||||||||||||||
Change in expected return on plan assets | |||||||||||||||||
• Benefit expense 2006 | (40 | ) | 40 | (2 | ) | 2 |
Other Post-Employment | ||||||||||||||||||||||||
Pensions Obligations | Benefit Obligations | |||||||||||||||||||||||
2006 | 2006 | |||||||||||||||||||||||
2004 | 2005 | Projected | 2004 | 2005 | Projected | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Germany | 322 | 306 | 320 | 52 | 48 | 45 | ||||||||||||||||||
Other countries | 172 | 176 | 77 | 56 | 53 | 51 | ||||||||||||||||||
Total | 494 | 482 | 397 | 108 | 101 | 96 | ||||||||||||||||||
Germany | Other Countries | Total | ||||||||||||||||||||||
Other Post- | Other Post- | Other Post- | ||||||||||||||||||||||
Employment | Employment | Employment | ||||||||||||||||||||||
Pension | Benefit | Pension | Benefit | Pension | Benefit | |||||||||||||||||||
Obligations | Obligations | Obligations | Obligations | Obligations | Obligations | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
2006 | 454 | 45 | 190 | 45 | 644 | 90 | ||||||||||||||||||
2007 | 466 | 39 | 198 | 47 | 664 | 86 | ||||||||||||||||||
2008 | 483 | 29 | 210 | 50 | 693 | 79 | ||||||||||||||||||
2009 | 501 | 22 | 227 | 53 | 728 | 75 | ||||||||||||||||||
2010 | 520 | 13 | 248 | 56 | 768 | 69 | ||||||||||||||||||
2011-2015 | 2,890 | 9 | 1,504 | 330 | 4,394 | 339 |
F-81
Table of Contents
Pension Obligations — | Pensions Obligations — | |||||||||||||||||||||||
Germany | Other Countries | |||||||||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
Defined benefit obligation | 8,099 | 8,866 | 10,256 | 3,746 | 3,807 | 4,269 | ||||||||||||||||||
Fair value of plan assets | 4,240 | 4,373 | 4,599 | 2,675 | 2,841 | 3,485 | ||||||||||||||||||
Funded status | (3,859 | ) | (4,493 | ) | (5,657 | ) | (1,071 | ) | (966 | ) | (784 | ) | ||||||||||||
Accumulated actuarial gains/(losses) relating to benefit obligation | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
At beginning of year | (670 | ) | (1,119 | ) | (1,682 | ) | (98 | ) | (304 | ) | (421 | ) | ||||||||||||
Actuarial gains/ (losses) during the year relating to benefit obligation due to changes in actuarial parameters | (610 | ) | (575 | ) | (1,122 | ) | (249 | ) | (161 | ) | (265 | ) | ||||||||||||
Actuarial gains/ (losses) during the year relating to benefit obligation due to changes in empirical data | 161 | 12 | (38 | ) | 13 | 19 | 3 | |||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | ||||||||||||||||||
Translation differences | — | — | — | 30 | 25 | (9 | ) | |||||||||||||||||
At year end | (1,119 | ) | (1,682 | ) | (2,842 | ) | (304 | ) | (421 | ) | (692 | ) | ||||||||||||
Accumulated actuarial gains/(losses) relating to plan assets | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
At beginning of year | (753 | ) | (735 | ) | (786 | ) | (631 | ) | (315 | ) | (204 | ) | ||||||||||||
Actuarial gains/ (losses) relating to plan assets during the year | 18 | (51 | ) | 93 | 230 | 100 | 84 | |||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | ||||||||||||||||||
Translation differences | — | — | — | 86 | 11 | (5 | ) | |||||||||||||||||
At year end | (735 | ) | (786 | ) | (693 | ) | (315 | ) | (204 | ) | (125 | ) | ||||||||||||
Asset limitation due to uncertainty of obtaining future benefits | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||
(€ million) | ||||||||||||||||||||||||
At beginning of year | 1,058 | 1,058 | 1,058 | — | 7 | 9 | ||||||||||||||||||
Changes due to asset limitation during the year | — | — | — | 7 | 2 | 8 | ||||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | ||||||||||||||||||
Translation differences | — | — | — | — | — | — | ||||||||||||||||||
At year end | 1,058 | 1,058 | 1,058 | 7 | 9 | 17 | ||||||||||||||||||
F-82
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Other Post-Employment | Other Post-Employment | |||||||||||||||||||||||||||||||||||
Benefit Obligations — | Pension Obligations — | Benefit Obligations — | ||||||||||||||||||||||||||||||||||
Other Countries | Total | Total | ||||||||||||||||||||||||||||||||||
Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | ||||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||
Defined benefit obligation | 886 | 724 | 878 | 11,845 | 12,673 | 14,525 | 1,088 | 908 | 1,036 | |||||||||||||||||||||||||||
Fair value of plan assets | 263 | 286 | 359 | 6,915 | 7,214 | 8,084 | 263 | 286 | 359 | |||||||||||||||||||||||||||
Funded status | (623 | ) | (438 | ) | (519 | ) | (4,930 | ) | (5,459 | ) | (6,441 | ) | (825 | ) | (622 | ) | (677 | ) | ||||||||||||||||||
Accumulated actuarial gains/(losses) | ||||||||||||||||||||||||||||||||||||
relating to benefit obligation | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||
At beginning of year | (20 | ) | (222 | ) | (259 | ) | (768 | ) | (1,423 | ) | (2,103 | ) | (20 | ) | (222 | ) | (259 | ) | ||||||||||||||||||
Actuarial gains/(losses) during the year relating to benefit obligation due to changes in actuarial parameters | (190 | ) | (38 | ) | (31 | ) | (859 | ) | (736 | ) | (1,387 | ) | (190 | ) | (38 | ) | (31 | ) | ||||||||||||||||||
Actuarial gains/(losses) during the year relating to benefit obligation due to changes in empirical data | (42 | ) | (17 | ) | 31 | 174 | 31 | (35 | ) | (42 | ) | (17 | ) | 31 | ||||||||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Translation differences | 30 | 18 | — | 30 | 25 | (9 | ) | 30 | 18 | — | ||||||||||||||||||||||||||
At year end | (222 | ) | (259 | ) | (259 | ) | (1,423 | ) | (2,103 | ) | (3,534 | ) | (222 | ) | (259 | ) | (259 | ) | ||||||||||||||||||
Accumulated actuarial gains/(losses) | ||||||||||||||||||||||||||||||||||||
relating to plan assets | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||
At beginning of year | (92 | ) | (49 | ) | (36 | ) | (1,384 | ) | (1,050 | ) | (990 | ) | (92 | ) | (49 | ) | (36 | ) | ||||||||||||||||||
Actuarial gains/(losses) relating to plan assets during the year | 29 | 11 | (5 | ) | 248 | 49 | 177 | 29 | 11 | (5 | ) | |||||||||||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Translation differences | 14 | 2 | — | 86 | 11 | (5 | ) | 14 | 2 | — | ||||||||||||||||||||||||||
At year end | (49 | ) | (36 | ) | (41 | ) | (1,050 | ) | (990 | ) | (818 | ) | (49 | ) | (36 | ) | (41 | ) | ||||||||||||||||||
Asset limitation due to uncertainty of | ||||||||||||||||||||||||||||||||||||
obtaining future benefits | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |||||||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||||||||||
At beginning of year | — | — | — | 1,058 | 1,065 | 1,067 | — | — | — | |||||||||||||||||||||||||||
Changes due to asset limitation during the year | — | — | — | 7 | 2 | 8 | — | — | — | |||||||||||||||||||||||||||
Changes due to mergers, acquisitions and divestitures | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Translation differences | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
At year end | — | — | — | 1,065 | 1,067 | 1,075 | — | — | — | |||||||||||||||||||||||||||
F-83
Table of Contents
(€ million) | ||||
Balance at beginning of year | 6,219 | |||
Currency effects | 99 | |||
Changes in scope of consolidation | 25 | |||
Allocations | 1,849 | |||
Utilisation | (615 | ) | ||
Reversal | (403 | ) | ||
Balance at end of year | 7,174 | |||
Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Provisions for taxes | 997 | 648 | 803 | 431 | ||||||||||||
Provisions for personnel commitments | 1,261 | 692 | 1,485 | 837 | ||||||||||||
Provisions for environmental remediation | 249 | 41 | 279 | 81 | ||||||||||||
Provisions for restructuring | 163 | 152 | 92 | 83 | ||||||||||||
Provisions for trade-related commitments | 593 | 587 | 648 | 641 | ||||||||||||
Miscellaneous provisions | 648 | 587 | 1,042 | 936 | ||||||||||||
3,911 | 2,707 | 4,349 | 3,009 | |||||||||||||
Dec. 31, 2004 | |||||
(€ million) | |||||
Expected disbursements | |||||
2005 | 2,707 | ||||
2006 | 374 | ||||
2007 | 63 | ||||
2008 | 43 | ||||
2009 | 30 | ||||
2010 or later | 694 | ||||
3,911 | |||||
Dec. 31, 2005 | |||||
(€ million) | |||||
Expected disbursements | |||||
2006 | 3,009 | ||||
2007 | 231 | ||||
2008 | 125 | ||||
2009 | 81 | ||||
2010 | 229 | ||||
2011 or later | 674 | ||||
4,349 | |||||
F-84
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Changes | ||||||||||||||||||||||||||||
Jan. 1, | in scope of | Currency | Dec. 31, | |||||||||||||||||||||||||
2005 | consolidation | effects | Allocation | Utilization | Reversal | 2005 | ||||||||||||||||||||||
(€ million) | ||||||||||||||||||||||||||||
Taxes | 997 | (7 | ) | 69 | 438 | (355 | ) | (339 | ) | 803 | ||||||||||||||||||
Personnel commitments | 1,261 | 5 | 52 | 915 | (681 | ) | (67 | ) | 1,485 | |||||||||||||||||||
Environmental remediation | 249 | — | 16 | 53 | (30 | ) | (9 | ) | 279 | |||||||||||||||||||
Restructuring | 163 | — | 10 | 70 | (124 | ) | (27 | ) | 92 | |||||||||||||||||||
Trade-related commitments | 593 | — | 57 | 969 | (898 | ) | (73 | ) | 648 | |||||||||||||||||||
Miscellaneous | 648 | 11 | 60 | 829 | (417 | ) | (89 | ) | 1,042 | |||||||||||||||||||
Total | 3,911 | 9 | 264 | 3,274 | (2,505 | ) | (604 | ) | 4,349 | |||||||||||||||||||
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Stock | Stock | Stock | ||||||||||
Option | Incentive | Participation | ||||||||||
Program | Program | Program | ||||||||||
(€ million) | ||||||||||||
Intrinsic value as of December 31, 2004 | 2 | 1 | 1 | |||||||||
One-time remeasurement effect | 1 | 1 | 5 | |||||||||
Fair value as of January 1, 2005 | 3 | 2 | 6 | |||||||||
Stock | Stock | Stock | ||||||||||||||||||
Option | Incentive | Participation | ||||||||||||||||||
Program | Program | Program | Aspire I | Aspire II | ||||||||||||||||
(€ million) | ||||||||||||||||||||
January 1, 2005 | 3 | 2 | 6 | — | — | |||||||||||||||
Allocations | 10 | 1 | 6 | 11 | 23 | |||||||||||||||
Utilization | — | — | — | — | — | |||||||||||||||
Reversal | — | — | (1 | ) | — | — | ||||||||||||||
December 31, 2005 | 13 | 3 | 11 | 11 | 23 | |||||||||||||||
Dividend yield | 2.27 | % | ||
Risk-free interest rate | 2.92 | % | ||
Volatility of Bayer stock | 38.00 | % | ||
Volatility of the EURO STOXX 50SM | 19.55 | % | ||
Correlation between Bayer stock price and the EURO STOXX 50SM | 0.56 |
Long-term incentive program for members of the Board of Management and other senior executives (Aspire I) |
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Long-term incentive program for middle management (Aspire II) |
• | No personal investment in Bayer shares is required. | |
• | The amount of the award in relation to the employee’s personal Aspire target opportunity is based entirely on the absolute performance of Bayer stock during the performance period. | |
• | The award varies between 0 percent and 150 percent of the Aspire target opportunity. |
Stock Participation Program (2005) for other managers and non-managerial employees |
• | up to 30 Bayer shares at a discount of€6.75 per share and | |
• | additional Bayer shares at a 15 percent discount up to a maximum total value of€2,500. |
Stock Option | Stock Incentive | Stock Participation | ||||||||||
Program | Program | Program | ||||||||||
Year of issue | 2000 - 2004 | 2000 - 2004 | 2000 - 2004 | |||||||||
Original term in years | 5 | 10 | 10 | |||||||||
Retention period/distribution date in years from issue date | 3 | 2/6/10 | 2/6/10 | |||||||||
Reference price | 0 | 0 | 0 | |||||||||
Performance criteria | Yes | Yes | No |
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Severance | ||||||||||||
Payments | Other Costs | Total | ||||||||||
(€ million) | ||||||||||||
Balance at January 1, 2004 | 130 | 87 | 217 | |||||||||
Additions | 73 | 17 | 90 | |||||||||
Utilization | (97 | ) | (41 | ) | (138 | ) | ||||||
Exchange differences | (3 | ) | (3 | ) | (6 | ) | ||||||
Balance at December 31, 2004 | 103 | 60 | 163 | |||||||||
Additions | 50 | 20 | 70 | |||||||||
Utilization | (121 | ) | (30 | ) | (151 | ) | ||||||
Exchange differences | 9 | 1 | 10 | |||||||||
Balance at December 31, 2005 | 41 | 51 | 92 | |||||||||
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Debentures | 6,885 | 376 | 6,953 | 336 | ||||||||||||
Liabilities to banks | 480 | 363 | 703 | 602 | ||||||||||||
Liabilities under lease agreements | 419 | 55 | 468 | 61 | ||||||||||||
Liabilities from the issuance of promissory notes | 112 | 112 | 1 | 1 | ||||||||||||
Commercial paper | 861 | 861 | 174 | 174 | ||||||||||||
Liabilities from derivative financial instruments | 69 | 49 | 168 | 111 | ||||||||||||
Other financial liabilities | 365 | 350 | 485 | 482 | ||||||||||||
9,191 | 2,166 | 8,952 | 1,767 | |||||||||||||
Dec. 31, 2004 | |||||
(€ million) | |||||
Maturing in | |||||
2005 | 2,166 | ||||
2006 | 365 | ||||
2007 | 3,067 | ||||
2008 | 47 | ||||
2009 | 683 | ||||
2010 or later | 2,863 | ||||
9,191 | |||||
Dec. 31, 2005 | |||||
(€ million) | |||||
Maturing in | |||||
2006 | 1,767 | ||||
2007 | 2,152 | ||||
2008 | 262 | ||||
2009 | 486 | ||||
2010 | 36 | ||||
2011 or later | 4,249 | ||||
8,952 | |||||
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Effective | Stated | Dec. 31, | Dec. 31, | |||||||||||||||
Rate | Rate | Nominal Volume | 2004 | 2005 | ||||||||||||||
(€ million) | ||||||||||||||||||
Bayer AG | ||||||||||||||||||
5.515% | 5.375% | Eurobonds 2002/2007 | EUR 2,137 million | 3,018 | 2,098 | |||||||||||||
6.075% | 6.000% | Eurobonds 2002/2012 | EUR 2,000 million | 2,129 | 2,104 | |||||||||||||
5.155% | 5.000% | Hybrid bonds 2005/2105 (2015) | EUR 1,300 million | — | 1,268 | |||||||||||||
3.500% | 3.500% | Bonds Private Placement 2003/2005 | EUR 15 million | 15 | — | |||||||||||||
variable | variable | Bonds Private Placement 2003/2006 | EUR 250 million | 250 | 250 | |||||||||||||
2.470% | 2.470% | Bonds Private Placement 2004/2005 | EUR 25 million | 25 | — | |||||||||||||
variable | variable | Bonds Private Placement 2004/2006 | EUR 50 million | 50 | 50 | |||||||||||||
3.502% | 3.490% | Bonds Private Placement 2004/2008 | EUR 20 million | 20 | 20 | |||||||||||||
0.160% | 0.160% | Bonds Private Placement 2005/2006 | JPY 5 billion | — | 36 | |||||||||||||
Bayer Capital Corporation | ||||||||||||||||||
variable | variable | Bonds Private Placement 2002/2005 | EUR 65 million | 65 | — | |||||||||||||
Bayer Corporation | ||||||||||||||||||
7.180% | 7.125% | Notes 1995/2015 | USD 200 million | 145 | 164 | |||||||||||||
6.670% | 6.650% | Notes 1998/2028 | USD 350 million | 257 | 294 | |||||||||||||
6.210% | 6.200% | Bonds 1998/2028 (2008) | USD 250 million | 184 | 213 | |||||||||||||
4.043% | 3.750% | Bonds Private Placement 2004/2009 | EUR 460 million | 456 | 456 | |||||||||||||
Bayer Ltd., Japan | ||||||||||||||||||
3.750% | 3.750% | Bonds 2000/2005 | CHF 400 million | 271 | — | |||||||||||||
6,885 | 6,953 | |||||||||||||||||
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Dec. 31, 2004 | |||||
(€ million) | |||||
Lease payments | |||||
Maturing in | |||||
2005 | 76 | ||||
2006 | 71 | ||||
2007 | 38 | ||||
2008 | 31 | ||||
2009 | 21 | ||||
2010 or later | 311 | ||||
548 | |||||
(€ million) | |||||
Interest component | |||||
Maturing in | |||||
2005 | 21 | ||||
2006 | 17 | ||||
2007 | 15 | ||||
2008 | 14 | ||||
2009 | 9 | ||||
2010 or later | 53 | ||||
129 | |||||
(€ million) | |||||
Liabilities under finance leases | |||||
Maturing in | |||||
2005 | 55 | ||||
2006 | 54 | ||||
2007 | 23 | ||||
2008 | 17 | ||||
2009 | 12 | ||||
2010 or later | 258 | ||||
419 | |||||
Dec. 31, 2005 | |||||
(€ million) | |||||
Lease payments | |||||
Maturing in | |||||
2006 | 82 | ||||
2007 | 68 | ||||
2008 | 36 | ||||
2009 | 38 | ||||
2010 | 45 | ||||
2011 or later | 327 | ||||
596 | |||||
(€ million) | |||||
Interest component | |||||
Maturing in | |||||
2006 | 21 | ||||
2007 | 19 | ||||
2008 | 17 | ||||
2009 | 16 | ||||
2010 | 16 | ||||
2011 or later | 39 | ||||
128 | |||||
(€ million) | |||||
Liabilities under finance leases | |||||
Maturing in | |||||
2006 | 61 | ||||
2007 | 49 | ||||
2008 | 19 | ||||
2009 | 22 | ||||
2010 | 29 | ||||
2011 or later | 288 | ||||
468 | |||||
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||||||||||
of which | of which | |||||||||||||||
Total | current | Total | current | |||||||||||||
(€ million) | ||||||||||||||||
Accrued interest on liabilities | 292 | 292 | 424 | 424 | ||||||||||||
Payroll liabilities | 298 | 223 | 232 | 162 | ||||||||||||
Liabilities for social expenses | 136 | 125 | 115 | 114 | ||||||||||||
License liabilities | 42 | 42 | 33 | 33 | ||||||||||||
Advance payments received | 26 | 25 | 30 | 30 | ||||||||||||
Liabilities from the acceptance of drafts | 5 | 5 | 3 | 2 | ||||||||||||
Liabilities from commodity futures contracts | 31 | 7 | 209 | 6 | ||||||||||||
Deferred income | 603 | 530 | 511 | 362 | ||||||||||||
Long-term capital contributions of minority stockholders | — | — | 39 | — | ||||||||||||
Other miscellaneous liabilities | 688 | 669 | 936 | 883 | ||||||||||||
2,121 | 1,918 | 2,532 | 2,016 | |||||||||||||
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[33.3] | Economic hedges and hedge accounting with derivative financial instruments |
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Dec. 31, 2004 | Dec. 31, 2005 | ||||||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||||||
Notional | Positive | Negative | Notional | Positive | Negative | ||||||||||||||||||||
Amount | Fair Value | Fair Value | Amount | Fair Value | Fair Value | ||||||||||||||||||||
(€ million) | (€ million) | ||||||||||||||||||||||||
Currency hedging of realized transactions | 5,854 | 505 | (45 | ) | 4,759 | 18 | (105 | ) | |||||||||||||||||
Forward exchange contracts | 4,420 | 108 | (45 | ) | 3,600 | 15 | (34 | ) | |||||||||||||||||
of which FV hedges | 75 | — | (3 | ) | — | — | — | ||||||||||||||||||
of which CF hedges | — | — | — | — | — | — | |||||||||||||||||||
Currency options | 20 | 1 | — | 44 | 1 | (1 | ) | ||||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | — | — | — | — | — | — | |||||||||||||||||||
Cross-currency interest-rate swaps | 1,414 | 396 | — | 1,115 | 2 | (70 | ) | ||||||||||||||||||
of which FV hedges | 182 | 92 | — | — | — | — | |||||||||||||||||||
of which CF hedges | 459 | 45 | — | 460 | — | (10 | ) | ||||||||||||||||||
Currency hedging of forecasted transactions | 479 | 31 | (1 | ) | 942 | 10 | (40 | ) | |||||||||||||||||
Forward exchange contracts | 376 | 22 | (1 | ) | 817 | 5 | (33 | ) | |||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | 371 | 22 | (1 | ) | 809 | 5 | (33 | ) | |||||||||||||||||
Currency options | 103 | 9 | — | 125 | 5 | (7 | ) | ||||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | 103 | 9 | — | 93 | 3 | (7 | ) | ||||||||||||||||||
Interest rate hedging of realized transactions | 5,791 | 198 | (49 | ) | 11,327 | 174 | (66 | ) | |||||||||||||||||
Interest rate swaps | 5,791 | 198 | (49 | ) | 10,327 | 172 | (65 | ) | |||||||||||||||||
of which FV hedges | 4,104 | 176 | (1 | ) | 5,533 | 30 | (31 | ) | |||||||||||||||||
of which CF hedges | 575 | — | (29 | ) | — | — | — | ||||||||||||||||||
Interest rate options | — | — | — | 1,000 | 2 | (1 | ) | ||||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | — | — | — | — | — | — | |||||||||||||||||||
Commodity price hedging | 802 | 59 | (31 | ) | 465 | 280 | (209 | ) | |||||||||||||||||
Forward commodity contracts | 802 | 59 | (31 | ) | 416 | 210 | (125 | ) | |||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | 10 | 2 | — | 168 | 71 | (1 | ) | ||||||||||||||||||
Commodity option contracts | — | — | — | 49 | 70 | (84 | ) | ||||||||||||||||||
of which FV hedges | — | — | — | — | — | — | |||||||||||||||||||
of which CF hedges | — | — | — | — | — | — | |||||||||||||||||||
Total | 12,926 | 793 | (126 | ) | 17,493 | 482 | (420 | ) | |||||||||||||||||
of which short-term derivative financial instruments | 6,468 | 547 | (54 | ) | 5,443 | 116 | (161 | ) | |||||||||||||||||
for currency hedging | 5,864 | 488 | (46 | ) | 4,872 | 29 | (155 | ) | |||||||||||||||||
for interest rate hedging | 109 | 26 | (1 | ) | 350 | — | — | ||||||||||||||||||
for commodity hedging | 495 | 33 | (7 | ) | 221 | 87 | (6 | ) |
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Dec. 31, 2004 | Dec. 31, 2005 | |||||||
(€ million) | ||||||||
Issuance and endorsement of bills | 7 | 12 | ||||||
Guarantees | 70 | 93 | ||||||
Other commitments | 117 | 72 | ||||||
194 | 177 | |||||||
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Dec. 31, 2004 | ||||
Maturing in | (€ million) | |||
2005 | 96 | |||
2006 | 80 | |||
2007 | 69 | |||
2008 | 59 | |||
2009 | 51 | |||
2010 or later | 86 | |||
441 | ||||
Dec. 31, 2005 | ||||
Maturing in | (€ million) | |||
2006 | 106 | |||
2007 | 90 | |||
2008 | 71 | |||
2009 | 62 | |||
2010 | 49 | |||
2011 or later | 74 | |||
452 | ||||
Dec. 31, 2004 | ||||
Maturing in | (€ million) | |||
2005 | 193 | |||
2006 | 153 | |||
2007 | 165 | |||
2008 | 76 | |||
2009 | 93 | |||
2010 or later | 167 | |||
847 | ||||
Dec. 31, 2005 | ||||
Maturing in | (€ million) | |||
2006 | 109 | |||
2007 | 111 | |||
2008 | 82 | |||
2009 | 93 | |||
2010 | 85 | |||
2011 or later | 82 | |||
562 | ||||
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PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, were recognized as expenses in the 2005 fiscal year:
2005 | ||||
(€ million) | ||||
Financial statements auditing | 5 | |||
Audit-related services and other audit work | 3 | |||
Tax consultancy | — | |||
Other services rendered to Bayer AG or subsidiaries | 1 | |||
9 | ||||
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2004 | 2005 | |||||||
(€ million) | ||||||||
Revenue | 123 | 229 | ||||||
Purchased services | (365 | ) | (378 | ) | ||||
Receivables | 102 | 98 | ||||||
Liabilities | (87 | ) | (68 | ) |
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Stock-Based Compensation | ||||||||||||||||||||||||||||
Change in | ||||||||||||||||||||||||||||
Value of | ||||||||||||||||||||||||||||
Remuneration | Entitlement | Entitlements | ||||||||||||||||||||||||||
Fixed | Variable | in Kind and | Acquired in | Acquired Prior | ||||||||||||||||||||||||
Base Salary | Supplement | Bonus | Other Payments | Total | 2005 | to 2005 | ||||||||||||||||||||||
(In€) | (In€) | (In€) | (In€) | (In€) | (In€) | (In€) | ||||||||||||||||||||||
Klaus Kühn | 412,236 | 170,647 | 843,713 | 35,266 | 1,461,862 | 285,748 | 99,693 | |||||||||||||||||||||
Dr. Udo Oels | 412,236 | 170,647 | 843,713 | 41,942 | 1,468,538 | 285,748 | 99,693 | |||||||||||||||||||||
Dr. Richard Pott | 412,236 | 170,647 | 843,713 | 39,044 | 1,465,640 | 284,248 | 98,055 | |||||||||||||||||||||
Werner Wenning | 748,872 | 325,132 | 1,554,615 | 40,169 | 2,668,788 | 495,504 | 169,289 | |||||||||||||||||||||
1,985,580 | 837,073 | 4,085,754 | 156,421 | 7,064,828 | 1,351,248 | 466,730 | ||||||||||||||||||||||
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Notes | 2003 | 2004 | 2005 | 2005 | ||||||||||||||||
(€ million) | (€ million) | (€ million) | (U.S.$ million(*)) | |||||||||||||||||
Net income (loss) reported under IFRS | (1,291 | ) | 682 | 1,595 | 1,889 | |||||||||||||||
Business combinations | a | 28 | 192 | (4 | ) | (5 | ) | |||||||||||||
Pensions and other post-employment benefits | b | (121 | ) | (325 | ) | (450 | ) | (532 | ) | |||||||||||
In-process research and development | c | 12 | 38 | 8 | 9 | |||||||||||||||
Asset impairment | d | (360 | ) | (7 | ) | 23 | 27 | |||||||||||||
Early retirement program | e | 178 | (58 | ) | (20 | ) | (24 | ) | ||||||||||||
Revaluation surplus | f | — | — | 4 | 5 | |||||||||||||||
Minority interest | g | (12 | ) | 3 | 2 | 2 | ||||||||||||||
Other | h | (13 | ) | (14 | ) | (12 | ) | (14 | ) | |||||||||||
Deferred tax effect on U.S. GAAP adjustments | 134 | 142 | 181 | 214 | ||||||||||||||||
Net income (loss) reported under U.S. GAAP | (1,445 | ) | 653 | 1,327 | 1,571 | |||||||||||||||
Basic and diluted earnings (loss) per share under U.S. GAAP | (1.98 | ) | 0.89 | 1.82 | 2.15 | |||||||||||||||
December 31, | ||||||||||||||||
Notes | 2004 | 2005 | 2005 | |||||||||||||
(€ million) | (€ million) | (U.S.$ million(*)) | ||||||||||||||
Stockholders’ equity reported under IFRS | 10,943 | 11,157 | 13,212 | |||||||||||||
Business combinations | a | 1,003 | 1,013 | 1,200 | ||||||||||||
Pensions and other post-employment benefits | b | 2,317 | 691 | 818 | ||||||||||||
In-process research and development | c | (93 | ) | (87 | ) | (103 | ) | |||||||||
Asset impairment | d | (162 | ) | (138 | ) | (163 | ) | |||||||||
Early retirement program | e | 151 | 101 | 120 | ||||||||||||
Revaluation surplus | f | (66 | ) | (62 | ) | (73 | ) | |||||||||
Minority interest | g | (111 | ) | (80 | ) | (95 | ) | |||||||||
Other | h | 28 | 19 | 21 | ||||||||||||
Deferred tax effect on U.S. GAAP adjustments | (964 | ) | (267 | ) | (316 | ) | ||||||||||
Stockholders’ equity reported under U.S. GAAP | 13,046 | 12,347 | 14,621 | |||||||||||||
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December 31, | ||||||||||||
2004 | 2005 | 2005 | ||||||||||
(€ million) | (€ million) | (U.S.$ million(*)) | ||||||||||
Components of stockholders’ equity in accordance with U.S. GAAP: | ||||||||||||
Capital stock of Bayer AG | 1,870 | 1,870 | 2,215 | |||||||||
Capital reserves of Bayer AG | 2,942 | 2,942 | 3,484 | |||||||||
Retained earnings | 10,968 | 10,224 | 12,107 | |||||||||
Accumulated other comprehensive income: | ||||||||||||
— Unrealized market value adjustment on securities available for sale (net of taxes of€(2) million,€(7) million and U.S.$(8) million) | 25 | 28 | 33 | |||||||||
— Unrealized market value adjustment on cash flow hedges (net of taxes of€(11) million,€(6) million and U.S.$(7) million) | 17 | 11 | 13 | |||||||||
— Additional minimum pension liability (net of taxes of€415 million,€1,289 million and U.S.$1,526 million) | (609 | ) | (1,920 | ) | (2,274 | ) | ||||||
Translation differences | (2,167 | ) | (808 | ) | (957 | ) | ||||||
Total | 13,046 | 12,347 | 14,621 | |||||||||
(*) | The 2005 U.S. dollar figures have been translated at an exchange rate of€1.0000 = U.S.$1.1842 which is the noon buying rate of the Federal Reserve Bank of New York on December 31, 2005. Such translations should not be construed as representations that the euro amounts represent, or have been or could be converted into, United States dollars at that or any other rate. |
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1. Under IFRS, due to the retrospective application of IAS 19 (amended 2004), actuarial gains and losses arising from valuing the assets and liabilities of the Company’s pension and post employment defined benefit plans at fair value are recognized immediately in the statement of recognized income and expense for all periods presented. Under U.S. GAAP, these differences are recognized in the income statement only when they exceed 10 percent of the greater of the projected benefit plan obligation or the market-related value of plan assets. | |
2. Under SFAS No. 87, an additional minimum liability may be required to be recognized in certain instances when the accumulated benefit obligation exceeds the fair value of plan assets. If an additional minimum liability is recognized, a contra amount is recognized first as an intangible asset up to the amount of unrecognized prior service costs, with any excess being reported in other comprehensive income. Such requirement does not exist under IFRS. In 2005, 2004 and 2003, the recognition of an additional minimum liability of€3,265 million,€1,024 million and€637 million, respectively, resulted in the recognition of an intangible asset in the amount of€56 million,€nil and€nil, respectively. | |
3. Under U.S. GAAP, the Company amortized over the remaining average service lives of employees the unrecognized transition obligation of€238 million that resulted from the adoption of SFAS No. 87 in 1994. As of December 31, 2003 the unrecognized transition obligation from 1994 was fully amortized. | |
4. In 2004 the Company amended its retiree medical plan. Under IFRS, this plan amendment qualified either as a negative plan amendment for fully vested employees or a plan curtailment for unvested or partially vested employees. Gains resulting from negative plan amendments relating to fully vested employees and plan curtailments are recognized in income when they occur. Under U.S. GAAP, the retiree medical plan amendment is considered a negative plan amendment in accordance with SFAS No. 106 and the reduction in benefit obligation is first reduced by any existing unrecognized prior service cost resulting from previous plan benefit improvements and then reduced by any remaining transition obligations. The remaining gain is recognized as a prior service cost over the remaining years of service until the benefit becomes vested (13 years). The related adjustment recorded in 2004 amounted to€139 million and reflects the reversal of prior service costs and curtailments recognized under IFRS within “other operating income” which are either not permitted to be recorded under U.S. GAAP or are to be recorded on a deferred basis. Further, other changes relating to certain benefit plans in 2004 resulted in a curtailment of these plans under both IFRS and U.S. GAAP. For IFRS purposes, a curtailment gain of€62 was recognized in “other operating income”. However, for U.S. GAAP purposes, the€62 million gain recognized under IFRS has been reversed, as the entire gain was offset by existing unrecognized actuarial losses. In aggregate, a total of€201 million of income recognized under IFRS in “other operating income” in connection with plan amendments in 2004 have been reversed under U.S. GAAP. | |
5. In 2005, the Company replaced several defined benefit plans with defined contribution plans. As a result of this change, active employees participating in these plans will cease accruing pension benefits under these plans which results in a curtailment of the plan obligation. In addition, as a result of a reduction in headcount relating to the disposal of the Plasma business, a curtailment of plan obligation occurred. Under IFRS, curtailment gains of€327 million were recognized in “other operating income” as a result of these |
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changes. However, for U.S. GAAP purposes,€308 million of the gains recognized under IFRS have been reversed, as the gains were partially offset by existing unrecognized losses. Furthermore, the Company amended certain benefit plans granting additional benefits for services periods rendered previously. Under IFRS, these prior service costs are recognized over the remaining vesting period or, where benefits are already vested, are to be recognized immediately. Under U.S. GAAP, these prior service costs are to be recognized over the remaining service lives of the active employees. The reversal of prior service costs which are recognized earlier under IFRS, offset with the amortization of negative prior service costs under U.S. GAAP relating to the 2004 amendment of the retiree medical plan, resulted in a reversal of a net gain in the amount of€1 million for U.S. GAAP purposes. |
2004 | 2005 | |||||||
(€ million) | ||||||||
Pension and OPEB benefits: | ||||||||
Net liability recognized for IFRS | (6,147 | ) | (7,137 | ) | ||||
Difference in unrecognized actuarial gains and losses/asset limitation | 3,123 | 4,046 | ||||||
Difference in unrecognized prior service cost | (127 | ) | (146 | ) | ||||
Additional minimum liability under SFAS No. 87 | (920 | ) | (3,265 | ) | ||||
Net liability recognized for U.S. GAAP | (4,071 | ) | (6,502 | ) | ||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Pension and OPEB benefits: | ||||||||||||
Net periodic benefit cost recognized for IFRS | 749 | 368 | 188 | |||||||||
Difference in recognition of actuarial amounts | 89 | 112 | 141 | |||||||||
Amortization of transition obligation | 23 | — | — | |||||||||
Difference in recognition of prior service amounts | — | 139 | 1 | |||||||||
Difference in pension curtailment and settlement costs | — | 62 | 308 | |||||||||
Net periodic benefit cost recognized for U.S. GAAP | 861 | 681 | 638 | |||||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Net U.S. GAAP income statement difference on pensions and other post-employment benefit plans | 9 | 12 | — |
2004 | 2005 | |||||||
(€ million) | ||||||||
Net U.S. GAAP equity difference on pensions and other post-employment benefits | (241 | ) | — |
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2003 | 2004 | 2005 | ||||||||||
(€ million) | ||||||||||||
Total U.S. GAAP income statement difference on pensions and other post-employment benefits | 121 | 325 | 450 |
2004 | 2005 | |||||||
(€ million) | ||||||||
Total U.S. GAAP equity difference on pensions and other post-employment benefits | (2,317 | ) | (691 | ) |
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• | The first step is to compare each reporting unit’s fair value with its carrying amount including goodwill. If a reporting unit’s carrying amount exceeds its fair value, this indicates that its goodwill may be impaired and the second step is required. | |
• | The second step is to compare the implied fair value of the reporting unit’s goodwill with the carrying amount of its goodwill. The implied fair value is computed by allocating the reporting unit’s fair value to all of its assets and liabilities in a manner that is similar to a purchase price allocation in a business combination in accordance with SFAS 141. The remaining unallocated purchase price is the implied fair value of the reporting unit’s goodwill. If the implied fair value of goodwill is less than its carrying value, the difference is recorded as an impairment. |
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2004 | 2005 | |||||||
(€ million) | ||||||||
Goodwill: | ||||||||
Differences in carrying amount of goodwill written-off directly to equity before January 1, 1995 | 397 | 454 | ||||||
FAS 142 and IFRS 3 transition differences | 554 | 507 | ||||||
Differences on account of IPR&D included in goodwill under IFRS | (60 | ) | (61 | ) | ||||
Differences in impairments | (29 | ) | (18 | ) | ||||
Purchase price and purchase price allocation differences | — | — | ||||||
Differences in carrying amount of goodwill | 862 | 882 | ||||||
Other intangible assets: | ||||||||
FAS 142 and IFRS 3 transition differences | 32 | 32 | ||||||
IPR&D from acquisitions, expensed under U.S. GAAP | (33 | ) | (25 | ) | ||||
Differences in impairments | — | — | ||||||
Purchase price and purchase price allocation differences | 20 | 20 | ||||||
Revaluation surplus | (66 | ) | (62 | ) | ||||
Additional Minimum Liabilities | — | 56 | ||||||
Other differences | 10 | 10 | ||||||
Differences in carrying amount of other intangible assets | (37 | ) | 31 | |||||
Total U.S. GAAP increase in intangible assets | 825 | 913 | ||||||
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Bayer Group Pro Forma 2004 Totals | (Unaudited) | |||
(€ million) | ||||
Net sales | 24,290 | |||
Income after tax | 529 | |||
Earnings per share | 0.72 |
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2003 | 2004 | 2005 | 2005 | |||||||||||||
(€ million) | (€ million) | (€ million) | (U.S.$ million) | |||||||||||||
Income (loss) from continuing operations | (623 | ) | 657 | 1,289 | 1,526 | |||||||||||
Discontinued operations — net of tax | (822 | ) | (4 | ) | 38 | 45 | ||||||||||
Net income/loss reported under U.S. GAAP | (1,445 | ) | 653 | 1,327 | 1,571 | |||||||||||
Earnings per Share | 2003 | 2004 | 2005 | 2005 | |||||||||||||
(€ million) | (€ million) | (€ million) | (U.S.$ million) | ||||||||||||||
Basic and diluted: | |||||||||||||||||
Income (loss) from continuing operations | (0.85 | ) | 0.90 | 1.77 | 2.09 | ||||||||||||
Income (loss) from discontinued operations | (1.13 | ) | (0.01 | ) | 0.05 | 0.06 | |||||||||||
Basic and diluted earnings (loss) per share | (1.98 | ) | 0.89 | 1.82 | 2.15 | ||||||||||||
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Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | (€ million) | (€ million) | ||||||||||
United States | 1,010 | 985 | 867 | |||||||||
Germany | 195 | 200 | 474 | |||||||||
Japan | 98 | 99 | 71 | |||||||||
Brazil | 61 | 59 | 120 | |||||||||
Others | 243 | 207 | 166 | |||||||||
Deferred tax assets | 1,607 | 1,550 | 1,698 | |||||||||
Dec. 31, | Dec. 31, | Dec. 31, | ||||||||||
2003 | 2004 | 2005 | ||||||||||
(€ million) | (€ million) | (€ million) | ||||||||||
Germany | 7,312 | 6,765 | 5,758 | |||||||||
United States | 4,338 | 3,948 | 4,062 | |||||||||
France | 1,502 | 1,356 | 1,311 | |||||||||
Others | 3,299 | 3,132 | 4,878 | |||||||||
Long-lived assets | 16,451 | 15,201 | 16,009 | |||||||||
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2003 | 2004 | 2005 | ||||||||||
(€ million) | (€ million) | (€ million) | ||||||||||
Net income (loss) under U.S. GAAP | (1,445 | ) | 653 | 1,327 | ||||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized market value adjustment on available-for-sale securities (net of taxes of€(2) million,€(2) million and€(6) million, respectively) | 27 | 18 | 3 | |||||||||
Unrealized market value adjustment on cash flow hedges (net of taxes of€19 million,€(18) million, and€6 million) | (29 | ) | 46 | (9 | ) | |||||||
Reclassification adjustment: | ||||||||||||
Net realized (gains)/losses on sales of securities (net of taxes of€(4) million,€nil, and€nil, respectively) | 1 | (6 | ) | — | ||||||||
Net realized (gains)/losses on sales of cash flow hedges (net of taxes of€(2)million,€(1) million and€nil, respectively) | 3 | 2 | 3 | |||||||||
Additional minimum pension liability (net of taxes of€63 million,€155 million and€916 million, respectively) | (94 | ) | (232 | ) | (1,373 | ) | ||||||
Foreign currency translation adjustment | (1,222 | ) | (398 | ) | 1,359 | |||||||
Comprehensive income (loss) under U.S. GAAP | (2,759 | ) | 83 | 1,310 | ||||||||
December 31, | ||||||||
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets | 2004 | 2005 | ||||||
(€ million) | ||||||||
Projected benefit obligation | 4,939 | 10,256 | ||||||
Accumulated benefit obligation | 4,795 | 9,919 | ||||||
Fair value of plan assets | 44 | 4,599 |
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December 31, | ||||||||
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets | 2004 | 2005 | ||||||
(€ million) | ||||||||
Projected benefit obligation | 2,895 | 3,920 | ||||||
Accumulated benefit obligation | 2,543 | 3,722 | ||||||
Fair value of plan assets | 2,208 | 3,198 |
December 31, | ||||||||
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets | 2004 | 2005 | ||||||
(€ million) | ||||||||
Projected benefit obligation | 7,834 | 14,176 | ||||||
Accumulated benefit obligation | 7,338 | 13,641 | ||||||
Fair value of plan assets | 2,252 | 7,797 |
Balance Sheet Information | Dec. 31, 2004 | Dec. 31, 2005 | ||||||
(€ million) | ||||||||
Current assets | 16 | 15 | ||||||
Noncurrent assets | 41 | 62 | ||||||
Pension provisions | — | — | ||||||
Other provisions | (14 | ) | (16 | ) | ||||
Financial liabilities | (2 | ) | (3 | ) | ||||
Remaining liabilities | (15 | ) | (14 | ) |
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Statement of Income Information | Dec. 31, 2004 | Dec. 31, 2005 | ||||||
(€ million) | ||||||||
Net sales | 30 | 48 | ||||||
Operating result | — | 4 | ||||||
Net income (loss) | (1 | ) | 3 |
Statement of Cash Flow Information | Dec. 31, 2004 | Dec. 31, 2005 | ||||||
(€ million) | ||||||||
Net cash provided by operating activities | 9 | 3 | ||||||
Net cash provided by (used in) investing activities | 3 | (9 | ) | |||||
Net cash provided by (used in) financing activities | (4 | ) | 1 |
• | product liability; | |
• | competition and antitrust; | |
• | patent validity and infringement; | |
• | tax assessments; and | |
• | past waste disposal practices and release of chemicals into the environment. |
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