EX 99.1
[Bunge logo][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 Second Quarter 2005 Results
White Plains, NY - July 28, 2005 - Bunge Limited (NYSE:BG).
Financial Highlights
(In millions, except per share data and percentages)
- ----------------------------------------- ------------------------- ------------- ----------------------------- ------------
Quarter Ended Percent Six Months Ended Percent
------------- ----------------
6/30/05 6/30/04 Change 6/30/05 6/30/04 Change
- ----------------------------------------- ------------ ------------ ------------- -------------- -------------- ------------
Volumes (metric tons) 31.9 29.8 7% 58.8 53.6 10%
Net sales $5,872 $6,657 (12)% $11,323 $12,396 (9)%
Total segment operating profit(1) $177 $218 (19)% $316 $354 (11)%
Net income $113 $112 1% $211 $182 16%
Earnings per share(2) $0.94 $1.00 (6)% $1.76 $1.65 7%
- ----------------------------------------- ------------ ------------ ------------- -------------- -------------- ------------
Bunge's results included certain gains that may be of interest to investors.
These gains totaled $30 million, or $0.25 per share, in the quarter ended June
30, 2005; $46 million, or $0.38 per share, in the six months ended June 30,
2005; and $3 million, or $0.03 per share, in the six months ended June 30, 2004.
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 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 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 six months ended June 30, 2005
and 2004 are reported on a fully diluted basis. See Note 1 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 performance this quarter despite significant challenges,
particularly when compared to last year's extraordinary results. Global
conditions for our business remain good and our positive outlook is unchanged.
"Better than expected results in agribusiness and food products balanced
weakness in our fertilizer business in Brazil. Our balanced portfolio and
integrated business model allow us to capture value at various points along the
farm-to-consumer chain, and provide a natural hedge against fluctuations in
supply and demand.
"This quarter, our fertilizer business faced a difficult scenario in Brazil.
Drought conditions in southern Brazil reduced the soybean crop, pressured farm
economics in that region and reduced plantings for the winter corn crop. Farmers
waited for higher commodity prices or a weaker Brazilian real to commercialize
their crop. As a result, farmers deferred fertilizer purchases as they lobbied
for assistance from the Brazilian government. Assistance was forthcoming in
early July, when the government announced a R$3 billion program to help farmers
for the coming planting season. Consequently, the market expects a higher
proportion of fertilizer sales to occur in the second half of the year as
compared to 2004, and a 5 to 10% decline in total Brazilian fertilizer market
volumes from last year. Despite these short-term issues, we see no change in the
long-term fundamentals that are driving growth in Brazil's agricultural markets.
"We continue to steadily execute our strategy. In Argentina, we began loading
ships at our new port in Ramallo, north of Buenos Aires, and commenced crushing
at our newly expanded T6 Industrial joint venture. With a capacity of 19,000
tons per day, this plant is currently the largest soybean crushing plant in the
world, and is located in the heart of the lowest cost producing region in the
world. We announced the purchase of a majority share in a soybean crushing and
refining plant in the port of Rizhao, China. Rizhao is located in Shandong
province, a large market for soybean meal and oil. Operating a plant in such a
market enables Bunge to link directly to end customers. Supplying the facility
from our global origination network improves supply chain efficiency and
reliability.
"I am confident that because of good market fundamentals, our integrated and
balanced business model, and the experience of our people, Bunge will continue
to deliver superior results."
2
Second Quarter Results
Agribusiness
Agribusiness results in this quarter, while strong, were below the second
quarter of 2004, which was a period of unusual volatility, strong softseed
profitability and above average earnings from freight management.
Agribusiness volumes rebounded as markets responded to lower commodity and
freight prices. The reversal of a pretax $14 million provision ($10 million
after tax) due to a favorable tax ruling contributed to results for the quarter,
offset in part by lower earnings from freight management. Canadian results
declined compared to the second quarter of 2004 due to poor canola seed quality
and margins below last year's record levels. In South America, volumes increased
but were not sufficient to compensate higher costs. Costs increased due to the
effects of a stronger Brazilian real on local currency operating costs when
tanslated into U.S. dollars and higher industial expenses. In the second quarter
of 2005, the average real-dollar exchange rate was R$2.48, compared to R$3.05 in
the second quarter of 2004, a 19% strengthening. Agribusiness selling, general
and administrative expenses (SG&A) increased primarily due to higher employee
costs, some of which related to building Bunge's grain origination business in
Eastern Europe, as well as the effects of a stronger Brazilian real.
Fertilizer
Fertilizer results in this quarter were weak. Fertilizer volumes declined as
Brazilian farmers reduced and delayed fertilizer purchases. The decline in
volumes was offset in part by benefits from higher international prices for
nitrogen-based fertilizer raw materials and a pretax $35 million value-added tax
credit ($20 million after tax) related to taxes paid in prior periods.
Legislation passed in May 2005 permitted companies to record a tax credit for
fertilizer inputs that will benefit margins going forward. Results also suffered
from the effects of a stronger Brazilian real and higher expenses. SG&A expenses
also increased due to higher bad debt provisions for farmer customers as well as
higher employee expenses. Depreciation expenses increased due to new facilities
that commenced production after the second quarter of 2004.
Edible Oil Products
Despite lower raw material costs in Brazil and the United States, edible oil
results declined in all regions. Results in Eastern Europe were negatively
affected by lower margins, poor crop quality, increased competition and higher
energy costs and SG&A expenses. Crop quality in Eastern Europe is expected to
improve when the new crop is harvested in the third and fourth quarters. The
increase in edible oil SG&A expenses was due primarily to higher advertising
expenses in Poland and Brazil, increased
3
employee costs in Europe and the effects of stronger Brazilian and Romanian
currencies on local currency costs when translated into U.S. dollars. The
increase in employee costs in Europe was related to building a sales force in
Russia.
Milling Products
Wheat milling results benefited from higher selling prices as a result of the
rally in wheat prices when outlook for the international wheat crop
deteriorated. Bunge benefited from low raw material prices as it purchased most
of its inventory prior to the price rally.
Financial Costs
Interest income increased primarily due to higher average balances of
interest-bearing accounts receivable. Interest expense decreased due to lower
average borrowings. Foreign exchange benefited from gains compared to losses in
the same period last year. These gains and losses were incurred primarily on the
net U.S. dollar-denominated monetary liability position of Bunge's Brazilian
subsidiaries. Foreign exchange losses on commodity inventories, included in
segment operating profit, substantially offset these gains. At June 30, 2005,
the Brazilian real had appreciated 13% in value against the U.S. dollar when
compared to its value at March 31, 2005, and at June 30, 2004 had depreciated 6%
in value when compared to its value at March 31, 2004.
Other
Other income (expense) - net increased compared to the second quarter of 2004
primarily due to higher earnings from Bunge's French oilseed processing joint
venture.
Income Tax Expense
Bunge's effective tax rate for the second quarter of 2005 was 28% compared to
29% in the same period in 2004 and 32% for fiscal 2004. The decline in the tax
rate from 2004 was primarily attributable to higher earnings in lower tax
jurisdictions.
Minority Interest
Minority share of net income decreased due to Bunge's acquisition in the third
and fourth quarters of 2004 of the remaining 17% minority interest in Bunge
Brasil S.A. Bunge now owns 100% of Bunge Brasil.
4
Cash Flow and Net Financial Debt(3)
Net financial debt and readily marketable inventories at June 30, 2005 increased
$639 million and $874 million, respectively, from December 31, 2004, primarily
due to seasonally higher levels of inventory resulting from the purchase of
agricultural commodity inventories in South America and increases in inventories
in the fertilizer segment in anticipation of sales for the new planting season
in South America, which begins in the third and fourth quarters.
Cash flow used by operations was $349 million for the six months ended June 30,
2005 compared to $316 million used in the six months ended June 30, 2004.
Bunge's cash flow in the first half of the year is typically negative as cash is
used to purchase oilseeds and grains from the South American harvest and
fertilizer raw materials in anticipation of planting.
Outlook
Bill Wells, Chief Financial Officer, stated, "We expect a good year overall in
2005 and the first half has given us a solid start. Supplies of oilseeds and
grains remain ample despite reduced harvests in Brazil. We continue to
anticipate good results in our fertilizer business, but below the extraordinary
results from last year.
"Our 2005 guidance is as follows:
o Depreciation, Depletion and Amortization: $230 million to $240 million
o Capital Expenditures: $440 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
"Strengthening of the Brazilian real against the U.S. dollar is a powerful
headwind that we have been fighting all year. When we first established our 2005
net income guidance, the Brazilian real was valued at R$2.63 to the U.S. dollar;
at second quarter
- ---------------
(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
end it was valued at R$2.35, an 11% strengthening. Nevertheless, we are
maintaining our 2005 net income guidance.
"Therefore, assuming stable currencies in South America and Europe and normal
2005/2006 North American and European crops, our 2005 net income guidance is
$485 million to $505 million, representing $4.05 to $4.22 per share.
This fully diluted per share guidance is based on an estimated weighted average
of 120.9 million shares outstanding."
Conference Call and Webcast Information
Bunge Limited's management will host a conference call at 10:00 a.m. EDT on July
28, 2005, to discuss the company's second quarter results.
To listen to the conference call, please dial (800) 811-7286. If you are located
outside of the United States, dial (913) 981-4902. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
2646998. The conference call will also be available live on the company's
website at http://www.Bunge.com.
To access the webcast, go to the Bunge website and select "Upcoming Events" from
the left navigation menu. Click the "Webcast" link for the "Q2 2005 Bunge
Limited Conference Call," and follow the prompts to join the call. Please go to
the Web site at least 15 minutes prior to the call to register and to download
and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay of the call will be
available beginning at 1:00 p.m. EDT on July 28, 2005 and continuing through
1:00 p.m. EDT August 28, 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 981441. A rebroadcast of the conference call
will also be available on the company's Web site beginning at 1:00 p.m. EDT on
July 28, 2005 and continuing through 12:00 p.m. EDT on August 28, 2005.
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 2005 Bunge Limited Conference Call." Follow the
prompts to access the replay.
6
About Bunge Limited
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 processor, 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 that may be of interest
to investors. The table includes a description of these items and their effect
on total segment operating profit, income from operations before income tax and
minority interest, net income and earnings per share for the quarter and year
ended June 30, 2005 and 2004.
- ------------------------------------- --------------------- --------------------- --------------------- -----------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted (1)
- ------------------------------------ ---------------- ----------------- ---------- -----------
Quarter Ended June 30: 2005 2004 2005 2004 2005 2004 2005 2004
---- ---- ---- ---- ---- ---- ---- ----
Value-added tax credits $35 $- $35 $- $20 $- $0.17 $-
Reversal of a transactional tax
provision 14 - 14 - 10 - 0.08 -
---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Total $49 $- $49 $- $30 $- $0.25 $-
========== ========== ========== ========== ========== ========== ============ ==========
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
- ------------------------------------- --------------------- --------------------- --------------------- -----------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit Minority Interest Net Income Diluted (1)
- ------------------------------------ ---------------- ----------------- ---------- -----------
Six Months Ended June 30: 2005 2004 2005 2004 2005 2004 2005 2004
---- ---- ---- ---- ---- ---- ---- ----
Reversal of recoverable
tax valuation allowance $27 $- $27 $- $19 $- $0.16 $ -
Value-added tax credits 28 - 28 - 17 - 0.14 -
Reversal of a transactional tax
provision 14 - 14 - 10 - 0.08 -
Gain on exchange of
Brazilian retail flour business - - - 5 - 3 - 0.03
---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
Total $69 $- $69 $5 $46 $3 $0.38 $0.03
========== ========== ========== ========== ========== ========== ============ ==========
- ------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ ----------
(1) See Note 1 of Notes to the Consolidated Statements of Income.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------- Percent ---------------------------- Percent
2005 2004 Change 2005 2004 Change
-------------------------------------------------------------------------------
Net sales $5,872 $6,657 (12)% $11,323 $12,396 (9)%
Cost of goods sold (5,445) (6,161) (12)% (10,511) (11,535) (9)%
------------- ------------- ------------- -------------
Gross profit 427 496 (14)% 812 861 (6)%
Selling, general and administrative expenses (243) (192) 27% (439) (370) 19%
Interest income 26 24 8% 49 40 23%
Interest expense (39) (43) (9)% (89) (83) 7%
Interest expense on readily marketable inventories (11) (19) (42)% (18) (31) (42)%
Foreign exchange gains (losses) 23 (64) 7 (80)
Other income (expense)-net 4 (1) 22 10
------------- ------------- ------------- -------------
Income from operations before income tax and
minority interest 187 201 (7)% 344 347 (1)%
Income tax expense (52) (58) (10)% (96) (116) (17)%
------------- ------------- ------------- -------------
Income from operations before minority interest 135 143 (6)% 248 231 7%
Minority interest (22) (31) (29)% (37) (49) (24)%
------------- ------------- ------------- -------------
Net income $ 113 $ 112 1% $ 211 $ 182 16%
============= ============= ============= =============
Earnings per common share - basic (Note 1):
Net income per share - basic $ 1.02 $ 1.08 (6)% $ 1.90 $ 1.79 6%
============= ============= ============= =============
Earnings per common share - diluted (Note 1):
Net income per share - diluted $ 0.94 $ 1.00 (6)% $ 1.76 $ 1.65 7%
============= =============------------============= =============-----------
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Note 1: 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,
--------------------------------- ---------------------------------
2005 2004 2005 2004
--------------- ---------------- --------------- ----------------
(In millions, except share data)
Net income - basic $113 $112 $211 $182
Interest on convertible notes, net of 1 1 2 2
tax
--------------- ---------------- --------------- ----------------
Net income - diluted $114 $113 $213 $184
=============== ================ =============== ================
Weighted average number of
common shares outstanding:
Basic 110,986,481 103,434,409 110,870,107 101,725,621
Effect of dilutive shares:
-Stock options and awards 2,130,485 1,678,953 2,110,493 1,743,109
-Convertible notes 7,776,172 7,778,425 7,776,811 7,778,425
--------------- ---------------- --------------- ----------------
Diluted 120,893,138 112,891,787 120,757,411 111,247,155
=============== ================ =============== ================
Net income - per share:
-Basic $1.02 $1.08 $1.90 $1.79
=============== ================ =============== ================
-Diluted $0.94 $1.00 $1.76 $1.65
=============== ================ =============== ================
The calculation of diluted earnings per common share for the quarter
and six months ended June 30, 2005 and 2004 includes the weighted
average common shares that are issuable upon conversion of Bunge's
3.75% convertible notes due 2022.
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, Percent June 30, Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ---------- ------------ ------------- ----------
Volumes (in thousands of metric tons):
Agribusiness 27,880 24,944 12% 50,900 44,972 13%
Fertilizer 1,927 2,634 (27)% 3,656 4,394 (17)%
Edible oil products 1,160 1,178 (2)% 2,309 2,216 4%
Milling products 944 1,034 (9)% 1,929 2,000 (4)%
------------ ------------ ------------ -------------
Total 31,911 29,790 7% 58,794 53,582 10%
============ ============ ============ =============
Net sales:
Agribusiness $4,481 $4,924 (9)% $8,556 $9,183 (7)%
Fertilizer 431 524 (18)% 834 890 (6)%
Edible oil products 746 1,013 (26)% 1,525 1,927 (21)%
Milling products 214 196 9% 408 396 3%
------------ ------------ ------------ -------------
Total $5,872 $6,657 (12)% $11,323 $12,396 (9)%
============ ============ ============ =============
Cost of goods sold:
Agribusiness $(4,246) $(4,626) (8)% $(8,095) $(8,673) (7)%
Fertilizer (334) (408) (18)% (667) (689) (3)%
Edible oil products (688) (954) (28)% (1,403) (1,818) (23)%
Milling products (177) (173) 2% (346) (355) (3)%
------------ ------------ ------------ -------------
Total $(5,445) $(6,161) (12)% $(10,511) $(11,535) (9)%
============ ============ ============ =============
Gross profit:
Agribusiness $235 $298 (21)% $461 $510 (10)%
Fertilizer 97 116 (16)% 167 201 (17)%
Edible oil products 58 59 (2)% 122 109 12%
Milling products 37 23 61% 62 41 51%
------------ ------------ ------------ -------------
Total $427 $496 (14)% $812 $861 (6)%
============ ============ ============ =============
Selling, general and administrative expenses:
Agribusiness $(121) $(105) 15% $(218) $(205) 6%
Fertilizer (62) (38) 63% (105) (69) 52%
Edible oil products (47) (38) 24% (92) (74) 24%
Milling products (13) (11) 18% (24) (22) 9%
------------ ------------ ------------ -------------
Total $(243) $(192) 27% $(439) $(370) 19%
============ ============ ============ =============
Foreign exchange gain (loss):
Agribusiness $22 $(45) $26 $(50)
Fertilizer 1 (13) (16) (24)
Edible oil products 1 - - -
Milling products (1) - (1) -
------------ ------------ ------------ -------------
Total $23 $(58) $9 $(74)
============ ============ ============ =============
Interest income:
Agribusiness $9 $3 200% $13 $5 160%
Fertilizer 10 11 (9)% 23 20 15%
Edible oil products - 3 (100)% 1 6 (83)%
Milling products 1 2 (50)% 1 3 (67)%
------------ ------------ ------------ -------------
Total $20 $19 5% $38 $34 12%
============ ============ ============ =============
Interest expense:
Agribusiness $(32) $(29) 10% $(62) $(60) 3%
Fertilizer (9) (9) -% (23) (20) 15%
Edible oil products (8) (8) -% (16) (14) 14%
Milling products (1) (1) -% (3) (3) -%
------------ ------------ ------------ -------------
Total $(50) $(47) 6% $(104) $(97) 7%
============ ============ ---------- ============ ============= ----------
Quarter Ended Six Months Ended
------------------------ -------------------------
June 30, Percent June 30, Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ---------- ------------ ------------- ----------
- ----------------------------------------------------
Segment operating profit:
Agribusiness $113 $122 (7)% $220 $200 10%
Fertilizer 37 67 (45)% 46 108 (57)%
Edible oil products 4 16 (75)% 15 27 (44)%
Milling products 23 13 77% 35 19 84%
------------ ------------ ------------ -------------
Total (Note 2) $177 $218 (19)% $316 $354 (11)%
- ---------------------------------------------------- ============ ============ ---------- ============ ============= ----------
Income from operations before income tax
and minority interest:
Segment operating profit $177 $218 $316 $354
Unallocated income (expense) - net (Note 3) 10 (17) 28 (7)
------------ ------------ ------------ -------------
Income from operations before income tax
and minority interest $187 $201 $344 $347
============ ============ ============ =============
Depreciation, depletion and amortization:
Agribusiness $28 $20 40% $53 $41 29%
Fertilizer 26 17 53% 49 34 44%
Edible oil products 11 10 10% 23 20 15%
Milling products 3 3 -% 6 6 -%
------------ ------------ ------------ -------------
Total $68 $50 36% $131 $101 30%
============ ============ ---------- ============ ============= ----------
NOTES TO THE CONSOLIDATED SEGMENT INFORMATION
(Unaudited)
Note 1: In the first quarter of 2005, Bunge reclassified certain agribusiness
product lines from the edible oil segment to the agribusiness segment.
As a result, amounts for the quarter and six months ended June 30, 2004
have been reclassified to conform to the quarter ended June 30, 2005
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
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 the reconciliation to
income from 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
June 30, December 31, June 30,
2005 2004 2004
----------------- ------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $414 $432 $524
Trade accounts receivable 1,802 1,928 1,889
Inventories 3,592 2,636 3,583
Deferred income taxes 149 95 63
Other current assets 1,549 1,577 1,387
----------------- ------------------ ------------------
Total current assets 7,506 6,668 7,446
Property, plant and equipment, net 2,789 2,536 2,010
Goodwill 189 167 138
Other intangible assets, net 178 156 97
Investments in affiliates 570 564 554
Deferred income taxes 273 273 255
Other non-current assets 518 543 344
----------------- ------------------ ------------------
Total assets $12,023 $10,907 $10,844
================= ================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $557 $541 $649
Current portion of long-term debt 207 140 143
Trade accounts payable 2,042 1,898 2,100
Deferred income taxes 56 38 55
Other current liabilities 1,210 1,285 1,194
----------------- ------------------ ------------------
Total current liabilities 4,072 3,902 4,141
Long-term debt 3,137 2,600 2,826
Deferred income taxes 224 232 183
Other non-current liabilities 564 518 407
Minority interest in subsidiaries 308 280 505
Shareholders' equity 3,718 3,375 2,782
----------------- ------------------ ------------------
Total liabilities and shareholders' equity $12,023 $10,907 $10,844
================= ================== ==================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
June 30,
----------------------------
2005 2004
------------- -------------
OPERATING ACTIVITIES
Net income $211 $182
Adjustments to reconcile net income to cash used for
operating activities:
Foreign exchange (gains) losses on debt (100) 88
Bad debt expense 20 7
(Decreases) increases in the allowance for recoverable
taxes (27) 10
Depreciation, depletion and amortization 131 101
Deferred income taxes (27) 3
Minority interest 37 49
Changes in operating assets and liabilities, excluding the
effects of acquisitions:
Trade accounts receivable 132 (449)
Inventories (840) (899)
Prepaid commodity purchase contracts (89) 220
Advances to suppliers 220 (96)
Trade accounts payable 18 535
Other - net (35) (67)
------------- -------------
Cash used for operating activities (349) (316)
INVESTING ACTIVITIES
Payments made for capital expenditures (212) (120)
Acquisitions of businesses and other intangible assets (24) (37)
Investments in affiliates (1) (18)
Repayments of related party loans 14 -
Proceeds from disposal of property, plant and equipment 5 10
------------- -------------
Cash used for investing activities (218) (165)
FINANCING ACTIVITIES
Net change in short-term debt 15 (226)
Proceeds from long-term debt 794 850
Repayments of long-term debt (215) (387)
Proceeds from sale of common shares 9 336
Dividends paid to shareholders (30) (22)
Dividends paid to minority interest (29) (18)
------------- -------------
Cash provided by financing activities 544 533
Effect of exchange rate changes on cash and cash equivalents
5 (17)
------------- -------------
Net (decrease) increase in cash and cash equivalents (18) 35
Cash and cash equivalents, beginning of period 432 489
------------- -------------
Cash and cash equivalents, end of period $414 $524
============= =============
Reconciliation of Non-GAAP Measures
This earnings release contains total segment operating profit, net financial
debt and net financial debt less readily marketable inventories, which are
"non-GAAP financial measures" as this term is defined in Regulation G of the
Securities Exchange Act of 1934. In accordance with Regulation G, Bunge has
reconciled these non-GAAP financial measures to the most directly comparable
U.S. GAAP measures.
Total Segment Operating Profit
Total segment operating profit, which is the consolidated segment operating
profit of all of Bunge's operating segments, is Bunge's consolidated income from
operations before income tax 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 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 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 operations before income tax and
minority interest to total segment operating profit:
Quarter Ended Six Months
June 30, Ended June 30,
----------------------- -------------------------
(In millions) 2005 2004 2005 2004
------------- ---------- --------- ----------- ----------
Income from operations before income tax and
minority interest $187 $201 $344 $347
Minus: Unallocated (income) expenses - net (1) (10) 17 (28) 7
---------- --------- ----------- ----------
Total segment operating profit $177 $218 $316 $354
========== ========= =========== ==========
-----------------
(1) Includes interest income, interest expense and foreign exchange gains
and losses and other income and expenses not directly attributable to
Bunge's operating segments.
Net Financial Debt
Net financial debt is the sum of short-term debt, current maturities of
long-term debt and long-term debt, less cash and cash equivalents and marketable
securities. Net financial debt is presented because management believes it
represents a meaningful measure of Bunge's leverage capacity and solvency. Net
financial debt is not a measure of solvency under U.S. GAAP and should not be
considered as an alternative to total debt as a measure of solvency.
Net financial debt less readily marketable inventories (RMI), or net financial
debt less RMI, is the sum of short-term debt, current maturities of long-term
debt and long-term debt, less cash and cash equivalents, marketable securities
and readily marketable inventories. Net financial debt less RMI is presented
because management believes it represents a more complete picture of Bunge's
leverage capacity and solvency since it adjusts for readily marketable
inventories. Readily marketable inventories are agricultural inventories that
are readily convertible to cash because of their commodity characteristics,
widely available markets and international pricing mechanisms. Net financial
debt less RMI is not a measure of leverage capacity and solvency under U.S. GAAP
and should not be considered as an alternative to total debt as a measure of
solvency.
Below is a reconciliation of total long-term and short-term debt to net
financial debt and to net financial debt less readily marketable inventories:
June 30, December 31, June 30,
(In millions) 2005 2004 2004
------------
--------------- ----------------- ---------------
Short-term debt $557 $541 $649
Long-term debt, including current portion 3,344 2,740 2,969
--------------- ----------------- ---------------
Total debt 3,901 3,281 3,618
Less:
Cash and cash equivalents 414 432 524
Marketable securities 13 14 29
--------------- ----------------- ---------------
Net financial debt 3,474 2,835 3,065
Less: Readily marketable inventories 2,138 1,264 2,436
--------------- ----------------- ---------------
Net financial debt less readily marketable
inventories $1,336 $1,571 $629
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