Cashflow

Cash provided by operating activities

In 2007, we generated cash provided by operating activities of €5,807 million despite the expansion of the business and the associated higher amount tied up in working capital. This almost matched the record level achieved in 2006. Miscellaneous items primarily reflected reclassification of non-cash gains resulting from the reduction in the average overall corporate tax rate to 29% due to the German Corporate Tax Reform 2008.

Cash flow (billion €)

Cash used in investing activities

Net expenses decreased to €3,612 million compared with €8,414 million in 2006. Expenditures for acquisitions were significantly higher in 2006.

In 2007, expenditures for acquisitions totaled €635 million and were primarily attributable to the compensation payment for the asset swap with Gazprom in connection with the Yuzhno Russkoye project.

We generated proceeds of €99 million from divestitures. These resulted primarily from portfolio optimization measures in the Fine Chemicals division and from the sale of a stake of almost 42% in an ethane cracker in the United States to Williams Olefins.

In 2007, we invested a total of €2,562 million, or 6% more than in 2006, in property, plant and equipment and intangible assets. Investments in property, plant and equipment and intangible assets were again below the level of depreciation and amortization. Free cash flow amounted to €3,245 million compared with €3,529 million in 2006. All material additions to property, plant and equipment are described in the section “BASF Segments”.

Payments for financial investments, marketable securities and financial receivables of €755 million in 2007 related primarily to BASF’s contribution to the financing of the production company for the Yuzhno Russkoye natural gas field. This company is consolidated using the equity method. The disposal of long-term assets generated proceeds of €241 million.

Cash provided by/(used in) financing activities

In 2007, cash used in financing activities was €(2,236) million compared with a cash inflow of €2,421 million in 2006. We repurchased 21.5 million shares at an average price of €88.35 per share for a total of €1,899 million. For further information on the share buyback program see also Note 17 to the Consolidated Financial Statements.

The sum of €1,624 million was paid in dividends and profit transfers in 2007. Of this amount, €1,484 million, or €3.00 per share, was for dividend payments to shareholders of BASF Aktiengesellschaft for fiscal year 2006. Partners in fully or proportionately consolidated companies received €140 million.

Financial indebtedness increased by 6.5% to €10,102 million compared with 2006. Net debt increased by €686 million to €9,335 million. We partially refinanced our commercial papers with long-term bonds. More information on financial indebtedness can be found in Note 22 to the Consolidated Financial Statements. Detailed information on other financial obligations can be found in Note 23 to the Consolidated Financial Statements.