Exhibit 99.1
[BUNGLE LOGO] 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 Third Quarter 2006 Results
White Plains, NY - October 26, 2006 - Bunge Limited (NYSE:BG).
>> Financial Highlights
(In millions, except per share data and percentages)
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Ended Percent Nine Months Ended Percent
9/30/06 9/30/05 Change 9/30/06 9/30/05 Change
- ---------------------------------------------------------------------------------------------------------------------------
Volumes (metric tons) 30.8 29.7 3% 86.2 87.8 (2)%
Net sales $ 6,965 $ 6,248 11% $18,591 $17,624 5%
Total segment operating profit(1) $ 179 $ 151 19% $ 251 $ 467 (46)%
Net income $ 169 $ 170 (1)% $ 257 $ 381 (33)%
Earnings per share - diluted $ 1.40 $ 1.41 (1)% $ 2.13 $ 3.18 (33)%
- ---------------------------------------------------------------------------------------------------------------------------
Bunge's results included certain gains and charges that may be of interest to
investors. In the quarter ended September 30, 2006, the net charges totaled
$(18) million, or $(0.15) per share. For the nine months ended September 30,
2006, the net charges totaled $(32) million, or $(0.27) per share. In the
quarter ended September 30, 2005, the gains totaled $43 million, or $0.35 per
share, and for the nine months ended September 30, 2005, the gains totaled $89
million, or $0.73 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.
>> Overview
Alberto Weisser, Bunge's Chairman and Chief Executive Officer stated: "The
environment for our business began to improve in the third quarter. Bunge's
operating results were substantially better when compared to a weak first half
and were stronger than in the same quarter last year. We expect improvement in
business conditions to continue as we move into 2007.
"Processing margins in Argentina rose as the industry reduced soy crushing
volumes in the country. Our earlier closure of five oilseed processing
facilities benefited results and improved capacity utilization in Brazil. Lower
inventories, cost reductions in local currency and enhanced foreign exchange
hedging helped profitability in fertilizer, although that business is improving
more slowly than expected. Government financial assistance, a more stable real
and increases in crop prices helped spur farmer selling in Brazil.
"Recent improvements in global prices for agricultural commodities are a
positive indicator for farmers. Better prices in Brazil should stimulate farmer
selling of existing crops and create incentives for expanding production.
Although this season's plantings and fertilizer sales will be lower in Brazil
when compared to 2005, in time these positive forces will influence crop
production and demand for inputs, including fertilizer.
"Increased demand for our core products created by biofuel production is an
important contributor to positive industry fundamentals. As biofuel production
capacity increases this demand should grow. To date we have announced eight
joint-venture investments in biodiesel and ethanol in the U.S. and Europe. We
are breaking ground on an ethanol plant in Vicksburg, Mississippi this morning.
"Today Bunge's share of biofuel production from these ventures is 50 million
gallons per year. This should rise to over 300 million gallons per year in the
next two years as capacity comes on stream. More importantly, the total biofuel
production from these joint ventures should exceed one billion gallons per year,
for which Bunge will supply most of the raw materials.
"We continue to invest in improving Bunge's global footprint to capitalize on
the overall trends that drive our industry. During the third quarter we
finalized the purchase of our second soy crushing plant in China. This week we
announced a project to expand capacity at our crushing plant in Council Bluffs,
Iowa. The expansion will make the plant the largest in the U.S. and enhance our
strong position supplying customers in the western U.S. and Mexico.
>> Third Quarter Results
Agribusiness
Results in the quarter improved significantly over a weak first half of the
year, and also improved compared to the same period last year.
Higher margins in Brazil and Argentina more than offset lower volumes. Benefits
from prior restructuring actions reduced the effects of a stronger Brazilian
real on local currency operating costs when translated into U.S. dollars. The
average real-U.S. dollar exchange rate strengthened 8% when compared to the
third quarter of 2005. Results continued to be strong in North America and
Europe. SG&A increased primarily due to higher bad debt and increased employee
related costs.
Fertilizer
Results improved due to increased margins and improved foreign currency hedging,
which offset the impact of a stronger real on margins and costs. Sales volume
was slightly lower. Prior cost reduction measures also benefited results.
Edible Oil Products
Strong results were primarily due to increased volumes and margins in Europe.
Margins benefited from lower seed costs, better distribution and brand
positioning. Strong Brazil edible oils results, driven principally by higher
volume, more than offset lower results in North America. Increased oil shipments
to biodiesel processors in the U.S. positively affected margins.
Milling Products
Results in the quarter were slightly less than last year's strong performance.
Wheat milling benefited from higher volumes and margins, but was offset by
volume and margin declines in corn milling.
Financial Costs
Interest expense increased primarily due to higher short-term interest rates and
higher average debt balances.
Income Taxes
Income tax expense for the third quarter of 2006 includes a charge of $21
million relating to a reversal of certain tax benefits on U.S. foreign sales
recorded from 2001 to 2005. Excluding this item, the effective tax rate for the
nine months ended September 30, 2006 was 4%. Bunge's income tax expense for the
nine months ended September 30, 2005 reflected a $38 million reduction in its
deferred tax valuation allowances. Excluding this item, the effective tax rate
for the nine months ended September 30, 2005 was 24%.
The decrease in the effective tax rate for the nine months ended September 30,
2006 compared to the nine months ended September 30, 2005 was primarily due to
the decline in income from operations before income tax in subsidiaries that are
in tax jurisdictions with higher income tax rates. In addition, higher earnings
in lower tax jurisdictions and the effects of a legal restructuring completed in
2005 also contributed to the lower effective tax rate.
Minority Interest
Minority interest expense decreased when compared to 2005 due to lower earnings
at Fosfertil.
Cash Flow and Net Financial Debt(2)
Net financial debt and readily marketable inventories at September 30, 2006
increased $962 million, and $587 million, respectively, from December 31, 2005,
primarily due to normal seasonally higher levels of grain and fertilizer
inventory. Net financial debt less readily marketable inventories at September
30, 2006 was only marginally higher than at the same date last year.
Cash flow used by operations was $548 million for the nine months ended
September 30, 2006 compared to $50 million used by operations in the nine months
ended September 30, 2005. Lower net income and increases in working capital
contributed to the decline in cash flow from operations. The increase in working
capital is primarily attributable to higher prices for agricultural commodities,
a higher level of soybean purchases in Brazil and a positive carrying structure
in the market for agricultural commodities. Generally, during periods when
commodity prices are high, operations require increased levels of working
capital.
- -----------------------
(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.
>> Outlook
Bill Wells, Chief Financial Officer, stated, "We expect a solid fourth quarter.
The fourth quarter is typically the strongest for North American and European
agribusiness due to the harvest, while South American agribusiness slows down.
Fertilizer sales are typically strong. Although market conditions in South
America remain challenging, we feel the situation has stabilized and that we
have adjusted our company to the current environment. Milling and edible oils
should continue to perform well. Capital investments are coming on line and
beginning to contribute to our results.
"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.
"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 Tax Rate (includes $21 million charge in third quarter): 6% to 10%
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
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 all items year-to-date in the attached schedule titled
"Additional Financial Information", totaling $(32) million, or $(0.27) per
share. It also includes $17 million, or $0.14 per share, in the fourth quarter
related to a gain on sale of assets and share-based compensation expense.
Conference Call and Webcast Details
Bunge Limited's management will host a conference call at 10:00 a.m. EDT on
October 26 to discuss the company's results.
To listen to the conference call, please dial (800) 819-9193. If you are located
outside of the United States, dial (913) 981-4911. Please dial in five to 10
minutes before the scheduled start time. When prompted, enter passcode number
2943833. 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 "Q3
2006 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 October 26, 2006 and continuing through
1:00 p.m. EST on November 26, 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 2943833. A rebroadcast of the conference call
will also be available on the company's Web site. 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 "Q3
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 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, income from operations before
income tax, net income and earnings per share for the quarter and nine months
ended September 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 September 30: 2006 2005 2006 2005 2006 2005 2006 2005
---- ---- ---- ---- ---- ---- ---- ----
Litigation settlement (1) $ 6 $ -- $ 6 $ -- $ 4 $ -- $ 0.03 $ --
Incremental share-based
compensation expense (2) (2) -- (2) -- (1) -- (0.01) --
Tax benefit reversal on U.S.
foreign sales (3) -- -- -- -- (21) -- (0.17) --
Reversal of income tax
valuation allowance -- -- -- -- -- 38 -- 0.31
Gain on sale of asset -- -- -- 7 -- 5 -- 0.04
----------------------------------------------------------------------------------------------------
Total $ 4 $ -- $ 4 $ 7 $(18) $ 43 $(0.15) $0.35
====================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Income From
Total Segment Operations Before Earnings Per
(In millions, except per share data) Operating Profit Income Tax Net Income Share Diluted
- ------------------------------------ ---------------- ----------------- ---------- -------------
Nine Months Ended September 30: 2006 2005 2006 2005 2006 2005 2006 2005
---- ---- ---- ---- ---- ---- ---- ----
Impairment and restructuring
charges (4) $(24) $ -- $(24) $ -- $(16) $ -- $(0.13) $ --
Reversal of social contribution/
transactional tax provision (5) 12 14 12 14 6 10 0.05 0.08
Litigation settlement (1) 6 -- 6 -- 4 -- 0.03 --
Incremental share-based
compensation expense (2) (7) -- (7) -- (5) -- (0.05) --
Reversal of recoverable
tax valuation allowance (6) -- 27 -- 27 -- 19 -- 0.16
Value added tax credits -- 28 -- 28 -- 17 -- 0.14
Tax benefit reversal on U.S.
foreign sales (3) -- -- -- -- (21) -- (0.17) --
Reversal of income tax
valuation allowance -- -- -- -- -- 38 -- 0.31
Gain on sale of asset -- -- -- 7 -- 5 -- 0.04
----------------------------------------------------------------------------------------------------
Total $(13) $ 69 $(13) $ 76 $(32) $ 89 $(0.27) $0.73
====================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
(1) In the quarter ended September 30, 2006, Bunge received a payment of $6
million in partial settlement of its litigation in Brazil against Centrais
Eletricias Brasileiras S.A. (Eletrobras), of which $4 million was
recognized in the agribusiness segment and $2 million in the edible oil
products segment.
(2) In the quarter ended March 31, 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) In the quarter ended September 30, 2006, Bunge recorded a charge of $21
million to income tax expense. This charge represents a correction of
certain tax benefits recognized from 2001 to 2005 related to income tax
incentives under the Foreign Sales Corporation/Extraterritorial Income
Exclusion provisions of the U.S. Internal Revenue Code.
(4) Impairment and restructuring charges in the nine months ended September 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.
(5) In the quarter ended June 30, 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.
(6) Represents the reversal of the remaining Argentine recoverable tax
valuation allowance in the agribusiness segment.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data and percentages)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------------- Percent ----------------------------- Percent
2006 2005 Change 2006 2005 Change
------------------------------------------------------------------------------------
Net sales (Note 1) $ 6,965 $ 6,248 11% $ 18,591 $ 17,624 5%
Cost of goods sold (Note 1) (6,480) (5,841) 11% (17,534) (16,405) 7%
----------- ----------- ----------- -----------
Gross profit 485 407 19% 1,057 1,219 (13)%
Selling, general and administrative expenses (255) (230) 11% (700) (669) 5%
Interest income 29 29 --% 87 78 12%
Interest expense (41) (41) --% (143) (130) 10%
Interest expense on readily marketable
inventories (25) (15) 67% (51) (33) 55%
Foreign exchange gain 7 3 35 10
Other income (expense)-net (Note 2) 3 11 7 16
----------- ----------- ----------- -----------
Income from operations before income tax 203 164 24% 292 491 (41)%
Income tax (expense) benefit (25) 18 (33) (78) (58)%
----------- ----------- ----------- -----------
Income from operations after income tax 178 182 (2)% 259 413 (37)%
Minority interest (19) (22) (14)% (38) (59) (36)%
Equity in earnings of affiliates (Note 2) 10 10 --% 36 27 33%
----------- ----------- ----------- -----------
Net income $ 169 $ 170 (1)% $ 257 $ 381 (33)%
=========== =========== =========== ===========
Earnings per common share - diluted:
Net income per share - diluted $ 1.40 $ 1.41 (1)% $ 2.13 $ 3.18 (33)%
=========== =========== =========== ===========
Weighted-average common shares
outstanding-diluted 120,804,750 120,982,588 120,760,305 120,863,053
=========== =========== =========== ===========
- --------------------------------------------------------------------------------
Note 1: Bunge has corrected its classification of interest on secured advances
to suppliers by reclassifying amounts from cost of goods sold to net
sales. The effect of this reclassification increased cost of goods sold
and net sales by $22 million in the quarter ended September 30, 2005
and $75 million in the nine months ended September 30, 2005. This
change does not affect gross profit, segment operating profit or net
income.
Note 2: In the quarter ended March 31, 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 nine months ended September 30, 2005 have been reclassified
to conform to the quarter and nine months ended September 30, 2006
presentation.
CONSOLIDATED SEGMENT INFORMATION
(In millions, except volumes and percentages)
(Unaudited) (Note 1)
Set forth below is a summary of certain items in our consolidated statements of
income and volumes by reportable segment.
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------------- Percent ------------------------- Percent
2006 2005 Change 2006 2005 Change
--------------------------------------------------------------------------------------
Volumes (in thousands of metric tons):
Agribusiness 24,508 23,509 4% 72,317 73,964 (2)%
Fertilizer 4,069 4,125 (1)% 7,657 7,781 (2)%
Edible oil products 1,180 1,124 5% 3,255 3,150 3%
Milling products 995 966 3% 2,962 2,895 2%
----------- --------- ---------- ----------
Total 30,752 29,724 3% 86,191 87,790 (2)%
=========== ========= ========== ==========
Net sales:
Agribusiness (Note 2) $ 4,885 $ 4,200 16% $ 13,590 $ 12,773 6%
Fertilizer 883 946 (7)% 1,684 1,780 (5)%
Edible oil products 955 879 9% 2,603 2,440 7%
Milling products 242 223 9% 714 631 13%
----------- --------- ---------- ----------
Total $ 6,965 $ 6,248 11% $ 18,591 $ 17,624 5%
=========== ========= ========== ==========
Gross profit:
Agribusiness $ 254 $ 199 28% $ 513 $ 647 (21)%
Fertilizer 114 107 7% 201 274 (27)%
Edible oil products 85 69 23% 245 204 20%
Milling products 32 32 --% 98 94 4%
----------- --------- ---------- ----------
Total $ 485 $ 407 19% $ 1,057 $ 1,219 (13)%
=========== ========= ========== ==========
Selling, general and administrative expenses:
Agribusiness $ (134) $ (107) 25% $ (356) $ (322) 11%
Fertilizer (52) (52) --% (141) (157) (10)%
Edible oil products (53) (56) (5)% (156) (151) 3%
Milling products (16) (15) 7% (47) (39) 21%
----------- --------- ---------- ----------
Total $ (255) $ (230) 11% $ (700) $ (669) 5%
=========== ========= ========== ==========
Foreign exchange gain (loss):
Agribusiness $ (2) $ 9 $ (20) $ 35
Fertilizer (3) (4) 38 (20)
Edible oil products (1) 1 2 1
Milling products -- -- -- (1)
----------- --------- ---------- ----------
Total $ (6) $ 6 $ 20 $ 15
=========== ========= ========== ==========
Interest income:
Agribusiness $ 7 $ 7 --% $ 20 $ 19 5%
Fertilizer 13 15 (13)% 44 38 16%
Edible oil products 1 1 --% 2 3 (33)%
Milling products -- -- --% 2 1 100%
----------- --------- ---------- ----------
Total $ 21 $ 23 (9)% $ 68 $ 61 11%
=========== ========= ========== ==========
Interest expense:
Agribusiness $ (53) $ (41) 29% $ (139) $ (100) 39%
Fertilizer (5) (6) (17)% (28) (29) (3)%
Edible oil products (6) (7) (14)% (22) (26) (15)%
Milling products (2) (1) 100% (5) (4) 25%
----------- --------- ---------- ----------
Total $ (66) $ (55) 20% $ (194) $ (159) 22%
=========== ========= ========== ==========
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------------ Percent ----------------------- Percent
2006 2005 Change 2006 2005 Change
--------------------------------------------------------------------------------------
Segment operating profit:
Agribusiness $ 72 $ 67 7% $ 18 $ 279 (94)%
Fertilizer 67 60 12% 114 106 8%
Edible oil products 26 8 225% 71 31 129%
Milling products 14 16 (13)% 48 51 (6)%
----- ----- ----- -----
Total (Note 3) $ 179 $ 151 19% $ 251 $ 467 (46)%
===== ===== ===== =====
Income from operations before income tax :
Segment operating profit $ 179 $ 151 $ 251 $ 467
Unallocated income - net (Note 4) 24 13 41 24
----- ----- ----- -----
Income from operations before income tax $ 203 $ 164 $ 292 $ 491
===== ===== ===== =====
Depreciation, depletion and amortization:
Agribusiness $ 31 $ 27 15% $ 91 $ 78 17%
Fertilizer 33 27 22% 97 76 28%
Edible oil products 14 12 17% 40 37 8%
Milling products 4 4 --% 11 10 10%
----- ----- ----- -----
Total $ 82 $ 70 17% $ 239 $ 201 19%
===== ===== ===== =====
- --------------------------------------------------------------------------------
Note 1: In the quarter ended March 31, 2006, Bunge reclassified certain product
lines in its agribusiness segment to its edible oil products segment.
As a result, amounts for the quarter and nine months ended September
30, 2005 have been reclassified to conform to the quarter and nine
months ended September 30, 2006 presentation.
Note 2: Bunge has corrected its classification of interest on secured advances
to suppliers by reclassifying amounts from cost of goods sold to net
sales. The effect of this reclassification increased cost of goods
sold and net sales by $22 million in the quarter ended September 30,
2005 and $75 million in the nine months ended September 30, 2005. This
change does not affect gross profit, segment operating profit or net
income.
Note 3: 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 4: 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)
September 30, December 31, September 30,
2006 2005 2005
--------------- -------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 287 $ 354 $ 326
Trade accounts receivable 2,008 1,702 2,081
Inventories 3,430 2,769 3,049
Deferred income taxes 100 102 148
Other current assets 1,979 1,637 1,715
--------------- -------------- ---------------
Total current assets 7,804 6,564 7,319
Property, plant and equipment, net 3,165 2,900 2,952
Goodwill 189 176 194
Other intangible assets, net 123 132 184
Investments in affiliates 637 585 583
Deferred income taxes 569 462 359
Other non-current assets 734 627 612
--------------- -------------- ---------------
Total assets $13,221 $11,446 $12,203
=============== ============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 771 $ 411 $ 552
Current portion of long-term debt 156 178 213
Trade accounts payable 2,008 1,803 2,027
Deferred income taxes 41 38 100
Other current liabilities 1,313 1,187 1,260
--------------- -------------- ---------------
Total current liabilities 4,289 3,617 4,152
Long-term debt 3,114 2,557 2,875
Deferred income taxes 146 145 233
Other non-current liabilities 577 576 594
Minority interest in subsidiaries 381 325 331
Shareholders' equity 4,714 4,226 4,018
--------------- -------------- ---------------
Total liabilities and shareholders' equity $13,221 $11,446 $12,203
=============== ============== ===============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
--------------------------------
2006 2005
------------ --------------
OPERATING ACTIVITIES
Net income $ 257 $ 381
Adjustments to reconcile net income to cash used by operating activities:
Foreign exchange gain on debt (93) (177)
Impairment of assets 20 --
Bad debt expense 35 24
Depreciation, depletion and amortization 239 201
Increase (decrease) in the allowance for recoverable taxes 1 (27)
Deferred income taxes (50) (80)
Minority interest 38 59
Equity in earnings of affiliates (36) (27)
Changes in operating assets and liabilities, excluding the effects of
acquisitions:
Trade accounts receivable (236) (99)
Inventories (551) (216)
Prepaid commodity purchase contracts (111) (60)
Advances to suppliers 258 148
Trade accounts payable 113 (68)
Advances on sales (54) 39
Accrued liabilities 30 7
Unrealized net (gain) loss on derivative contracts (124) 74
Other - net (284) (229)
------- -------
Cash used by operating activities (548) (50)
INVESTING ACTIVITIES
Payments made for capital expenditures (315) (342)
Investments in affiliates (68) (2)
Acquisitions of businesses and other intangible assets (29) (29)
Return of capital from affiliate 13 7
Related party loan repayments 19 13
Proceeds from sale of investments 11 --
Proceeds from disposal of property, plant and equipment 8 10
------- -------
Cash used for investing activities (361) (343)
FINANCING ACTIVITIES
Net change in short-term debt 339 11
Proceeds from long-term debt 761 1,195
Repayments of long-term debt (213) (845)
Proceeds from sale of common shares 11 12
Dividends paid to shareholders (55) (46)
Dividends paid to minority interest (15) (51)
------- -------
Cash provided by financing activities 828 276
Effect of exchange rate changes on cash and cash equivalents 14 11
------- -------
Net decrease in cash and cash equivalents (67) (106)
Cash and cash equivalents, beginning of period 354 432
------- -------
Cash and cash equivalents, end of period $ 287 $ 326
======= =======
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 Nine Months
September 30, Ended September 30,
--------------------- ---------------------
(In millions) 2006 2005 2006 2005
----- ----- ----- -----
Income from operations before income tax $ 203 $ 164 $ 292 $ 491
Unallocated income - net (1) (24) (13) (41) (24)
----- ----- ----- -----
Total segment operating profit $ 179 $ 151 $ 251 $ 467
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(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:
September 30, December 31, September 30,
(In millions) 2006 2005 2005
------------- ------------- ------------ -------------
Short-term debt $ 771 $ 411 $ 552
Long-term debt, including current portion 3,270 2,735 3,088
------------- ------------ -------------
Total debt 4,041 3,146 3,640
Less:
Cash and cash equivalents 287 354 326
Marketable securities 9 9 11
------------- ------------ -------------
Net financial debt 3,745 2,783 3,303
Less: Readily marketable inventories 2,121 1,534 1,690
------------- ------------ -------------
Net financial debt less readily marketable inventories $1,624 $1,249 $1,613
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