Chairman’s Letter
Notes
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Financial Statements
33. Net cash provided by (used in) operating activities
Since the annual financial statements as of December 31, 2006, the cash flow statement starts from income after taxes from continuing operations and not from the operating result. The prior-year figures have been restated accordingly. The gross cash flow for 2006 of €3,913 million (2005: €3,114 million) is the cash surplus from operating activities before any changes in working capital. The cash flows by segment and region are shown in the table in Note [1].
The net operating cash flow of €3,928 million (2005: €3,227 million) from continuing operations takes account of changes in working capital and other net assets. The €275 million net cash flow from the discontinued operations comprises operating income from the H.C. Starck and Wolff Walsrode business units and the Diagnostics Division. The previous year’s figure of €275 million also includes the plasma business and LANXESS. The total net operating cash flow amounted to €4,203 million in 2006 (2005: €3,502 million), with Schering contributing €483 million.
A new line “Non-cash effects of the remeasurement of acquired assets (inventory workdown)” has been inserted in the cash flow statement in order to eliminate the effects of the Schering purchase price allocation from gross cash flow. Thus, the non-cash effect of the work-down of the step-up from the remeasurement of Schering inventories to fair value as of June 23, 2006, the date of acquisition, on the gross cash flow is reversed. For 2006 an amount of €429 million is transferred from “Decrease/increase in inventories” to this new line. These non-cash effects do not impact cash flow.
The net operating cash flow of €3,928 million (2005: €3,227 million) from continuing operations takes account of changes in working capital and other net assets. The €275 million net cash flow from the discontinued operations comprises operating income from the H.C. Starck and Wolff Walsrode business units and the Diagnostics Division. The previous year’s figure of €275 million also includes the plasma business and LANXESS. The total net operating cash flow amounted to €4,203 million in 2006 (2005: €3,502 million), with Schering contributing €483 million.
A new line “Non-cash effects of the remeasurement of acquired assets (inventory workdown)” has been inserted in the cash flow statement in order to eliminate the effects of the Schering purchase price allocation from gross cash flow. Thus, the non-cash effect of the work-down of the step-up from the remeasurement of Schering inventories to fair value as of June 23, 2006, the date of acquisition, on the gross cash flow is reversed. For 2006 an amount of €429 million is transferred from “Decrease/increase in inventories” to this new line. These non-cash effects do not impact cash flow.
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