Exhibit 99.1
| Investor Contact: | Mark Haden |
| | Bunge Limited |
| | 914-684-3398 |
| | Mark.Haden@Bunge.com |
| | |
| Media Contact: | Stewart Lindsay |
| | Bunge Limited |
| | 914-684-3369 Stewart.Lindsay@Bunge.com |
| | www.bunge.com |
Bunge Reports Fourth Quarter Net Income of $245 Million
White Plains, NY – February 7, 2008 – Bunge Limited (NYSE:BG)
| · | Total segment operating profit increased 77% when compared to the same quarter last year |
| · | Agribusiness benefited from improved global market conditions, posting 14% volume growth in the quarter |
| · | Fertilizer continued to benefit from improved farm economics and high international prices |
(In millions, except per share data and percentages)
| | | Quarter Ended | | Year Ended | |
| | | 12/31/07 | | 12/31/06 | | % Change | | 12/31/07 | | 12/31/06 | | % Change | |
Volumes (metric tons) | | | 34.1 | | | 30.8 | | | 11 | % | | 137.0 | | | 120.1 | | | 14 | % |
Net sales | | $ | 14,018 | | $ | 7,683 | | | 82 | % | $ | 44,804 | | $ | 26,274 | | | 71 | % |
Total segment operating profit (1,2) | | $ | 340 | | $ | 192 | | | 77 | % | $ | 1,162 | | $ | 443 | | | 162 | % |
Net income (2) | | $ | 245 | | $ | 264 | | | (7 | )% | $ | 778 | | $ | 521 | | | 49 | % |
Earnings per common share - diluted (3) | | $ | 1.82 | | $ | 2.12 | | | (14 | )% | $ | 5.95 | | $ | 4.28 | | | 39 | % |
| (1) | Total segment operating profit is the consolidated segment operating profit of Bunge’s segments. Total segment operating profit is a non-GAAP measure and is not intended to replace income from operations before income tax, the most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to income from operations before income tax, is included in the tables attached to this press release. |
| (2) | Bunge’s results included certain gains and charges that may be of interest to investors. See the Additional Financial Information section included in the tables attached to this press release for more information. |
| (3) | See Note 1 to the consolidated statements of income attached to this press release for information on the calculation of diluted earnings per share. |
Alberto Weisser, Bunge’s Chairman and Chief Executive Officer stated, “2007 was an outstanding year. Bunge leveraged its integrated, global operations, leading positions in key markets and good teamwork to produce record results.”
“In 2007, the agribusiness and fertilizer markets were characterized by improved structural conditions. Demand for Bunge’s end products grew and farm economics in Brazil strengthened. Our risk management strategies performed well in a dynamic market, and we were well-positioned to serve customers during a period marked by significant supply dislocations.
“The conditions that made 2007 compelling should continue in 2008. The USDA forecasts higher global protein meal and vegetable oil demand, as well as strong demand for and trade in other agricultural commodities. Crop prices should remain high, promoting input purchases by farmers. Not all market forces are working in Bunge’s favor, however. For example, the strong real will increase local costs in our Brazilian businesses, and higher input costs could pressure margins in fertilizer and edible oils during the year.
“We plan to build on our success by continuing to follow our strategy of investing for growth and efficiency in our core businesses and in complementary value chains. In 2007, we expanded our oilseed processing footprint and launched a regional consumer packaged oil brand in China. We also enhanced processing assets in the Americas and Europe, purchased our first sugarcane mill and established a joint venture with OCP, the Moroccan fertilizer manufacturer, which will provide our business with a valuable supply of fertilizer raw materials and products. Construction on the venture’s production facilities is well underway, and we expect initial phosphoric acid capacity to come online later this year. We are pleased with how our asset network is growing and becoming more balanced across geography and products.”
Agribusiness Operating Profit
Results increased in most regions and areas of the business. Improved performance in South America and North America were driven by higher oilseed processing and grain origination margins and volumes. Higher distribution results were due to strong global demand and improved margins. Risk management strategies performed well during a volatile quarter.
Fourth quarter results included $25 million of impairment and restructuring charges relating to the closure of oilseed processing facilities in Europe and the U.S. The closure of the European processing plant is a continuation of our strategy to improve the efficiency of our asset footprint in Eastern Europe. The U.S. processing facility was older and high-cost. The attached grain elevator will continue to operate.
Fertilizer Operating Profit
The strong performance in fertilizer was due to higher margins, which benefited from higher international fertilizer prices. Selling prices in South America are based on international prices and include the cost of transportation and other import costs. As expected, demand for fertilizer products slowed in the fourth quarter after above trend-line volume growth in the first half of the year, when farmers accelerated purchases because of favorable agricultural commodity prices and concerns about increasing crop input costs.
Fourth quarter results included a $50 million increase in our value-added-tax provision, resulting from a change in tax laws in several Brazilian states that will take effect in 2008 and will make the recoverability of these taxes uncertain.
Edible Oil Products Operating Profit
Improved margins were offset by higher operating expenses, which included investments to grow the business in Asia and Europe.
Fourth quarter results included $29 million of impairment and restructuring charges. These charges primarily relate to the closure of edible oil facilities in Eastern Europe, as well as impairments to goodwill and other intangible assets in India.
Milling Products Operating Profit
Higher raw material and operating costs in wheat milling more than offset improved results in corn milling.
Fourth quarter results included a $13 million impairment charge related to the closure of a wheat milling facility in Brazil. This facility is being replaced by a newer, more efficient facility that will come on-line in 2008.
Financial Costs
Interest expense increased due to higher average borrowings, mostly resulting from the higher prices of agricultural commodity inventories which drove higher average working capital levels.
Foreign exchange gains, incurred primarily on the net U.S. dollar-denominated monetary liability positions of Bunge’s Brazilian subsidiaries, were $39 million in the fourth quarter of 2007. These gains largely offset foreign exchange losses on inventories included in gross profit.
Income Taxes
The effective tax rate for the year ended December 31, 2007 was 26%. For the year ended December 31, 2006, Bunge had a tax benefit of $36 million. The increase in the effective tax rate, excluding the one time items which resulted in the tax benefit in 2006, was primarily due to increases in operating earnings in higher tax jurisdictions.
Minority Interest
Minority interest increased when compared to the same quarter in 2006 due to higher earnings at Fosfertil.
Cash Flow
Cash provided by operations in the fourth quarter of 2007 was $254 million compared to cash provided by operations in the fourth quarter of 2006 of $259 million. For the year ended December 31, 2007, cash used by operations increased to $388 million from $289 million in the same period last year, driven by significant increases in commodity prices.
Jacqualyn Fouse, Chief Financial Officer, stated, “Looking forward, we expect the improved market fundamentals that we experienced in 2007 to continue into 2008, though as previously mentioned, we do see some headwinds. In consideration of this outlook, our 2008 full-year net income guidance is $830 million to $870 million, or $6.01 to $6.30 per share. This fully diluted per share guidance is based on an estimated weighted average of 138 million shares outstanding, which includes assumed dilution relating to our convertible preference shares.”
"Additionally, our 2008 guidance includes the following:
| · | Depreciation, Depletion and Amortization: $450 million to $470 million |
| · | Capital Expenditures (net of asset dispositions): $1 billion to $1.1 billion, of which approximately 30% will be invested in sustaining, maintenance, safety and environmental projects. |
Conference Call and Webcast Details
Bunge Limited's management will host a conference call at 10:00 a.m. EST on Thursday, February 7, 2008, to discuss the company's results.
Additionally, a slide presentation to accompany the discussion of the fourth quarter financial results can be found in the ‘Investor Information’ section of our Web site, www.Bunge.com, under ‘Investor Presentations’.
To listen to the conference call, please dial (877) 718-5111. If you are located outside of the United States or Canada, dial (719) 325-4762. Please dial in five to 10 minutes before the scheduled start time. When prompted, enter confirmation code 7165114. The conference call will also be available live on the company's Web site at www.Bunge.com.
To access the webcast, click the "News and Information" link on the Bunge homepage then select "Webcasts and Upcoming Events". Click the link for the "Q4 2007 Bunge Limited Conference Call," and follow the prompts to join the call. Please go to the Web site at least 15 minutes prior to the call to register and to download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay of the call will be available beginning at 1:00 p.m. EST on February 7, 2008 and continuing through 1:00 p.m. EST on March 8, 2008. To listen to the replay, please dial (888) 203-1112, or, if located outside of the United States or Canada, dial (719) 457-0820. When prompted, enter confirmation code 7165114. A rebroadcast of the conference call will also be available on the company's Web site. To locate the rebroadcast on the Web site, click the "News and Information" link on the Bunge homepage then select "Audio Archives" from the left-hand menu. Select the link for the "Q4 2007 Bunge Limited Conference Call." Follow the prompts to access the replay.
About Bunge Limited
Bunge Limited (www.Bunge.com, NYSE: BG) is a leading global agribusiness and food company founded in 1818 and headquartered in White Plains, New York. Bunge’s over 22,000 employees in over 30 countries enhance lives by improving the global agribusiness and food production chain. The company supplies fertilizer to farmers in South America, originates, transports and processes oilseeds, grains and other agricultural commodities worldwide, produces food products for commercial customers and consumers and supplies raw materials and services to the biofuels industry.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but
rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "will," "expect," "anticipate," "believe," "intend," "estimate," "continue" and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these forward-looking statements. The following important factors, among others, could affect our business and financial performance: our ability to complete, integrate and benefit from acquisitions, divestitures, joint ventures and strategic alliances; estimated demand for the commodities and other products that we sell and use in our business; industry conditions, including the cyclicality of the agribusiness industry and unpredictability of the weather; agricultural, economic and political conditions in the primary markets where we operate; and other economic, business, competitive and/or regulatory factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Additional Financial Information
The following table provides a summary of certain gains and charges that may be of interest to investors. The table includes a description of these items and their effect on total segment operating profit, income from operations before income tax, net income and earnings per share for the quarter and year ended December 31, 2007 and 2006.
(In millions, except per share data) | | Total Segment Operating Profit (Loss) | | | Income (Loss) From Operations Before Income Tax | | | Net Income | | | Earnings Per Share Diluted | |
| Quarter Ended December 31: | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Impairment and restructuring charges (1) | | $ | (67 | ) | | $ | − | | | $ | (67 | ) | | $ | − | | | $ | (51 | ) | | $ | – | | | $ | (0.38 | ) | | $ | – | |
Value-added tax provision (2) | | | (50 | ) | | | − | | | | (50 | ) | | | − | | | | (22 | ) | | | – | | | | (0.16 | ) | | | – | |
Gain on sale of investments (3) | | | 22 | | | | − | | | | 22 | | | | − | | | | 15 | | | | – | | | | 0.11 | | | | – | |
| Reversal of social contribution/ transactional tax provision | | | − | | | | 6 | | | | | | | | 6 | | | | | | | | 2 | | | | – | | | | 0.02 | |
| Total | | $ | (95 | ) | | $ | 6 | | | $ | (95 | ) | | $ | 6 | | | $ | (58 | ) | | $ | 2 | | | $ | 0.43 | | | $ | 0.02 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In millions, except per share data) | | Total Segment Operating Profit | | | Income From Operations Before Income Tax | | | Net Income | | | Earnings Per Share Diluted | |
| Year Ended December 31: | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Impairment and restructuring charges (1) | | $ | (78 | ) | | $ | (24 | ) | | $ | (78 | ) | | $ | (24 | ) | | $ | (59 | ) | | $ | (16 | ) | | $ | (0.45 | ) | | $ | (0.13 | ) |
Value-added tax provision (2) | | | (50 | ) | | | – | | | | (50 | ) | | | – | | | | (22 | ) | | | – | | | | (0.17 | ) | | | – | |
Gain on sale of investments (3) | | | 22 | | | | – | | | | 22 | | | | – | | | | 15 | | | | – | | | | 0.11 | | | | – | |
| Reversal of social contribution/ transactional tax provision | | | − | | | | 18 | | | | − | | | | 18 | | | | − | | | | 8 | | | | − | | | | 0.07 | |
| Litigation settlement | | | − | | | | 6 | | | | – | | | | 6 | | | | – | | | | 4 | | | | – | | | | 0.03 | |
| Total | | $ | (106 | ) | | $ | – | | | $ | (106 | ) | | $ | – | | | $ | (66 | ) | | $ | (4 | ) | | $ | (0.51 | ) | | $ | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Impairment and restructuring pretax charges in the quarter ended December 31, 2007 consisted of $25 million in the agribusiness segment, $29 million in the edible oil products segment, and $13 million in the milling products segment. Impairment and restructuring pretax charges in the year ended December 31, 2007 consisted of $30 million in the agribusiness segment, $35 million in the edible oil products segment and $13 million in the milling products segment. The impairment and restructuring charges for the quarter and year ended December 31, 2007 were recorded in cost of goods sold, other than $11 million of the edible oil products segment total, which was recorded in selling general and administrative expenses. Impairment and restructuring charges in the year ended December 31, 2006 consisted of $20 million in the agribusiness segment and $2 million in the edible oil products segment, which were recorded in cost of goods sold, and $2 million in the fertilizer segment, which was recorded in selling general and administrative expenses. |
| (2) | Value-added-tax provision of $50 million in the quarter and year ended December 31, 2007 in the fertilizer segment resulted from a recent change in tax laws in several Brazilian states that will take effect in 2008, which will make the recoverability of these taxes uncertain. |
| (3) | Gain on sale of investments of $22 million recorded in other income (expense)-net in the quarter and year ended December 31, 2007 resulted from a sale of investment securities. |
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
| | | Quarter Ended December 31, | | | Percent | | Year Ended December 31, | | | Percent |
| | | 2007 | | | 2006 | | | Change | | 2007 | | | 2006 | | | Change |
| | | | | | | | | | | | | | | | | | | |
| Net sales | | $ | 14,018 | | | $ | 7,683 | | | | 82 | % | | $ | 44,804 | | | $ | 26,274 | | | | 71 | % |
| Cost of goods sold | | | (13,242 | ) | | | (7,169 | ) | | | 85 | % | | | (42,289 | ) | | | (24,703 | ) | | | 71 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross profit | | | 776 | | | | 514 | | | | 51 | % | | | 2,515 | | | | 1,571 | | | | 60 | % |
| Selling, general and administrative expenses | | | (434 | ) | | | (278 | ) | | | 56 | % | | | (1,359 | ) | | | (978 | ) | | | 39 | % |
| Interest income | | | 54 | | | | 32 | | | | 69 | % | | | 166 | | | | 119 | | | | 39 | % |
| Interest expense | | | (73 | ) | | | (68 | ) | | | (7 | )% | | | (217 | ) | | | (195 | ) | | | 11 | % |
| Interest expense on readily marketable inventories | | | (29 | ) | | | (18 | ) | | | 61 | % | | | (136 | ) | | | (85 | ) | | | 60 | % |
| Foreign exchange gain (loss) | | | 39 | | | | 24 | | | | | | | | 217 | | | | 59 | | | | | |
| Other income (expense)−net | | | 17 | | | | 24 | | | | (29 | )% | | | 15 | | | | 31 | | | | (52 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income from operations before income tax | | | 350 | | | | 230 | | | | 52 | % | | | 1,201 | | | | 522 | | | | 130 | % |
| Income tax (expense) benefit | | | (89 | ) | | | 69 | | | | | | | | (310 | ) | | | 36 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income from operations after income tax | | | 261 | | | | 299 | | | | (13 | )% | | | 891 | | | | 558 | | | | 60 | % |
| Minority interest | | | (42 | ) | | | (22 | ) | | | 91 | % | | | (146 | ) | | | (60 | ) | | | 143 | % |
| Equity in earnings of affiliates | | | 26 | | | | (13 | ) | | | 300 | % | | | 33 | | | | 23 | | | | 43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | 245 | | | | 264 | | | | (7 | )% | | | 778 | | | | 521 | | | | 49 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Convertible preference share dividends | | | (15 | ) | | | (4 | ) | | | | | | | (40 | ) | | | (4 | ) | | | | |
| Net income available to common shareholders | | $ | 230 | | | $ | 260 | | | | (12 | )% | | $ | 738 | | | $ | 517 | | | | 43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per common share – diluted (Note 1): | | $ | 1.82 | | | $ | 2.12 | | | | (14 | )% | | $ | 5.95 | | | $ | 4.28 | | | | 39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted–average common shares outstanding-diluted (Note 1) | | | 134,501,104 | | | | 124,409,362 | | | | | | | | 130,753,807 | | | | 120,849,357 | | | | | |
| | |
| Note 1: | The dilutive effect of the of 11,661,359 and 8,536,729 weighted average common shares, which would be issuable upon conversion of Bunge’s convertible preference shares, is included in the earnings per common share- diluted calculation for the quarter and year ended December 31, 2007, respectively, because the effect of the conversion would have been dilutive. |
CONSOLIDATED SEGMENT INFORMATION
(In millions, except volumes and percentages)
(Unaudited) (Note 1 and 2)
Set forth below is a summary of certain items in our consolidated statements of income and volumes by reportable segment.
| | | Quarter Ended December 31, | | | Percent | | | Year Ended December 31, | | | Percent |
| | | 2007 | | | 2006 | | | Change | | | 2007 | | | 2006 | | | Change |
| Volumes (in thousands of metric tons): | | | | | | | | | | | | | | | | | | |
| Agribusiness | | | 28,104 | | | | 24,645 | | | | 14 | % | | | 114,365 | | | | 99,801 | | | | 15 | % |
| Fertilizer | | | 3,548 | | | | 3,921 | | | | (10 | )% | | | 13,077 | | | | 11,578 | | | | 13 | % |
| Edible oil products | | | 1,461 | | | | 1,266 | | | | 15 | % | | | 5,530 | | | | 4,777 | | | | 16 | % |
| Milling products | | | 973 | | | | 933 | | | | 4 | % | | | 3,983 | | | | 3,895 | | | | 2 | % |
Total | | | 34,086 | | | | 30,765 | | | | 11 | % | | | 136,955 | | | | 120,051 | | | | 14 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net sales: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 10,481 | | | $ | 5,471 | | | | 92 | % | | $ | 33,877 | | | $ | 18,909 | | | | 79 | % |
| Fertilizer | | | 1,280 | | | | 918 | | | | 39 | % | | | 3,944 | | | | 2,602 | | | | 52 | % |
| Edible oil products | | | 1,840 | | | | 1,043 | | | | 76 | % | | | 5,622 | | | | 3,798 | | | | 48 | % |
| Milling products | | | 417 | | | | 251 | | | | 66 | % | | | 1,361 | | | | 965 | | | | 41 | % |
Total | | $ | 14,018 | | | $ | 7,683 | | | | 82 | % | | $ | 44,804 | | | $ | 26,274 | | | | 71 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross profit: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 496 | | | $ | 280 | | | | 77 | % | | $ | 1,407 | | | $ | 818 | | | | 72 | % |
| Fertilizer (Note 3) | | | 157 | | | | 125 | | | | 26 | % | | | 639 | | | | 326 | | | | 96 | % |
| Edible oil products | | | 102 | | | | 69 | | | | 48 | % | | | 334 | | | | 289 | | | | 16 | % |
| Milling products | | | 21 | | | | 40 | | | | (48 | )% | | | 135 | | | | 138 | | | | (2 | )% |
Total | | $ | 776 | | | $ | 514 | | | | 51 | % | | $ | 2,515 | | | $ | 1,571 | | | | 60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Selling, general and administrative expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | (210 | ) | | $ | (156 | ) | | | 35 | % | | $ | (661 | ) | | $ | (516 | ) | | | 28 | % |
| Fertilizer | | | (85 | ) | | | (49 | ) | | | 73 | % | | | (284 | ) | | | (190 | ) | | | 49 | % |
| Edible oil products | | | (105 | ) | | | (55 | ) | | | 91 | % | | | (316 | ) | | | (207 | ) | | | 53 | % |
| Milling products | | | (34 | ) | | | (18 | ) | | | 89 | % | | | (98 | ) | | | (65 | ) | | | 51 | % |
Total | | $ | (434 | ) | | $ | (278 | ) | | | 56 | % | | $ | (1,359 | ) | | $ | (978 | ) | | | 39 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign exchange gain (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 48 | | | $ | 8 | | | | | | | $ | 136 | | | $ | (12 | ) | | | | |
| Fertilizer | | | 17 | | | | 9 | | | | | | | | 114 | | | | 47 | | | | | |
| Edible oil products | | | 3 | | | | 3 | | | | | | | | 6 | | | | 5 | | | | | |
| Milling products | | | (1 | ) | | | – | | | | | | | | (4 | ) | | | – | | | | | |
Total | | $ | 67 | | | $ | 20 | | | | | | | $ | 252 | | | $ | 40 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 15 | | | $ | 7 | | | | 114 | % | | $ | 38 | | | $ | 27 | | | | 41 | % |
| Fertilizer | | | 16 | | | | 14 | | | | 14 | % | | | 64 | | | | 58 | | | | 10 | % |
| Edible oil products | | | 2 | | | | – | | | | 100 | % | | | 4 | | | | 2 | | | | 100 | % |
| Milling products | | | – | | | | 1 | | | | (100 | )% | | | 1 | | | | 3 | | | | (67 | )% |
Total | | $ | 33 | | | $ | 22 | | | | 50 | % | | $ | 107 | | | $ | 90 | | | | (19 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | (85 | ) | | $ | (64 | ) | | | 33 | % | | $ | (296 | ) | | $ | (203 | ) | | | 46 | % |
| Fertilizer | | | (2 | ) | | | (11 | ) | | | (82 | )% | | | (16 | ) | | | (39 | ) | | | (59 | )% |
| Edible oil products | | | (15 | ) | | | (9 | ) | | | 67 | % | | | (38 | ) | | | (31 | ) | | | 23 | % |
| Milling products | | | – | | | | (2 | ) | | | (100 | )% | | | (3 | ) | | | (7 | ) | | | (57 | )% |
Total | | $ | (102 | ) | | $ | (86 | ) | | | 19 | % | | $ | (353 | ) | | $ | (280 | ) | | | 26 | % |
| | | Quarter Ended December 31, | | | Percent | | | Year Ended December 31, | | | Percent |
| | | 2007 | | | 2006 | | | Change | | | 2007 | | | 2006 | | | Change |
| Segment operating profit (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 264 | | | $ | 75 | | | | 252 | % | | $ | 624 | | | $ | 114 | | | | 447 | % |
| Fertilizer | | | 103 | | | | 88 | | | | 17 | % | | | 517 | | | | 202 | | | | 156 | % |
| Edible oil products | | | (13 | ) | | | 8 | | | | (263 | )% | | | (10 | ) | | | 58 | | | | (117 | )% |
| Milling products | | | (14 | ) | | | 21 | | | | (167 | )% | | | 31 | | | | 69 | | | | (55 | )% |
Total (Note 4) | | $ | 340 | | | $ | 192 | | | | 77 | % | | $ | 1,162 | | | $ | 443 | | | | 162 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income from operations before income tax : | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment operating profit | | $ | 340 | | | $ | 192 | | | | 77 | % | | $ | 1,162 | | | $ | 443 | | | | 162 | % |
| Unallocated income - net (Note 5) | | | 10 | | | | 38 | | | | (74 | )% | | | 39 | | | | 79 | | | | (51 | )% |
| Income from operations before income tax | | $ | 350 | | | $ | 230 | | | | 52 | % | | $ | 1,201 | | | $ | 522 | | | | 130 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Depreciation, depletion and amortization: | | | | | | | | | | | | | | | | | | | | | | | | |
| Agribusiness | | $ | 49 | | | $ | 35 | | | | 40 | % | | | 157 | | | $ | 126 | | | | 25 | % |
| Fertilizer | | | 44 | | | | 33 | | | | 33 | % | | | 151 | | | | 130 | | | | 16 | % |
| Edible oil products | | | 17 | | | | 13 | | | | 31 | % | | | 61 | | | | 53 | | | | 15 | % |
| Milling products | | | 4 | | | | 4 | | | | – | % | | | 16 | | | | 15 | | | | 7 | % |
Total | | $ | 114 | | | $ | 85 | | | | 34 | % | | $ | 385 | | | $ | 324 | | | | 19 | % |
| Note 1: | In the first quarter of 2007, Bunge reclassified certain product lines from the edible oil products segment to the agribusiness segment. As a result, amounts for the quarter and year ended December 31, 2006 have been reclassified to conform to the current period presentation. |
| Note 2: | Impairment and restructuring pretax charges in the quarter ended December 31, 2007 consisted of $25 million in the agribusiness segment, $29 million in the edible oil products segment, and $13 million in the milling products segment. Impairment and restructuring pretax charges in the year ended December 31, 2007 consisted of $30 million in the agribusiness segment, $35 million in the edible oil products segment and $13 million in the milling products segment. The impairment and restructuring charges for the quarter and year ended December 31, 2007 were recorded in cost of goods sold, other than $11 million of the edible oil products segment total, which was recorded in selling general and administrative expenses. Impairment and restructuring charges in the year ended December 31, 2006 consisted of $20 million in the agribusiness segment and $2 million in the edible oil products segment, which were recorded in cost of goods sold, and $2 million in the fertilizer segment, which was recorded in selling general and administrative expenses. |
| Note 3: | Value-added-tax provision of $50 million in the quarter and year ended December 31, 2007 in the fertilizer segment resulted from a recent change in tax laws in several Brazilian states that will take effect in 2008, which will make the recoverability of these taxes uncertain. |
| Note 4: | Total segment operating profit is the consolidated segment operating profit of all of Bunge’s operating segments. Total segment operating profit is a non-GAAP measure and is not intended to replace income from operations before income tax, the most directly comparable GAAP measure. The information required by Regulation G under the Securities Exchange Act of 1934, including the reconciliation to income from operations before income tax, is included under the caption “Reconciliation of Non-GAAP Measures”. |
| Note 5: | Includes interest income, interest expense and foreign exchange gains and losses and other income and expenses not directly attributable to Bunge’s operating segments. |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 981 | | | $ | 365 | |
| Trade accounts receivable | | | 2,541 | | | | 1,879 | |
| Inventories | | | 5,924 | | | | 3,684 | |
| Deferred income taxes | | | 211 | | | | 149 | |
| Other current assets | | | 4,886 | | | | 2,316 | |
| Total current assets | | | 14,543 | | | | 8,393 | |
| | | | | | | | | |
| Property, plant and equipment, net | | | 4,216 | | | | 3,446 | |
| Goodwill | | | 377 | | | | 236 | |
| Other intangible assets, net | | | 116 | | | | 99 | |
| Investments in affiliates | | | 706 | | | | 649 | |
| Deferred income taxes | | | 903 | | | | 714 | |
| Other non-current assets | | | 1,155 | | | | 810 | |
| Total assets | | $ | 22,016 | | | $ | 14,347 | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Short-term debt | | $ | 590 | | | $ | 454 | |
| Current portion of long-term debt | | | 522 | | | | 156 | |
| Trade accounts payable | | | 4,061 | | | | 2,328 | |
| Deferred income taxes | | | 173 | | | | 54 | |
| Other current liabilities | | | 3,513 | | | | 1,523 | |
| Total current liabilities | | | 8,859 | | | | 4,515 | |
| | | | | | | | | |
| Long-term debt | | | 3,435 | | | | 2,874 | |
| Deferred income taxes | | | 149 | | | | 180 | |
| Other non-current liabilities | | | 876 | | | | 700 | |
| Minority interest in subsidiaries | | | 752 | | | | 410 | |
| Shareholders’ equity | | | 7,945 | | | | 5,668 | |
| Total liabilities and shareholders’ equity | | $ | 22,016 | | | $ | 14,347 | |
| | | | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| | | Year Ended December 31, | |
| | | 2007 | | | 2006 | |
| OPERATING ACTIVITIES | | | | | | |
| Net income | | $ | 778 | | | $ | 521 | |
| Adjustments to reconcile net income to cash used for operating activities: | | | | | | | | |
| Foreign exchange gain on debt | | | (285 | ) | | | (175 | ) |
| Impairment of assets | | | 70 | | | | 20 | |
| Bad debt expense | | | 48 | | | | 41 | |
| Depreciation, depletion and amortization | | | 385 | | | | 324 | |
| Stock-based compensation expense | | | 48 | | | | 19 | |
| Deferred income taxes | | | (62 | ) | | | (191 | ) |
| Gain on sale of assets | | | (22 | ) | | | (36 | ) |
| (Increase) decrease in the allowance for recoverable taxes | | | (47 | ) | | | 5 | |
| Minority interest | | | 146 | | | | 60 | |
| Equity in earnings of affiliates | | | (33 | ) | | | (23 | ) |
| Changes in operating assets and liabilities, excluding the effects of acquisitions: | | | | | | | | |
| Trade accounts receivable | | | (319 | ) | | | (69 | ) |
| Inventories | | | (1,743 | ) | | | (729 | ) |
| Prepaid commodity purchase contracts | | | (184 | ) | | | (88 | ) |
| Secured advances to suppliers | | | 207 | | | | 256 | |
| Trade accounts payable | | | 1,231 | | | | 365 | |
| Unrealized net gain on derivative contracts | | | (530 | ) | | | (184 | ) |
| Margin deposits | | | (175 | ) | | | (85 | ) |
| Other – net | | | 99 | | | | (320 | ) |
| Cash used for operating activities | | | (388 | ) | | | (289 | ) |
| | | | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | |
| Payments made for capital expenditures | | | (667 | ) | | | (503 | ) |
| Investments in affiliates | | | (39 | ) | | | (91 | ) |
| Acquisitions of businesses (net of cash acquired) and intangible assets | | | (223 | ) | | | (74 | ) |
| Proceeds from disposal of property, plant and equipment | | | 55 | | | | 49 | |
| Related party loans | | | (22 | ) | | | (21 | ) |
| Return of capital from affiliate | | | – | | | | 18 | |
| Proceeds from sale of investments | | | 23 | | | | 11 | |
| Cash used for investing activities | | | (873 | ) | | | (611 | ) |
| | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | |
| Net change in short-term debt | | | 95 | | | | 11 | |
| Proceeds from long-term debt | | | 2,086 | | | | 488 | |
| Repayments of long-term debt | | | (1,203 | ) | | | (200 | ) |
| Proceeds from sale of preference shares | | | 845 | | | | 677 | |
| Proceeds from sale of common shares | | | 32 | | | | 16 | |
| Dividends paid to preference shareholders | | | (34 | ) | | | – | |
| Dividends paid to common shareholders | | | (80 | ) | | | (74 | ) |
| Dividends paid to minority interest | | | (18 | ) | | | (27 | ) |
| Other | | | 95 | | | | – | |
| Cash provided by financing activities | | | 1,818 | | | | 891 | |
| Effect of exchange rate changes on cash and cash equivalents | | | 59 | | | | 20 | |
| | | | | | | | | |
| Net increase in cash and cash equivalents | | | 616 | | | | 11 | |
| Cash and cash equivalents, beginning of period | | | 365 | | | | 354 | |
| Cash and cash equivalents, end of period | | $ | 981 | | | $ | 365 | |
Reconciliation of Non-GAAP Measures
This earnings release contains total segment operating profit, net financial debt and net financial debt less readily marketable inventories, which are “non-GAAP financial measures” as this term is defined in Regulation G of the Securities Exchange Act of 1934. In accordance with Regulation G, Bunge has reconciled these non-GAAP financial measures to the most directly comparable U.S. GAAP measures.
Total Segment Operating Profit
Total segment operating profit, which is the consolidated segment operating profit of all of Bunge’s operating segments, is Bunge’s consolidated income from operations before income tax that includes interest income of each segment and an allocated portion of the foreign exchange gains and losses and of interest expense relating to debt financing operating working capital, including readily marketable inventories.
Total segment operating profit is a non-GAAP financial measure and is not intended to replace income from operations before income tax, the most directly comparable GAAP financial measure. Total segment operating profit is a key performance measurement used by Bunge’s management to evaluate whether operating activities cover the financing costs of its business. Bunge believes total segment operating profit is a more complete measure of its operating profitability, since it allocates foreign exchange gains and losses and the cost of debt financing working capital to the appropriate operating segments. Additionally, Bunge believes total segment operating profit assists investors by allowing them to evaluate changes in the operating results of its portfolio of businesses before non-operating factors that affect net income. Total segment operating profit is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to income from operations before income tax or any other measure of consolidated operating results under U.S. GAAP.
Below is a reconciliation of income from operations before income tax to total segment operating profit:
| | | Quarter Ended December 31, | | | Year Ended December 31, | |
(In millions) | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Income from operations before income tax | | $ | 350 | | | $ | 230 | | | $ | 1,201 | | | $ | 522 | |
Unallocated income - net (1) | | | (10 | ) | | | (38 | ) | | | (39 | ) | | | (79 | ) |
| Total segment operating profit | | $ | 340 | | | $ | 192 | | | $ | 1,162 | | | $ | 443 | |
| | | | |
| (1) | Includes interest income, interest expense and foreign exchange gains and losses and other income and expenses not directly attributable to Bunge’s operating segments. |
Net Financial Debt
Net financial debt is the sum of short-term debt, current maturities of long-term debt and long-term debt, less cash and cash equivalents and marketable securities. Net financial debt is presented because management believes it represents a meaningful measure of Bunge’s leverage capacity and solvency. Net financial debt is not a measure of solvency under U.S. GAAP and should not be considered as an alternative to total debt as a measure of solvency.
Net financial debt less readily marketable inventories (RMI), or net financial debt less RMI, is the sum of short-term debt, current maturities of long-term debt and long-term debt, less cash and cash equivalents, marketable securities and readily marketable inventories. Net financial debt less RMI is presented because management believes it represents a more complete picture of Bunge’s leverage capacity and solvency since it adjusts for readily marketable inventories. Readily marketable inventories are agricultural inventories that are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms. Net financial debt less RMI is not a measure of leverage capacity and solvency under U.S. GAAP and should not be considered as an alternative to total debt as a measure of solvency.
Below is a reconciliation of total long-term and short-term debt to net financial debt and to net financial debt less readily marketable inventories:
| | | December 31, | | | December 31, | |
(In millions) | | 2007 | | | 2006 | |
| Short-term debt | | $ | 590 | | | $ | 454 | |
| Long-term debt, including current portion | | | 3,957 | | | | 3,030 | |
| Total debt | | | 4,547 | | | | 3,484 | |
| Less: | | | | | | | | |
Cash and cash equivalents | | | 981 | | | | 365 | |
Marketable securities | | | 5 | | | | 3 | |
| Net financial debt | | | 3,561 | | | | 3,116 | |
| Less: Readily marketable inventories | | | 3,358 | | | | 2,325 | |
| Net financial debt less readily marketable inventories | | $ | 203 | | | $ | 791 | |
| | | | | | | | | |
