CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Millions, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales | $10,345 | $9,198 |
Cost of goods sold | (9,800) | (9,063) |
Gross profit | 545 | 135 |
Selling, general and administrative expenses | (347) | (294) |
Interest income | 19 | 36 |
Interest expense | (78) | (67) |
Foreign exchange losses | (50) | (19) |
Other income (expense) - net | (7) | |
Income (loss) from operations before income tax | 89 | (216) |
Income tax (expense) benefit | (9) | 34 |
Income (loss) from operations after income tax | 80 | (182) |
Equity in earnings of affiliates | 6 | |
Net income (loss) | 80 | (176) |
Net income attributable to noncontrolling interest | (17) | (19) |
Net income (loss) attributable to Bunge | 63 | (195) |
Convertible preference share dividends | (19) | (19) |
Net income (loss) available to Bunge common shareholders | $44 | ($214) |
Earnings (loss) per common share - basic (Note 18) | ||
Earnings (loss) to Bunge common shareholders (in dollars per share) | 0.31 | -1.76 |
Earnings (loss) per common share - diluted (Note 18) | ||
Earnings (loss) to Bunge common shareholders (in dollars per share) | 0.31 | -1.76 |
Dividends per common share (in dollars per share) | 0.21 | 0.19 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Current assets: | ||
Cash and cash equivalents | $473 | $553 |
Trade accounts receivable (less allowance of $198 and $192 ) | 2,368 | 2,363 |
Inventories (Note 5) | 3,890 | 4,862 |
Deferred income taxes | 244 | 506 |
Current assets held for sale (Note 4) | 1,055 | |
Other current assets (Note 6) | 3,327 | 3,499 |
Total current assets | 11,357 | 11,783 |
Property, plant and equipment, net | 4,653 | 5,347 |
Goodwill (Note 7) | 991 | 427 |
Other intangible assets, net (Note 8) | 205 | 170 |
Investments in affiliates | 586 | 622 |
Deferred income taxes | 948 | 979 |
Non-current assets held for sale (Note 4) | 1,964 | |
Other non-current assets | 1,846 | 1,958 |
Total assets | 22,550 | 21,286 |
Current liabilities: | ||
Short-term debt | 355 | 166 |
Current portion of long-term debt | 288 | 31 |
Trade accounts payable | 3,285 | 3,275 |
Deferred income taxes | 95 | 100 |
Current liabilities held for sale (Note 4) | 533 | |
Other current liabilities (Note 10) | 2,373 | 2,635 |
Total current liabilities | 6,929 | 6,207 |
Long-term debt | 3,544 | 3,618 |
Deferred income taxes | 112 | 183 |
Non-current liabilities held for sale (Note 4) | 308 | |
Other non-current liabilities | 784 | 913 |
Commitments and contingencies (Note 15) | ||
Shareholders' equity: | ||
Common shares, par value $.01; authorized - 400,000,000 shares; issued and outstanding: 2010 - 144,152,871 shares, 2009 134,096,906 -shares | 1 | 1 |
Additional paid-in capital | 4,196 | 3,625 |
Retained earnings | 4,008 | 3,996 |
Accumulated other comprehensive income (loss) | 229 | 319 |
Total Bunge shareholders' equity | 9,987 | 9,494 |
Noncontrolling interest | 886 | 871 |
Total equity | 10,873 | 10,365 |
Total liabilities and shareholders' equity | 22,550 | 21,286 |
Mandatory convertible preference shares | ||
Shareholders' equity: | ||
Preference shares - Mandatory convertible and Convertible perpetual | 863 | 863 |
Convertible perpetual preference shares | ||
Shareholders' equity: | ||
Preference shares - Mandatory convertible and Convertible perpetual | $690 | $690 |
1_CONDENSED CONSOLIDATED BALANC
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
Trade accounts receivable, allowance (in dollars) | $198 | $192 |
Common shares, par value (in dollars per share) | 0.01 | 0.01 |
Common shares authorized | 400,000,000 | 400,000,000 |
Common shares issued | 144,152,871 | 134,096,906 |
Common shares outstanding | 144,152,871 | 134,096,906 |
Mandatory convertible preference shares | ||
Preference shares, par value (in dollars per share) | 0.01 | 0.01 |
Preference shares authorized | 862,500 | 862,500 |
Preference shares issued | 862,455 | 862,455 |
Preference shares outstanding | 862,455 | 862,455 |
Preference shares liquidation preference (in dollars per share) | $1,000 | $1,000 |
Convertible perpetual preference shares | ||
Preference shares, par value (in dollars per share) | 0.01 | 0.01 |
Preference shares authorized | 6,900,000 | 6,900,000 |
Preference shares issued | 6,900,000 | 6,900,000 |
Preference shares outstanding | 6,900,000 | 6,900,000 |
Preference shares liquidation preference (in dollars per share) | $100 | $100 |
2_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
OPERATING ACTIVITIES | ||
Net income (loss) | $80 | ($176) |
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: | ||
Foreign exchange loss on debt | 93 | 120 |
Impairment of assets | 12 | |
Bad debt expense | 11 | 8 |
Depreciation, depletion and amortization | 102 | 95 |
Stock-based compensation expense | 6 | 10 |
Recoverable taxes provision | 4 | 15 |
Deferred income taxes | (39) | (133) |
Equity in earnings of affiliates | (6) | |
Changes in operating assets and liabilities, excluding the effects of acquisitions: | ||
Trade accounts receivable | (380) | 374 |
Inventories | 632 | 603 |
Prepaid commodity purchase contracts | (25) | (34) |
Secured advances to suppliers | 31 | 44 |
Trade accounts payable | 434 | (1,155) |
Advances on sales | 65 | (16) |
Unrealized net gain/loss on derivative contracts | (304) | 265 |
Margin deposits | 166 | 17 |
Accrued liabilities | 145 | (136) |
Other-net | (273) | (258) |
Cash provided by (used for) operating activities | 760 | (363) |
INVESTING ACTIVITIES | ||
Payments made for capital expenditures | (287) | (112) |
Acquisitions of businesses (net of cash acquired) | (133) | (4) |
Related party loans | (15) | (52) |
Proceeds from investments | 52 | 30 |
Proceeds from disposal of property, plant and equipment | 2 | 1 |
Change in restricted cash | (28) | |
Cash used for investing activities | (381) | (165) |
FINANCING ACTIVITIES | ||
Net change in short-term debt with maturities of 90 days or less | 36 | (38) |
Proceeds from short-term debt with maturities greater than 90 days | 170 | 507 |
Repayments of short-term debt with maturities greater than 90 days | (514) | (328) |
Proceeds from long-term debt | 129 | 98 |
Repayment of long-term debt | (107) | (133) |
Proceeds from sale of common shares | 1 | |
Dividends paid to preference shareholders | (19) | (19) |
Dividends paid to common shareholders | (30) | (23) |
Dividends paid to noncontrolling interest | (8) | |
Other | 13 | (26) |
Cash (used for) provided by financing activities | (321) | 30 |
Effect of exchange rate changes on cash and cash equivalents | (8) | |
Net increase (decrease) in cash and cash equivalents | 58 | (506) |
Cash related to assets held for sale | (138) | |
Cash and cash equivalents, beginning of period | 553 | 1,004 |
Cash and cash equivalents, end of period | $473 | $498 |
3_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | ||||||||
In Millions, except Share data | Convertible Preference Shares
| Common Shares
| Additional Paid-in Capital
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Non -Controlling Interest
| Comprehensive Income (Loss)
| Total
|
Balance at Dec. 31, 2008 | $1,553 | $1 | $2,849 | $3,844 | ($811) | $692 | $8,128 | |
Balance (in shares) at Dec. 31, 2008 | 7,762,455 | 121,632,456 | ||||||
Comprehensive (loss) income: | ||||||||
Net (loss) income | (195) | 19 | (176) | (176) | ||||
Other comprehensive income (loss): | ||||||||
Foreign exchange translation adjustment, net of tax expense | (76) | (12) | (88) | (88) | ||||
Unrealized gains on commodity futures and foreign exchange contracts, net of tax expense | 14 | 14 | 14 | |||||
Reclassification of realized net (gains) losses, net of tax | (1) | (1) | (1) | |||||
Pension adjustment, net of tax benefit | (4) | (6) | (10) | (10) | ||||
Total comprehensive loss | (67) | (18) | (261) | |||||
Dividends on common shares | (46) | (46) | ||||||
Dividends on preference shares | (19) | (19) | ||||||
Dividends paid to noncontrolling interest on subsidiary common stock | (8) | (8) | ||||||
Return of capital to noncontrolling interest | (43) | (43) | ||||||
Capital contribution from noncontrolling interest | 23 | 23 | ||||||
Purchase of additional shares in subsidiary from noncontrolling interest | (4) | (4) | ||||||
Stock-based compensation expense | 10 | 10 | ||||||
Issuance of common shares: | ||||||||
-stock options and award plans, net of shares withheld for taxes | (4) | (4) | ||||||
-stock options and award plans, net of shares withheld for taxes (in shares) | 376,293 | |||||||
Balance at Mar. 31, 2009 | 1,553 | 1 | 2,851 | 3,584 | (878) | 665 | 7,776 | |
Balance (in shares) at Mar. 31, 2009 | 7,762,455 | 122,008,749 | ||||||
Balance at Dec. 31, 2009 | 1,553 | 1 | 3,625 | 3,996 | 319 | 871 | 10,365 | |
Balance (in shares) at Dec. 31, 2009 | 7,762,455 | 134,096,906 | ||||||
Comprehensive (loss) income: | ||||||||
Net (loss) income | 63 | 17 | 80 | 80 | ||||
Other comprehensive income (loss): | ||||||||
Foreign exchange translation adjustment, net of tax expense | (96) | (18) | (114) | (114) | ||||
Unrealized gains on commodity futures and foreign exchange contracts, net of tax expense | 3 | 3 | 3 | |||||
Reclassification of realized net (gains) losses, net of tax | 1 | 1 | 1 | |||||
Other postretirement healthcare subsidy tax deduction adjustment | 2 | 2 | 2 | |||||
Total comprehensive loss | (90) | (1) | (28) | |||||
Dividends on common shares | (32) | (32) | ||||||
Dividends on preference shares | (19) | (19) | ||||||
Capital contribution from noncontrolling interest | 13 | 13 | ||||||
Initial consolidation of subsidiary | 3 | 3 | ||||||
Stock-based compensation expense | 6 | 6 | ||||||
Issuance of common shares: | ||||||||
Business acquisition (Note 3) | 570 | 570 | ||||||
Business acquisition (in shares) (Note 3) | 9,718,632 | |||||||
-stock options and award plans, net of shares withheld for taxes | (5) | (5) | ||||||
-stock options and award plans, net of shares withheld for taxes (in shares) | 337,333 | |||||||
Balance at Mar. 31, 2010 | $1,553 | $1 | $4,196 | $4,008 | $229 | $886 | $10,873 | |
Balance (in shares) at Mar. 31, 2010 | 7,762,455 | 144,152,871 |
4_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) (USD $) | ||
In Millions | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||
Foreign exchange translation adjustment, tax expense | $0 | $0 |
Unrealized gains on commodity futures and foreign exchange contracts, tax expense | 1 | 8 |
Reclassification of realized net (gains) losses, tax | (1) | 1 |
Pension adjustment, tax benefit | $5 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | |
3 Months Ended
Mar. 31, 2010 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Bunge Limited and its subsidiaries (Bunge) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and the instructions to Form10-Q and Article10 of RegulationS-X of the Securities Exchange Act of 1934, as amended (Exchange Act). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The consolidated balance sheet at December31, 2009 has been derived from Bunges audited consolidated financial statements at that date. Operating results for the three months ended March31, 2010 are not necessarily indicative of the results to be expected for the year ending December31, 2010. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December31, 2009, forming part of Bunges 2009 Annual Report on Form10-K filed with the Securities and Exchange Commission (SEC) on March1, 2010. Reclassifications Certain reclassifications related to Bunges change in segments were made to the prior period condensed consolidated financial statements to conform to the current period presentation (see Note 19 of the notes to the condensed consolidated financial statements). |
ADOPTION OF NEW ACCOUNTING PRON
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS | |
3 Months Ended
Mar. 31, 2010 | |
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS | |
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS | 2. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Amendment to Consolidation In June2009, the FASB issued a standard that requires an enterprise to (1)determine whether an entity is a variable interest entity (VIE), (2)determine whether the enterprise has a controlling financial interest indicating it is a primary beneficiary of a VIE, which would result in the enterprise being required to consolidate the VIE in its financial statements, and (3)provide enhanced disclosures about the enterprises involvement in VIEs. As a result of the adoption of this standard on January1, 2010, Bunge consolidated one of its agribusiness joint ventures (see Note 17 of notes to the condensed consolidated financial statements). Accounting for Transfers of Financial Assets In June2009, the FASB issued a standard that amended a previously issued standard to improve the information reported in financial statements related to the transfer of financial assets and the effects of the transfers of such assets on the financial position, results from operations and cash flows of the transferor and a transferors continuing involvement, if any, with transferred financial assets. In addition, the amendment limits the circumstances in which a financial asset or a portion of a financial asset should be derecognized in the financial statements of the transferor when the transferor has not transferred the entire original financial asset. Upon adoption of this standard on January1, 2010, all trade accounts receivables sold after that date under Bunges accounts receivable securitization programs (the securitization programs) are included in trade accounts receivable and the amounts outstanding under the securitization programs ($8 million at March31, 2010) are accounted for as secured borrowings and are reflected as short-term debt on Bunges condensed consolidated balance sheet. In addition, while Bunge is analyzing potential changes in the arrangements under the securitization programs, Bunge reduced its utilization of the securitization programs during the three months ended March31, 2010. As a result, the adoption of this standard did not have a material impact on Bunges financial position, results from operations or cash flows. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | |
3 Months Ended
Mar. 31, 2010 | |
BUSINESS ACQUISITIONS | |
BUSINESS ACQUISITIONS | 3. BUSINESS ACQUISITIONS Moema Acquisition In February2010, Bunge acquired a 100% interest in five Brazilian sugarcane mills in So Paulo and Minas Gerais states that were formerly part of the Moema Group through the acquisition of Usina Moema Patricpacoes S.A. (Moema Par) and remaining interests in four mills that were not wholly-owned by Moema Par. We collectively refer to the acquired entities as Moema. The purchase consideration for the Moema acquisition was as follows: (US$in millions) Fair value of Bunge Limited common shares issued $570 Cash paid 51 Contingent purchase price at fair value 27 Total purchase price $648 Bunge issued 9,718,632 of its common shares at the closing of the transaction with a fair value of $570 million and paid 97 million Brazilian reais in cash, which equated to approximately $51 million. In addition, included in other current liabilities in the condensed consolidated balance sheet at March31, 2010 is $27 million representing a contingent liability pending determination of a post-closing purchase price adjustment, which is based on working capital and net debt of the acquired companies at closing under Brazilian generally accepted accounting principles. The final purchase price adjustment is expected to be settled in the second quarter of 2010. Acquisition related expenses were $11 million and are included in selling, general and administrative expenses in the condensed consolidated statements of income for the three months ended March31, 2010. The table below includes Bunges preliminary assessment of the fair values of assets and liabilities acquired and related goodwill: (US$in millions) Assets acquired: Cash $ 3 Inventories 184 Other current assets 64 Property, plant and equipment 642 Intangible assets 44 Other long-term assets 100 Total assets 1,037 Liabilities acquired: Short-term debt (378) Other current liabilities (349) Long-term debt (177) Other long-term liabilities (30) Total liabilities (934) Goodwill 545 Total purchase price $ 648 Intangible assets consist of the following: Useful Life (US$in millions) Land lease agreements $43 7 years Other 1 2-20 years Total $44 The fair value assigned to intangible assets associated with land lease agreements for the production of sugarcane was determined using the income approach. The fair value of the other intangibles was primarily determined using the market approach. The intangible assets have no expected residual value at the end of their useful lives and are subject to amortization on a straight-line basis. The fair values of tangible assets were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued. None of the acquired assets or liabilities will be measured at fair value on a recurring basis in periods subsequent to the initial recognition. Moema is a party to a number of claims and lawsuits, primarily civil, labor and environmental claims arising |
BUSINESS DIVESTITURE
BUSINESS DIVESTITURE | |
3 Months Ended
Mar. 31, 2010 | |
BUSINESS DIVESTITURE | |
BUSINESS DIVESTITURE | 4. BUSINESS DIVESTITURE In January 2010, Bunge and two of its wholly owned subsidiaries entered into a definitive agreement (the Agreement) with ValeS.A., a Brazil-based global mining company (Vale), and an affiliate of Vale, pursuant to which Vale will acquire Bunges fertilizer nutrients assets in Brazil, including its interest in Fertilizantes FosfatadosS.A. (Fosfertil), for $3.8billion in cash. The consideration is subject to a post-closing adjustment based on changes in working capital and net debt, as provided in the Agreement. The transaction is expected to close in the second quarter of 2010. All assets and liabilities that are subject to the Agreement were classified as held for sale at March31, 2010. The major classes of assets and liabilities held for sale included in our condensed consolidated balance sheet at March31, 2010 are as follows: (US$in millions) March31, 2010 ASSETS Cash $ 138 Receivables, net 111 Inventories 421 Deferred income taxes 264 Other current assets 121 Total current assets held for sale 1,055 Property, plant and equipment, net 1,516 Other intangible assets, net 9 Investments in affiliates 31 Deferred income taxes 124 Other non-current assets 284 Total non-current assets held for sale 1,964 Total assets held for sale $ 3,019 LIABILITIES Short-term debt $ 49 Trade accounts payable 290 Deferred income taxes 15 Other current liabilities 179 Total current liabilities held for sale 533 Long-term debt 11 Deferred income taxes 119 Other non-current liabilities 178 Total non-current liabilities held for sale 308 Total liabilities held for sale $ 841 All assets and liabilities held for sale at March31, 2010 are a component of the fertilizer segment. |
INVENTORIES
INVENTORIES | |
3 Months Ended
Mar. 31, 2010 | |
INVENTORIES | |
INVENTORIES | 5. INVENTORIES Inventories by segment are included in the table below. Readily marketable inventories refers to inventories that are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms. (US$in millions) March31, 2010 December31, 2009 Agribusiness (1) $ 2,827 $ 3,535 Sugar and Bioenergy (2) 189 89 Fertilizer (3) 397 749 Edible oil products (4) 368 371 Milling products (4) 109 118 Total $ 3,890 $ 4,862 (1) Includes readily marketable agricultural commodity inventories carried at fair value of $2,482 and $3,197 at March31, 2010 and December31, 2009, respectively. All other agribusiness segment inventories are carried at lower of cost or market. (2) Includes readily marketable sugar inventories of $26 million and $21 million at March31, 2010 and December31, 2009, respectively. Of these sugar inventories, $22 million and $21 million, respectively, are carried at fair value in our trading and merchandising business. Sugar and ethanol inventories in our industrial production business are carried at lower of cost or market. (3) Fertilizer inventories are carried at lower of cost or market. (4) Edible oil products and milling products inventories are generally carried at lower of cost or market, with the exception of readily marketable inventories of bulk soybean oil and corn, which are carried at fair value in the aggregate amount of $161million and $162million at March31, 2010 and December31, 2009, respectively. |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | |
3 Months Ended
Mar. 31, 2010 | |
OTHER CURRENT ASSETS | |
OTHER CURRENT ASSETS | 6. OTHER CURRENT ASSETS Other current assets consist of the following: (US$in millions) March31, 2010 December31, 2009 Prepaid commodity purchase contracts (1) $ 199 $ 110 Secured advances to suppliers (2) 232 275 Unrealized gains on derivative contracts at fair value 1,289 1,202 Recoverable taxes (3) 473 680 Margin deposits (4) 364 530 Marketable securities 19 15 Other 751 687 Total $ 3,327 $ 3,499 (1) Prepaid commodity purchase contracts represent advance payments against fixed priced contracts for future delivery of specified quantities of agricultural commodities. These contracts are recorded at fair value based on prices of the underlying agricultural commodities. (2) Bunge makes cash advances to suppliers, primarily Brazilian farmers of soybeans and other agricultural commodities, to finance a portion of the suppliers production costs. These advances are strictly financial in nature. Bunge does not bear any of the costs or risks associated with the related growing crops. The advances are largely collateralized by future crops and physical assets of the suppliers, carry a local market interest rate and settle when the farmers crop is harvested and sold. In addition to current secured advances, Bunge has non-current secured advances to suppliers, primarily farmers in Brazil, in the amount of $306million and $308million at March31, 2010 and December31, 2009, respectively, net of allowance for uncollectible advances, which are included in other non-current assets in the condensed consolidated balance sheets. The allowance for uncollectible advances totaled $77million and $75million at March31, 2010 and December31, 2009, respectively. The repayment terms of the non-current secured advances generally range from two to three years. Included in the secured advances to suppliers recorded in other current assets are advances that were renegotiated from their original terms, equal to an aggregate of $28million and $36million at March31, 2010 and December31, 2009, respectively. Included in the secured advances to suppliers recorded in other non-current assets are advances that were renegotiated from their original terms, equal to an aggregate of $23million and $20 million at March31, 2010 and December31, 2009, respectively. These renegotiated advances are largely collateralized by future crops and mortgages on assets such as land, buildings and equipment. Also included in non-current secured advances to suppliers are advances for which Bunge has initiated legal action to collect the outstanding balance or obtain title to the assets pledged by the farmers as collateral, equal to an aggregate of $260million and $264million at March31, 2010 and December31, 2009, respectively. Collections being pursued through legal action largely reflect loans made for the 2006 and 2005 crop years. Interest earned on secured advances to suppliers of $9million and $16million for the three months ended March31, 2010 and 2009, respectively, is included in net sales in the condensed consolidated statements of income. (3) Bunge has an a |
GOODWILL
GOODWILL | |
3 Months Ended
Mar. 31, 2010 | |
GOODWILL | |
GOODWILL | 7. GOODWILL For the three months ended March31, 2010, the changes in the carrying value of goodwill by segment are as follows: (US$in millions) Agribusiness Sugar and Bioenergy Edible Oil Products Milling Products Fertilizer Total Balance, December31, 2009 $ 204 $130 $ 83 $ 10 $ $427 Acquired goodwill (1) 545 4 549 Reallocation of acquired goodwill(1) (4 ) (4 ) Tax benefit on goodwill amortization (2) (1 ) (1 ) Foreign exchange translation (4 ) 26 (1 ) (1 ) 20 Balance, March31, 2010 $ 199 $ 701 $ 78 $ 9 $ 4 $991 (1) See Note 3 of the notes to the condensed consolidated financial statements. (2) Bunges Brazilian subsidiarys tax deductible goodwill is in excess of its book goodwill. For financial reporting purposes, the tax benefits attributable to the excess tax goodwill are first used to reduce associated goodwill and then other intangible assets to zero, prior to recognizing any income tax benefit in the condensed consolidated statements of income. |
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS | |
3 Months Ended
Mar. 31, 2010 | |
OTHER INTANGIBLE ASSETS | |
OTHER INTANGIBLE ASSETS | 8. OTHER INTANGIBLE ASSETS Other intangible assets, net consist of the following: (US$in millions) March31, 2010 December31, 2009 Trademarks/brands, finite-lived $124 $130 Licenses 12 12 Other 115 72 251 214 Less accumulated amortization: Trademarks/brands (1) (48 ) (47 ) Licenses (2 ) (2 ) Other (23 ) (23 ) (73 ) (72 ) Trademarks/brands, indefinite-lived 27 28 Intangible assets, net of accumulated amortization $205 $170 (1) Bunges Brazilian subsidiarys tax deductible goodwill in the agribusiness segment is in excess of its book goodwill. For financial reporting purposes, prior to recognizing any income tax benefit of tax deductible goodwill in excess of its book goodwill in the condensed consolidated statements of income and after the related book goodwill has been reduced to zero, any such remaining tax deductible goodwill in excess of its book goodwill is used to reduce other intangible assets to zero. In the first quarter of 2010, Bunge assigned values totaling $48 million to other intangible assets acquired in business acquisitions, with $44 million and $4 million, respectively, in the sugar and bioenergy and fertilizer segments. Finite lives of these assets range from 2 and 20 years. (See Note 3 of the notes to the condensed consolidated financial statements). In addition, $9 million of other intangible assets, net has been reclassified to long-term assets held for sale (see Note 4 of notes to the condensed consolidated financial statements). Aggregate amortization expense was $4 million and $2 million for the three months ended March31, 2010 and 2009, respectively. The annual estimated aggregate amortization expense for 2010 is approximately $27million with approximately $24million estimated per year for 2011 through 2014. |
IMPAIRMENT AND RESTRUCTURING CH
IMPAIRMENT AND RESTRUCTURING CHARGES | |
3 Months Ended
Mar. 31, 2010 | |
IMPAIRMENT AND RESTRUCTURING CHARGES | |
IMPAIRMENT AND RESTRUCTURING CHARGES | 9. IMPAIRMENT AND RESTRUCTURING CHARGES Impairment In the first quarter of 2010, Bunge recorded pretax non-cash impairment charges of $12 million in cost of goods sold in its consolidated statements of income, of which $10 million was allocated to its agribusiness segment and $2 million was allocated to its milling products segments, respectively, relating to the closure of an older, less efficient oilseed processing facility in the United States and a co-located corn oil extraction line. Declining results of operations at this facility due to local competitive pressures, as well as our additions of new, larger and better located facilities in recent years led management to decide to permanently close this facility. The fair values of the facility are not material and were determined internally by Bunges management. Restructuring In the first quarter of 2010, Bunge recorded pretax restructuring charges of $12million in cost of goods sold related to its North American, European and Brazilian businesses. These charges consisted of termination benefit costs of $4million each in the agribusiness and fertilizer segments and $1 million each in the edible oil products, milling products and sugar and bioenergy segments and other costs of $1 million in the agribusiness segment. Termination benefit costs in the agribusiness segment related to benefit obligations associated with approximately 90 employees related to the closure of the U.S. oilseed processing facility and the consolidation of management and administrative functions in Brazil. This management and administrative consolidation also impacted Bunges sugar and bioenergy, fertilizer, edible oil products and milling products segments. Termination benefit costs in our edible oil products segment also included 421 employees in the reorganization of certain of our operations in Europe. Substantially all of these costs will be paid in 2010 under severance plans that were defined and communicated in 2010. Funding for the payments will be provided by cash flows from operations. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | |
3 Months Ended
Mar. 31, 2010 | |
OTHER CURRENT LIABILITIES | |
OTHER CURRENT LIABILITIES | 10. OTHER CURRENT LIABILITIES Other current liabilities consist of the following: (US$in millions) March31, 2010 December31, 2009 Accrued liabilities $ 1,052 $ 1,046 Unrealized losses on derivative contracts at fair value 1,051 1,250 Advances on sales 219 253 Other 51 86 Total $ 2,373 $ 2,635 |
FINANCIAL INSTRUMENTS AND FAIR
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
3 Months Ended
Mar. 31, 2010 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 11. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS Bunges various financial instruments include certain components of working capital such as cash and cash equivalents, trade accounts receivable and trade accounts payable. Additionally, Bunge uses short- and long-term debt to fund operating requirements and derivative instruments to manage its foreign exchange, interest rate, commodity price, freight and energy cost exposures. Bunge also uses derivative instruments to reduce volatility in its income tax expense that results from foreign exchange gains and losses on certain U.S. dollar-denominated loans in Brazil. Cash and cash equivalents, trade accounts receivable and accounts payable and short-term debt are stated at their carrying value, which is a reasonable estimate of fair value. For long-term debt, see Note 12 of the notes to the condensed consolidated financial statements. All derivative instruments and marketable securities are stated at fair value. Fair value is the price that would be received for an asset or paid to transfer a liability (an exit price) in Bunges principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Bunge determines the fair values of its readily marketable inventories, derivative contracts, and certain other assets based on the fair value hierarchy established under US GAAP, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs based on market data obtained from sources independent of the reporting entity that reflect the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are inputs that are developed based on the best information available in circumstances that reflect Bunges own assumptions based on market data and on assumptions that market participants would use in pricing the asset or liability. The standard describes three levels within its hierarchy that may be used to measure fair value. Level1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level1 assets and liabilities include exchange traded derivative contracts. Level2: Observable inputs, including Level1 prices (adjusted); quoted prices for similar assets or liabilities; quoted prices in markets that are less active than traded exchanges; and other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level2 assets and liabilities include readily marketable inventories and over-the-counter (OTC) commodity purchase and sales contracts and other OTC derivatives whose value is determined using pricing models with inputs that are generally based on exchange traded prices, adjusted for location specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data. Level3: Unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the asset |
DEBT
DEBT | |
3 Months Ended
Mar. 31, 2010 | |
DEBT | |
DEBT | 12. DEBT In February2010, Bunge repurchased and canceled approximately $2 million of its $200 million aggregate principal amount of 7.80% senior notes due 2012. The fair value of Bunges long-term debt is based on interest rates currently available on comparable maturities to companies with credit standing similar to that of Bunge. The carrying amounts and fair value of long-term debt are as follows: March31, 2010 December31, 2009 (US$in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, including current portion $3,832 $4,045 $3,649 $3,796 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | |
3 Months Ended
Mar. 31, 2010 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS Bunge purchased soybeans, related soybean commodity products and other commodity products and fertilizer products from its unconsolidated joint ventures, which totaled $139million and $143million for the three months ended March31, 2010 and 2009, respectively. Bunge also sold soybean commodity products and other commodity products to these joint ventures, which totaled $129 million and $128million for the three months ended March31, 2010 and 2009, respectively. Bunge believes these transactions are recorded at values similar to those with third parties. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | |
3 Months Ended
Mar. 31, 2010 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 14. EMPLOYEE BENEFIT PLANS U.S.-Pension Benefits Three Months Ended March31, Foreign-Pension Benefits Three Months Ended March31, (US$in millions) 2010 2009 2010 2009 Service cost $ 3 $ 3 $ 1 $ 1 Interest cost 6 5 12 9 Expected return on plan assets (6 ) (5 ) (13 ) (9 ) Amortization of prior service cost 1 Amortization of net loss (gain) 1 1 (1 ) Net periodic benefit cost $ 5 $ 4 $ $ U.S.-Postretirement Healthcare Benefits ThreeMonths Ended March31, Foreign-Postretirement Healthcare Benefits ThreeMonths Ended March31, (US$in millions) 2010 2009 2010 2009 Service cost $ $ $ $ Interest cost 3 2 Amortization of net loss (gain) Net periodic benefit cost $ $ $ 3 $ 2 In the three months ended March31, 2010, Bunge made contributions totaling approximately $1 million and approximately $3million to its U.S. and foreign defined benefit pension plans, respectively. In the three months ended March31, 2009, Bunge made contributions totaling approximately $12million and approximately $2million to its U.S. and foreign defined benefit pension plans, respectively. In the three months ended March31, 2010, Bunge made contributions totaling approximately $1million and approximately $2million to its U.S. and to its foreign postretirement benefit plans, respectively. In the three months ended March31, 2009, Bunge made contributions totaling approximately $1million and approximately $1million to its U.S. and to its foreign postretirement benefit plans, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
3 Months Ended
Mar. 31, 2010 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Bunge is party to a large number of claims and lawsuits, primarily tax and labor claims in Brazil, arising in the normal course of business. Bunge records liabilities related to its general claims and lawsuits when the exposure item becomes probable and can be reasonably estimated. After taking into account the recorded liabilities for these matters, management believes that the ultimate resolution of such matters will not have a material adverse effect on Bunges financial condition, results of operations or liquidity. Included in other non-current liabilities at March31, 2010 and December31, 2009 are the following accrued liabilities: March31, December31, (US$in millions) 2010 2009 Tax claims $ 147 $ 135 Labor claims 98 97 Civil and other claims 112 110 Total $ 357 $ 342 Tax Claims The tax claims relate principally to claims against Bunges Brazilian subsidiaries, including primarily value-added tax claims (ICMS, IPI, PIS and COFINS, of which PIS and COFINS are used by the Brazilian government to fund social contribution programs). The determination of the manner in which various Brazilian federal, state and municipal taxes apply to the operations of Bunge is subject to varying interpretations arising from the complex nature of Brazilian tax law. Labor Claims The labor claims relate principally to claims against Bunges Brazilian subsidiaries. The labor claims primarily relate to dismissals, severance, health and safety, salary adjustments and supplementary retirement benefits. Civil and Other The civil and other claims relate to various disputes with third parties, including suppliers and customers. GuaranteesBunge has issued or was a party to the following guarantees at March31, 2010: (US$in millions) Maximum Potential Future Payments Customer financing (1) $ 133 Unconsolidated affiliates financing (2) 10 Total $ 143 (1) Bunge has issued guarantees to third parties in Brazil related to amounts owed to these third parties by certain of Bunges customers. The terms of the guarantees are equal to the terms of the related financing arrangements, which are generally one year or less, with the exception of guarantees issued under certain Brazilian government programs, primarily from 2006, where terms are up to five years. In the event that the customers default on their payments to the third parties and Bunge would be required to perform under the guarantees, Bunge has obtained collateral from the customers. At March31, 2010, Bunge had approximately $82million of tangible property that had been pledged to Bunge as collateral against certain of these refinancing arrangements. Bunge evaluates the likelihood of the customer repayments of the amounts due under these guarantees based upon an expected loss analysis and records the fair value of such guarantees as an obligation in its condensed consolidated financial statements. The fair value of these guarantees at March31, 2010 was not significant. (2) Bunge issued guarantees to certain financial institutions related to debt of |
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME (LOSS) | |
3 Months Ended
Mar. 31, 2010 | |
COMPREHENSIVE INCOME (LOSS). | |
COMPREHENSIVE INCOME (LOSS) | 16. COMPREHENSIVE INCOME (LOSS) The following table summarizes the components of comprehensive income (loss): Three Months Ended March31, (US$in millions) 2010 2009 Net income (loss) $ 80 $ (176 ) Other comprehensive income (loss): Foreign exchange translation adjustment, net of tax expense of $0 (114 ) (88 ) Unrealized gains on commodity futures and foreign exchange contracts designated as cash flow hedges, net of tax expense of $(1)and $(8) 3 14 Reclassification of realized net losses (gains) to net income, net of tax of (benefit) expense $(1)and $1 1 (1 ) Pension adjustment, net of tax benefit of $5 (10 ) Other postretirement healthcare subsidy tax deduction adjustment 2 Total comprehensive loss (28 ) (261 ) Less: Comprehensive loss (income) attributable to noncontrolling interest 1 (1 ) Total comprehensive loss attributable to Bunge $ (27 ) $ (262 ) |
TRANSFERS
TRANSFERS (TO) FROM NONCONTROLLING INTERESTS | |
3 Months Ended
Mar. 31, 2010 | |
TRANSFERS (TO) FROM NONCONTROLLING INTERESTS | |
TRANSFERS (TO) FROM NONCONTROLLING INTERESTS | 17. TRANSFERS (TO) FROM NONCONTROLLING INTERESTS Bunge has a 51% controlling interest in a joint venture that is developing a grain terminal in Longview, Washington, U.S., which it consolidates. In the first quarter of 2010, the noncontrolling interest holders, which have a 49% interest in this joint venture, made a $13 million capital contribution to this joint venture. Bunge made a proportionate contribution to this joint venture, which resulted in no ownership percentage change. In the first quarter of 2010, Bunge adopted a FASB issued standard that amends the consolidation guidance that applies to variable interest entities (VIEs). As a result of this adoption, Bunge consolidated AGRI-Bunge, LLC, an agribusiness joint venture which originates grains and operates a Mississippi river terminal in the United States in which Bunge has 50% voting power and a 34% interest in the equity and earnings. Bunge recorded $3 million of noncontrolling equity interest upon its consolidation of this joint venture in the first quarter of 2010. In January2009, Bunge redeemed shares held by certain third party investors in a private investment fund consolidated by Bunge. The shares were valued at $43 million and represented 51% of the outstanding shares of the fund and 100% of the ownership interest of these investors in the fund. Additionally, the investors received $8 million of dividends representing their share of the cumulative earnings of the fund. This transaction resulted in Bunges ownership interest in the fund increasing from 16% at December31, 2008 to 31% at March31, 2009. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | |
3 Months Ended
Mar. 31, 2010 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 18. EARNINGS PER COMMON SHARE Basic earnings per share is computed by dividing net income available to Bunge common shareholders by the weighted-average number of common shares outstanding, excluding any dilutive effects of stock options, restricted stock unit awards, convertible preference shares and convertible notes during the reporting period. Diluted earnings per share is computed similar to basic earnings per share, except that the weighted-average number of common shares outstanding is increased to include additional shares from the assumed exercise of stock options, restricted stock unit awards and convertible securities and notes, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options, except those which are not dilutive, were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period. In addition, Bunge accounts for the effects of convertible securities and convertible notes, using the if-converted method. Under this method, the convertible securities and convertible notes are assumed to be converted and the related dividend or interest expense, net of tax, is added back to earnings, if dilutive. Bunge had 862,455 mandatory convertible preference shares outstanding as of March31, 2010. Each mandatory convertible preference share has a liquidation preference of $1,000per share. On the mandatory conversion date of December1, 2010, each mandatory convertible preference share will automatically convert into between 8.2416 and 9.7250 of Bunge Limited common shares, subject to certain additional anti-dilution adjustments, depending on the average daily volume-weighted average price per common share over the 20-trading day period ending on the third trading day prior to such date. At any time prior to December1, 2010, holders may elect to convert the mandatory convertible preference shares at the conversion rate of 8.2416, subject to certain additional anti-dilution adjustments (which represents 7,108,009 Bunge Limited common shares as of March31, 2010). In addition, Bunge had 6,900,000 convertible perpetual preference shares outstanding as of March31, 2010. Each convertible preference share has an initial liquidation preference of $100per share and each convertible preference share is convertible, at any time at the holders option, initially into approximately 1.0891 Bunge Limited common shares based on a conversion price of $91.82per convertible preference share, subject in each case to certain anti-dilution specified adjustments (which represents 7,514,790 Bunge Limited common shares as of March31, 2010). The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March31, 2010 and 2009: Three Months Ended March31, (US$in millions, except for share data) 2010 2009 Net income (loss) attributable to Bunge $ 63 $ (195 ) Convertible preference share dividends (19 ) (19 ) Net income (loss) available to Bunge common shareholders $ 44 $ (214 ) Weighted average number o |
SEGMENT INFORMATION
SEGMENT INFORMATION | |
3 Months Ended
Mar. 31, 2010 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 19. SEGMENT INFORMATION Sugar and Bioenergy segment Bunge participates in the sugar and sugarcane-based ethanol industries through its sugar origination, trading and merchandising business, headquartered in London, and its Brazilian sugarcane milling operations in Brazil. In addition, Bunge has investments in entities that produce corn-based ethanol in the United States. Bunge wholly owns or has majority interests in seven sugarcane mills in Brazil, five of which were acquired in the Moema acquisition in February2010 (see Note 3 of the notes to the condensed consolidated financial statements). Bunge also has an 80% stake in a greenfield mill that it is developing with a partner, which it expects to become initially operational in 2010. The mills allow Bunge to adjust production, within certain capacity limits, between sugar and sugarcane-based ethanol, and for the Moema mills, between hydrous and anhydrous ethanol and raw and crystal sugar, allowing Bunge to readily respond to changes in customer demand and market prices within each of these product lines. Bunge intends to make investments to expand the crushing capacity of its sugarcane mills. Bunge also has cogeneration facilities at all mills which produce energy through the burning of sugarcane bagasse in boilers, enabling these mills to be self-sufficient for their energy needs and, in most cases, to sell surplus energy to third parties such as local utilities. In the first quarter of 2010, Bunge began reporting the results of its sugar and bioenergy businesses as a reportable segment, which includes the results of its sugar origination, milling, trading and merchandising businesses and its ethanol production investments and activities. Prior to the first quarter of 2010, sugar and bioenergy results and assets were included in the agribusiness segment. Accordingly, amounts for prior periods presented have been reclassified to conform to the current period segment presentation. As a result, Bunge has five reportable segmentsagribusiness, sugar and bioenergy, fertilizer, edible oil products and milling products, which are organized based upon similar economic characteristics and are similar in nature of products and services offered, the nature of production processes, the type and class of customer and distribution methods. The agribusiness segment is characterized by both inputs and outputs being agricultural commodities and thus high volume and low margin. The sugar and bioenergy segment involves the sugar origination, milling, trading and merchandising businesses, as well as sugar and sugarcane-based ethanol production and corn-based ethanol investments and activities. The activities of the fertilizer segment include raw material mining, manufacturing of phosphate and nitrogen based fertilizers, mixing fertilizer components and marketing products. In January 2010, Bunge entered into a definitive agreement with Vale S.A., a Brazil-based global mining company, pursuant to which Vale will acquire Bunges fertilizer nutrients assets in Brazil, including its interest in Fertilizantes FosfatadosS.A. (Fosfertil). The transaction is expected to close in the second quarter of 2010 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | |
3 Months Ended
Mar. 31, 2010 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 20. SUBSEQUENT EVENTS On April 26, 2010, Bunge's oilseed processing and refining facility in Mannheim, Germany was significantly damaged by a fire. Bunge expects portions of the facility to be unusable for an extended period of time and to incur costs related to the restoration of the facility as well as business interruption expenses, including costs related to alternative sourcing of products to fulfill existing customer commitments. Bunge maintains property and business interruption insurance coverage, subject to certain deductible amounts, on this facility. Bunge is currently evaluating the impact of the fire on its ongoing operations. |
Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | May. 03, 2010
| |
Document and Entity Information | ||
Entity Registrant Name | Bunge LTD | |
Entity Central Index Key | 0001144519 | |
Document Type | 10-Q | |
Document Period End Date | 2010-03-31 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 144,155,479 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 |