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BUSINESS DIVESTITURES
 9 Months Ended
Sep. 30, 2013
BUSINESS DIVESTITURES  
BUSINESS DIVESTITURES

4.                                      BUSINESS DIVESTITURES

 

On December 6, 2012, Bunge entered into a definitive agreement with Yara International ASA (Yara), under which Yara would acquire Bunge’s Brazilian fertilizer distribution business, including blending facilities, brands and warehouses, for $750 million in cash.  As a result of the transaction, which closed on August 8, 2013, Bunge will no longer have significant ongoing cash flows related to the Brazilian fertilizer business or any significant ongoing participation in the operations of this business.  Bunge received cash proceeds of the Brazilian real equivalent of $750 million upon closing the transaction, resulting in recognition of a gain of $148 million ($112 million net of tax) which is included in discontinued operations in our condensed consolidated statements of income for the three and nine months ended September 30, 2013. Included in the gain are approximately $7 million of transaction costs incurred in connection with the divestiture and $41 million release of the cumulative translation adjustment associated with the disposed business.

 

The results of the Brazilian fertilizer distribution business and the tax impact are reported in discontinued operations for the three and nine months ended September 30, 2013 and 2012 and are summarized as follows:

 

 

 

Three Months Ended September 30,

 

(US$ in millions)

 

2013

 

2012

 

Net sales

 

$

149

 

$

750

 

Cost of goods sold

 

(139

)

 

(734

)

Gross profit

 

10

 

16

 

Selling, general and administrative expenses

 

(14

)

(19

)

Interest income

 

8

 

8

 

Interest expense

 

—

 

(9

)

Foreign exchange gain (loss)

 

(13

)

5

 

Other income (expenses)—net

 

1

 

—

 

Gain on sale of Brazilian fertilizer business

 

148

 

—

 

Income (loss) from discontinued operations before income tax

 

140

 

1

 

Income tax (expense) benefit

 

(37

)

1

 

Income (loss) from discontinued operations, net of tax

 

$

103

 

$

2

 

 

 

 

Nine Months Ended September 30,

 

(US$ in millions)

 

2013

 

2012

 

Net sales

 

$

1,217

 

$

1,878

 

Cost of goods sold

 

(1,141

)

(1,861

)

Gross profit

 

76

 

17

 

Selling, general and administrative expenses

 

(58

)

(68

)

Interest income

 

14

 

17

 

Interest expense

 

(9

)

(16

)

Foreign exchange gain (loss)

 

(14

)

18

 

Other income (expenses)—net

 

(12

)

(36

)

Gain on sale of Brazilian fertilizer business

 

148

 

—

 

Income (loss) from discontinued operations before income tax

 

145

 

(68

)

Income tax (expense) benefit

 

(51

)

35

 

Income (loss) from discontinued operations, net of tax

 

$

94

 

$

(33

)

 

Approximately $7 million of transaction costs are included as a component of cash used for operating activities in Bunge’s condensed consolidated statements of cash flows for the nine months ended September 30, 2013.  Gross proceeds of $750 million and cash disposed of $4 million related to the sale of the Brazilian fertilizer distribution business are included as a component of cash provided by investing activities in Bunge’s condensed consolidated statements of cash flows for the nine months ended September 30, 2013.

 

The assets and liabilities classified as held for sale related to the fertilizer divestiture in the condensed consolidated balance sheet at December 31, 2012 consisted of the following:

 

 

 

December 31,

 

(US$ in millions)

 

2012

 

Assets:

 

 

 

Cash and cash equivalents

 

$

2

 

Trade accounts receivable (less allowance of $2)

 

189

 

Inventories

 

402

 

Other current assets

 

67

 

Current assets held for sale

 

$

660

 

Property, plant and equipment, net

 

$

218

 

Deferred income taxes

 

40

 

Other non-current assets

 

(8

)

Non-current assets held for sale

 

$

250

 

 

 

 

 

Liabilities:

 

 

 

Trade accounts payable

 

$

157

 

Other current liabilities

 

140

 

Current liabilities held for sale

 

$

297

 

Other non-current liabilities

 

13

 

Non-current liabilities held for sale

 

$

13