Exhibit 99.1
[BUNGE LOGO] [GRAPHIC OMITTED]
Investor Contact: Mark Haden
Bunge Limited
914-684-3398
Mark.Haden@Bunge.com
Media Contact: Stewart Lindsay
Bunge Limited
1-914-684-3369
Stewart.Lindsay@Bunge.com
Bunge Reports Second Quarter 2006 Results
White Plains, NY - July 27, 2006 - Bunge Limited (NYSE:BG).
o Financial Highlights
(In millions, except per share data and percentages)
- ---------------------------------------------------------------------------------------------------------------
Quarter Ended Six Months Ended
------------- Percent ---------------- Percent
6/30/06 6/30/05 Change 6/30/06 6/30/05 Change
- ---------------------------------------------------------------------------------------------------------------
Volumes (metric tons) 30.5 31.6 (3)% 55.4 58.1 (5)%
Net sales $5,980 $5,872 2% $11,581 $11,323 2%
Total segment operating profit(1) $18 $177 (90)% $72 $316 (77)%
Net income $30 $113 (73)% $88 $211 (58)%
Earnings per share - diluted $0.25 $0.94 (73)% $.73 $1.76 (59)%
- ---------------------------------------------------------------------------------------------------------------
Bunge's results included certain gains and charges that may be of interest to
investors. In the quarter ended June 30, 2006, the gains totaled $4 million, or
$0.03 per share. For the six months ended June 30, 2006, the net charges totaled
$(14) million, or $(0.11) per share. In the quarter ended June 30, 2005, the
gains totaled $30 million, or $0.25 per share, and for the six months ended June
30, 2005, the gains totaled $46 million, or $0.38 per share. 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, 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, is included in the tables attached to this press
release.
o Overview
Alberto Weisser, Bunge's Chairman and Chief Executive Officer stated:
"Conditions in the first half of 2006 proved more challenging than expected.
Additional losses in freight, farmer protests in Brazil, excess capacity in
Argentina and lower volumes and margins in international marketing all
contributed to a weak first half. On the positive side, we have seen continued
strong performance in North America and in our edible oil and milling
businesses.
"We expect better performance in the second half of the year. Losses from
previously contracted freight are almost entirely behind us, and we should see
improvements from international marketing. Our North American operations produce
the majority of their results in the second half. South America will remain
challenging, but efforts earlier in the year to lower costs, reduce fertilizer
inventory and enhance foreign currency risk management should benefit results. A
more stable Brazilian real and help for farmers in the form of government aid
programs have stimulated commercialization of crops. Longer-term, as the steady
demand for meal and oil and increasing demand for biofuels draw down global
stocks of soybeans, the market will price crops at levels that improve
profitability for Brazilian farmers and encourage additional production and
input purchases. The USDA forecasts that substantially all of the medium- to
long-term growth in global soybean production will occur in South America,
especially Brazil.
"We continue to improve our competitive position. Our new plant in Bilbao, Spain
and switch line at our plant in Mannheim, Germany are starting operations. We
are close to finalizing the purchase of our second soy crushing plant in China.
We are working on a number of bioenergy joint venture projects in North America
and Europe that fit strategically with our business. Over the last twelve months
we have developed a solid position originating and marketing sugar from Brazil.
We intend to become an integrated producer of sugar and sugar-based ethanol, and
we are considering several interesting opportunities, principally in Brazil."
o Second Quarter Results
Agribusiness
Volume was down due to lower oilseed processing activity in Brazil and weak
demand in Southern Europe. Freight management results in the quarter were
negative. In South America, oilseed processing results decreased due to
depressed crushing margins in Argentina and lower volumes in Brazil. The average
real-U.S. dollar exchange rate strengthened 12% when compared to the second
quarter of 2005, resulting in higher local costs in Brazil when translated into
U.S. dollars. International Marketing performance was lower due to reduced
volumes and margins. North American results, while good, were below last year's
high levels.
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Fertilizer
Results fell in the quarter, due to lower sales volumes and margins, as soy
farmers held back purchases in anticipation of the Brazilian government's aid
package.
Selling, general and administrative expenses for the second quarter of 2006
declined due to lower expenses resulting from layoffs made earlier in the year
and a $12 million provision reversal due to a favorable court ruling relating to
Brazilian social taxes. Fertilizer results for the second quarter of 2005
included a $35 million value-added tax credit related to taxes paid in prior
periods.
Edible Oil Products
Results were stronger due to higher volumes and improved margins in Europe.
Margins benefited from lower seed costs, the consolidation of an acquisition in
Poland, better distribution and brand positioning. European results more than
offset weaker results in the Americas. In North America, oil shipments to
biodiesel processors are having a positive impact on margins.
Milling Products
Results were strong, but down, due to lower margins and higher expenses.
Financial Costs
Interest income increased primarily due to higher levels of interest-bearing
accounts. Interest expense increased primarily due to higher short-term interest
rates.
Volatility in the value of the Brazilian real relative to the U.S. dollar during
the second quarter of 2006 resulted in exchange rate losses on the net U.S.
dollar-denominated monetary liability position of Bunge's Brazilian
subsidiaries. In the second quarter of 2005, the appreciation of the Brazilian
real resulted in exchange gains on the net U.S. dollar-denominated monetary
liability position of Bunge's Brazilian subsidiaries.
Income Taxes
The effective tax rate for six months ended June 30, 2006 was 9% compared to 29%
in the same period in 2005. The decline in the tax rate from 2005 was primarily
due to a reduction in income from operations before income tax for the six
months ended June 30, 2006 of $238 million compared to the same period in 2005.
Most of the decline in income from operations before income tax occurred in
subsidiaries that are in tax jurisdictions with higher income tax rates. In
addition, higher earnings in lower tax
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jurisdictions and the effects of a legal restructuring also contributed to the
lower effective tax rate.
Minority Interest
Minority interest expense decreased when compared to 2006 due to lower earnings
at Fosfertil.
Cash Flow and Net Financial Debt(2)
Net financial debt and readily marketable inventories at June 30, 2006 increased
$598 million, and $596 million, respectively, from December 31, 2005, primarily
due to normal higher levels of grain and fertilizer inventory in South America.
Cash flow used by operations was $400 million for the six months ended June 30,
2006 compared to $349 million used by operations in the six months ended June
30, 2005. 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 the new planting season.
o Outlook
Bill Wells, Chief Financial Officer, stated, "Our performance in the second half
of the year should be much better. Freight results are expected to improve since
capacity previously contracted at higher rates has been substantially utilized.
Farmer protests in Brazil have ceased, and the Brazilian government assistance
program is starting to have a positive effect on farmers' credit exposure and
their commercialization of crops. Although ANDA, the Brazilian fertilizer
industry association, now forecasts lower year-over-year retail fertilizer
sales, we expect our fertilizer business will perform better than last year due
to cost reductions, enhanced risk management and reduced inventory levels in the
market. Our North American and European operations are expected to have a good
year. Strong domestic markets for milling and European edible oils will
contribute to improved performance in our food products business.
"Our enhanced foreign currency hedging programs are working well. Net income
effects of the stronger Brazilian real should be mitigated by our initiatives to
improve margins, lower costs, decrease our effective tax rate and reduce
exposure to the real throughout our business. Although difficult to quantify,
mark-to-market effects on freight, foreign
- ---------------------------
(2) 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.
4
exchange and commodity exposures will probably shift some results from the first
half to the second half of the year. Results will be realized when physical
volumes are sold.
"Our 2006 guidance is as follows:
o Depreciation, Depletion and Amortization: $310 million to $320 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: 8% to 12%
o Joint Venture Earnings: $40 million to $45 million
"Our guidance assumes the following:
o Stable currencies in South America and Europe
o Normal crops
o Stable international fertilizer prices, and
o Lower Brazilian retail fertilizer market sales when compared to 2005.
"Based on these assumptions, our 2006 net income guidance is $425 million to
$445 million, representing $3.50 to $3.67 per share. This fully diluted per
share guidance is based on an estimated weighted average of 121.3 million shares
outstanding, and includes $0.06 per share for stock option expense, as well as
the effect of impairment and restructuring charges taken during the first
quarter.
Background Information, Conference Call and Webcast Details
Background information on cash flow, secured advances to farmers and income tax
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. EDT on July
27 to discuss the company's results.
To listen to the conference call, please dial (800) 818-5264. If you are located
outside of the United States, dial (913) 981-4910. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
4429908. The conference call will also be available live on the company's Web
site at www.Bunge.com.
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 "Q2
2006 Bunge
5
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 27, 2006 and continuing through
1:00 p.m. EDT on August 27, 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 4429908. 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 27, 2006 and continuing through 12:00 p.m. EDT on August 27, 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 "Q2 2006 Bunge Limited Conference Call." Follow the prompts to
access the replay.
About Bunge Limited
Bunge Limited (www.Bunge.com) is an integrated, global agribusiness and food
company operating in the farm-to-consumer food chain. Founded in 1818 and
headquartered in White Plains, New York, Bunge has over 22,000 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
6
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 operations before
income tax, net income and earnings per share for the quarter and six months
ended June 30, 2006 and 2005.
- ------------------------------------------------------------------------------------------------------------------------------------
Income From
Total Segment Operations Before Earnings Per
(In millions, except per share data) Operating Profit Income Tax Net Income Share Diluted
- ------------------------------------ ----------------- ---------- ---------- -------------
Quarter Ended June 30: 2006 2005 2006 2005 2006 2005 2006 2005
---- ---- ---- ---- ---- ---- ---- ----
Reversal of social contribution/
transactional tax provision (1) $ 12 $ 14 $ 12 $ 14 $ 6 $ 10 $ 0.05 $ 0.08
Incremental share-based
compensation expense (2) (2) - (2) - (2) - (0.02) -
Value added tax credits - 35 - 35 - 20 - 0.17
---------------------------------------------------------------------------------------------
Total $ 10 $ 49 $ 10 $ 49 $ 4 $ 30 $ 0.03 $ 0.25
==============================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Income From
Total Segment Operations Before Earnings Per
(In millions, except per share data) Operating Profit Income Tax Net Income Share Diluted
- ------------------------------------ ----------------- ---------- ---------- -------------
Six Months Ended June 30: 2006 2005 2006 2005 2006 2005 2006 2005
---- ---- ---- ---- ---- ---- ---- ----
Impairment and restructuring
charges (3) $(24) $ - $(24) $ - $(16) $ - $(0.13) $ -
Reversal of social contribution/
transactional tax provision 12 14 12 14 6 10 0.05 0.08
Incremental share-based
compensation expense (2) (5) - (5) - (4) - (0.03) -
Reversal of recoverable
tax valuation allowance (4) - 27 - 27 - 19 - 0.16
Value added tax credits - 28 - 28 - 17 - 0.14
- ------------------------------------------------------------------------------------------------------------------------------------
Total $(17) $ 69 $(17) $ 69 $(14) $ 46 $(0.11) $ 0.38
==============================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
(1) In the second quarter of 2006, Bunge received a favorable final ruling from
the Brazilian tax court related to social contribution taxes improperly
levied in prior years. As a result, Bunge's Brazilian fertilizer
subsidiaries affected by this ruling reversed their provision related to
this tax. The effect on net income is net of minority interest.
(2) In the first quarter of 2006, Bunge adopted Financial Accounting Standards
No. 123R - Share Based Payments (SFAS No. 123R) and began expensing stock
options. Prior to the adoption of SFAS No. 123R, Bunge accounted for
stock-based compensation using the intrinsic value method under Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25), and Financial Accounting Standards Board (FASB)
Interpretation No. 28, Accounting for Stock Appreciation Rights and Other
Variable Stock Option or Award Plans (FIN 28) with pro forma disclosure in
accordance with the provisions of SFAS No. 123, Accounting for Stock-Based
Compensation.
(3) Impairment and restructuring charges in the six months ended June 30, 2006
consisted of $20 million in the agribusiness segment, $2 million in the
fertilizer segment and $2 million in the edible oil products segment. (4)
Represents the reversal of the remaining Argentine recoverable tax
valuation allowance in the agribusiness segment.
8
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- Percent ------------------------- Percent
2006 2005 Change 2006 2005 Change
---------------------------------------------------------------------------
Net sales $ 5,980 $ 5,872 2% $ 11,581 $ 11,323 2%
Cost of goods sold (5,692) (5,445) 5% (11,009) (10,511) 5%
------------ ------------ ------------ ------------
Gross profit 288 427 (33)% 572 812 (30)%
Selling, general and administrative expenses (218) (243) (10)% (445) (439) 1%
Interest income 30 26 15% 58 49 18%
Interest expense (54) (39) 38% (102) (89) 15%
Interest expense on readily marketable
inventories (13) (11) 18% (26) (18) 44%
Foreign exchange gain (loss) (15) 23 28 7
Other income (expense)-net (Note 1) 3 (3) 4 5
------------ ------------ ------------ ------------
Income from operations before income tax 21 180 (88)% 89 327 (73)%
Income tax benefit (expense) 3 (52) 106)% (8) (96) (92)%
------------ ------------ ------------ ------------
Income from operations after income tax 24 128 (81)% 81 231 (65)%
Minority interest (8) (22) (64)% (19) (37) (49)%
Equity in earnings of affiliates (Note 1) 14 7 100% 26 17 53%
------------ ------------ ------------ ------------
Net income $ 30 $ 113 (73)% $ 88 $ 211 (58)%
============ ============ ============ ============
Earnings per common share - diluted:
Net income per share - diluted $ 0.25 $ 0.94 (73)% $ 0.73 $ 1.76 (59)%
============ ============ ============ ============
Weighted-average common shares outstanding-diluted 120,731,717 120,893,138 120,702,213 120,757,411
============ ============ ============ ============
------------------------------------------------------------------------------
Note 1: In the first quarter of 2006, Bunge reclassified certain earnings
on investments in affiliates from other income (expense) - net to
equity in earnings of affiliates. As a result, amounts for the quarter
and six months ended June 30, 2005 have been reclassified to conform
to the quarter and six months ended June 30, 2006 presentation.
9
CONSOLIDATED SEGMENT INFORMATION
(In millions, except volumes and percentages)
(Unaudited) (Note 1)
Set forth below is a summary of certain items in our consolidated statements of
income and volumes by reportable segment.
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- Percent ------------------------- Percent
2006 2005 Change 2006 2005 Change
---------------------------------------------------------------------------
Volumes (in thousands of metric tons):
Agribusiness 26,557 27,664 (4)% 47,809 50,455 (5)%
Fertilizer 1,870 1,927 (3)% 3,588 3,656 (2)%
Edible oil products 1,071 1,028 4% 2,075 2,026 2%
Milling products 1,017 944 8% 1,967 1,929 2%
-------- -------- -------- --------
Total 30,515 31,563 (3)% 55,439 58,066 (5)%
======== ======== ======== ========
Net sales:
Agribusiness $ 4,498 $ 4,464 1% $ 8,660 $ 8,520 2%
Fertilizer 381 431 (12)% 801 834 (4)%
Edible oil products 862 763 13% 1,648 1,561 6%
Milling products 239 214 12% 472 408 16%
-------- -------- -------- --------
Total $ 5,980 $ 5,872 2% $ 11,581 $ 11,323 2%
======== ======== ======== ========
Gross profit:
Agribusiness $ 133 $ 229 (42)% $ 259 $ 448 (42)%
Fertilizer 37 97 (62)% 87 167 (48)%
Edible oil products 84 64 31% 160 135 19%
Milling products 34 37 (8)% 66 62 6%
-------- -------- -------- --------
Total $ 288 $ 427 (33)% $ 572 $ 812 (30)%
======== ======== ======== ========
Selling, general and administrative expenses:
Agribusiness $ (118) $ (120) (2)% $ (222) $ (215) 3%
Fertilizer (35) (62) (44)% (89) (105) (15)%
Edible oil products (49) (48) 2% (103) (95) 8%
Milling products (16) (13) 23% (31) (24) 29%
-------- -------- -------- --------
Total $ (218) $ (243) (10)% $ (445) $ (439) 1%
======== ======== ======== ========
Foreign exchange gain (loss):
Agribusiness $ (19) $ 22 $ (18) $ 26
Fertilizer 8 1 41 (16)
Edible oil products 2 1 3 --
Milling products -- (1) -- (1)
-------- -------- -------- --------
Total $ (9) $ 23 $ 26 $ 9
======== ======== ======== ========
Interest income:
Agribusiness $ 6 $ 8 (25)% $ 13 $ 12 8%
Fertilizer 15 10 50% 31 23 35%
Edible oil products 1 1 -% 1 2 (50)%
Milling products 2 1 100% 2 1 100%
-------- -------- -------- --------
Total $ 24 $ 20 20% $ 47 $ 38 24%
======== ======== ======== ========
Interest expense:
Agribusiness $ (48) $ (30) 60% $ (86) $ (59) 46%
Fertilizer (9) (9) -% (23) (23) -%
Edible oil products (9) (10) (10)% (16) (19) (16)%
Milling products (1) (1) -% (3) (3) -%
-------- -------- -------- --------
Total $ (67) $ (50) 34% $ (128) $ (104) 23%
======== ======== ======== ========
10
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- Percent ------------------------- Percent
2006 2005 Change 2006 2005 Change
- ---------------------------------------------------------------------------------------------------------------------------
Segment operating profit (loss):
Agribusiness $ (46) $ 109 (142)% $ (54) $ 212 (125)%
Fertilizer 16 37 (57)% 47 46 2%
Edible oil products 29 8 263% 45 23 96%
Milling products 19 23 (17)% 34 35 (3)%
-------- -------- -------- --------
Total (Note 2) $ 18 $ 177 (90)% $ 72 $ 316 (77)%
======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
Income from operations before income tax :
Segment operating profit $ 18 $ 177 $ 72 $ 316
Unallocated income - net (Note 3) 3 3 17 11
-------- -------- -------- --------
Income from operations before income tax $ 21 $ 180 $ 89 $ 327
======== ======== ======== ========
Depreciation, depletion and amortization:
Agribusiness $ 30 $ 26 15% $ 60 $ 51 18%
Fertilizer 33 26 27% 64 49 31%
Edible oil products 13 13 -% 26 25 4%
Milling products 3 3 -% 7 6 17%
-------- -------- -------- --------
Total $ 79 $ 68 16% $ 157 $ 131 20%
======== ======== ======== ========
- --------------------------------------------------------------------------------
Note 1: In the first quarter of 2006, Bunge reclassified certain product lines
in its agribusiness segment to its edible oil products segment. As a
result, amounts for the quarter and six months ended June 30, 2005
have been reclassified to conform to the quarter and six months ended
June 30, 2006 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, 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, 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.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
June 30, December 31, June 30,
2006 2005 2005
---------------- ----------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 279 $ 354 $ 414
Trade accounts receivable 1,690 1,702 1,802
Inventories 3,300 2,769 3,592
Deferred income taxes 108 102 149
Other current assets 1,790 1,637 1,549
---------------- ----------------- ---------------
Total current assets 7,167 6,564 7,506
Property, plant and equipment, net 3,103 2,900 2,789
Goodwill 188 176 189
Other intangible assets, net 126 132 178
Investments in affiliates 623 585 570
Deferred income taxes 564 462 273
Other non-current assets 653 627 518
---------------- ----------------- ---------------
Total assets $12,424 $11,446 $12,023
================ ================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 709 $ 411 $ 557
Current portion of long-term debt 87 178 207
Trade accounts payable 1,943 1,803 2,042
Deferred income taxes 35 38 56
Other current liabilities 1,111 1,187 1,210
---------------- ----------------- ---------------
Total current liabilities 3,885 3,617 4,072
Long-term debt 2,872 2,557 3,137
Deferred income taxes 145 145 224
Other non-current liabilities 618 576 564
Minority interest in subsidiaries 364 325 308
Shareholders' equity 4,540 4,226 3,718
---------------- ----------------- ---------------
Total liabilities and shareholders' equity $12,424 $11,446 $12,023
================ ================= ===============
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
June 30,
--------------------------------
2006 2005
-------------- --------------
OPERATING ACTIVITIES
Net income $ 88 $ 211
Adjustments to reconcile net income to cash used by operating activities:
Foreign exchange gain on debt (114) (100)
Impairment of assets 20 -
Bad debt expense 21 20
Depreciation, depletion and amortization 157 131
Decrease in the allowance for recoverable taxes (6) (27)
Deferred income taxes (34) (27)
Minority interest 19 37
Equity in earnings of affiliates (26) (17)
Changes in operating assets and liabilities, excluding the effects of
acquisitions:
Trade accounts receivable 72 132
Inventories (412) (840)
Prepaid commodity purchase contracts (31) (89)
Advances to suppliers 101 220
Trade accounts payable 47 18
Advances on sales (80) (29)
Accrued liabilities (36) (64)
Other - net (186) 75
-------------- --------------
Cash used by operating activities (400) (349)
INVESTING ACTIVITIES
Payments made for capital expenditures (181) (212)
Investments in affiliates (52) (1)
Acquisitions of businesses and other intangible assets (6) (24)
Return of capital from affiliate 13 8
Related party loan repayments 6 14
Proceeds from sale of investments 11 -
Proceeds from disposal of property, plant and equipment 4 5
--------------------------------
Cash used for investing activities (205) (210)
FINANCING ACTIVITIES
Net change in short-term debt 278 15
Proceeds from long-term debt 452 794
Repayments of long-term debt (172) (215)
Proceeds from sale of common shares 9 9
Dividends paid to shareholders (36) (30)
Dividends paid to minority interest (16) (37)
-------------- --------------
Cash provided by financing activities 515 536
Effect of exchange rate changes on cash and cash equivalents 15 5
-------------- --------------
Net decrease in cash and cash equivalents (75) (18)
Cash and cash equivalents, beginning of period 354 432
-------------- --------------
Cash and cash equivalents, end of period $ 279 $ 414
============== ==============
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Reconciliation of Non-GAAP Measures
This earnings release contains total segment operating profit, net financial
debt and net financial debt less readily marketable inventories, which are
"non-GAAP financial measures" as this term is defined in Regulation G of the
Securities 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 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, the most directly
comparable GAAP financial measure. Total segment operating profit 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 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 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 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 or any other measure of consolidated operating results under
U.S. GAAP.
Below is a reconciliation of income from operations before income tax to total
segment operating profit:
Quarter Ended Six Months
June 30, Ended June 30,
--------------- ---------------
(In millions) 2006 2005 2006 2005
------------- ------ ------ ------ ------
Income from operations before income tax $ 21 $ 180 $ 89 $ 327
Unallocated income - net (1) (3) (3) (17) (11)
----- ----- ----- -----
Total segment operating profit $ 18 $ 177 $ 72 $ 316
===== ===== ===== =====
--------------------
(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.
14
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) 2006 2005 2005
------------- ---------------- -------------- ---------------
Short-term debt $ 709 $ 411 $ 557
Long-term debt, including current portion 2,959 2,735 3,344
---------------- -------------- ---------------
Total debt 3,668 3,146 3,901
Less:
Cash and cash equivalents 279 354 414
Marketable securities 8 9 13
---------------- -------------- ---------------
Net financial debt 3,381 2,783 3,474
Less: Readily marketable inventories 2,130 1,534 2,138
---------------- -------------- ---------------
Net financial debt less readily marketable
inventories $ 1,251 $ 1,249 $ 1,336
================ ============== ===============
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