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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission File Number 001-16625

BUNGE LIMITED
(Exact name of registrant as specified in its charter)

(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 is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ý    No o

        As of November 2, 2004, the number of common shares issued and outstanding of the registrant was:

Common shares, par value $.01: 110,344,172

BUNGE LIMITED

Table of Contents

1

PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements

BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(United States Dollars in Millions, except per share data)

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

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BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(United States Dollars in Millions, except share data)

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

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BUNGE LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(United States Dollars in Millions)

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

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BUNGE LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION

        The accompanying unaudited condensed consolidated financial statements of Bunge Limited and its subsidiaries (Bunge) have been prepared in accordance with United States of America generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The consolidated balance sheet at December 31, 2003 has been derived from Bunge's audited financial statements at that date. Operating results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the year ending December 31, 2004. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2003 included in Bunge's 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 27, 2004.

        Reclassifications—Certain reclassifications were made to the prior period condensed consolidated financial statements to conform to the current period presentation.

2.    NEW ACCOUNTING STANDARDS

        In October 2004, the Financial Accounting Standards Board (FASB) concluded that the proposed Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment (SFAS No. 123R), would require all companies to measure compensation cost for all share-based payments (including stock options) at fair value. This would be effective for Bunge for the interim or annual periods beginning July 1, 2005. Retroactive application of the requirements of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123) to the beginning of the fiscal year that includes the effective date would be permitted. Bunge has not yet determined whether it will adopt the proposed SFAS No. 123R upon its effective date or earlier as it awaits the issuance of the final rule by the FASB.

        In September 2004, the FASB Emerging Issues Task Force (EITF) reached a final consensus that contingently convertible instruments, which generally become convertible into common stock only if one or more specified events occur, such as the underlying common stock achieving a specified market price target, should be included in the diluted earnings per share computations (if dilutive) regardless of whether the market price target has been met. In the fourth quarter of 2004, the FASB plans to issue an amendment to SFAS No. 128, Earnings per Share (SFAS No. 128) and this consensus would have the same transition requirement as the amended SFAS No. 128. The amendment to SFAS No. 128 is expected to be effective for Bunge's December 2004 year end and the consensus must be applied by restating prior periods presented during which the instrument was outstanding. However, the consensus need not be applied to instruments that were repaid in cash prior to the end of the period of adoption. Further, the determination of the dilutive effect upon adoption is based on the form of the instrument as it exists at the end of the quarter of adoption. Upon the issuance of the amendment to SFAS No. 128, Bunge may be required to restate all prior period computations presented in its 2004 annual report, if the instrument is dilutive.

        In March 2004, the FASB Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 04-2, Whether Mineral Rights Are Tangible or Intangible Assets (Issue No. 04-2), that mineral rights, as defined in Issue No. 04-2, are tangible assets. There is an inconsistency between this consensus that mineral rights are tangible assets and the characterization of mineral rights as intangible assets in Statement of Financial Accounting Standards (SFAS) No. 141 and No. 142. In April 2004, the FASB issued proposed Staff Position (FSP) No. FAS 141-a and 142-a, Interaction of FASB Statements No. 141, Business Combinations and No. 142, Goodwill and Other Intangible Assets and EITF Issue No. 04-2, Whether Mineral Rights Are Tangible or Intangible Assets to eliminate the inconsistency between EITF Issue No. 04-2 and SFAS No. 141 and No. 142. The guidance in this FSP would be effective for the first reporting

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BUNGE LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2.    NEW ACCOUNTING STANDARDS (Continued)

period beginning after the date that this FSP is finalized. Early application of this guidance is permitted in periods for which financial statements have not yet been issued. Bunge has applied the EITF and the proposed FSP to its consolidated balance sheet beginning as of March 31, 2004 and has reclassified the prior period consolidated balance sheet to conform to this presentation. The reclassification at December 31, 2003 was $208 million, resulting in an increase to property, plant and equipment, net and a corresponding decrease in other intangible assets in the condensed consolidated balance sheets.

        In January 2004, the FASB issued FSP No. FAS 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). The Act to which FSP No. FAS 106-1 relates, which was signed into law in December 2003, introduces a prescription drug benefit under Medicare as well as a federal subsidy, under certain conditions, to sponsors of retiree health care benefit plans. Bunge has elected a one-time deferral of the accounting for the effects of the Act, as permitted by FSP No. FAS 106-1. In May 2004, the FASB issued FSP No. FAS 106-2, which superceded FSP No. FAS 106-1. FSP No. FAS 106-2 is effective for interim periods beginning after June 15, 2004 and allows two alternate methods of transition, retroactive application to the date of enactment of the Act or prospective application from the date of adoption of this statement. FSP No. FAS 106-2 will require a remeasurement of the applicable Plans' assets and benefit obligations at the applicable date. Bunge has made a preliminary determination that the effects of the Act are not a significant event for Bunge and not material to its financial position or results of operations. Although final guidance on the definition of "actuarially equivalent" is not yet available, Bunge expects that the prescription drug benefits it provides will be actuarially equivalent. Based on this assumption, the estimated subsidy resulting from the Act will be incorporated prospectively into the Plan obligation as of the 2004 measurement date as an actuarial gain.

3.    INVENTORIES

        Inventories consist of the following:

(1)

Readily marketable inventories are agricultural commodities inventories that are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms.

(2)

Other consists of agribusiness inventories, other than readily marketable inventories, carried at lower of cost or market.

4.    BUSINESS COMBINATIONS

        Acquisition of Bunge Brasil Minority Interest—In September 2004, Bunge acquired an additional 15% of the outstanding capital stock of Bunge Brasil S.A. (Bunge Brasil) through a tender offer in Brazil. The acquisition was funded with the net proceeds of a public equity offering completed in June 2004. The total purchase price paid for these shares was approximately $282 million in cash. As a result of the acquisition, Bunge now owns directly 98% of Bunge Brasil and its subsidiaries Bunge Alimentos S.A.,

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BUNGE LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.    BUSINESS COMBINATIONS (Continued)

Bunge's Brazilian agribusiness and food products subsidiary, and Bunge Fertilizantes S.A., Bunge's Brazilian fertilizer subsidiary. The excess of the cost to acquire the minority interest in Bunge Brasil over the historical book value was $113 million and has been preliminarily allocated to goodwill. The allocation is subject to adjustment as Bunge is in the process of obtaining third party valuations of the property, plant, equipment and intangible assets. Bunge intends to acquire the remaining shares of Bunge Brasil that it does not already own in the fourth quarter of 2004 for approximately $30 million.

        The following unaudited pro forma summary financial information reflects the results of Bunge's operations as if the acquisition of the Bunge Brasil minority interest and the June 2004 public offering of Bunge's common shares had occurred as of January 1, 2003.

        Polska Oil—In April 2004, Bunge acquired the remaining 40% of Polska Oil Investment B.V., a holding company for certain of Bunge's operations in Poland, from the European Bank for Reconstruction and Development, or EBRD, pursuant to the terms of an amended and restated shareholders agreement between the parties. The purchase price of the EBRD stake in Polska Oil was approximately $27 million.

        J. Macêdo Exchange Transaction—In the quarter ended March 31, 2004, Bunge completed an asset exchange transaction with J. Macêdo S.A., whereby Bunge exchanged its Brazilian domestic retail flour assets for J. Macêdo's industrial flour assets and approximately $7 million in cash. The assets exchanged were comprised primarily of brands. Bunge recognized a pre-tax gain of $5 million as a result of this transaction, which is included in other income (expense)—net in the condensed consolidated statement of income for the nine months ended September 30, 2004.

        Other Business Acquisitions—During the nine months ended September 30, 2004, Bunge completed additional acquisitions having an aggregate purchase price of approximately $21 million. In addition, Bunge invested approximately $23 million in existing joint ventures in South America and Europe. Bunge did not recognize any goodwill on these transactions.

        Acquisition Restructuring—In connection with the acquisition of Cereol S.A. in 2002, Bunge has accrued termination benefits and facility related realignment obligations as part of its integration plan (the Plan). The Plan is designed to streamline personnel and realign facilities acquired from Cereol. These obligations, which totaled $35 million, have been accrued as part of the purchase price and are included in other current liabilities in the condensed consolidated balance sheets. Bunge's integration process and the Plan regarding this acquisition, which included an evaluation of these issues, was finalized in 2003. Of the obligations accrued, $29 million relate to employee termination and $6 million relate to facility realignment.

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BUNGE LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.    BUSINESS COMBINATIONS (Continued)

        The following table summarizes activity related to the Plan.

        Payments related to employee termination and facility realignment obligations are expected to be substantially completed in 2005. The Plan has been funded by cash flows from operations. No significant unresolved issues exist related to the Plan. Any adjustments to the Plan will be reported as an adjustment to net income in the period in which they occur.

5.    OTHER CURRENT ASSETS

        Other current assets consist of the following:

6.    GOODWILL

        At September 30, 2004, the changes in the carrying value of goodwill by segment are as follows:

(1)

Reflects the preliminary allocation of the excess of the cost to acquire the minority interest in Bunge Brasil over the historical book value. The allocation is subject to adjustment as Bunge is in the process of obtaining third party valuations of the property, plant, equipment and intangible assets (see Note 4 of the notes to the condensed consolidated financial statements).

(2)

Bunge's Brazilian subsidiary's tax deductible goodwill is in excess of its book goodwill. For financial reporting purposes, the tax benefits attributable to the excess tax goodwill are first used to reduce goodwill and then intangible assets to zero, prior to recognizing any income tax benefit in the condensed consolidated statements of income.

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BUNGE LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7.    OTHER CURRENT LIABILITIES

        Other current liabilities consist of the following:

8.    LONG-TERM DEBT

        In September 2004, Bunge entered into treasury rate lock agreements with an aggregate notional amount of $500 million at a 10-year treasury yield of 4.15% with a settlement date of March 2005. The treasury rate lock agreements were not designated as hedging instruments, an election allowable under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133). As of September 30, 2004, Bunge recorded a gain in other income (expense)—net in the consolidated income statement of approximately $5 million relating to these derivative agreements.

        In June 2004, Bunge entered into various interest rate swap agreements to manage its interest rate exposure on a portion of its fixed rate debt. These swap agreements had an aggregate notional amount of $1 billion at weighted average fixed rates receivable of 4.375% and 5.35% and weighted average variable rates payable of 2.23% and 2.17%, with maturity dates of 2008 and 2014. These interest rate swap agreements were accounted for as fair value hedges. In September 2004, Bunge terminated the June 2004 swap agreements and received $60 million in cash, which was comprised of $8 million of accrued interest and a $52 million gain on the net settlement of the June 2004 swap agreements. The $8 million of accrued interest was recorded as a reduction of interest expense in the condensed consolidated statement of income and the $52 million gain was recorded as an adjustment to the carrying amount of the related debt in the condensed consolidated balance sheet. The $52 million gain will be amortized to earnings over the remaining term of the debt, which ranges from four to nine years.

        Concurrent with the September termination of the June 2004 swap agreements, Bunge entered into various new interest rate swap agreements to manage its interest rate exposure on a portion of its fixed rate debt. Bunge has accounted for these new swap agreements as fair value hedges.

        The derivatives used by Bunge as hedging instruments have been recorded at fair value in other liabilities in the condensed consolidated balance sheet with changes in fair value recorded currently in earnings. Additionally, the carrying amount of the associated debt is adjusted through earnings for changes in the fair value due to changes in interest rates. Ineffectiveness is recognized to the extent that these two adjustments