Exhibit 99.1
[GRAPHIC OMITTED]
Investor Susie Ter-Jung
Contact: Bunge Limited
1-914-684-3398
Susie.Ter-Jung@Bunge.com
Media Stewart Lindsay
Contact: Bunge Limited
1-914-684-3369
Stewart.Lindsay@Bunge.com
Bunge Reports 2004 Third Quarter
EPS Growth of 74%
White Plains, NY - October 28, 2004 - Bunge Limited (NYSE:BG).
o Financial Highlights
(In millions, except per share data and percentages)
- --------------------------------------------------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
------------- -----------------
Percent Percent
9/30/04 9/30/03 Change 9/30/04 9/30/03 Change
- --------------------------------------------------------------------------------------------------------------------------------
Volumes (metric tons) 29.0 28.9 -% 82.6 79.7 4%
Net sales $6,560 $5,784 13% $18,956 $15,807 20%
Total segment operating profit(1) $313 $180 74% $667 $427 56%
Gain on sale of soy
ingredients business - - - - $111 -
Net income $182 $89 104% $364 $311 17%
Earnings per share(2) $1.53 $0.88 74% $3.22 $3.08 5%
- --------------------------------------------------------------------------------------------------------------------------------
Net income for the third quarter of 2004 was $182 million, a $93 million or 104%
increase over the same period last year, and earnings per share were $1.53, a
$0.65 per share or 74% increase over the same period last year.
Bunge's results included certain gains and charges that may be of interest to
investors. These items totaled a charge of $(2) million, or ($0.02) per share,
in the third quarter of 2004, and a gain of $7 million, or $0.07 per share, in
the same quarter of 2003. Additional information is provided 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 a
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 (EPS) numbers are reported on a fully diluted basis,
which includes approximately 7.78 million common shares issuable on conversion
of Bunge's 3.75% convertible notes due 2022 for the quarter and nine months
ended September 30, 2004. See Note 4 to the consolidated statements of income
attached to this press release for more information.
o Overview
Alberto Weisser, Bunge's Chairman and Chief Executive Officer, stated, "We are
pleased with our strong performance in the third quarter of 2004. All three of
our divisions performed well, generating solid bottom line results. Bunge's
year-to-date results were above expectations, despite unprecedented volatility
in agribusiness markets and a disruption in soybean trade with China. This shows
once again the importance of geographic and product balance, the value of
operating in all parts of an integrated chain and the strength of the Bunge
team.
"We are optimistic for a solid finish to the year and a strong 2005. A large
North American soybean harvest and planting intentions by farmers in South
America indicate ample supply. Commodity prices have returned to historical
average levels, which should stimulate demand. Fertilizer volumes have
stabilized at the new higher level established after last year's spectacular
growth and the margin outlook continues strong. Increased biodiesel demand due
to high petroleum prices and legislation in the EU and U.S. is stimulating
vegetable oil demand. These are all positive indicators for 2005.
"Due to our strong results, the power of our business model and our optimistic
outlook for the future, we are raising both our 2004 guidance and the base for
our long-term EPS growth target."
o Third Quarter Results
Agribusiness
Agribusiness benefited from improvements in operating profit in most of Bunge's
business lines and geographies. A large North American harvest allowed Bunge to
bring all of its North American processing capacity back on line with attractive
margins. Bunge's southern U.S. grain origination assets benefited from the early
harvest and nearly ideal harvest conditions. Profitability in European soy
processing operations has improved with prospects of a large North American
soybean harvest. Effective freight and risk management, strong softseed
profitability and efficiency improvements in logistics also contributed to the
results for the quarter.
Volumes for the quarter were flat versus last year as demand was affected by the
high soy prices earlier in the year and a reduction in sales to China. With
prospects for a large North American soybean harvest, prices have decreased
significantly. Consequently, Bunge expects its volumes to benefit. The USDA
projects a 6% increase in global soybean meal demand and 5% increase in global
soyoil demand in the coming year.
2
Fertilizer
The fertilizer segment benefited from higher average selling prices for
fertilizers. Higher international prices for fertilizer raw materials increased
local selling prices and margins on local production, as products are priced to
import parity.
After above trend line volume growth of 19% in 2003, the Brazilian retail
fertilizer market's growth leveled off in 2004, and year-to-date growth is
slightly below 2003. Bunge's year-to-date retail sales volumes increased from
2003 due to an increase in market share. In the third quarter of 2004 this
increase in retail volumes was more than offset by decreases in sales volumes of
low margin fertilizer byproducts, such as gypsum.
Edible Oil Products
Bunge's edible oil business benefited from higher sales volumes and margins in
Hungary and Poland. This was offset in part by margin pressure in other regions
as a result of higher raw material prices. Third quarter 2004 results included a
$3 million impairment charge relating to Bunge's North American packaged oil
operations; and third quarter 2003 results included a $2 million gain relating
to the curtailment of certain post-retirement benefit plans.
Milling Products
Wheat milling results were affected by lower selling prices in Brazil, while
U.S. corn milling results were flat. Third quarter 2003 results included a
$2 million gain relating to the curtailment of certain post-retirement benefit
plans.
Selling, General and Administrative Expenses (SG&A)
SG&A increased in the third quarter 2004 due to higher bonus provisions
associated with the improved results, increased headcount in Bunge's
international marketing business, increased tax provisions in Brazil and higher
bad debt provisions associated with higher commodity prices.
Financial Costs
Interest expense decreased primarily due to lower interest rates on our
outstanding debt and benefits from interest rate hedges, partially offset by
higher average borrowings. Interest income declined despite higher levels of
invested cash from Bunge's June 2004 equity offering, primarily due to lower
interest rates earned on assets in Brazil.
In the third quarter of 2004, the Brazilian real appreciated 9% against the U.S.
dollar as compared to a 2% devaluation in the same period last year. Foreign
exchange gains,
3
incurred primarily on the net U.S. dollar-denominated monetary liability
position of Bunge's Brazilian subsidiaries, were $24 million in the third
quarter of 2004 compared to foreign exchange losses in Brazil in the third
quarter of 2003. Foreign exchange gains and losses on commodity inventories,
included in segment operating profit, substantially offset gains and losses on
the debt funding the inventories. In the third quarter of 2003, Bunge also
recorded a gain on a net U.S. dollar-denominated monetary asset position in
Argentina.
Other
Other income (expense) - net increased during the third quarter of 2004
primarily due to an increase in Bunge's share of earnings from its joint venture
in France and gains on interest rate hedges.
Income Tax Expense
Bunge's effective tax rate for the third quarter of 2004 was 30% compared to 28%
in the same period in 2003. The effective tax rate increased primarily due to a
shift in income to higher tax jurisdictions. Excluding the gain on sale of
Bunge's Brazilian soy ingredients business in 2003, Bunge's effective tax rate
for the nine months ended September 30, 2004 and 2003 was unchanged at 32%.
Net Financial Debt(3) and Cash Flow
Net financial debt decreased by $607 million from December 31, 2003 primarily
due to lower commodity prices, seasonally lower levels of working capital and
robust cash flows from operations.
Cash flow provided by operations in the third quarter of 2004 was $1,256
million, an increase of $838 million over the same period of 2003. Cash flow was
favorably affected by strong operating results and lower agricultural commodity
prices, which reduced operating working capital.
- --------------------
(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
Bunge Brasil
On September 27, 2004, Bunge acquired through a tender offer an additional 15%
interest in the outstanding shares of Bunge Brasil S.A. and delisted the company
from the Sao Paulo stock exchange. The purchase price for the shares was $282
million, financed by the net proceeds from Bunge's June 2004 equity offering.
Bunge now owns approximately 98% of Bunge Brasil, and in the fourth quarter
intends to acquire the remaining shares at an estimated cost of $30 million.
o Outlook
Bill Wells, Chief Financial Officer, stated, "We expect continued solid
performance in the fourth quarter of 2004. North America is harvesting a large
soybean crop, and fertilizer margins are strong and should remain so.
"Our 2004 guidance is as follows:
o Depreciation: $210 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: 30% to 35%
o Joint Venture Earnings: $12 million to $15 million
"Due to our continued positive outlook, and assuming stable currencies in South
America, we are raising our 2004 net income guidance by $85 million to between
$440 million to $460 million, representing $3.85 to $4.03 per share. This fully
diluted per share guidance is based on an estimated weighted average of 115.5
million shares outstanding and assumes that all Bunge's 3.75% convertible notes
due 2022 convert to common shares."
"We are also increasing our long-term EPS target by raising the base from which
we intend to grow our EPS. In February 2004, we established a new, higher base
of $300 - 320 million net income, or $2.97 to $3.17 per share for 2004. Today,
we are increasing that base for 2004 by $90 million to $390 - $410 million net
income, or $3.42 to $3.59 per share, based on an estimated weighted average of
115.5 million shares outstanding. Our new, higher base is below our expected
2004 net income due to exceptional 2004 profitability in our retail fertilizer
business and certain other financial and tax-related benefits in 2004. Although
our EPS growth rate may vary from year-to-year, we believe we can increase EPS
from this base 10 - 12% per year on average over the five-year period beginning
in 2004."
5
Conference Call and Webcast Information
Bunge Limited's management will host a conference call at 10:00 a.m. Eastern
time on October 28, 2004 to discuss the company's third quarter results.
To listen to the conference call, please dial (800) 810-0924 or, if located
outside of the United States, dial (913) 981-4900. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
981441.
The conference call will also be webcast live on the company's Web site,
www.Bunge.com. Please go there at least 15 minutes prior to the call to register
and to download and install any necessary audio software.
To access the webcast, select the "News and Information" link located at the
bottom left of the homepage. Open the "Webcasts and Upcoming Events" link and
click on "Q3 2004 Bunge Limited Conference Call." Follow the prompts to join the
call.
For those who cannot listen to the live broadcast, a replay of the call will be
available beginning at 2:00 p.m. Eastern time on October 28, 2004, and
continuing through November 28, 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 981441. A rebroadcast of the conference call
will also be available on the company's Web site beginning at 2:00 p.m. Eastern
time on October 28. It will be accessible for six months.
To access the archived webcast, go to www.Bunge.com and select the "News &
Information" link located at the bottom left of the homepage. Open the "Audio
Archive" link, and click on "Q3 2004 Bunge Limited Conference Call." Follow the
prompts to listen to the webcast.
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 25,000 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.
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
6
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.
7
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 nine months ended September 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 Sept. 30:
Impairment charges(1) $(3) $- $(3) $- $(2) $- $(0.02) $-
Post retirement curtailment
gains(2) - 13 - 13 - 9 - 0.09
Loss on discontinued
operations, net of
tax - - - - - (2) - (0.02)
-----------------------------------------------------------------------------------------
Total $(3) $13 $(3) $13 $(2) $7 $(0.02) $0.07
=========================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
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
---- ---- ---- ---- ---- ---- ---- ----
Nine Months Ended Sept. 30:
Impairment charges(1) $(3) $- $(3) $- $(2) $- $ (0.02) $-
Post retirement curtailment
gains(2) - 24 - 24 - 16 - 0.16
Gain on sale of soy ingredients
Business - - - 111 - 111 - 1.10
Gain on exchange of
retail flour business - - 5 - 3 - 0.03 -
Loss on discontinued
operations, net of
tax - - - - - (4) - (0.04)
-----------------------------------------------------------------------------------------
Total $(3) $24 $2 $135 $1 $123 $0.01 $1.22
==========================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
- --------------------------
(1) Impairment charges relate to the North American packaged oil operations.
(2) Post retirement curtailment gains of $2 million, relating to the
discontinued operations of Bunge's bakery business, were recorded in the loss on
discontinued operations.
8
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited) (Note 5)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- Percent ---------------------------- Percent
2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
Net sales $6,560 $5,784 13% $18,956 $15,807 20%
Cost of goods sold (6,007) (5,415) 11% (17,542) (14,896) 18%
------------- ------------- ------------- -------------
Gross profit 553 369 50% 1,414 911 55%
Gain on sale of soy ingredients business (Note 1) - - - - 111 -
Selling, general and administrative expenses (231) (179) 29% (601) (492) 22%
Interest income 34 39 (13)% 74 83 (11)%
Interest expense (40) (47) (15)% (123) (138) (11)%
Interest expense on readily marketable inventories (12) (9) 33% (43) (29) 48%
Foreign exchange gains (losses) 24 (1) (56) 76
Other income (expense)-net 9 - 19 4
------------- ------------- ------------- -------------
Income from continuing operations before income tax
and minority interest 337 172 96% 684 526 30%
Income tax expense (100) (48) 108% (216) (133) 62%
------------- ------------- ------------- -------------
Income from continuing operations before minority
interest 237 124 91% 468 393 19%
Minority interest (55) (33) 67% (104) (78) 33%
------------- ------------- ------------- -------------
Income from continuing operations 182 91 100% 364 315 16%
Discontinued operations, net of tax (Note 3) - (2) - (4)
------------- ------------- ------------- -------------
Net income $ 182 $ 89 104% $ 364 $ 311 17%
============= ============= ============= =============
Earnings per common share - basic (Note 4):
Income from continuing operations $1.65 $ 0.91 $3.48 $ 3.16
Discontinued operations - (0.02) - (0.04)
------------- ------------- ------------- -------------
$1.65 $ 0.89 85% $3.48 $ 3.12 12%
Net income per share - basic
============= ============= ============= =============
Earnings per common share - diluted (Note 4):
Income from continuing operations $1.53 $ 0.90 $3.22 $ 3.12
Discontinued operations - (0.02) - (0.04)
------------- ------------- ------------- -------------
Net income per share - diluted $1.53 $ 0.88 74% $3.22 $ 3.08 5%
============= =============------------============= =============-----------
9
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 July 2003, Bunge sold its Lesieur bottled oil business in France
to Saipol, Bunge's joint venture with Sofiproteol (the financial arm of
the French oilseed farmer's association) for $240 million in cash and
repayment of Lesieur intercompany debt owed to Cereol. Bunge did not
recognize a gain or loss on this transaction.
Note 3: 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 nine months ended September 30, 2003.
Note 4: Earnings per share are calculated on the basis of the following number
of common shares outstanding:
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2004 2003 2004 2003
--------------- ---------------- --------------- ----------------
(In millions, except share data)
--------------------------------
Income from continuing operations -
basic $182 $91 $364 $315
Interest on convertible notes, net of 1 - 3 -
tax
--------------- ---------------- --------------- ----------------
Income from continuing operations -
diluted $183 $91 $367 $315
=============== ================ =============== ================
Weighted average number of common
shares outstanding:
Basic 110,080,027 99,812,000 104,530,750 99,699,001
Effect of dilutive shares:
-Stock options and awards 1,766,461 1,411,850 1,765,720 1,179,967
-Convertible notes 7,778,425 - 7,778,425 -
--------------- ---------------- --------------- ----------------
Diluted 119,624,913 101,223,850 114,074,895 100,878,968
=============== ================ =============== ================
Income from continuing operations -
per share:
-Basic $1.65 $.91 $3.48 $3.16
=============== ================ =============== ================
-Diluted $1.53 $.90 $3.22 $3.12
=============== ================ =============== ================
The calculation of diluted earnings per common share for the quarter
and nine months ended September 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 September 30, 2004. The convertible notes
will remain convertible until December 31, 2004. Bunge's diluted
weighted average common shares outstanding for the quarter and nine
months ended September 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 5: Certain reclassifications were made to the prior period's
consolidated financial statements to conform to the 2004 presentation.
10
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 Nine Months Ended
September 30, September 30,
------------------------ Percent ------------------------- Percent
2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------
Volumes (in thousands of metric tons):
Agribusiness 22,758 22,822 -% 67,575 65,142 4%
Fertilizer 3,888 4,065 (4)% 8,282 8,343 (1)%
Edible oil products 1,265 1,131 12% 3,678 3,501 5%
Milling products 1,043 900 16% 3,043 2,561 19%
Other (soy ingredients) - - - - 140 (100)%
---------- --------- ---------- ----------
Food products total 2,308 2,031 14% 6,721 6,202 8%
---------- --------- ---------- ----------
Total 28,954 28,918 -% 82,578 79,687 4%
========== ========= ========== ==========
Net sales:
Agribusiness $4,511 $4,128 9% $13,664 $11,476 19%
Fertilizer 861 660 30% 1,751 1,361 29%
Edible oil products 978 799 22% 2,935 2,367 24%
Milling products 210 197 7% 606 551 10%
Other (soy ingredients) - - - - 52 (100)%
---------- --------- --------- ----------
Food products total 1,188 996 19% 3,541 2,970 19%
---------- --------- --------- ----------
Total $6,560 $5,784 13% $18,956 $15,807 20%
========== ========= ========== ==========
Cost of goods sold:
Agribusiness $(4,266) $(3,975) 7% $(12,932) $(11,135) 16%
Fertilizer (645) (533) 21% (1,334) (1,086) 23%
Edible oil products (909) (735) 24% (2,734) (2,150) 27%
Milling products (187) (172) 9% (542) (491) 10%
Other (soy ingredients) - - - - (34) (100)%
---------- --------- ---------- ----------
Food products total (1,096) (907) 21% (3,276) (2,675) 22%
---------- --------- ---------- ----------
Total $(6,007) $(5,415) 11% $(17,542) $(14,896) 18%
========== ========= ========== ==========
Gross profit:
Agribusiness $245 $153 60% $732 $341 115%
Fertilizer 216 127 70% 417 275 52%
Edible oil products 69 64 8% 201 217 (7)%
Milling products 23 25 (8)% 64 60 7%
Other (soy ingredients) - - - - 18 (100)%
---------- --------- ---------- ---------
Food products total 92 89 3% 265 295 (10)%
---------- --------- ---------- ---------
Total $553 $369 50% $1,414 $911 55%
========== ========= ========== ==========
Selling, general and administrative expenses:
Agribusiness $(128) $(88) 45% $(330) $(233) 42%
Fertilizer (55) (42) 31% (124) (86) 44%
Edible oil products (38) (38) -% (115) (133) (14)%
Milling products (10) (11) (9)% (32) (33) 3%
Other (soy ingredients) - - - - (7) (100)%
---------- --------- ---------- ---------
Food products total (48) (49) (2)% (147) (173) (15)%
---------- --------- ---------- ---------
Total $(231) $(179) 29% $(601) $(492) 22%
========== ========= ========== =========
Foreign exchange gain (loss):
Agribusiness $26 $2 $(24) $80
Fertilizer (4) (13) (28) (26)
Edible oil products - - - -
Milling products - - - -
Other (soy ingredients) - - - (1)
---------- --------- ---------- ---------
Food products total - - - (1)
---------- --------- ---------- ---------
Total $22 $(11) $(52) $53
========== ========== ========== =========
--------------------------------------------------------------------------
11
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ Percent ------------------------- Percent
2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------
Interest income:
Agribusiness $13 $18 (28)% $18 $25 (28)%
Fertilizer 12 15 (20)% 32 39 (18)%
Edible oil products - 1 (100)% 6 4 50%
Milling products - - - 3 - -%
Other (soy ingredients) - - - - - -
---------- --------- ---------- ----------
Food products total - 1 (100)% 9 4 125%
---------- --------- ---------- ----------
Total $25 $34 (26)% $59 $68 (13)%
========== ========= ========== =========
Interest expense:
Agribusiness $(27) $(17) 59% $(87) $(57) 53%
Fertilizer (14) (9) 56% (34) (28) 21%
Edible oil products (11) (5) 120% (25) (19) 32%
Milling products (4) (2) 100% (7) (7) -%
Other (soy ingredients) - - - - (2) (100)%
---------- --------- ---------- ----------
Food products total (15) (7) 114% (32) (28) 14%
---------- --------- ---------- ----------
Total $(56) $(33) 70% $(153) $(113) 35%
========== ========= ========== ==========
- -------------------------------------------------------------------------------------------------------------------------------
Segment operating profit:
Agribusiness $129 $68 90% $309 $156 98%
Fertilizer 155 78 99% 263 174 51%
Edible oil products 20 22 (9)% 67 69 (3)%
Milling products 9 12 (25)% 28 20 40%
Other (soy ingredients) - - - - 8 (100)%
---------- --------- ---------- ----------
Food products total 29 34 (15)% 95 97 (2)%
---------- --------- ---------- ----------
Total (Note 2) $313 $180 74% $667 $427 56%
========== ========= ========== ==========
- -------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income
tax and minority interest:
Segment operating profit $313 $180 $667 $427
Gain on sale of soy ingredients business - - - 111
Unallocated income (expense) - net (Note 3) 24 (8) 17 (12)
---------- --------- ---------- ----------
Income from continuing operations before income
tax and minority interest $337 $172 $684 $526
========== ========= ========== =========
Depreciation, depletion and amortization:
Agribusiness $22 $17 29% $63 $58 9%
Fertilizer 17 15 13% 51 41 24%
Edible oil products 11 9 22% 31 24 29%
Milling products 3 4 (25)% 9 10 (10)%
Other (soy ingredients) - - - - - -
---------- --------- ---------- ----------
Food products total 14 13 8% 40 34 18%
---------- --------- ---------- ----------
Total $53 $45 18% $154 $133 16%
========== ========= --------- ========== ========== -----------
12
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 nine months ended September
30, 2003 have been reclassified to conform to the quarter and nine
months ended September 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 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. The amount of unallocated income (expense)
- net for the quarter ended September 30, 2004 increased by $32 million
compared to the third quarter of 2003, primarily due to lower
unallocated interest expense. The interest expense allocated to segment
operating profit in 2004 was higher than 2003, primarily due to higher
levels of working capital in 2004 compared to 2003 resulting from high
commodity prices. In addition, interest rate hedging benefits of $11
million earned in 2004 and interest income of $10 million on the cash
invested in Brazil from the net proceeds of the June 2004 equity
offering, that was subsequently used to purchase the additional 15%
interest in Bunge Brasil, were not allocated to segment operating
profit.
The amount of unallocated income (expense) - net for the nine months
ended September 30, 2004 increased by $29 million compared to the nine
months ended September 30, 2003, primarily due to lower unallocated
interest expense. As described above, interest rate hedging benefits of
$12 million and interest income of $10 million were not allocated to
operating segment profit in 2004.
13
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
September 30, December 31, September 30,
2004 2003 2003
--------------- ---------------- ------------------
ASSETS
Cash and cash equivalents $ 610 $ 489 $ 501
Trade accounts receivable 1,936 1,495 1,342
Inventories 2,775 2,867 2,369
Other current assets 1,720 1,567 1,246
--------------- ---------------- ------------------
Total current assets 7,041 6,418 5,458
Property, plant and equipment, net 2,138 2,090 1,863
Goodwill 264 148 150
Investments in affiliates 566 537 530
Other non-current assets 799 691 666
--------------- ---------------- ------------------
Total assets $10,808 $9,884 $8,667
=============== ================ ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt $ 150 $ 889 $671
Current portion of long-term debt 122 128 232
Trade accounts payable 2,262 1,678 1,596
Other current liabilities 1,479 1,242 1,170
--------------- ---------------- ------------------
Total current liabilities 4,013 3,937 3,669
Long-term debt 2,634 2,377 1,684
Other non-current liabilities 653 639 569
Minority interest in subsidiaries 408 554 545
Shareholders' equity 3,100 2,377 2,200
--------------- ---------------- ------------------
Total liabilities and shareholders' equity $10,808 $9,884 $8,667
=============== ================ ==================
14
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
--------------------------
2004 2003
------------- -----------
OPERATING ACTIVITIES
Net income $ 364 $ 311
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 8 (68)
Depreciation, depletion and amortization 154 133
Bad debt expense 30 9
Deferred income taxes (49) (43)
Minority interest 104 78
Changes in operating assets and liabilities, excluding the
effects of acquisitions:
Trade accounts receivable (444) 57
Inventories 44 173
Recoverable taxes (40) 14
Trade accounts payable 622 69
Arbitration settlement - (57)
Other - net 147 73
------------- -----------
Cash provided by operating activities 940 638
INVESTING ACTIVITIES
Payments made for capital expenditures (208) (183)
Business acquisitions, net of cash acquired (329) (108)
Investments in affiliates (23) -
(Investments in) repayments of related party loans (46) 41
Proceeds from disposal of property, plant and equipment 11 26
Proceeds from sale of assets held for sale - 449
------------- -----------
Cash (used for) provided by investing activities (595) 225
FINANCING ACTIVITIES
Net change in short-term debt (735) (583)
Proceeds from long-term debt 856 324
Repayments of long-term debt (635) (594)
Proceeds from receivable from former shareholder - 55
Proceeds from sale of common shares 339 7
Dividends paid to shareholders (36) (31)
Dividends paid to minority interest (36) (61)
------------- -----------
Cash used for financing activities (247) (883)
Effect of exchange rate changes on cash and cash equivalents
23 51
------------- -----------
Net increase in cash and cash equivalents 121 31
Cash and cash equivalents, beginning of period 489 470
------------- -----------
Cash and cash equivalents, end of period $610 $501
============= ===========
15
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 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 Nine Months
September 30, Ended September 30,
-------------------------------- --------------------------------
(In millions) 2004 2003 2004 2003
- ------------- -------------- -------------- --------------- -------------
Income from continuing operations before
income tax and minority interest $337 $172 $684 $526
Gain on sale of soy ingredients business - - - (111)
Plus (minus): Unallocated (income)/expenses -
net (1) (24) 8 (17) 12
-------------- -------------- --------------- -------------
Total segment operating profit $313 $180 $667 $427
============== ============== =============== =============
- ------------------------
(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.
16
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:
Sept. 30, December 31, Sept. 30,
(In millions) 2004 2003 2003
------------- ------------- -------------- ------------
Short-term debt $150 $ 889 $671
Long-term debt, including current portion 2,756 2,505 1,916
------------- -------------- -----------
Total debt 2,906 3,394 2,587
Less:
Cash and cash equivalents 610 489 501
Marketable securities 11 13 14
------------- -------------- ------------
Net financial debt 2,285 2,892 2,072
Less: Readily marketable inventories 1,503 1,868 1,563
------------- -------------- ------------
Net financial debt less readily marketable inventories $782 $1,024 $509
============= ============== ============
17