SECURITIES AND EXCHANGE COMMISSION

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2005

Bayer Aktiengesellschaft
Bayer Corporation*

Bayerwerk, Gebaeude W11
Kaiser-Wilhelm-Allee
51368 Leverkusen
Germany
(Address of principal executive offices)

     Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  þ                    Form 40-F  o

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1):      N/A     

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7):      N/A     

     Indicate by check mark whether, by furnishing the information contained in this form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  o                    No  þ

     If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):      N/A     

* Bayer Corporation is also the name of a wholly-owned subsidiary of the registrant in the United States.

Stockholders’ Newsletter 2005

Interim Report for the First Quarter of 2005

Report on the 53rd Annual Stockholders’ Meeting of Bayer AG
on April 29, 2005 in Cologne

Bayer Group Key Data

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Contents
Bayer Stockholders’ Newsletter 2005

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Bayer: strong first quarter 2005

Overview of Sales, Earnings and Financial Position

Bayer had a successful start to 2005, with all subgroups contributing to the Group’s positive performance in the first quarter.

Group sales from continuing operations advanced by 15.7 percent year on year to €6,704 million (2004: €5,792 million), including sales of the consumer health business acquired from Roche and sales to LANXESS after its spin-off from Bayer. Currency- and portfolio-adjusted sales grew by 9.3 percent, due mainly to gratifying volume increases and higher selling prices in the MaterialScience subgroup.

The strong growth in business brought a substantial improvement in the operating result to which all subgroups contributed. EBIT from continuing operations before special items rose by 50.1 percent to €1,142 million (2004: €761 million), thanks to considerably higher margins at MaterialScience, additional cost savings and efficiency improvements. Underlying EBITDA advanced by 27.3 percent from €1,237 million to €1,575 million.

First-quarter earnings were impacted by €138 million in special charges (2004: €7 million), including one-time charges of €94 million arising from the termination of the co-promotion agreement with GlaxoSmithKline for Levitra® and expenses of €21 million for the integration of the consumer health business acquired from Roche.

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After special items, first-quarter EBIT climbed by 33.2 percent to €1,004 million (2004: €754 million). EBITDA also increased considerably, moving ahead by 16.8 percent to €1,437 million (2004: €1,230 million). After a non-operating result of minus €131 million (2004: minus €116 million), pre-tax income came to €873 million (2004: €638 million). Net income, which also included €52 million in after-tax income from discontinued operations, expanded by 55.6 percent to €652 million.

Thanks to the improvement in operating performance, the Bayer Group’s gross cash flow from continuing operations climbed by 27.0 percent to €1,101 million (2004: €867 million). Working capital increased due to the substantial growth in business and to seasonal effects. Net cash flow came to minus €226 million (2004: minus €205 million), while net debt grew to €7,115 million mainly as a result of the payment of the purchase price for the Roche consumer health activities.

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Outlook

In light of the very pleasing sales and earnings trend in the first quarter, we confirm our guidance for the full year 2005 and are optimistic about future developments.

This year we are targeting an increase of more than 5 percent in currency- and portfolio-adjusted sales, to over €25 billion.

As far as earnings are concerned, we are very confident that we can improve EBIT before special items by about 20 percent year on year.

In the Bayer HealthCare subgroup, we have achieved savings in the Pharmaceuticals Division more quickly than originally planned. We also benefited from a strong flu season in the first quarter. In Consumer Care we realized synergies ahead of schedule.

In the Pharmaceuticals, Biological Products segment, we are now aiming for an underlying EBIT margin in low double digits. We are therefore raising our full-year 2005 guidance for the HealthCare business, where we believe we will more than offset the negative effects of the fair-value measurement of inventories acquired with the Roche OTC business and the decline in earnings from Cipro®, pushing underlying HealthCare EBIT above the 2004 level.

The very pleasing business trend at Bayer MaterialScience is continuing. We remain optimistic for the full year and uphold our forecast of significant growth in underlying EBIT. Of course it remains to be seen how the economy and raw material prices will develop.

In Bayer CropScience too, we expect a considerable improvement in underlying EBIT.

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Changes in Group Portfolio, New IFRS Regulations

LANXESS ceased to be part of the Bayer Group when it was spun off at the end of January 2005. The data of the LANXESS group are thus no longer included in the balance sheet as of March 31, 2005. In the income and cash flow statements for the first quarter of 2005 and the corresponding period of 2004, LANXESS is reported under discontinued operations according to IFRS 5. This new International Financial Reporting Standard requires reporting to be based primarily on continuing operations, while discontinued operations are to be stated separately in a single line item. Net earnings of the LANXESS group for the month of January are recognized in Bayer Group income for the current year. The individual items of the income statement such as sales, functional costs and the non-operating result reflect only continuing operations. The information in this report thus relates exclusively to continuing operations, except where specific reference is made to discontinued operations. Details on the reporting of discontinued operations are given in the “Accounting policies” section of the notes beginning on page 32.

The plasma business of the Bayer HealthCare subgroup was divested effective March 31, 2005. Since Bayer is continuing to market plasma products outside the United States for a transitional period, only the U.S. plasma business is reflected in discontinued operations. The explanations in the above paragraph apply analogously. The revenues from our marketing activities outside the United States are reflected in the sales of our Pharmaceuticals, Biological Products segment from continuing operations.

Bayer largely completed the acquisition of the Roche consumer health business by January 1, 2005. The acquired business with non-prescription medicines and vitamins is now part of the Consumer Care Division of the Bayer HealthCare subgroup, and has already been integrated into the Bayer organization. The business acquired from Roche is thus reflected in the balance sheet, income statement and cash flow statement with effect from that date.

In December 2004, the International Accounting Standards Board (IASB) adopted an amendment to IAS 19 (Employee Benefits) that allows actuarial gains and losses from defined benefit plans to be offset immediately against stockholders’ equity without affecting net income. In accordance with the recommendation of the IASB, we are implementing this reporting change with effect from January 1, 2005.

Among the other principal changes is that goodwill and other intangible assets with an indefinite service life are no longer amortized but subjected to annual impairment testing.

The IFRS also require the presentation of assets and liabilities according to maturity starting in 2005.

Details of the relevant new and amended IFRS standards are provided in the notes beginning on page 32.

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Performance by Subgroup

Our realigned business activities are grouped into the Bayer HealthCare, Bayer CropScience and Bayer MaterialScience subgroups. In view of the spin-off of LANXESS and the acquisition of the Roche consumer health business, we have altered our segmentation to reflect the new corporate structure. Further details of the new reporting segments are given in the notes on page 36.

Bayer HealthCare

Sales of the Bayer HealthCare subgroup grew by 5.1 percent year on year in the first quarter of 2005, to €2,135 million. The increase was mainly due to the acquisition of the Roche consumer health business. Currency- and portfolio-adjusted sales declined as expected by 5.1 percent, mainly because of the expiration last June of the market exclusivity for Cipro® in the United States that had been granted by the regulatory authorities. EBIT of the subgroup fell by 34.2 percent to €183 million. Before special items totaling €119 million in the Pharmaceuticals and Consumer Care divisions, EBIT from continuing operations improved by €24 million, or 8.6 percent.

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Pharmaceuticals, Biological Products

Sales of the Pharmaceuticals, Biological Products segment receded by €132 million, or 12.2 percent, to €952 million.

Sales of the Pharmaceuticals Division fell by 15.5 percent to €766 million. Of this decline, the expiration of market exclusivity for our antibiotic Cipro® in the United States accounted for about €120 million and the realignment of our U.S. pharmaceuticals business

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for approximately €50 million. As part of this realignment, Schering-Plough has marketed some of our products in the United States – primarily Avelox®, Cipro XR® and Levitra® – since September 2004.

A strong flu season spurred business with our respiratory antibiotic Avalox®/Avelox®, particularly in Europe. As a result of a currency-adjusted 46.3 increase in sales of Avelox® outside the United States, global sales of the product remained steady year on year.

Levitra® sales grew by €18 million compared to the fourth quarter of 2004, to €60 million. Business with this product expanded by a gratifying 34.1 percent year on year in non-U.S. markets, where we are now marketing Levitra® by ourselves following termination of the co-promotion agreement with GlaxoSmithKline in January 2005. We recorded lower U.S. revenues from Levitra® than in the first quarter of 2004. However, the data are not comparable due to the settlement arrangements with Schering-Plough.

In the field of cancer research and development, we announced that BAY 43-9006 (active ingredient: sorafenib, a RAF kinase and VEGFR inhibitor) significantly extends progression-free survival in patients with renal cell carcinoma. An independent panel of experts in the United States reviewed the safety and efficacy data from the important phase III study in patients with advanced renal cell carcinoma and concluded that the trial met this surrogate endpoint. In light of these favorable results, Bayer HealthCare and Onyx are preparing a New Drug Application for possible accelerated approval in the United States. We are also in contact with the regulatory authorities of other countries in this connection. In addition, based on data analysis and in agreement with the regulatory authorities, all patients participating in the current phase III study for treatment of advanced renal cell carcinoma are now being offered access to sorafenib.

Sales from continuing operations of the Biological Products Division advanced by 4.5 percent to €186 million, of which Kogenate® accounted for €125 million (+ 3.3 percent) and the plasma business outside the United States for €61 million (+ 8.9 percent). Following the divestiture of the plasma business with effect from March 31, 2005, Bayer is continuing to market the products outside the United States for a transitional period.

EBIT of the Pharmaceuticals, Biological Products segment came in at €79 million below the previous year, mainly because of a €94 million special charge in connection with the termination of the co-promotion agreement for Levitra®. Adjusted for special items, EBIT grew by €19 million to €184 million. The decline in earnings due to the genericization of Cipro® was more than offset by positive effects from the Schering-Plough alliance, savings in research and development, €40 million in additional business with governments, and other items.

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Consumer Care

Sales of the Consumer Care segment climbed by 60.4 percent to €523 million as a result of the first-time inclusion of the acquired consumer health business, which contributed €237 million in sales. We are successfully integrating this former Roche business, which includes brands such as Aleve®, Bepanthen®, Redoxon®, Rennie® and Supradyn®.

Adjusted for currency and portfolio effects, sales of Consumer Care were down by 10.9 percent. Sales of Aleve®, in particular, suffered from the effects of the discussion surrounding non-steroidal anti-inflammatory drugs (NSAIDs) in the United States. However, business picked up in March due to positive results from the FDA Advisory Committee. Sales of Aspirin® declined year on year, mainly because wholesalers reduced their inventories.

First-quarter EBIT of the Consumer Care segment was well below the previous year, at €11 million. The fair-value measurement of inventories acquired from Roche depresses margins by an estimated €57 million, the greater part of which was recognized in first-quarter income. A further negative factor was a €21 million special charge in connection with the integration of the Roche business.

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Diabetes Care, Diagnostics

Sales of the Diabetes Care, Diagnostics segment rose by €17 million, or 3.8 percent, from the same period of 2004, to €461 million. In local currencies, sales were up by 5.8 percent.

Sales of Diabetes Care advanced by 1.4 percent to €143 million due to strong growth in Europe. The Diagnostics Division increased sales by €15 million, or 5.0 percent, to €318 million, the main contributors to growth being the Laboratory Testing Systems and Near Patient Testing business units.

EBIT of the segment moved ahead by €9 million to €37 million due to the positive trend in sales.

Animal Health

Sales of the Animal Health segment advanced by a gratifying 11.8 percent to €199 million. This growth was mainly attributable to the Advantage®/Advantix® product line, sales of which improved by 20.0 percent. The increase in sales was reflected in a €17 million rise in EBIT.

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Bayer CropScience

Sales of the Bayer CropScience subgroup edged forward by 0.7 percent year on year to €1,744 million. Currency- and portfolio-adjusted sales dipped by 1.1 percent.
 
EBIT improved by €35 million to €414 million; underlying EBIT was up by 11.6 percent.

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Crop Protection

Sales of the Crop Protection segment remained steady year on year at €1,417 million. Sales of the Insecticides business unit declined, while Seed Treatment and Fungicides showed positive trends.

Sales of the Insecticides business unit receded by 5.7 percent to €364 million. Business with our Confidor®/Gaucho®/Admire®/Merit® product group remained steady year on year at €171 million. Temik® did not repeat the exceptionally high sales level of the previous first quarter in the United States, while the continuing drought in southern Brazil led to lower sales of Tamaron®. In addition to imidacloprid, our principal active ingredient from the neonicotinyles class, our recent products Poncho® for seed treatment and Calypso® for foliar application now figure prominently in our insecticides portfolio.

Sales of the Fungicides business unit rose by 2.4 percent to €347 million. Although Asian soybean rust remains widespread in many parts of Brazil and appeared even earlier than last year in Argentina, business receded due to the ongoing drought in southern Brazil. This decline was more than offset by higher sales in Europe. The new Proline® family of cereal fungicides and our new strobilurin fungicide Fandango® enjoyed an excellent start to the season, resulting in considerably higher sales, particularly in Germany.

Sales of the Herbicides business unit held steady year on year at €555 million. Continuing cold weather in Europe had an adverse effect on business and delayed the start of the corn and cereal herbicide season. Sales in March, however, were very strong and well above our expectations.

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Due largely to our acquisition in 2004 of Crompton Corporation’s 50 percent interest in Gustafson, which is now a wholly owned Bayer subsidiary, sales of the Seed Treatment business unit grew by 9.4 percent to €151 million.

EBIT of the Crop Protection segment climbed by €39 million to €322 million. The main factor in this increase, apart from strict cost management and lower restructuring expenses, was the absence of goodwill amortization. Underlying EBIT rose by 17.0 percent.

Environmental Science, BioScience

Sales of the Environmental Science, BioScience segment moved ahead by 3.5 percent to €327 million, due to the positive performance of BioScience.

Sales of the Environmental Science Business Group fell by 6.5 percent to €174 million. While sales of professional products dipped only slightly, business in consumer products dropped considerably, due mainly to prolonged cold, wet weather in the United States that delayed the start of the season.

Sales of the BioScience Business Group advanced by 17.7 percent from the same period of 2004, to €153 million. The strongest contributor to this growth was our product InVigor®.

EBIT of the Environmental Science, BioScience segment fell by €4 million to €92 million.

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Bayer MaterialScience

First-quarter sales of the Bayer MaterialScience subgroup climbed by €667 million, or 35.5 percent, to €2,544 million. The currency- and portfolio-adjusted increase came to 34.0 percent. EBIT of the subgroup also grew substantially, advancing by €271 million to €406 million.

Materials

Sales of the Materials segment advanced by €223 million, or 31.9 percent. In local currencies, sales improved by 34.6 percent.

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Polycarbonates and H.C. Starck were instrumental in this positive performance. Sales of Polycarbonates jumped by 36.7 percent year on year, to €588 million. Demand remained strong, enabling us to raise prices in all regions. We also increased volume sales worldwide. Business of H.C. Starck expanded by 46.6 percent to €217 million as a result of brisk demand from the electronics industry and the pass-through of raw material cost increases.

EBIT of the Materials segment improved by €127 million to €159 million thanks to an improved price trend compared to the first quarter of 2004. This in turn was attributable both to strong demand and to our successful implementation of price increases across the board.

Systems

Sales of our Systems segment also rose strongly compared to the same period of the previous year, advancing by 37.7 percent to €1,621 million, or by 39.8 percent in local currencies.

This gratifying increase was accounted for mainly by the Polyurethanes business unit, where sales climbed by 45.9 percent to €1,196 million. Persistent high demand for MDI enabled us to impose lasting price increases in all regions, and volumes continued to grow. Sales of TDI declined, with prices remaining relatively stable and volumes receding, particularly in Europe and Asia. Additional sales of raw materials, particularly styrene, contributed €158 million to the impressive growth in Polyurethanes.

EBIT of the Systems segment improved by €144 million year on year to €247 million. Here too, we succeeded in compensating for the higher raw material costs through price increases.

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Performance by Region

Group sales from continuing operations posted a substantial €912 million increase in the first quarter of 2005, to €6,704 million worldwide. The largest share of this growth was achieved in Europe, where sales rose by €592 million, or 23.6 percent, with MaterialScience the main contributor to the increase. The Consumer Care Division also s ignificantly boosted sales in Europe due to a strong flu season and the products acquired from Roche. Group sales in Germany advanced by 31.0 percent to €1,030 million, though this was partly because our sales to LANXESS are reported as external as of the date of the spin-off. Without this effect or the additional sales volume acquired from Roche, the increase in Germany amounted to about 10 percent.

Thanks to continued strong demand for our industrial products in North America and to brisk business with crop protection products in the United States, sales in these segments grew considerably. However, sales of our Pharmaceuticals Division fell as expected due to generic competition for Cipro® and lower sales as a result of the alliance with Schering-Plough. Group sales in North America improved overall by 4.4 percent compared to the same period of 2004.

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MaterialScience was the growth driver in the Asia-Pacific region, with appreciable growth rates that included a more than 60 percent improvement in China. The region’s positive business environment was a major factor in this development. Our HealthCare subgroup also recorded a pleasing performance, especially in Japan, where business expanded by 10.3 percent. By contrast, CropScience sales in the region were down, especially in Japan where the decline amounted to 14.0 percent.

Sales in the Latin America/Africa/Middle East region improved by 14.2 percent to €774 million, largely as a result of the continuing upward trend in Latin American markets. However, sales in our Crop Protection segment fell by 15.8 percent compared to the previous year’s high level due to the prolonged drought in southern Brazil. This effect was substantially overcompensated by strong growth in MaterialScience and acquisition-related sales increases in Consumer Care.

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Liquidity and Capital Resources

Thanks to the considerable improvement in operating performance, gross cash flow of the Bayer Group increased by 27.0 percent to €1,101 million (2004: €867 million). Net cash flow held steady year on year at minus €226 million. Working capital increased compared to the first quarter of 2004, due mainly to the substantial growth in business. In addition, €114 million of deferred income was reversed due to the termination of the co-promotion agreement with GlaxoSmithKline.

There was a net cash outflow of €947 million for investing activities, compared to a €160 million net inflow in the first quarter of 2004. A total of €2,053 million was spent for acquisitions, including a €1.9 billion disbursement for the Roche consumer health acquisition. We had already made a €200 million advance payment for this acquisition and a €208 million payment for the remaining 50 percent interest in our U.S. joint venture with Roche at the end of 2004. Cash inflows consisted mainly of €1,000 million related to investments, which in turn resulted primarily from the scheduled repayment of loans following the LANXESS spin-off and the expiration of derivatives used to hedge currency risks. Cash receipts from sales of property, plant and equipment totaled €256 million, including some €230 million from the divestiture of the plasma business.

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Principal components of the €430 million net cash outflow for financing activities were €107 million in interest payments and €290 million used to pay down net debt.

Net debt of the Bayer Group had increased to €7,115 million by the end of the first quarter, mostly due to payments made to acquire the Roche consumer health business.

Including marketable securities and other assets, the Group had liquid assets of €1,783 million on March 31, 2005.

Employees

On March 31, 2005, the Bayer Group had 93,300 employees in continuing operations, which was 800 more than a year before and 1,600 more than on December 31, 2004. The latter increase resulted primarily from the transfer of employees from Roche in connection with the integration of the consumer health business, which was partially offset by a reduction in the workforce in connection with the Schering-Plough alliance.

Headcount increased by 1,500 in Europe, 800 in Latin America/Africa/Middle East and about 700 in Asia/Pacific, and decreased by 1,400 in North America.

Personnel expenses in the first quarter of 2005 were down by 0.1 percent from the same period last year, to €1,509 million.

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Legal Risks

Increased risks in our HealthCare business continue to exist from litigation commenced in the United States following the voluntary withdrawal of the statin Lipobay/Baycol from the market and the voluntary cessation of the marketing of products containing PPA. Further risks arise from pending U.S. lawsuits involving Cipro® alleging violations of antitrust regulations.

Lipobay/Baycol: Over the course of the Lipobay/Baycol litigation Bayer has been named as a defendant in approximately 14,700 cases worldwide (more than 14,580 of them in the U.S.). As of April 25, 2005, the number of Lipobay/Baycol cases pending against Bayer worldwide was 6,067 (5,989 of them in the U.S., including several class actions). The decrease in the number of U.S. cases is attributable to various reasons, including voluntary dismissals by plaintiffs, dismissals based on settlements and court-ordered dismissals, such as for failure to satisfy procedural requirements.

As of April 25, 2005, Bayer had settled 2,995 Lipobay/Baycol cases worldwide without acknowledging any liability and resulting in settlement payments of approximately US$ 1,133 million. On a voluntary basis and without acknowledging any legal liability, Bayer will continue its policy of trying to agree on fair compensation for people who experienced serious side effects from Lipobay/Baycol. After more than three years of litigation we are currently aware of fewer than 50 cases in the United States that in our opinion hold a potential for settlement, although we cannot rule out the possibility that additional cases involving serious side effects from Lipobay/Baycol may come to our attention. In addition, there could be further settlements of cases outside of the United States. In the 2003 fiscal year, Bayer took a €300 million charge to the operating result in connection with the Lipobay/Baycol litigation risk, over and beyond the assumed insurance coverage of approximately US$ 1.2 billion. An additional €47 million charge to the operating result was taken in the 2004 fiscal year in light of settlements already concluded or expected to be concluded and anticipated defense costs.

PPA: Bayer is a defendant in numerous product liability lawsuits relating to phenylpropa-nolamine (PPA), which was previously contained in a cough/cold product of the company supplied in effervescent-tablet form. The first PPA lawsuits were filed after the U.S. Food and Drug Administration recommended in the fall of 2000 that manufacturers voluntarily cease marketing products containing this active ingredient. Since that time, Bayer and other manufacturers of PPA-containing products, along with several retailers and distributors, have been named in numerous lawsuits in the United States brought by plaintiffs alleging injuries related to the claimed ingestion of PPA. Following the dismissal or withdrawal of many of these lawsuits, fewer than 680 cases remained pending against Bayer as of the end of April 2005. Bayer is the sole manufacturer named as a defendant in approximately 460 cases and co-defendant together with other former manufacturers of PPA-containing products in approximately 220 cases. The majority of these cases are still at an early stage. Further dismissals are therefore possible, particularly should plaintiffs fail to comply with court orders requiring the submission of causative evidence. Currently, approximately 290 appeals have been filed by some of the plaintiffs whose suits were dismissed in the first instance on the grounds of procedural deficiency.

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Three PPA cases against Bayer have gone to trial so far. In the first case, in October 2004, a Texas jury awarded a plaintiff damages amounting to US$ 400,000. Bayer is appealing this decision. In two subsequent cases the juries returned verdicts in Bayer’s favor.

Although Bayer plans to vigorously defend the majority of its PPA cases, there are cases where the company may consider settlement to be appropriate. To date, we have settled several cases without acknowledging liability. We have decided to attempt to settle certain additional cases with sufficiently developed factual records to permit a meaningful assessment. Taking into account the existing insurance coverage, a €16 million charge for settlements and further defense costs was recorded in 2004. Due to the considerable uncertainty associated with these proceedings, it remains impossible to further estimate potential liability with respect to the balance of the pending PPA cases and thus no additional provisions for such potential liabilities have been recorded for them.

Bayer intends to continue to vigorously defend the Lipobay/Baycol and PPA litigation. Since the existing insurance coverage is exhausted, it is possible – depending on the future progress of the litigation – that Bayer could face further payments that are not covered by the accounting measures already taken. We will regularly review the possibility of further accounting measures depending on the progress of the litigation.

Cipro®: 39 putative class action lawsuits, one individual lawsuit and one consumer protection group lawsuit against Bayer involving the drug Cipro® have been filed since July 2000 in the United States. The plaintiffs are suing Bayer and other companies also named as defendants, alleging that a settlement to end patent litigation reached in 1997 between Bayer and Barr Laboratories, Inc. violated antitrust regulations. The plaintiffs claim the alleged violation prevented the marketing of generic ciprofloxacin as of 1997. In particular, they are seeking triple damages under U.S. law. Bayer believes the plaintiffs will not be able to establish that the settlement with Barr was outside of the scope of Bayer’s valid Cipro® patent, which patent has been the subject of a successful re-examination by the U.S. Patent and Trademark Office and of successful defenses in U.S. Federal Courts.

All of the actions pending in federal court were consolidated in federal court in New York in a Multidistrict pre-trial proceeding. On March 31, 2005, this court granted Bayer’s motion for summary judgment and dismissed all of plaintiffs’ claims. This decision is appealable. In addition Bayer is involved in several proceedings pending before various state courts. Bayer believes that it has meritorious defenses to these allegations and will continue to vigorously defend the litigation.

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Rubber, polyester polyols, urethane: Risks also exist in connection with investigations by the E.U. Commission and the U.S. and Canadian antitrust authorities for alleged anti-competitive conduct involving certain products in the rubber field. In two cases Bayer AG has already reached agreements with the U.S. Department of Justice to pay fines, amounting to US$ 66 million for antitrust violations relating to rubber chemicals and approximately US$ 5 million for those relating to acrylonitrile-butadiene rubber. Both these agreements have received court approval and the respective amounts have been paid. Provisions of €50 million were established in 2003 for risks arising out of the E.U. Commission’s investigations, although a reliable estimate cannot yet be made as to the actual amount of any fines.

Bayer Corporation has reached agreement with the U.S. Department of Justice to pay a fine of US$ 33 million for antitrust violations in the United States relating to adipic-based polyester polyols. This fine, for which a provision has been established, requires court approval. A similar investigation is pending in Canada, but it is not currently possible to estimate the amount of any fine that may result.

A number of civil claims for damages have been filed in the United States, and in Canada, against Bayer AG and some of its subsidiaries. These lawsuits, involving allegations of unlawful collusion on prices for certain rubber and polyester polyol product lines, are still at a very early stage.

The financial risk associated with all of the above litigation (with the exception of those criminal proceedings in which fines have already been imposed), including the financial risk of private claims for damages, is currently not quantifiable, so no accounting measures have been taken in this regard. The company expects that, in the course of the above-mentioned regulatory proceedings and civil damages suits, significant expenses will become necessary that may be of material importance to the company.

In the United States, civil actions are also pending involving allegations of unlawful collusion on prices for polyether polyols and other precursors for urethane products. These lawsuits are also at a very early stage.

Subsequent Events

The Annual Stockholders’ Meeting of Bayer AG took place on April 29, 2005. The resolutions adopted are summarized in the Notes to the Interim Report, page 34.

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Bayer Stock

Bayer stock showed a very pleasing trend in the first quarter of 2005. On March 31, 2005 it closed at €25.47, a gain of 9.0 percent from the end of 2004. The DAX and DJ EURO-STOXX 50 performance indices rose by 2.2 and 3.8 percent, respectively, over the same period.

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Bayer Group Consolidated Statements of Income

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Bayer Group Consolidated Balance Sheets

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Bayer Group Consolidated Statements of Cash Flows

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Bayer Group Consolidated Statements of Recognized Income and Expense

Bayer Group Consolidated Statements of Changes in Stockholders’ Equity