Bunge Earnings 2019-06-30

BG 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-16625

BUNGE LIMITED

(Exact name of registrant as specified in its charter)



Bermuda		98-0231912
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

50 Main Street
White Plains
New York		10606
(Address of principal executive offices)		(Zip Code)

(914) 684-2800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	ý	Accelerated filer	☐	Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934). Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ý

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, $0.01 par value per share	BG	New York Stock Exchange

As of July 26, 2019 the number of shares issued of the registrant was:

Common shares, par value $.01 per share: 141,556,942

Table of Contents

BUNGE LIMITED

TABLE OF CONTENTS



		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2019 and 2018	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2019 and 2018	4

	Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	6

	Condensed Consolidated Statements of Changes in Equity and Redeemable Noncontrolling Interests for the Three and Six Months Ended June 30, 2019 and 2018	7

	Notes to the Condensed Consolidated Financial Statements	9

	Cautionary Statement Regarding Forward-Looking Statements	37

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	57

PART II — INFORMATION

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	58

Signatures		59

Exhibit Index		59

Table of Contents

PART I— FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(U.S. dollars in millions, except per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales	$	10,096		$	12,147		$	20,034		$	22,788
Cost of goods sold	(9,584		)	(11,605		)	(19,085		)	(21,862		)
Gross profit	512			542			949			926
Selling, general and administrative expenses	(335		)	(377		)	(640		)	(721		)
Interest income	7			6			14			14
Interest expense	(88		)	(94		)	(163		)	(164		)
Foreign exchange gains (losses)	(11		)	(96		)	(18		)	(96		)
Other income (expense) – net	187			4			218			28
Income (loss) from continuing operations before income tax	272			(15		)	360			(13		)
Income tax (expense) benefit	(60		)	(2		)	(98		)	(21		)
Income (loss) from continuing operations	212			(17		)	262			(34		)
Income (loss) from discontinued operations, net of tax	—			7			—			5
Net income (loss)	212			(10		)	262			(29		)
Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests	2			(2		)	(3		)	(4		)
Net income (loss) attributable to Bunge	214			(12		)	259			(33		)
Convertible preference share dividends	(9		)	(9		)	(17		)	(17		)
Net income (loss) available to Bunge common shareholders	$	205		$	(21	)	$	242		$	(50	)

Earnings per common share—basic (Note 19)
Net income (loss) from continuing operations	$	1.46		$	(0.20	)	$	1.72		$	(0.39	)
Net income (loss) from discontinued operations	—			0.05			—			0.03
Net income (loss) attributable to Bunge common shareholders	$	1.46		$	(0.15	)	$	1.72		$	(0.36	)

Earnings per common share—diluted (Note 19)
Net income (loss) from continuing operations	$	1.43		$	(0.20	)	$	1.71		$	(0.39	)
Net income (loss) from discontinued operations	—			0.05			—			0.03
Net income (loss) attributable to Bunge common shareholders	$	1.43		$	(0.15	)	$	1.71		$	(0.36	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(U.S. dollars in millions)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income (loss)	$	212		$	(10	)	$	262		$	(29	)
Other comprehensive income (loss):
Foreign exchange translation adjustment	97			(1,024		)	68			(1,036		)
Unrealized gains (losses) on designated hedges, net of tax (expense) benefit of ($1) and ($1) in 2019 and $2 and $2 in 2018	(8		)	161			(31		)	164
Reclassification of realized net (gains) losses to net income, net of tax expense (benefit) of $1 and $1 in 2019 and nil and nil in 2018	(1		)	3			(2		)	(1		)
Pension adjustment, net of tax (expense) benefit of nil and nil in 2019 and nil and nil in 2018	—			2			—			1
Total other comprehensive income (loss)	88			(858		)	35			(872		)
Total comprehensive income (loss)	300			(868		)	297			(901		)
Less: comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests	(5		)	8			(1		)	3
Total comprehensive income (loss) attributable to Bunge	$	295		$	(860	)	$	296		$	(898	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in millions, except share data)



	June 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	238		$	389
Trade accounts receivable (less allowances of $113 and $113) (Note 14)	1,711			1,637
Inventories (Note 6)	5,875			5,871
Other current assets (Note 7)	3,283			3,171
Total current assets	11,107			11,068
Property, plant and equipment, net	5,238			5,201
Operating lease assets (Note 4)	1,027			—
Goodwill	729			727
Other intangible assets, net	643			697
Investments in affiliates	474			451
Deferred income taxes	456			458
Other non-current assets (Note 8)	750			823
Total assets	$	20,424		$	19,425
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,885		$	750
Current portion of long-term debt (Note 13)	424			419
Trade accounts payable (includes $721 and $441 carried at fair value)	3,053			3,501
Current operating lease obligations (Note 4)	231			—
Other current liabilities (Note 10)	1,864			2,502
Total current liabilities	7,457			7,172
Long-term debt (Note 13)	4,039			4,203
Deferred income taxes	349			356
Non-current operating lease obligations (Note 4)	750			—
Other non-current liabilities	879			892
Commitments and contingencies (Note 16)
Redeemable noncontrolling interest (Note 17)	425			424
Equity (Note 18):
Convertible perpetual preference shares, par value $.01; authorized – 21,000,000 shares, issued and outstanding: 2019 and 2018 - 6,899,683 shares (liquidation preference $100 per share)	690			690
Common shares, par value $.01; authorized – 400,000,000 shares; issued and outstanding: 2019 – 141,533,722 shares, 2018 – 141,111,081 shares	1			1
Additional paid-in capital	5,300			5,278
Retained earnings	8,179			8,059
Accumulated other comprehensive income (loss) (Note 18)	(6,919		)	(6,935		)
Treasury shares, at cost - 2019 and 2018 - 12,882,313 shares	(920		)	(920		)
Total Bunge shareholders’ equity	6,331			6,173
Noncontrolling interests	194			205
Total equity	6,525			6,378
Total liabilities, redeemable noncontrolling interest and equity	$	20,424		$	19,425

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in millions)



	Six Months Ended June 30,
	2019			2018
OPERATING ACTIVITIES
Net income (loss)	$	262		$	(29	)
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Impairment charges	22			4
Foreign exchange loss on net debt	38			171
Bad debt expense	4			23
Depreciation, depletion and amortization	294			304
Share-based compensation expense	17			21
Deferred income tax (benefit)	3			(50		)
Other, net	(13		)	5
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Trade accounts receivable	(106		)	(245		)
Inventories	5			(2,202		)
Secured advances to suppliers	(120		)	(308		)
Trade accounts payable and accrued liabilities	(503		)	(48		)
Advances on sales	(169		)	(80		)
Net unrealized gains and losses on derivative contracts	(214		)	262
Margin deposits	121			(217		)
Marketable securities	(272		)	(56		)
Beneficial interest in securitized trade receivables	(521		)	(1,074		)
Other, net	69			(30		)
Cash provided by (used for) operating activities	(1,083		)	(3,549		)
INVESTING ACTIVITIES
Payments made for capital expenditures	(265		)	(220		)
Acquisitions of businesses (net of cash acquired)	—			(968		)
Proceeds from investments	213			945
Payments for investments	(277		)	(1,082		)
Settlement of net investment hedges	(39		)	12
Proceeds from beneficial interest in securitized trade receivables	547			1,064
Payments for investments in affiliates	(6		)	—
Other, net	12			32
Cash provided by (used for) investing activities	185			(217		)
FINANCING ACTIVITIES
Net change in short-term debt with maturities of 90 days or less	1,198			1,903
Proceeds from short-term debt with maturities greater than 90 days	44			231
Repayments of short-term debt with maturities greater than 90 days	(104		)	(63		)
Proceeds from long-term debt	3,262			5,926
Repayments of long-term debt	(3,496		)	(4,430		)
Proceeds from the exercise of options for common shares	7			11
Dividends paid to common and preference shareholders	(158		)	(147		)
Other, net	(8		)	(13		)
Cash provided by (used for) financing activities	745			3,418
Effect of exchange rate changes on cash and cash equivalents and restricted cash	8			(32		)
Net increase (decrease) in cash and cash equivalents and restricted cash	(145		)	(380		)
Cash and cash equivalents and restricted cash - beginning of period	393			605
Cash and cash equivalents and restricted cash - end of period	$	248		$	225

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(Unaudited)

(U.S. dollars in millions, except share data)



				Convertible Preference Shares			Common Shares
	Redeemable Non- Controlling Interests			Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Shares			Non- Controlling Interests			Total Equity
Balance, April 1, 2019	$	421		6,899,683	$	690	141,469,061	$	1	$	5,284	$	8,045		$	(7,000	)	$	(920	)	$	204		$	6,304
Net income (loss)	(1		)	—	—		—	—		—		214			—			—			(1		)	213
Other comprehensive income (loss)	5			—	—		—	—		—		—			81			—			2			83
Dividends on common shares, $0.50 per share	—			—	—		—	—		—		(71		)	—			—			—			(71		)
Dividends on preference shares, $1.21875 per share	—			—	—		—	—		—		(9		)	—			—			—			(9		)
Dividends to noncontrolling interests on subsidiary common stock	—			—	—		—	—		—		—			—			—			(11		)	(11		)
Share-based compensation expense	—			—	—		—	—		13		—			—			—			—			13
Issuance of common shares, including stock dividends	—			—	—		64,661	—		3		—			—			—			—			3
Balance, June 30, 2019	$	425		6,899,683	$	690	141,533,722	$	1	$	5,300	$	8,179		$	(6,919	)	$	(920	)	$	194		$	6,525



				Convertible Preference Shares			Common Shares
	Redeemable Non- Controlling Interests			Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Shares			Non- Controlling Interests			Total Equity
Balance, April 1, 2018	$	470		6,899,700	$	690	140,904,028	$	1	$	5,233	$	8,008		$	(5,947	)	$	(920	)	$	212		$	7,277
Net income (loss)	1			—	—		—	—		—		(12		)	—			—			1			(11		)
Other comprehensive income (loss)	(25		)	—	—		—	—		—		—			(848		)	—			(10		)	(858		)
Dividends on common shares, $0.50 per share	—			—	—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$53.17	141	$7,520

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-22	Exit Costs, Impairments, Other Events, Exhibits
8-K	2019-06-30	Earnings, Exhibits
8-K	2019-05-24	Shareholder Vote
8-K	2019-05-08	Officers, Exhibits
8-K	2019-04-26	Officers, Exhibits
8-K	2019-03-31	Earnings, Exhibits
8-K	2019-02-28	Officers
8-K	2019-01-24	Officers
8-K	2019-01-24	Officers
8-K	2019-01-17	Earnings, Officers, Other Events, Exhibits
8-K	2018-12-31	Earnings, Exhibits
8-K	2018-12-14	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2018-12-09	Officers, Other Events, Exhibits
8-K	2018-12-05	Officers, Regulation FD, Exhibits
8-K	2018-10-31	Enter Agreement, Officers, Regulation FD, Exhibits
8-K	2018-10-31	Earnings, Exhibits
8-K	2018-10-30	Regulation FD, Other Events, Exhibits
8-K	2018-09-10	Other Events, Exhibits
8-K	2018-09-04	Other Events, Exhibits
8-K	2018-09-04	Regulation FD, Exhibits
8-K	2018-08-06	Officers, Exhibits
8-K	2018-08-01	Earnings, Exhibits
8-K	2018-07-12	Officers, Exhibits
8-K	2018-05-24	Shareholder Vote
8-K	2018-05-15	Other Events, Exhibits
8-K	2018-05-01	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-03-20	Officers
8-K	2018-02-14	Earnings, Exit Costs, Exhibits
8-K	2018-01-03	Officers, Exhibits

FMX	Mexican Economic Development	173,470
STZ	Constellation Brands	38,630
GWW	Grainger W W	15,160
NDSN	Nordson	8,210
TXRH	Texas Roadhouse	3,930
HLX	Helix Energy Solutions Group	1,110
AC	Associated Capital Group	898
SFBC	Sound Financial Bancorp	87
IMH	Impac Mortgage Holdings	72
NOVA	Nova Star Innovations	0

EX-10.2	offerltrneppl-05x7x19f.htm
EX-31.1	bg-06302019x10qex311.htm
EX-31.2	bg-06302019x10qex312.htm
EX-32.1	bg-06302019x10qex321.htm
EX-32.2	bg-06302019x10qex322.htm