[GRAPHIC OMITTED] Investor Contact: Susie Ter-Jung
Bunge Limited
914-684-3398
Susie.Ter-Jung@bunge.com
Media Contact: Stewart Lindsay
Bunge Limited
1-914-684-3369
Stewart.Lindsay@Bunge.com
Bunge Reports Fourth Quarter 2005 Results
White Plains, NY - February 9, 2006 - Bunge Limited (NYSE:BG).
Financial Highlights
(In millions, except per share data and percentages)
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter Ended Percent Year Ended Percent
12/31/05 12/31/04 Change 12/31/05 12/31/04 Change
- -----------------------------------------------------------------------------------------------------------------------------------
Volumes (metric tons) 29.8 26.9 11% 118.7 109.4 8%
Net sales $6,726 $6,212 8% $24,275 $25,168 (4)%
Total segment operating profit (loss)(1) $(11) $183 (106)% $456 $850 (46)%
Net income $149 $105 42% $530 $469 13%
Earnings per share(2) $1.25 $0.89 40% $4.43 $4.10 8%
- -----------------------------------------------------------------------------------------------------------------------------------
Bunge's results included certain gains and charges that may be of interest to
investors. These items totaled $52 million, or $0.44 per share, in the quarter
ended December 31, 2005; $141 million, or $1.17 per share, in the year ended
December 31, 2005; $(13) million, or $(0.11) per share in the quarter ended
December 31, 2004; and $(12) million, or $(0.10) per share, in the year ended
December 31, 2004. Additional information is provided in the attached schedule
titled "Additional Financial Information."
- ------------------------
(1) Total segment operating profit (loss) is the consolidated segment
operating profit (loss) of Bunge's segments. Total segment operating
profit (loss) 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) 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: "2005 was
a difficult year for Bunge. We faced significant external challenges, and we
made some mistakes. We have improved our operations however, and while we will
not see a return to trend line growth in all areas, we believe that 2006 will be
a better year.
"In 2005, our principal problems stemmed from a weak operating environment in
Brazil. Farm economics deteriorated due to a drought, lower soybean prices and a
steadily appreciating Brazilian real. Farmers reacted by withholding crop sales
and delaying purchases of farm inputs. The real appreciation affected Bunge
directly, primarily by raising local costs and squeezing margins. Fertilizer
inventory purchased earlier in the year was sold later at a stronger real-U.S.
dollar exchange rate, pressuring dollar margins.
"Had we started the year with a lower level of fertilizer inventory, reduced
crushing capacity sooner and improved our foreign exchange risk management
program we would have achieved better results. The appreciation of the real, and
its timing, was perhaps the biggest negative of the year, and we did not
anticipate it or react to it quickly enough. We hedged our balance sheet
exposure but not our local costs, and we could have made better decisions when
hedging fertilizer inventories. Local costs in dollar terms increased by 19% in
2005 due to foreign exchange.
"The market situation in Brazil will improve more slowly than we had
anticipated, largely due to the continued strength of the real. Farm economics
remain weak, and retail fertilizer volumes will likely be flat for the year. We
are not waiting for better conditions however. We have taken steps to improve
our performance in the current environment and, largely as a result of these
changes, expect Bunge to produce better operational results in 2006.
o We have initiated an expanded and refined risk management program that will
lower our exposure to the Brazilian real by hedging both the balance sheet
and expenses.
o We have liquidated higher-priced fertilizer inventories, which should
benefit margins. We are beginning 2006 with inventory value approximately
20% below levels at the start of 2005.
o We have reduced our workforce in Brazil by approximately 10%, initiated
cost savings measures, permanently closed two oilseed processing plants and
idled seven fertilizer facilities. We estimate that these steps will save
$60-80 million in 2006.
2
o We have also reduced our ongoing effective tax rate through a legal
restructuring.
"In 2006 we will stay focused on growth and efficiency. This year we intend to
create a stronger link to customers in China by purchasing a second soybean
crushing and refining plant in that country. We will bring on-stream two new
crushing plants in Spain, replacing less efficient assets. We will also expand
our phosphate mining capacity in Brazil by over 10% and substitute more
fertilizer imports with domestic supply at better margins. 2006 should see the
start of operations at our new grain and fertilizer terminal in Santos,
Brazil--one of many logistics projects that help to improve the efficiency of
our integrated food production chain--as well as the completion of two new
sunseed crushing plants in Eastern Europe. By year end, our new Russian plant
should supply our domestic bottled oil business at improved margins. We are also
leveraging the efficiencies of our existing infrastructure to initiate a small
sugar origination and marketing business.
"The fundamentals of our industry remain intact, with steady growth in
agricultural production and food consumption. While we will always experience
market fluctuations, these fundamentals should drive long-term growth in our
business. We will continue to position Bunge to benefit from them."
Fourth Quarter Results
Agribusiness
In the fourth quarter, stronger agribusiness results in the Northern Hemisphere
were more than offset by weak results in Brazil.
Volumes were higher than in the fourth quarter of 2004 due primarily to higher
international marketing sales and oilseed processing activity in Argentina.
Bunge's U.S. businesses and global softseed operations benefited from solid
margins and produced strong results. In Brazil, slow farmer selling and an
appreciating local currency continued to pressure margins and increase local
costs when translated into U.S. dollars. The average real-U.S. dollar exchange
rate in the fourth quarter of 2005 was R$2.25, a 19% appreciation over an
average rate of R$2.79 in the fourth quarter of 2004. Freight management results
declined from last year primarily due to a decrease in ocean vessel freight
rates. Energy costs increased in the U.S. and Argentina. Selling, general and
administrative (SG&A) expenses declined due to lower variable compensation
expenses and reduced bad debt.
Fourth quarter 2005 results included $35 million of impairment charges related
to the closure of two oilseed processing plants in Brazil and the impairment of
one plant in India, and $10 million of restructuring charges related to
operations in Brazil and Europe. Fourth quarter 2004 results included $10
million of impairment and $7 million
3
of cash restructuring charges related to Bunge's Western European oilseed
processing operations.
Fertilizer
Fertilizer results in the quarter were extremely poor despite higher volumes,
which rose on increased sales at Fosfertil. Margins were pressured by higher
average inventory costs, higher industrial costs and the liquidation of excess
inventories. Fertilizer raw material inventory purchased earlier in the year in
anticipation of good demand was sold at a stronger real-U.S. dollar exchange
rate later in the year, pressuring dollar margins. Due to a stronger real
relative to the same period last year, local costs were higher when translated
into U.S. dollars. Fourth quarter 2005 results included a $2 million cash
restructuring charge.
Edible Oil Products
Edible oil results declined primarily due to weaker performance in Europe.
Improved results in Ukraine and Hungary were more than offset by lower volumes
and margins in Romania, higher advertising expenses for a new margarine brand in
Poland and higher SG&A in Russia. In North America, strong demand for canola oil
and trans fatty acid replacement products benefited results. Energy and
transport costs rose in the U.S. In Brazil, stronger performance in margarine
and specialty oil was offset by lower margins and volumes in packaged oil. Costs
rose due to the appreciation of the Brazilian real and higher marketing expenses
for a repositioned margarine brand.
Fourth quarter 2005 results included a $2 million cash restructuring charge
related to operations in Brazil and Europe. Fourth quarter 2004 results included
a $4 million non-cash impairment charge related to Bunge's Brazilian packaged
oil operations.
Milling Products
Wheat milling results benefited from higher volumes and improved product mix,
but were offset by margin declines in corn milling.
Financial Costs
Interest income decreased primarily due to lower average balances of invested
cash. Interest expense increased primarily due to higher average borrowings
funding operating working capital and increases in short-term interest rates.
Foreign exchange losses in the fourth quarter of 2005 resulted from the effects
of the devaluation of the Brazilian real at year end compared to the U.S. dollar
on the net U.S. dollar-denominated monetary liability position of Bunge's
Brazilian subsidiaries. In the fourth quarter of 2004, the Brazilian real and
the euro appreciated against the U.S. dollar which resulted in foreign exchange
gains on the net U.S. dollar-denominated monetary liability position of Bunge's
Brazilian and European subsidiaries.
4
Income Taxes
In the fourth quarter of 2005, Bunge received a favorable U.S. tax ruling with
respect to the unremitted earnings of a foreign subsidiary holding company. As a
result, Bunge liquidated this foreign subsidiary, reduced the associated
deferred tax liability and recognized a $77 million one-time, non-cash tax
benefit. Additionally, Bunge decreased its deferred tax valuation allowance by
$36 million, primarily as a result of projected increased taxable income in
subsidiaries with previously reserved net operating losses.
Minority Interest
Minority interest decreased when compared to 2004 due to lower earnings at
Fosfertil.
Cash Flow and Net Financial Debt(3)
Net financial debt at December 31, 2005, decreased $52 million from December 31,
2004. Cash flow provided by operations was $382 million in 2005 compared to $802
million in 2004. Cash flow from operations declined from last year primarily due
to lower segment operating profit. Cash flow from operations in the fourth
quarter of 2005 included approximately $155 million from the sale of accounts
receivable through a new securitization facility.
Outlook
Bill Wells, Chief Financial Officer, stated, "The global agribusiness market
should experience good conditions in 2006, but will not be free of challenges.
We see growing demand for our core products, soybean meal and vegetable oil, and
strong consumption of biodiesel that should benefit the softseed market, but
continued weakness in Brazil and a tougher crushing environment in Argentina.
North America should have a good year, but a difficult comparison to excellent
results in 2004 and 2005. We anticipate higher energy costs generally and
headwinds in our freight management business. Expectations are for flat retail
sales in the Brazilian fertilizer market. Solid demand for vegetable oil and
improved results in Ukraine should contribute to improved performance in edible
oils.
"Overall, we expect Bunge to produce better operational results in 2006 due to
initiatives to improve margins, lower costs, and mitigate exposure to the real.
Many of these initiatives are already in place and are beginning to produce
results.
- -----------------
(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
"Our 2006 guidance is as follows:
o Depreciation, Depletion and Amortization: $300 million to $310
million
o Capital Expenditures (net of asset dispositions): $490 million to
$510 million
o $195 million to $215 million maintenance, safety and
environmental capital expenditures
o Effective Tax Rate: 18% to 22%
o Joint Venture Earnings: $40 million to $45 million
"This guidance assumes the following:
o Stable currencies in South America and Europe
o Normal 2005/2006 North and South American and European crops
o Stable international fertilizer prices, and
o Flat Brazilian market retail fertilizer sales when compared to 2005.
"Based on these assumptions, our 2006 net income guidance is $520 million to
$540 million, representing $4.29 to $4.45 per share. This fully diluted per
share guidance is based on an estimated weighted average of 121.3 million shares
outstanding, includes $0.05 per share for stock option expense and is a
reasonable base for calculating Bunge's five-year, 10-12% average annual EPS
growth target."
Background Information, Conference Call and Webcast Details
Background information on income tax and foreign exchange can be found in the
'Investor Information' section of our Web site, www.Bunge.com, under 'Investor
Presentations'.
Bunge Limited's management will host a conference call at 10:00 a.m. EST today
to discuss the company's results.
To listen to the conference call, please dial (800) 811-0667. If you are located
outside of the United States, dial (913) 981-4901. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
9994519. The conference call will also be available live on the company's Web
site at http://www.Bunge.com.
6
To access the webcast, click the "News and Information" link on the Bunge
homepage then select "Webcasts and Upcoming Events." Click the link for the "Q4
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. EST on February 9, 2006 and continuing through
1:00 p.m. EST March 9, 2006. 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 9994519. A rebroadcast of the conference call
will also be available on the company's Web site beginning at 1:00 p.m. EST on
February 9, 2006 and continuing through 12:00 p.m. EST on March 9, 2006. To
locate the rebroadcast on the Web site, click the "News and Information" link on
the Bunge homepage then select "Audio Archives" from the left-hand menu. Select
the link for the "Q4 2005 Bunge Limited Conference Call." Follow the prompts to
access the replay.
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 23,500 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,
7
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.
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 (loss), income from operations
before income tax and minority interest, net income and earnings per share for
the quarter and year ended December 31, 2005 and 2004.
- -----------------------------------------------------------------------------------------------------------------------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit (Loss) Minority Interest Net Income Diluted (1)
- ----------------------------------- ----------------------- ----------------- ----------- ------------------
Quarter Ended Dec 31: 2005 2004 2005 2004 2005 2004 2005 2004
------ ------ ------ ------- ------- ------ ------ ------
Impairment and restructuring
charges (2) $(49) $(21) $(49) $(21) $(33) $(13) $(0.27) $(0.11)
Gain on sale of assets - - 8 - 8 - 0.07 -
Reversal of deferred tax
liability on unremitted foreign
earnings (3) - - - - 77 - 0.64 -
-------------- ------------ ---------- ---------- ---------- --------- ----------- ---------
Total $(49) $(21) $(41) $(21) $52 $(13) $ 0.44 $(0.11)
============== ============ ========== ========== ========== ========= =========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Income From
Operations Before
Total Segment Income Tax and Earnings Per Share
(In millions, except per share data) Operating Profit (Loss) Minority Interest Net Income Diluted (1)
- ----------------------------------- ---------------------- ----------------- -------------- ------------------
Year Ended Dec 31: 2005 2004 2005 2004 2005 2004 2005 2004
----- ------ ------ ------ ----- ------ ------ ------
Reversal of recoverable
tax valuation allowance (4) $ 27 $ - $ 27 $ - $ 19 $ - $0.16 $ -
Value-added tax credits (5) 28 - 28 - 17 - 0.14 -
Reversal of a transactional tax
provision (6) 14 - 14 - 10 - 0.08 -
Impairment and
restructuring charges (2) (49) (24) (49) (24) (33) (15) (0.27) (0.13)
Gain on exchange of
Brazilian retail flour business - - - 5 - 3 - 0.03
Gain on sale of assets - - 15 - 13 - 0.11 -
Reversal of deferred tax
liability on unremitted foreign
earnings (3) - - - - 77 - 0.64 -
Reversal of income tax
valuation allowances (7) - - - - 38 - 0.31 -
-------------- ------------ ---------- ---------- ---------- --------- ----------- ----------
Total $ 20 $(24) $ 35 $(19) $141 $(12) $1.17 $(0.10)
============== ============ ========== ========== ========== ========= =========== ==========
- -----------------------------------------------------------------------------------------------------------------------------------
(1) See Note 1 of Notes to the Consolidated Statements of Income.
(2) Impairment and restructuring charges in 2005 of $49 million consisted of
$45 million in the agribusiness segment, $2 in the fertilizer segment and
$2 million in the edible oil products segment. Impairment and restructuring
charges in 2004, consisted of $17 million in the agribusiness segment and
$7 million in the edible oil products segment. Impairment and restructuring
charges in the fourth quarter of 2004, consisted of $17 million in the
agribusiness segment and $4 million in the edible oil products segment.
(3) In the fourth quarter 2005, Bunge received a favorable U.S. tax ruling with
respect to the unremitted earnings of a foreign subsidiary holding company.
As a result, Bunge liquidated this foreign subsidiary, reduced the
associated deferred tax liability and recognized a $77 million one-time,
non-cash tax benefit.
(4) Represents the reversal of the remaining Argentine recoverable tax balance
in the agribusiness segment.
(5) Represents value-added tax credits related to taxes paid in prior periods
in the fertilizer segment.
(6) Represents the reversal of a provision due to a favorable South American
tax ruling in the agribusiness segment.
(7) Represents the reduction of deferred tax asset valuation allowances
stemming from a legal restructuring initiated with the 2004 buyout of the
minority interests of Bunge Brasil S.A.
9
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
---------------------------- Percent ---------------------------- Percent
2005 2004 Change 2005 2004 Change
------------- ------------- ----------- ------------ -------------- ---------
Net sales $6,726 $6,212 8% $24,275 $25,168 (4)%
Cost of goods sold (6,374) (5,740) 11% (22,704) (23,282) (2)%
------------- ------------- ------------- -------------
Gross profit 352 472 (25)% 1,571 1,886 (17)%
Selling, general and administrative expenses (287) (270) 6% (956) (871) 10%
Interest income 26 29 (10)% 104 103 1%
Interest expense (62) (45) 38% (192) (168) 14%
Interest expense on readily marketable inventories (6) (3) 100% (39) (46) (15)%
Foreign exchange (loss) gain (32) 25 (22) (31)
Other income (expense)-net 10 12 (17)% 53 31 71%
------------- ------------- ------------- -------------
Income from operations before income tax and
minority interest 1 220 (100)% 519 904 (43)%
Income tax benefit (expense) 160 (73) 82 (289)
------------- ------------- ------------- -------------
Income from operations before minority interest 161 147 10% 601 615 (2)%
Minority interest (12) (42) (71)% (71) (146) (51)%
------------- ------------- ------------- -------------
Net income $ 149 $ 105 42% $ 530 $ 469 13%
============= ============= ============= =============
Earnings per common share - basic (Note 1):
Net income per share - basic $ 1.29 $ 0.95 36% $ 4.73 $ 4.42 7%
============= ============= ============= =============
Earnings per common share - diluted (Note 1):
Net income per share - diluted $ 1.25 $ 0.89 40% $ 4.43 $ 4.10 8%
============= ============= ============= =============
10
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Note 1: Earnings per common share are calculated on the basis of the following
number of common shares outstanding:
Quarter Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
2005 2004 2005 2004
--------------- ---------------- --------------- ----------------
(In millions, except share data)
Net income - basic $149 $105 $530 $469
Interest on convertible notes, net of 2 2 5 5
tax
--------------- ---------------- --------------- ----------------
Net income - diluted $151 $107 $535 $474
=============== ================ =============== ================
Weighted average number of common
shares outstanding:
Basic 115,384,311 110,438,941 112,131,739 106,015,869
Effect of dilutive shares:
-Stock options and awards 1,651,883 2,061,831 1,994,337 1,879,762
-Convertible notes 3,737,167 7,778,425 6,727,852 7,778,425
--------------- ---------------- --------------- ----------------
Diluted 120,773,361 120,279,197 120,853,928 115,674,056
=============== ================ =============== ================
Net income - per share:
-Basic $1.29 $0.95 $4.73 $4.42
=============== ================ =============== ================
-Diluted $1.25 $0.89 $4.43 $4.10
=============== ================ =============== ================
In October 2005, Bunge Limited announced its intent to redeem on November 22,
2005 for cash the remaining approximately $242 million principal amount
outstanding of its 3.75% convertible notes. Substantially all of the then
outstanding convertible notes were converted into 7,532,542 shares of Bunge
Limited common stock prior to the redemption date. The calculation of diluted
earnings per common share for the quarter and year ended December 31, 2005
includes the weighted average common shares that were issuable upon conversion
of the convertible notes through the date of redemption. The calculation of
diluted earnings per common share for the quarter and year ended December 31,
2004 includes the weighted average common shares that were issuable upon
conversion of the convertible notes during this period.
11
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, Percent December 31, Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ---------- ------------ ------------- ----------
Volumes (in thousands of metric tons):
Agribusiness 23,890 21,390 12% 98,534 89,132 11%
Fertilizer 3,697 3,307 12% 11,478 11,589 (1)%
Edible oil products 1,243 1,220 2% 4,760 4,678 2%
Milling products 995 944 5% 3,890 3,987 (2)%
-------- ------- -------- --------
Total 29,825 26,861 11% 118,662 109,386 8%
======== ======= ======== ========
Net sales:
Agribusiness $4,677 $4,269 10% $17,437 $17,983 (3)%
Fertilizer 894 830 8% 2,674 2,581 4%
Edible oil products 927 915 1% 3,305 3,800 (13)%
Milling products 228 198 15% 859 804 7%
-------- ------- -------- --------
Total $6,726 $6,212 8% $24,275 $25,168 (4)%
======== ======= ======== ========
Cost of goods sold:
Agribusiness $(4,491) $(4,062) 11% $(16,584) $(17,008) (2)%
Fertilizer (827) (646) 28% (2,333) (1,980) 18%
Edible oil products (859) (862) -% (3,053) (3,582) (15)%
Milling products (197) (170) 16% (734) (712) 3%
-------- ------- -------- --------
Total $(6,374) $(5,740) 11% $(22,704) $(23,282) (2)%
======== ======= ======== ========
Gross profit:
Agribusiness $186 $207 (10)% $ 853 $ 975 (13)%
Fertilizer 67 184 (64)% 341 601 (43)%
Edible oil products 68 53 28% 252 218 16%
Milling products 31 28 11% 125 92 36%
-------- ------- -------- --------
Total $352 $472 (25)% $1,571 $1,886 (17)%
======== ======= ======== ========
Selling, general and administrative expenses:
Agribusiness $(135) $(143) (6)% $(462) $(477) (3)%
Fertilizer (72) (73) (1)% (229) (197) 16%
Edible oil products (63) (40) 58% (209) (151) 38%
Milling products (17) (14) 21% (56) (46) 22%
-------- ------- -------- --------
Total $(287) $(270) 6% $(956) $(871) 10%
======== ======= ======== ========
Foreign exchange (loss) gain:
Agribusiness $ (6) $ 7 $ 30 $(17)
Fertilizer (27) (4) (47) (32)
Edible oil products (1) 5 (1) 5
Milling products - - (1) -
-------- ------- -------- --------
Total $(34) $ 8 $(19) $(44)
======== ======= ======== ========
Interest income:
Agribusiness $ 2 $ 3 (33)% $22 $21 5%
Fertilizer 19 18 6% 57 50 14%
Edible oil products - - -% 2 6 (67)%
Milling products 1 - 100% 2 3 (33)%
-------- ------- -------- --------
Total $22 $21 5% $83 $80 4%
======== ======= ======== ========
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Quarter Ended Year Ended
December 31, Percent December 31, Percent
2005 2004 Change 2005 2004 Change
------------ ------------ ---------- ------------ ------------- ----------
Interest expense:
Agribusiness $(43) $(24) 79% $(147) $(111) 32%
Fertilizer (12) (16) (25)% (41) (50) (18)%
Edible oil products (6) (7) (14)% (28) (32) (13)%
Milling products (3) (1) 200% (7) (8) (13)%
-------- ------- -------- --------
Total $(64) $(48) 33% $(223) $(201) 11%
======== ======= ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Segment operating profit (loss):
Agribusiness $ 4 $ 50 (92)% $296 $391 (24)%
Fertilizer (25) 109 (123)% 81 372 (78)%
Edible oil products (2) 11 (118)% 16 46 (65)%
Milling products 12 13 (8)% 63 41 54%
-------- ------- -------- --------
Total (Note 2) $(11) $183 (106)% $456 $850 (46)%
======== ======= ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Income from operations before income tax and
minority interest:
Segment operating profit (loss) $(11) $183 $456 $850
Unallocated income - net (Note 3) 12 37 63 54
-------- ------- -------- --------
Income from operations before income tax and
minority interest $ 1 $220 $519 $904
======== ======= ======== ========
Depreciation, depletion and amortization:
Agribusiness $33 $26 27% $113 $ 90 26%
Fertilizer 28 19 47% 104 70 49%
Edible oil products 12 10 20% 47 40 18%
Milling products 4 3 33% 14 12 17%
-------- ------- -------- --------
Total $77 $58 33% $278 $212 31%
======== ======= ======== ========
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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 the year ended December 31,
2004 have been reclassified to conform to the quarter and the year ended
December 31, 2005 presentation.
Note 2: Total segment operating profit (loss) is the consolidated segment
operating profit (loss) of all of Bunge's operating segments. Total
segment operating profit (loss) 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.
14
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
December 31, December 31,
2005 2004
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 354 $ 432
Trade accounts receivable 1,702 1,928
Inventories 2,769 2,636
Deferred income taxes 102 95
Other current assets 1,637 1,577
------------- ------------
Total current assets 6,564 6,668
Property, plant and equipment, net 2,900 2,536
Goodwill 176 167
Other intangible assets, net 132 156
Investments in affiliates 585 564
Deferred income taxes 462 273
Other non-current assets 627 543
------------- ------------
Total assets $11,446 $10,907
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 411 $ 541
Current portion of long-term debt 178 140
Trade accounts payable 1,803 1,898
Deferred income taxes 38 38
Other current liabilities 1,187 1,285
------------ -----------
Total current liabilities 3,617 3,902
Long-term debt 2,557 2,600
Deferred income taxes 145 232
Other non-current liabilities 576 518
Minority interest in subsidiaries 325 280
Shareholders' equity 4,226 3,375
------------ -----------
Total liabilities and shareholders' equity $11,446 $10,907
============ ===========
15
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Year Ended
December 31,
-----------------
2005 2004
------- -------
OPERATING ACTIVITIES
Net income $530 $469
Adjustments to reconcile net income to cash provided by
operating activities:
Foreign exchange gain on debt (112) (85)
Impairment of assets 35 17
Bad debt expense 40 54
Depreciation, depletion and amortization 278 212
(Decrease) increase in the allowance for recoverable
taxes (27) 2
Deferred income taxes (238) (56)
Minority interest 71 146
Changes in operating assets and liabilities, excluding the
effects of acquisitions:
Trade accounts receivable 270 (398)
Inventories (11) 328
Prepaid commodity purchase contracts (41) 211
Advances to suppliers 135 (341)
Trade accounts payable (337) 164
Other - net (211) 79
------- -------
Cash provided by operating activities 382 802
INVESTING ACTIVITIES
Payments made for capital expenditures (522) (437)
Acquisitions of businesses and other intangible assets (64) (355)
Investments in affiliates (4) (24)
Related party loans (repayments) 13 (13)
Investments in notes receivable - (26)
Return of capital from affiliates 38 17
Proceeds from disposal of long-lived assets 59 14
------- -------
Cash used for investing activities (480) (824)
FINANCING ACTIVITIES
Net change in short-term debt (130) (348)
Proceeds from long-term debt 1,210 860
Repayments of long-term debt (952) (678)
Proceeds from sale of common shares 13 348
Redemption of redeemable preferred stock - (170)
Dividends paid to shareholders (63) (51)
Dividends paid to minority interest (57) (52)
------- -------
Cash provided by (used for) financing activities 21 (91)
Effect of exchange rate changes on cash and cash equivalents
(1) 56
------- -------
Net decrease in cash and cash equivalents (78) (57)
Cash and cash equivalents, beginning of period 432 489
------- -------
Cash and cash equivalents, end of period $354 $432
======= =======
16
Reconciliation of Non-GAAP Measures
This earnings release contains total segment operating profit (loss), 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 (Loss)
Total segment operating profit (loss), which is the consolidated segment
operating profit (loss) 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 (loss) 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 (loss) is a key performance measurement used by Bunge's
management to evaluate whether operating activities cover the financing costs of
its business. Bunge believes total segment operating profit (loss) is a more
complete measure of its operating profitability, since it allocates foreign
exchange gains and losses and the cost of debt financing working capital to the
appropriate operating segments. Additionally, Bunge believes total segment
operating profit (loss) assists investors by allowing them to evaluate changes
in the operating results of its portfolio of businesses before non-operating
factors that affect net income. Total segment operating profit (loss) 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 tax 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 (loss):
Quarter Ended Year Ended
December 31, December 31,
----------------- ----------------
(In millions) 2005 2004 2005 2004
------- ------- ------ -------
Income from operations before income tax and
minority interest $ 1 $220 $ 519 $904
Minus: Unallocated income - net (1) (12) (37) (63) (54)
------- ------- ------- -------
Total segment operating profit (loss) $ (11) $183 $ 456 $850
======= ======= ======= =======
(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.
17
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) 2005 2004
--------------- -------------
Short-term debt $ 411 $ 541
Long-term debt, including current portion 2,735 2,740
--------------- -------------
Total debt 3,146 3,281
Less:
Cash and cash equivalents 354 432
Marketable securities 9 14
--------------- -------------
Net financial debt 2,783 2,835
Less: Readily marketable inventories 1,534 1,264
--------------- -------------
Net financial debt less readily marketable
inventories $1,249 $1,571
=============== =============
18