[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 Record Fiscal 2004 Net Income and EPS
White Plains, NY - February 8, 2005 - Bunge Limited (NYSE: BG).
- Financial Highlights
(In millions, except per share data and percentages)
- ------------------------------------------------------------------------------------------------------
Fourth Quarter Ended Percent Year Ended Percent
12/31/04 12/31/03 Change 12/31/04 12/31/03 Change
- ------------------------------------------------------------------------------------------------------
Volumes (metric tons) 26.8 26.9 (1)% 108.9 106.2 3%
Net sales $6,212 $6,358 (2)% $25,168 $22,165 14%
Total segment operating profit(1) $183 $191 (4)% $850 $618 38%
Gain on sale of soy
ingredients business - - - - $111 -
Net income $105 $100 5% $469 $411 14%
Earnings per share(2) $0.89 $0.94 (5)% $4.10 $3.83 7%
- ------------------------------------------------------------------------------------------------------
Excluding from 2003 results the $111 million gain on the sale of the Brazilian
soy ingredients business, 2004 net income increased $169 million, or 56% over
2003, and 2004 earnings per share increased $1.29 per share, or 46%, over 2003.
Bunge's results included certain gains and charges that may be of interest to
investors. These items totaled $(13) million, or $(0.11) per share, and $(12)
million, or $(0.10) per share, for the quarter and year ended December 31, 2004,
respectively, and $(66) million, or $(0.61) per share, and $57 million, or $0.53
per share for the quarter and year ended December 31, 2003, respectively.
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
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) for the quarters and years ended December 31, 2004
and 2003 are reported on a fully diluted basis, which includes 7,778,425 common
shares issuable on conversion of Bunge's 3.75% convertible notes due 2022. EPS
for the quarter and year ended December 31, 2003 were revised from the amounts
previously reported to reflect the 7,778,425 common shares issuable on
conversion of the convertible notes. See Note 2 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: "2004 was
an extraordinary year for Bunge. Our 2004 results were excellent and above our
expectations. Each of our businesses showed strength in dealing with volatile
markets. We attribute this performance in large part to Bunge's integrated and
balanced operations. We captured value at a variety of points on the food
production chain, while effectively mitigating risk. It is also due to our
approach and team. We emphasize values of openness and teamwork, and our
decentralized, entrepreneurial operating model enhances agility, which is
essential to navigating volatile markets.
"2005 promises strong growth and a return to more typical market conditions.
USDA estimates show supplies to be ample. This year's U.S. soy crop is
approximately 85 million tons, which represents a 27% increase over last year's
crop. The 2005/2006 Brazilian soy crop is forecast at 64 million tons, a 23%
increase over last year, and the Argentine crop is forecast at 39 million tons,
a 13% increase over 2004. Europe's rapeseed, wheat and feed grain crops are each
over 20% larger than last year, and India harvested another large oilseed crop
this season.
"Demand is strong. The USDA projects global soybean meal consumption in 2005 at
140 million tons, an 8% increase over 2004. We expect long-term demand to grow
by over 4% per year. Global vegetable oil demand growth is forecast at a similar
rate. In addition, favorable legislation in Europe, North America and Brazil
should drive increased demand for biofuels, further stimulating vegetable oil
demand.
"Demand will encourage production, and South America, especially Brazil, will
enjoy the majority of this growth. Brazilian soil needs nutrients so fertilizer
sales should increase steadily as well.
"Bunge took numerous steps in 2004 to ensure that we capitalize on these trends.
We improved our agribusiness and logistics footprints in key growth areas by
investing in a new port complex in Ramallo, Argentina and in grain terminals in
the ports of Rostov, Russia and Liepaja, Latvia, and by signing a throughput
agreement with Phu My port in Vietnam. We commenced construction of a new
sunseed crushing plant in Ukraine, and purchased an edible oils manufacturer in
Poland and premium bottled oil brand in Russia. These actions will improve our
integrated operations in Eastern Europe. We also enhanced our presence in value-
added markets by launching, together with DuPont, a low-linolenic soybean oil in
the United States, and by forming a partnership to manufacture phytosterol food
ingredients.
"Indicators for 2005 are encouraging, and we are confident that Bunge's unique
operating model positions the company to benefit from strong markets."
2
- Fourth Quarter Results
Agribusiness
Agribusiness volumes and operating profit were both below the exceptional levels
experienced in the fourth quarter of 2003. In the fourth quarter of 2003, record
soybean prices caused a wave of farmer selling in North and South America. This
selling, combined with strong customer demand, generated unusually strong
margins. The fourth quarter of 2004 was a return to more typical seasonal
patterns. South American results reflected reduced activity due primarily to
lack of farmer selling, and results in North America were also lower, offset in
part by improved results in Europe. Volumes declined primarily due to lack of
farmer selling and lower volumes in international marketing. Selling, general
and administrative expenses (SG&A) increased primarily due to bad debt
provisions associated with higher selling prices earlier in the year and
increased labor-related provisions in Brazil.
The fourth quarter of 2004 included $17 million of pre-tax impairment and
restructuring charges related to Bunge's Western European oilseed processing
operations, including $7 million of cash restructuring costs. The fourth quarter
of 2003 included $56 million of pre-tax, non-cash impairment charges on long-
term operating assets in Bunge's Western European oilseed processing operations.
Fertilizer
The fertilizer segment benefited from higher sales volumes, particularly in
Bunge's retail business, and higher average selling prices. Higher international
prices for fertilizer raw materials increased selling prices and margins on
local production, as products are priced to import parity. SG&A increased
primarily due to bad debt provisions associated with higher selling prices and
increased labor-related provisions in Brazil.
Edible Oil Products
Volumes increased as lower prices stimulated demand, particularly in Brazil and
the United States. Bunge's edible oil business in North America suffered from
increased competition and higher logistics and energy costs. Results in Eastern
Europe were negatively affected by margin pressure as a result of higher raw
material prices and lower seed quality and yields.
Fourth quarter 2004 results include a $4 million pre-tax, non-cash impairment
charge relating to Bunge's Brazilian packaged oil operations.
3
Milling Products
Milling products results benefited from higher volumes of corn milling products
sold to both commercial customers and the U.S. government for its food aid
program and from higher volumes and margins in Bunge's Brazilian wheat milling
business. These were offset in part by lower margins on corn milling products
sold to commercial customers.
Selling, General and Administrative Expenses
SG&A increased in the fourth quarter 2004 from the fourth quarter 2003 due to
higher bonus provisions associated with improved results, increased headcount in
Bunge's international marketing business, higher bad debt provisions due to
elevated commodity and fertilizer prices and increased labor-related provisions
in Brazil.
Financial Costs
Interest income increased primarily due to higher average balances of interest-
bearing accounts receivable as well as higher levels of invested cash in Bunge's
fertilizer business. Interest expense was unchanged compared to the same period
last year.
In the fourth quarter of 2004, the Brazilian real and the euro appreciated 8%
and 10% against the U.S. dollar, respectively, as compared to 1% and 8% in the
same period last year. Foreign exchange gains, incurred primarily on the net
U.S. dollar-denominated monetary liability position of Bunge's Brazilian and
European subsidiaries, were $25 million in the fourth quarter of 2004 compared
to $16 million in the fourth quarter of 2003. Foreign exchange gains and losses,
included in segment operating profit, substantially offset gains and losses on
debt funding commodity inventories. In the fourth 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 decreased during the fourth quarter of 2004
primarily due to lower earnings from Bunge's Solae and Saipol joint ventures,
offset in part by a $5 million gain on interest rate derivatives.
Income Tax Expense
Bunge's effective tax rate for the fourth quarter of 2004 was 33% compared to
35% in the same period in 2003. Excluding the gain on the sale of Bunge's
Brazilian soy ingredients business in 2003, Bunge's effective tax rate for the
years ended December 31, 2004 and 2003 was 32% and 33%, respectively.
Minority Interest
4
Despite the September 2004 repurchase of an additional 15% interest in Bunge
Brasil S.A., minority share of net income increased primarily due to increased
earnings in Fertilizantes Fosfatados S.A. (Fosfertil). In the fourth quarter of
2004, Bunge acquired the remaining 2% minority interest in Bunge Brasil for $32
million. Bunge now owns 100% of Bunge Brasil.
Cash Flow and Net Financial Debt(3)
Cash flow provided by operations in 2004 was $802 million. Cash flow provided by
operations was favorably affected by strong operating results and the return of
soybean prices to normal historical levels. Net financial debt decreased by $57
million from December 31, 2003.
- Outlook
Bill Wells, Chief Financial Officer, stated, "We are looking forward to a good
year in 2005, following the extraordinary one we experienced in 2004. Supplies
of oilseeds and grains are ample and we expect large South American harvests.
Demand from our customers is very strong as they seek to take advantage of lower
prices and a weak U.S. dollar. Fertilizer demand is expected to remain strong
with good margins.
"Our 2005 guidance is as follows:
o Depreciation, Depletion and Amortization: $230 million to $240 million
o Capital Expenditures: $410 million to $460 million
o $150 million to $170 million maintenance, safety and
environmental capital expenditures
o Effective Tax Rate: 28% to 33%
o Joint Venture Earnings: $30 million to $35 million
"Assuming stable currencies in South America and Europe and normal harvests in
Europe and the Americas, our net income guidance for 2005 is between $455
million to $475 million, representing $3.82 to $3.98 per share. This fully
diluted per share guidance is based on an estimated weighted average of 120.5
million shares outstanding. Our guidance excludes any effects of the anticipated
adoption of new
- -----------------------
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 a
reconciliation of net financial debt to total debt, the most directly comparable
GAAP measure, is included in the tables attached to this press release.
5
accounting standards for expensing of stock options. In anticipation of a more
normal seasonal distribution of results versus last year, we expect our earnings
to be split roughly 30% in the first half of 2005 and 70% in the second half of
2005. As we have seen in the past two years, profits can shift from quarter to
quarter so the right way to look at our results is to focus on the full year.
"In October 2004, we increased our long-term EPS target by increasing the base
from which we intend to grow to between $3.42 to $3.59 per fully diluted share.
At that time, we noted several exceptional factors in 2004 that caused our new,
higher base to be below our expected 2004 net income. Our 2005 guidance
represents an 11% increase in EPS from this new base for measuring progress
towards our long term goal of 10-12% average annual increases in EPS."
Conference Call and Webcast Information
Bunge Limited's management will host a conference call at 10:00 a.m. Eastern
time on February 8, 2005 to discuss the company's fourth quarter results.
To listen to the conference call, please dial (800) 289-0572 or, if located
outside of the United States, dial (913) 981-5543. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
245806.
The conference call will also be webcast live on the company's Web site, http:
//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 "Q4 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 February 8, 2005, and
continuing through March 8, 2005. 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 245806. 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 February 8. It will be accessible for six months.
To access the archived webcast, go to http://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 "Q4 2004 Bunge Limited Conference Call." Follow the
prompts to listen to the webcast.
6
About Bunge
Bunge Limited (http://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 32 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 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 twelve months ended December 31, 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(2)
- ------------------------------------ ---------------------- ------------------ ------------------ ------------------------
Quarter Ended December 31: 2004 2003 2004 2003 2004 2003 2004 2003
---------- ---------- -------- -------- -------- -------- ------------ -----------
Impairment and restructuring
charges(1) $(21) $(56) $(21) $(56) $(13) $(40) $(0.11) $(0.37)
South America tax provision - - - - - (23) - (0.21)
Loss on discontinued
operations, net of
tax - - - - - (3) - (0.03)
----------------------------------------------------------------------------------------
Total $(21) $(56) $(21) $(56) $(13) $(66) $(0.11) $(0.61)
========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
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(2)
- ------------------------------------ ------------------- -------------------- ------------------ -----------------------
Quarter Ended December 31: 2004 2003 2004 2003 2004 2003 2004 2003
---------- -------- ---------- --------- -------- -------- ----------- -----------
Impairment and restructuring
charges(1) $(24) $(56) $(24) $(56) $(15) $(40) $(0.13) $(0.37)
Gain on exchange of
retail flour business - - 5 - 3 - 0.03 -
Post retirement curtailment
gains(3) - 24 - 24 - 16 - 0.15
Gain on sale of soy ingredients
business - - - - - 111 - 1.02
South America tax provision - - - - - (23) - (0.21)
Loss on discontinued
operations, net of tax(3) - - - - - (7) - (0.06)
----------------------------------------------------------------------------------------
Total $(24) $(32) $(19) $(32) $(12) $57 $(0.10) $0.53
========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
(1) Impairment and restructuring charges of $24 million in 2004 were $17
million in the agribusiness segment in Western Europe and $7 million in
the edible oil products segment in North and South America. Impairment
charges in 2003 related to the agribusiness segment in Western Europe.
(2) See Note 2 of the Notes to the Consolidated Statements of Income.
(3) Post retirement curtailment gains of $2 million related to the
discontinued operations of Bunge's U.S. bakery business are recorded in
the loss on discontinued operations.
8
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
---------------------------- Percent ---------------------------- Percent
2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
Net sales $6,212 $6,358 (2)% $25,168 $22,165 14%
Cost of goods sold (5,740) (5,964) (4)% (23,282) (20,860) 12%
------------- ------------- ------------- -------------
Gross profit 472 394 20% 1,886 1,305 45%
Selling, general and administrative expenses (270) (199) 36% (871) (691) 26%
Gain on sale of soy ingredients business (Note 1) - - - - 111 -
Interest income 29 19 53% 103 102 1%
Interest expense (45) (43) 5% (168) (181) (7)%
Interest expense on readily marketable inventories (3) (5) (40)% (46) (34) 35%
Foreign exchange gains (losses) 25 16 (31) 92
Other income (expense)-net 12 15 (20)% 31 19 63%
------------- ------------- ------------- -------------
Income from continuing operations before income tax
and minority interest 220 197 12% 904 723 25%
Income tax expense (73) (68) 7% (289) (201) 44%
------------- ------------- ------------- -------------
Income from continuing operations before minority
interest 147 129 14% 615 522 18%
Minority interest (42) (26) 62% (146) (104) 40%
------------- ------------- ------------- -------------
Income from continuing operations 105 103 2% 469 418 12%
Discontinued operations, net of tax - (3) - (7)
------------- ------------- ------------- -------------
Net income $ 105 $ 100 5% $469 $ 411 14%
============= ============= ============= =============
Earnings per common share - basic (Note 2):
Income from continuing operations $0.95 $ 1.03 $4.42 $ 4.19
Discontinued operations - (0.03) - (0.07)
------------- ------------- ------------- -------------
Net income per share - basic $0.95 $ 1.00 (5)% $4.42 $ 4.12 7%
============= ============= ============= =============
Earnings per common share - diluted (Note 2):
Income from continuing operations $0.89 $ 0.97 $4.10 $ 3.89
Discontinued operations - (0.03) - (0.06)
------------- ------------- ------------- -------------
Net income per share - diluted $0.89 $ 0.94 (5)% $4.10 $ 3.83 7%
============= =============------------============= =============-----------
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. Bunge recognized a gain on sale of $111
million in the second quarter of 2003 in connection with this
transaction. Solae is a joint venture between Bunge and E.I. DuPont de
Nemours and Company.
Note 2: Earnings per share are calculated on the basis of the following number
of common shares outstanding:
Quarter Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
2004 2003 2004 2003
--------------- ---------------- --------------- ----------------
(In millions, except share data)
--------------------------------
Income from continuing operations -
basic $105 $103 $469 $418
Interest on convertible notes, net of tax 2 2 5 5
--------------- ---------------- --------------- ----------------
Income from continuing operations -
diluted $107 $105 $474 $423
=============== ================ =============== ================
Weighted average number of common
shares outstanding:
Basic 110,438,941 99,884,771 106,015,869 99,745,825
Effect of dilutive shares:
-Stock options and awards 2,061,831 1,176,973 1,879,762 1,129,777
-Convertible notes 7,778,425 7,778,425 7,778,425 7,778,425
--------------- ---------------- --------------- ----------------
Diluted 120,279,197 108,840,169 115,674,056 108,654,027
=============== ================ =============== ================
Income from continuing operations-
per share:
-Basic $0.95 $1.03 $4.42 $4.19
=============== ================ =============== ================
-Diluted $0.89 $0.97 $4.10 $3.89
=============== ================ =============== ================
The calculation of diluted earnings per common share for the quarter
and year ended December 31, 2004 and 2003 includes the 7,778,425 common
shares that are issuable upon conversion of our 3.75% convertible notes
due 2022 (the Notes). In November 2004, the Financial Accounting
Standards Board (FASB) Emerging Issues Task Force (EITF) reached a
consensus on EITF Issue No. 04-08, "The Effect of Contingently
Convertible Instruments on Diluted Earnings Per Share" (Issue No.
04-8), that contingently convertible shares should be included in
diluted earnings per share computations (if dilutive) regardless of
whether the market price triggers (or other contingent features) have
been met. The EITF concluded that Issue No. 04-8 would be applied by
restating diluted earnings per share for all prior periods presented.
Issue No. 04-8 is effective for periods ending after December 15, 2004.
Bunge has applied Issue No. 04-8 to its consolidated statements of
income and has restated diluted earnings per share for the three and
twelve months ended December 31, 2003 to include the 7,778,425 common
shares that are issuable upon the conversion of the Notes.
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 Year Ended
December 31, December 31,
------------------------ Percent ------------------------- Percent
2004 2003 Change 2004 2003 Change
------------ ------------ ---------- ------------ ------------- ----------
Volumes (in thousands of metric tons):
Agribusiness 21,274 21,820 (3)% 88,619 86,962 2%
Fertilizer 3,307 3,195 4% 11,589 11,538 -%
Edible oil products 1,273 1,026 24% 4,728 4,100 15%
Milling products 944 907 4% 3,987 3,468 15%
Other (soy ingredients) - - -% - 140 (100)%
------------ ------------ ------------ -------------
Food products total 2,217 1,933 15% 8,715 7,708 13%
------------ ------------ ------------ -------------
Total 26,798 26,948 (1)% 108,923 106,208 3%
============ ============ ============ =============
Net sales:
Agribusiness $4,247 $4,748 (11)% $17,911 $16,224 10%
Fertilizer 830 593 40% 2,581 1,954 32%
Edible oil products 937 817 15% 3,872 3,184 22%
Milling products 198 200 (1)% 804 751 7%
Other (soy ingredients) - - -% - 52 (100)%
------------ ------------ ------------ -------------
Food products total 1,135 1,017 12% 4,676 3,987 17%
------------ ------------ ------------ -------------
Total $6,212 $6,358 (2)% $25,168 $22,165 14%
============ ============ ============ =============
Cost of goods sold:
Agribusiness $(4,043) $(4,540) (11)% $(16,975) $(15,675) 8%
Fertilizer (646) (495) 31% (1,980) (1,581) 25%
Edible oil products (881) (750) 17% (3,615) (2,900) 25%
Milling products (170) (179) (5)% (712) (670) 6%
Other (soy ingredients) - - -% - (34) (100)%
------------ ------------ ------------ -------------
Food products total (1,051) (929) 13% (4,327) (3,604) 20%
------------ ------------ ------------ -------------
Total $(5,740) $(5,964) (4)% $(23,282) $(20,860) 12%
============ ============ ============ =============
Gross profit:
Agribusiness $204 $208 (2)% $936 $549 70%
Fertilizer 184 98 88% 601 373 61%
Edible oil products 56 67 (16)% 257 284 (10)%
Milling products 28 21 33% 92 81 14%
Other (soy ingredients) - - -% - 18 (100)%
------------ ------------ ------------ -------------
Food products total 84 88 (5)% 349 383 (9)%
------------ ------------ ------------ -------------
Total $472 $394 20% $1,886 $1,305 45%
============ ============ ============ =============
Selling, general and administrative expenses:
Agribusiness $(141) $(98) 44% $(471) $(332) 42%
Fertilizer (73) (43) 70% (197) (129) 53%
Edible oil products (42) (47) (11)% (157) (180) (13)%
Milling products (14) (11) 27% (46) (43) 7%
Other (soy ingredients) - - -% - (7) (100)%
------------ ------------ ------------ -------------
Food products total (56) (58) (3)% (203) (230) (12)%
------------ ------------ ------------ -------------
Total $(270) $(199) 36% $(871) $(691) 26%
============ ============ ============ =============
Foreign exchange gain (loss):
Agribusiness $7 $9 $(17) $89
Fertilizer (4) 6 (32) (20)
Edible oil products 5 - 5 -
Milling products - - - -
Other (soy ingredients) - - - (1)
------------ ------------ ------------ -------------
Food products total 5 - 5 (1)
------------ ------------ ------------ -------------
Total $8 $15 $(44) $68
============ ============ ---------- ============ ============= ----------
11
Quarter Ended Year Ended
December 31, December 31,
------------------------ Percent ------------------------- Percent
2004 2003 Change 2004 2003 Change
------------ ------------ ---------- ------------ ------------- ----------
Interest income:
Agribusiness $3 $1 200% $21 $26 (19)%
Fertilizer 18 14 29% 50 53 (6)%
Edible oil products - 2 (100)% 6 6 -%
Milling products - - -% 3 - 100%
Other (soy ingredients) - - -% - - -%
------------ ------------ ------------ -------------
Food products total - 2 (100)% 9 6 50%
------------ ------------ ------------ -------------
Total $21 $17 24% $80 $85 (6)%
============ ============ ============ =============
Interest expense:
Agribusiness $(24) $(24) -% $(111) $(80) 39%
Fertilizer (16) (7) 129% (50) (35) 43%
Edible oil products (7) (5) 40% (32) (24) 33%
Milling products (1) - (100)% (8) (8) -%
Other (soy ingredients) - - -% - (2) (100)%
------------ ------------ ------------ -------------
Food products total (8) (5) 60% (40) (34) 18%
------------ ------------ ------------ -------------
Total $(48) $(36) 33% $(201) $(149) 35%
============ ============ ============ =============
- -------------------------------------------------------------------------------------------------------------------------------
Segment operating profit:
Agribusiness $49 $96 (49)% $358 $252 42%
Fertilizer 109 68 60% 372 242 54%
Edible oil products 12 17 (29)% 79 86 (8)%
Milling products 13 10 30% 41 30 37%
Other (soy ingredients) - - -% - 8 (100)%
------------ ------------ ------------ -------------
Food products total 25 27 (7)% 120 124 (3)%
------------ ------------ ------------ -------------
Total (Note 2) $183 $191 (4)% $850 $618 38%
============ ============ ============ =============
- -------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
income tax and minority interest:
Segment operating profit $183 $191 $850 $618
Gain on sale of soy ingredients business - - - 111
Unallocated income (expense) - net (Note 3) 37 6 54 (6)
------------ ------------ ------------ -------------
Income from continuing operations before
income tax and minority interest $220 $197 $904 $723
============ ============ ============ =============
Depreciation, depletion and amortization:
Agribusiness $26 $22 18% $89 $77 16%
Fertilizer 19 16 19% 70 57 23%
Edible oil products 10 13 (23)% 41 37 11%
Milling products 3 3 -% 12 13 (8)%
Other (soy ingredients) - - -% - - -
------------ ------------ ------------ -------------
Food products total 13 16 (19)% 53 50 6%
------------ ------------ ------------ -------------
Total $58 $54 7% $212 $184 15%
============ ============ ---------- ============ ============= ----------
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 year ended December 31, 2003
have been reclassified to conform to the quarter and year ended
December 31, 2004 presentation.
Note 2: Total segment operating profit is the consolidated segment operating
profit of all of Bunge's operating segments. Total segment operating
profit is a non-GAAP measure and is not intended to replace income from
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 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 December 31, 2004 increased by $31 million
compared to the fourth quarter of 2003, primarily due to lower
unallocated interest expense. The interest expense allocated to segment
operating profit in the 2004 fourth quarter increased by $12 million
over the same period of 2003, primarily due to higher levels of working
capital in the fourth quarter of 2004 compared to the fourth quarter of
2003, which resulted from higher commodity prices experienced during
most of the year. In addition, unallocated foreign exchange gains
increased $16 million in the fourth quarter of 2004 compared to the
fourth quarter of 2003 primarily due to the 8% appreciation in the
value of the Brazilian real relative to the U.S. dollar in the fourth
quarter of 2004 compared to a 1% appreciation in the same period last
year. Unallocated income (expense) - net in the fourth quarter of 2004
includes a $5 million gain on interest rate derivatives.
The amount of unallocated income (expense) - net for the year ended
December 31, 2004 increased by $60 million compared to the year ended
December 31, 2003, primarily due to lower unallocated interest expense.
The interest expense allocated to segment operating profit in the year
ended December 31, 2004 increased by $52 million over 2003, primarily
due to higher levels of working capital in 2004 compared to the same
period ended in 2003 resulting from high commodity prices. Unallocated
income (expense) - net in the year ended December 31, 2004 includes a
$10 million gain on interest rate derivatives.
13
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
December 31, December 31,
2004 2003
----------------- ------------------
ASSETS
Current Assets:
Cash and cash equivalents $432 $489
Trade accounts receivable 1,928 1,495
Inventories 2,636 2,867
Deferred income taxes 95 93
Other current assets 1,577 1,474
----------------- ------------------
Total current assets 6,668 6,418
Property, plant and equipment, net 2,536 2,090
Goodwill (Note 1) 167 148
Other intangible assets 156 92
Investments in affiliates 564 537
Deferred income taxes 305 233
Other non-current assets 543 366
----------------- ------------------
Total assets $10,939 $9,884
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $541 $889
Current portion of long-term debt 140 128
Trade accounts payable 1,898 1,678
Deferred income taxes 38 42
Other current liabilities 1,294 1,200
----------------- ------------------
Total current liabilities 3,911 3,937
Long-term debt 2,600 2,377
Deferred income taxes 255 206
Other non-current liabilities 518 433
Minority interest in subsidiaries 280 554
Shareholders' equity 3,375 2,377
----------------- ------------------
Total liabilities and shareholders' equity $10,939 $9,884
================= ==================
NOTES TO CONSOLIDATED BALANCE SHEETS
- ------------------------------------
(Unaudited)
Note 1: In the second half of 2004, Bunge acquired the remaining 17% of the
outstanding capital stock of Bunge Brasil S.A. for $314 million in cash. The
acquisition was funded with net proceeds of a public offering in June 2004.
As a result of the acquisition, Bunge directly owns 100% of Bunge Brasil and
its subsidiaries Bunge Alimentos S.A., Bunge's Brazilian agribusiness and
food products subsidiary, and Bunge Fertilizantes S.A., Bunge's Brazilian
fertilizer subsidiary. The excess of the cost to acquire the minority
interest in Bunge Brasil over the historical book value was $137 million,
which was preliminarily allocated to assets and liabilities according to
estimated fair values. This allocation is subject to adjustment as Bunge is
in the process of finalizing the third party valuations of property, plant
and equipment and intangible assets.
14
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Year Ended
December 31,
----------------------------
2004 2003
------------- -------------
OPERATING ACTIVITIES
Net income $469 $ 411
Adjustments to reconcile net income to cash provided by
(used for) operating activities:
Depreciation, depletion and amortization 212 184
Gain on sale of soy ingredients business - (111)
Foreign exchange gains on debt (85) (120)
Impairment of assets 17 56
Bad debt expense 54 6
Provision for recoverable taxes 2 (38)
Deferred income taxes (56) (17)
Discontinued operations - 7
Minority interest 146 104
Changes in operating assets and liabilities, excluding the
effects of acquisitions:
Trade accounts receivable (398) (129)
Inventories 328 (249)
Recoverable taxes (86) 34
Prepaid commodity contracts 211 (76)
Advances to suppliers (341) (30)
Trade accounts payable 164 174
Arbitration settlement - (57)
Other - net 165 (190)
------------- -------------
Cash provided by (used for) operating activities 802 (41)
INVESTING ACTIVITIES
Payments made for capital expenditures (437) (304)
Business acquisitions, net of cash acquired (355) (196)
Investments in affiliates (24) -
(Investments in) proceeds from related party loans (39) 41
Proceeds from disposal of property, plant and equipment 14 28
Proceeds from sale of assets held for sale - 450
Proceeds from sale of discontinued operations - 82
------------- -------------
Cash (used for) provided by investing activities (841) 101
FINANCING ACTIVITIES
Net change in short-term debt (348) (381)
Proceeds from long-term debt 860 851
Repayments of long-term debt (678) (529)
Proceeds from sale of common shares 348 7
Redemption of redeemable preferred stock (170) -
Dividends paid to shareholders (51) (42)
Dividends paid to minority interest (35) (63)
Proceeds from receivable from former shareholder - 55
------------- -------------
Cash used for financing activities (74) (102)
Effect of exchange rate changes on cash and cash
equivalents 56 61
------------- -------------
Net (decrease) increase in cash and cash equivalents (57) 19
Cash and cash equivalents, beginning of period 489 470
------------- -------------
Cash and cash equivalents, end of period $432 $489
============= =============
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 operating 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 an allocation of 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 Year Ended
December 31, December 31,
-------------------------------- --------------------------------
(In millions) 2004 2003 2004 2003
- ------------- -------------- -------------- --------------- -------------
Income from continuing operations before
income tax and minority interest $220 $197 $904 $723
Gain on sale of soy ingredients business - - - (111)
Plus (Minus): Unallocated (income)/expenses -
net (1) (37) (6) (54) 6
-------------- -------------- --------------- -------------
Total segment operating profit $183 $191 $850 $618
============== ============== =============== =============
____________________
(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:
December 31, December 31,
(In millions) 2004 2003
------------- ----------------- -----------------
Short-term debt $541 $889
Long-term debt, including current portion 2,740 2,505
----------------- -----------------
Total debt 3,281 3,394
Less:
Cash and cash equivalents 432 489
Marketable securities 14 13
----------------- -----------------
Net financial debt 2,835 2,892
Less: Readily marketable inventories 1,264 1,846
----------------- -----------------
Net financial debt less readily marketable inventories $1,571 $1,046
================= =================
17