Exhibit 99.1
Contact: Susie Ter-Jung
[GRAPHIC OMITTED] Bunge
1-914-684-3398
Susie.Ter-Jung@Bunge.com
Bunge Reports Second Quarter 2004
Net Income of $112 Million
White Plains, NY - July 29, 2004 - Bunge Limited (NYSE:BG).
> Financial Highlights
(In millions, except per share data and percentages)
- ---------------------------------------------------------------------------------------------
Quarter Ended Six Months Ended
------------- ----------------
Percent Percent
6/30/04 6/30/03 Change 6/30/04 6/30/03 Change
- ---------------------------------------------------------------------------------------------
Volumes (metric tons) 29.8 28.0 6% 53.6 50.8 6%
Net sales $6,657 $5,181 28% $12,396 $10,023 24%
Total segment operating profit(1) $218 $136 60% $354 $247 43%
Gain on sale of soy
ingredients business - $111 - - $111 -
Net income $112 $182 (38)% $182 $222 (18)%
Earnings per share(2) $1.00 $1.80 (44)% $1.65 $2.20 (25)%
- ----------------------------------------------------------------------------------------------
Net income for the second quarter of 2004 was $112 million, a $41 million, or
58%, increase over the same period last year (excluding the $111 million gain on
sale of Bunge's soy ingredients business in the second quarter of 2003).
Bunge's results for the quarter ended June 30, 2003 and for the six months ended
June 30, 2004 and 2003 include certain gains and charges that may be of interest
to investors. For the six months ended June 30, 2004, these items totaled $3
million, or $0.03 per share. For the quarter and six months ended June 30, 2003,
these items totaled $117 million, or $1.16 per share, and $116 million, or $1.15
per share, respectively. These gains and charges are detailed in the attached
schedule titled "Additional Financial Information."
- ---------------------------
(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 continuing operations before income tax and
minority interest, the most directly comparable GAAP measure. The information
required by Regulation G under the Securities Exchange Act of 1934, including
reconciliation to income from continuing operations before income tax and
minority interest, is included in the tables attached to this press release.
(2) Earnings per share numbers are reported on a fully diluted basis, which
includes approximately 7.78 million common shares issuable upon conversion of
Bunge's 3.75% convertible notes due 2022 for the quarter and six months ended
June 30, 2004. See Note 3 to the consolidated statements of income attached to
this press release for more information.
> Overview
Alberto Weisser, Bunge's Chairman and Chief Executive Officer, stated, "We are
pleased with our strong performance in the second quarter of 2004. All three of
our divisions performed well, generating solid bottom line results. Quarterly
cash flow from operations of $404 million reflected our good operating results
and lower agricultural commodity prices, which reduced operating working
capital.
"Bunge's results for the first half of the year were above expectations, despite
unprecedented volatility in agribusiness markets and a disruption in soybean
trade with China. Disciplined risk and logistics management and our balanced
global footprint made the difference, giving us good momentum as we enter the
second half of the year."
> Second Quarter Results
Agribusiness
Agribusiness benefited from increases in sales volumes and improvements in
operating profit in most of our business lines and geographies. Effective
freight and risk management, strong softseed profitability and efficiency
improvements in logistics contributed to the results for the quarter.
Fertilizer
The fertilizer segment benefited from higher average selling prices for
fertilizers and increases in sales volumes, which resulted in improved segment
operating profit. Volumes in the second quarter of 2004 benefited from planned
increases in planted acreage. Higher international prices for fertilizer raw
materials boosted local selling prices and increased margins on local
production, as products are priced to import parity.
Edible Oil Products
For comparative purposes, the results of the edible oil segment are presented
below to exclude Lesieur, which was sold to our Saipol joint venture in July
2003.
------------------------------------------------------------------------------
Quarter Ended
----------------------------------------
As Excluding
Reported Lesieur Lesieur
(In millions, except volumes) 6/30/04 6/30/03 6/30/03 6/30/03
------------------------------------------------------------------------------
Volumes (in thousands of metric tons) 1,243 1,182 98 1,084
Net sales $1,025 $746 $119 $627
Segment operating profit $25 $28 $5 $23
------------------------------------------------------------------------------
Edible oil results benefited from higher sales volumes in North and South
America and margin expansion in Eastern Europe due to higher edible oil prices.
2
Milling Products
Milling products results benefited from higher sales volumes in both corn
milling in the United States and wheat milling in Brazil, improved production
yields from good corn quality and a favorable product mix in wheat milling as a
result of the asset exchange with J. Macedo in March 2004.
Selling, General and Administrative Costs (SG&A)
SG&A increased in the second quarter of 2004 due to increased bonus, legal and
tax provisions and increased headcount in Bunge's international marketing
business. The second quarter of 2003 benefited from an $11 million curtailment
gain related to certain pension and post-retirement benefit plans.
Financial Costs
Interest expense increased primarily due to higher average borrowings for the
second quarter of 2004, compared to the same period in 2003, offset by lower
average interest rates on long-term borrowings.
Foreign exchange losses, incurred primarily on the net U.S. dollar-denominated
monetary liability position of Bunge's Brazilian subsidiaries, were $64 million
in the second quarter of 2004 compared to foreign exchange gains of $70 million
in the same period last year. Foreign exchange gains on commodity inventories,
included in segment operating profit, substantially offset these losses. The
Brazilian real devalued 6% against the U.S. dollar in the second quarter of 2004
as compared to a 17% appreciation in the same period last year.
Other
Other income (expense) - net decreased in the second quarter of 2004 primarily
due to decreases in Bunge's share of earnings from its joint ventures in
Argentina.
Results for the second quarter of 2003 include a $111 million gain on sale of
the Brazilian soy ingredients business to The Solae Company (Solae). Solae is a
joint venture between Bunge and DuPont.
Income Tax Expense
Bunge's effective tax rate for the second quarter of 2004 was 29%. Excluding the
tax-free gain on the sale of the soy ingredients business, the effective tax
rate for the second quarter of 2003 was 33%. The primary cause for the decrease
in the effective tax rate in 2004 was the effect of a weaker Brazilian real.
3
Net Financial Debt(3) and Cash Flow
Net financial debt increased from December 31, 2003 primarily due to seasonally
higher levels of inventory resulting from the purchase of agricultural commodity
inventories in South America and increased levels of operating working capital
resulting from higher agricultural commodity prices and increases in sales
volumes.
Cash flow provided by operations in the second quarter of 2004 was positive $404
million, an increase of $181 million over the same period last year. Cash flow
was favorably affected by strong operating results and reduced levels of
operating working capital compared to the first quarter of 2004, due to lower
agricultural commodity prices. Prices are beginning to reflect current market
expectations of good crops for the coming North American harvest. As prices
return to normal historical levels, there is a corresponding favorable effect on
cash flow provided by operations.
Equity Offering
Bunge successfully completed an offering of 9,775,000 common shares this
quarter, raising net proceeds of approximately $330 million. Substantially all
of these funds will be used to buy back the outstanding minority
interests in Bunge Brasil S.A., Bunge's publicly traded Brazilian subsidiary.
The buyback is proceeding as planned, and is expected to close this fall.
> Outlook
Bill Wells, Chief Financial Officer, stated, "We are pleased with the strong
first half of the year and expect continued solid performance in 2004. South
America delivered large harvests and current U.S. growing prospects are good.
Fertilizer demand and prices are strong and should remain so. We expect
continued good performance in our food products division.
"Our 2004 guidance is as follows:
o Depreciation: $200 million to $220 million
o Capital Expenditures: $350 million to $400 million
o $115 million to $130 million maintenance capital
expenditures
o Effective Tax Rate: 33% to 38%
o Joint Venture Earnings: $18 million to $20 million
- ---------------------------
(3) Net financial debt is a non-GAAP financial measure and is not intended to
replace total debt. A definition of net financial debt and the information
required by Regulation G under the Securities Exchange Act of 1934, including
reconciliation of net financial debt to total debt, the most directly comparable
GAAP measure, is included in the tables attached to this press release.
4
"Considering our continued positive outlook, and assuming stable currencies in
South America and a normal 2004/2005 North American crop, we are raising our net
income guidance for fiscal 2004 to between $355 million to $375 million,
representing $3.12 to $3.29 per share. This fully diluted per share guidance is
based on a weighted average of 115,443,425 shares outstanding and assumes that
all holders of Bunge's 3.75% convertible notes due 2022 convert to common
shares. Our net income and per share guidance includes the effects of our June
2004 sale of common shares and the proposed buyout of minority interests in
Brazil."
Conference Call and Webcast Information
Bunge Limited's management will host a conference call at 10:00 a.m. EDT on July
29, 2004, to discuss the company's second quarter results.
To listen to the conference call, please dial (800) 753-0420, or, if located
outside of the United States, dial (913) 981-5501. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
597955. The conference call will also be available live on the company's Web
site at www.bunge.com.
To access the webcast, go to the Bunge Web site and select "Upcoming Events"
from the left navigation menu. Click the "Webcast" link for the "Q2 2004 Bunge
Limited Conference Call," and follow the prompts to access the event. 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 2:00 p.m. EDT on July 29, 2004 and continuing through
August 29, 2004. To listen to the replay, please dial (888) 203-1112, or, if
located outside of the United States, dial (719) 457-0820. When prompted, enter
passcode number 597955. A rebroadcast of the conference call will also be
available on the company's Web site beginning at 2:00 p.m. EDT on July 29, 2004
and continuing through 12:00 p.m. EDT on August 29, 2004.
To locate the rebroadcast on the Web site, select "News & Information" from the
left navigation menu. Open the "Audio Archive" subcategory and select the
"Webcast" link for the "Q2 2004 Bunge Limited Conference Call." Follow the
prompts to access the replay.
About Bunge
Bunge Limited (www.bunge.com) is an integrated, global agribusiness and food
company operating in the farm-to-consumer food chain. Founded in 1818 and
headquartered in White Plains, New York, Bunge has 24,000 employees and
locations in 30 countries. Bunge is the world's leading oilseed processing
company, the largest producer and supplier of fertilizers to farmers in South
America and the world's leading seller of bottled vegetable oils to consumers.
5
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.
6
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 continuing
operations before income taxes and minority interest, net income and earnings
per share for the quarter and six months ended June 30, 2004 and 2003.
- ----------------------------------------------------------------------------------------------------------------------------
Income From
Continuing
Operations Before
Total Segment Income Taxes and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted
---------------- ----------------- ---------- -------
2004 2003 2004 2003 2004 2003 2004 2003
---- ---- ---- ---- ---- ---- ---- ----
Quarter Ended June 30:
Post retirement curtailment
gains $- $11 $- $11 $- $7 $- $0.07
Gain on sale of soy ingredients
business - - - 111 - 111 - 1.10
Discontinued operations, net of
tax - - - - - (1) - (0.01)
--------------------------------------------------------------------------------------
Total $- $11 $ $122 $- $117 $- $1.16
======================================================================================
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Income From
Continuing
Operations Before
Total Segment Income Taxes and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted
---------------- ----------------- ---------- -------
2004 2003 2004 2003 2004 2003 2004 2003
---- ---- ---- ---- ---- ---- ---- ----
Six Months Ended June 30:
Post retirement curtailment
gains $- $11 $- $11 $- $7 $- $0.07
Gain on sale of soy ingredients
business - - - 111 - 111 - 1.10
Gain on exchange of
retail flour business - - 5 - 3 - 0.03 -
Discontinued operations, net of
tax - - - - - (2) - (0.02)
--------------------------------------------------------------------------------------
Total $- $11 $5 $122 $3 $116 $0.03 $1.15
======================================================================================
- ----------------------------------------------------------------------------------------------------------------------------
7
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited) (Note 4)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------- Percent ---------------------------- Percent
2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
Net sales $6,657 $5,181 28% $12,396 $10,023 24%
Cost of goods sold (6,161) (4,912) 25% (11,535) (9,481) 22%
------------- ------------- ------------- -------------
Gross profit 496 269 84% 861 542 59%
Gain on sale of soy ingredients business (Note 1) - 111 - - 111 -
Selling, general and administrative expenses (192) (164) 17% (370) (313) 18%
Interest income 24 24 - 40 44 (9)%
Interest expense (43) (49) (12)% (83) (96) (14)%
Interest expense on readily marketable inventories (19) (8) 138% (31) (15) 107%
Foreign exchange gains (losses) (64) 70 (80) 77
Other income (expense)-net (1) 3 10 4
------------- ------------- ------------- -------------
Income from continuing operations before income tax
and minority interest 201 256 (21)% 347 354 (2)%
Income tax expense (58) (48) 21% (116) (85) 36%
------------- ------------- ------------- -------------
Income from continuing operations before minority
interest 143 208 (31)% 231 269 (14%)
Minority interest (31) (25) 24% (49) (45) 9%
------------- ------------- ------------- -------------
Income from continuing operations 112 183 (39)% 182 224 (19)%
Discontinued operations, net of tax (Note 2) - (1) - (2)
------------- ------------- ------------- -------------
Net income $ 112 $ 182 (38)% $ 182 $ 222 (18)%
============= ============= ============= =============
Earnings per common share - basic (Note 3):
Income from continuing operations $ 1.08 $ 1.84 (41)% $ 1.79 $ 2.25 (20)%
Discontinued operations - (0.01) - (0.02)
------------- ------------- ------------- -------------
Net income per share - basic $ 1.08 $ 1.83 (41)% $ 1.79 $ 2.23 (20)%
============= ============= ============= =============
Earnings per common share - diluted (Note 3):
Income from continuing operations $ 1.00 $ 1.81 (45)% $ 1.65 $ 2.22 (26)%
Discontinued operations - (0.01) - (0.02)
------------- ------------- ------------- -------------
Net income per share - diluted $ 1.00 $ 1.80 (44%) $ 1.65 $ 2.20 (25)%
============= =============------------============= =============-----------
8
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Note 1: In May 2003, Bunge sold its Brazilian soy ingredients business to The
Solae Company (Solae) for $251 million in cash, net of expenses of
approximately $5 million. Consequently, Bunge recognized a gain on sale
of $111 million in the second quarter of 2003. Solae is a joint venture
between Bunge and E.I. DuPont de Nemours and Company.
Note 2: In December 2003, Bunge sold its North American bakery business to a
third party. Accordingly, the operating results for the disposed
division have been reported as discontinued operations for the quarter
and six months ended June 30, 2003.
Note 3: Earnings per share are calculated on the basis of the following number
of common shares outstanding:
Quarter Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
2004 2003 2004 2003
--------------- ---------------- --------------- ----------------
(In millions, except share data)
Income from continuing operations -
basic $112 $183 $182 $224
Interest on convertible notes, net of 1 - 2 -
tax
--------------- ---------------- --------------- ----------------
Income from continuing operations -
diluted $113 $183 $184 $224
=============== ================ =============== ================
Weighted average number of common
shares outstanding:
Basic 103,434,409 99,696,727 101,725,621 99,641,565
Effect of dilutive shares:
-Stock options and awards 1,678,953 1,226,735 1,743,109 1,062,955
-Convertible notes 7,778,425 - 7,778,425 -
--------------- ---------------- --------------- ----------------
Diluted 112,891,787 100,923,462 111,247,155 100,704,520
=============== ================ =============== ================
Income from continuing operations -
per share:
-Basic $1.08 $1.84 $1.79 $2.25
=============== ================ =============== ================
-Diluted $1.00 $1.81 $1.65 $2.22
=============== ================ =============== ================
The calculation of diluted earnings per common share for the quarter
and six months ended June 30, 2004 includes the 7,778,425 common
shares that would be issuable on conversion of our 3.75% convertible
notes due 2022. The convertible notes are convertible at the option of
the holder into our common shares, among other circumstances, during
any calendar quarter in which the closing price of our common shares
for at least 20 of the last 30 trading days of the immediately
preceding calendar quarter is more than 120% of the conversion price
of $32.1402, or approximately $38.57 per share. The closing price
condition was satisfied as of March 31, 2004 and the convertible notes
were convertible at the option of the holder throughout the quarter
ended June 30, 2004. The convertible notes are not convertible during
the quarter ending September 30, 2004 as the closing price condition
was not satisfied as of June 30, 2004. However, if the closing sale
price condition is satisfied as of September 30, 2004, the 7,778,425
common shares issuable on conversion will be included in Bunge's fully
diluted earnings per share for the third quarter and nine months ended
September 30, 2004. Bunge's diluted weighted average common shares
outstanding for the quarter and six months ended June 30, 2003 does
not include the common shares that would be issuable on conversion of
the convertible notes, because in accordance with their terms, the
convertible notes had not yet become convertible.
Note 4: Certain reclassifications were made to the prior period's consolidated
financial statements to conform to the 2004 presentation.
9
CONSOLIDATED SEGMENT INFORMATION
(In millions, except volumes and percentages)
(Unaudited) (Note 1)
Set forth below is a summary of certain items in our consolidated statements of
income and volumes by reportable segment.
Quarter Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
Percent Percent
2004 2003 Change 2004 2003 Change
------------ ------------ ---------- ------------ ------------- ----------
Volumes (in thousands of metric tons):
Agribusiness 24,880 23,548 6% 44,817 42,330 6%
Fertilizer 2,634 2,417 9% 4,394 4,278 3%
Edible oil products 1,243 1,182 5% 2,413 2,360 2%
Milling products 1,034 836 24% 2,000 1,661 20%
Other (soy ingredients) - 8 (100)% - 140 (100)%
------------ ------------ ------------ ------------- ----------
Food products total 2,277 2,026 12% 4,413 4,161 6%
------------ ------------ ------------ ------------- ----------
Total 29,791 27,991 6% 53,624 50,769 6%
============ ============ ============ ============= ==========
Net sales:
Agribusiness $4,912 $3,832 28% $9,153 $7,455 23%
Fertilizer 524 415 26% 890 701 27%
Edible oil products 1,025 746 37% 1,957 1,461 34%
Milling products 196 182 8% 396 354 12%
Other (soy ingredients) - 6 (100)% - 52 (100)%
------------ ------------ ------------ ------------- ----------
Food products total 1,221 934 31% 2,353 1,867 26%
------------ ------------ ------------ ------------- ----------
Total $6,657 $5,181 28% $12,396 $10,023 24%
============ ============ ============ =============
Cost of goods sold:
Agribusiness $(4,625) $(3,750) 23% $(8,666) $(7,262) 19%
Fertilizer (408) (327) 25% (689) (553) 25%
Edible oil products (955) (668) 43% (1,825) (1,313) 39%
Milling products (173) (162) 7% (355) (319) 11%
Other (soy ingredients) - (5) (100)% - (34) (100)%
------------ ------------ ------------ ------------- ----------
Food products total (1,128) (835) 35% (2,180) (1,666) 31%
------------ ------------ ------------ ------------- ----------
Total $(6,161) $(4,912) 25% $(11,535) $(9,481) 22%
============ ============ ============ =============
Gross profit:
Agribusiness $287 $82 250% $487 $193 152%
Fertilizer 116 88 32% 201 148 36%
Edible oil products 70 78 (10)% 132 148 (11)%
Milling products 23 20 15% 41 35 17%
Other (soy ingredients) - 1 (100)% - 18 (100)%
------------ ------------ ------------ ------------- ----------
Food products total 93 99 (6)% 173 201 (14)%
------------ ------------ ------------ ------------- ----------
Total $496 $269 84% $861 $542 59%
============ ============ ============ =============
Selling, general and administrative expenses:
Agribusiness $(102) $(81) 26% $(202) $(150) 35%
Fertilizer (38) (25) 52% (69) (44) 57%
Edible oil products (41) (47) (13)% (77) (90) (14)%
Milling products (11) (11) - (22) (22) -
Other (soy ingredients) - - - - (7) (100)%
------------ ------------ ------------ ------------- ----------
Food products total (52) (58) (10)% (99) (119) (17)%
------------ ------------ ------------ ------------- ----------
Total $(192) $(164) 17% $(370) $(313) 18%
============ ============ ============ =============
Foreign exchange gain (loss):
Agribusiness $(45) $67 $(50) $78
Fertilizer (13) (11) (24) (13)
Edible oil products - - - -
Milling products - - - -
Other (soy ingredients) - (2) - (1)
------------ ------------ ------------ -------------
Food products total - (2) - (1)
------------ ------------ ------------ -------------
Total $(58) $54 $(74) $64
============ ============ ============ =============
10
Quarter Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
Percent Percent
2004 2003 Change 2004 2003 Change
------------ ------------ ---------- ------------ ------------- ----------
Interest income:
Agribusiness $3 $4 (25)% $5 $7 (29)%
Fertilizer 11 13 (15)% 20 24 (17)%
Edible oil products 3 2 50% 6 3 100%
Milling products 1 - 100% 3 - 100%
Other (soy ingredients) - - - - - -
------------ ------------ ------------ -------------
Food products total 4 2 100% 9 3 200%
------------ ------------ ------------ -------------
Total $18 $19 (5)% $34 $34 -
============ ============ ============ =============
Interest expense:
Agribusiness $(30) $(27) 11% $(60) $(40) 50%
Fertilizer (9) (7) 29% (20) (19) 5%
Edible oil products (7) (5) 40% (14) (14) -
Milling products - (3) (100)% (3) (5) (40)%
Other (soy ingredients) - - - - (2) (100)%
------------ ------------ ------------ -------------
Food products total (7) (8) (13)% (17) (21) (19)%
------------ ------------ ------------ -------------
Total $(46) $(42) (10)% $(97) $(80) 21%
============ ============ ============ =============
- --------------------------------------------------------------------------------------------------------------------------------
Segment operating profit:
Agribusiness $113 $45 151% $180 $88 105%
Fertilizer 67 58 16% 108 96 13%
Edible oil products 25 28 (11)% 47 47 -
Milling products 13 6 117% 19 8 138%
Other (soy ingredients) - (1) (100)% - 8 (100)%
------------ ------------ ------------ -------------
Food products total 38 33 15% 66 63 5%
------------ ------------ ------------ -------------
Total (Note 2) $218 $136 60% $354 $247 43%
============ ============ ============ =============
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income
tax and minority interest:
Segment operating profit $218 $136 $354 $247
Gain on sale of soy ingredients business - 111 - 111
Unallocated (Note 3) (17) 9 (7) (4)
------------ ------------ ------------ -------------
Income from continuing operations before income
tax and minority interest $201 $256 $347 $354
============ ============ ============ =============
Depreciation, depletion and amortization:
Agribusiness $20 $15 33% $41 $41 -
Fertilizer 17 14 21% 34 26 31%
Edible oil products 10 8 25% 20 15 33%
Milling products 3 2 50% 6 6 -
Other (soy ingredients) - - - - - -
------------ ------------ ------------ -------------
Food products total 13 10 30% 26 21 24%
------------ ------------ ------------ -------------
Total $50 $39 28% $101 $88 15%
============ ============ ============ =============
11
NOTES TO CONSOLIDATED SEGMENT INFORMATION
(Unaudited)
Note 1: In the second quarter of 2004, Bunge reclassified certain consumer
product lines from the agribusiness segment to the edible oil segment.
As a result, amounts for the quarter and six months ended June 30, 2003
have been reclassified to conform to the quarter and six months ended
June 30, 2004 presentation.
Note 2: Total segment operating profit is the consolidated segment operating
profit of all of Bunge's segments. Total segment operating profit is a
non-GAAP measure and is not intended to replace income from continuing
operations before income tax and minority interest. The information
required by Regulation G under the Securities Exchange Act of 1934,
including a reconciliation to income from continuing operations before
income tax and minority interest, is included under the caption
"Reconciliation of Non-GAAP Measures".
Note 3: Includes interest income, interest expense and foreign exchange gains
and losses and other income and expenses not directly attributable to
Bunge's operating segments. In 2004, foreign exchange losses were
recorded on Bunge's U.S. dollar short position due to the devaluation of
the Brazilian real. In 2003, foreign exchange gains were recorded on
Bunge's U.S. dollar short position due to the appreciation of the
Brazilian real.
12
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
June 30, December 31, June 30,
2004 2003 2003
----------------- ------------------ ------------------
ASSETS
Cash and cash equivalents $ 524 $ 489 $ 441
Trade accounts receivable 1,889 1,495 1,356
Inventories 3,583 2,867 2,740
Other current assets 1,450 1,567 1,460
----------------- ------------------ ------------------
Total current assets 7,446 6,418 5,997
Property, plant and equipment, net 2,010 2,090 1,836
Goodwill 138 148 138
Investments in affiliates 554 537 603
Other non-current assets 696 691 493
----------------- ------------------ ------------------
Total assets $10,844 $9,884 $9,067
================= ================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt $ 649 $ 889 $956
Current portion of long-term debt 143 128 229
Trade accounts payable 2,100 1,678 1,572
Other current liabilities 1,249 1,242 1,248
----------------- ------------------ ------------------
Total current liabilities 4,141 3,937 4,005
Long-term debt 2,826 2,377 1,910
Other non-current liabilities 590 639 508
Minority interest in subsidiaries 505 554 539
Shareholders' equity 2,782 2,377 2,105
----------------- ------------------ ------------------
Total liabilities and shareholders' equity $10,844 $9,884 $9,067
================= ================== ==================
13
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
June 30,
----------------------------
2004 2003
------------- -------------
OPERATING ACTIVITIES
Net income $ 182 $ 222
Adjustments to reconcile net income to cash provided by
(used for) operating activities:
Gain on sale of soy ingredients business - (111)
Foreign exchange loss (gain) on debt 88 (121)
Minority interest 49 45
Depreciation, depletion and amortization 101 88
Other - net 8 (63)
Changes in operating assets and liabilities, excluding the
effects of acquisitions (744) 217
Arbitration settlement - (57)
------------- -------------
Cash (used for) provided by operating activities (316) 220
INVESTING ACTIVITIES
Payments made for capital expenditures (120) (119)
Business acquisitions and investments in affiliates (55) (75)
Proceeds from sale of soy ingredients business - 251
Proceeds from disposal of property, plant and equipment 10 20
------------- -------------
Cash (used for) provided by investing activities (165) 77
FINANCING ACTIVITIES
Net change in short-term debt (226) (303)
Proceeds from long-term debt 850 321
Repayments of long-term debt (387) (393)
Proceeds from receivable from former shareholder - 55
Proceeds from sale of common shares 336 5
Dividends paid to shareholders (22) (20)
Dividends paid to minority interest (18) (44)
------------- -------------
Cash provided by (used for) financing activities 533 (379)
Effect of exchange rate changes on cash and cash equivalents (17) 53
------------- -------------
Net increase (decrease) in cash and cash equivalents 35 (29)
Cash and cash equivalents, beginning of period 489 470
------------- -------------
Cash and cash equivalents, end of period $524 $441
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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 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 segments, is Bunge's consolidated income from
continuing operations before income tax and minority interest that includes an
allocated portion of the foreign exchange gains and losses relating to debt
financing operating working capital, including readily marketable inventories.
Also included in total segment operating profit is interest income and interest
expense attributable to the financing of operating working capital.
Total segment operating profit is a non-GAAP financial measure and is not
intended to replace income from continuing operations before income tax and
minority interest, the most directly comparable GAAP financial measure. Total
segment operating profit is a key performance measurement used by our management
to evaluate whether our operating activities cover the financing costs of our
business. We believe total segment operating profit is a more complete measure
of our operating profitability, since it allocates foreign exchange gains and
losses and the cost of debt financing working capital to the appropriate
operating segments. Additionally, we believe total segment operating profit
assists investors by allowing them to evaluate changes in the operating results
of our 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 continuing operations before income taxes and minority interest
or any other measure of consolidated operating results under U.S. GAAP.
Below is a reconciliation of income from continuing operations before income tax
and minority interest to total segment operating profit:
Quarter Ended Six Months
June 30, Ended June 30,
-------------------------------- --------------------------------
(In millions) 2004 2003 2004 2003
-------------- -------------- --------------- -------------
Income from continuing operations before
income tax and minority interest $201 $256 $347 $354
Gain on sale of soy ingredients business - (111) - (111)
Plus (minus): Unallocated expenses (1) 17 (9) 7 4
-------------- -------------- --------------- -------------
Total segment operating profit $218 $136 $354 $247
============== ============== =============== =============
- ----------------------------------
(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.
15
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:
June 30, December 31, June 30,
(In millions) 2004 2003 2003
------------- ---------------- --------------
Short-term debt $649 $ 889 $956
Long-term debt, including current portion 2,969 2,505 2,139
------------- ---------------- --------------
Total debt 3,618 3,394 3,095
Less:
Cash and cash equivalents 524 489 441
Marketable securities 29 13 13
------------- ---------------- --------------
Net financial debt 3,065 2,892 2,641
Less: Readily marketable inventories 2,434 1,868 1,949
------------- ---------------- --------------
Net financial debt less readily marketable inventories $631 $1,024 $692
============= ================ ==============
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