FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)
|
9 Months Ended |
Sep. 30, 2017 |
|---|
| Derivative Instruments |
|
| Schedule of assets and liabilities accounted for at fair value on a recurring basis |
The following table sets forth, by level, Bunge’s assets and liabilities that were accounted for at fair value on a recurring basis. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements at Reporting Date | | | September 30, 2017 | | December 31, 2016 | (US$ in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Assets: | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Readily marketable inventories (Note 6) | | $ | — |
| | $ | 4,133 |
| | $ | 569 |
| | $ | 4,702 |
| | $ | — |
| | $ | 3,618 |
| | $ | 237 |
| | $ | 3,855 |
| Trade accounts receivable (1) | | — |
| | 6 |
| | — |
| | 6 |
| | — |
| | 6 |
| | — |
| | 6 |
| Unrealized gain on designated derivative contracts(2): | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| Interest rate | | — |
| | — |
| | — |
| | — |
| | — |
| | 1 |
| | — |
| | 1 |
| Foreign exchange | | — |
| | 25 |
| | — |
| | 25 |
| | — |
| | 29 |
| | — |
| | 29 |
| Unrealized gain on undesignated derivative contracts (2): | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Interest rate | | — |
| | — |
| | — |
| | — |
| | — |
| | 1 |
| | — |
| | 1 |
| Foreign exchange | | — |
| | 416 |
| | — |
| | 416 |
| | — |
| | 312 |
| | — |
| | 312 |
| Commodities | | 107 |
| | 406 |
| | 19 |
| | 532 |
| | 421 |
| | 431 |
| | 96 |
| | 948 |
| Freight | | 25 |
| | — |
| | 6 |
| | 31 |
| | 16 |
| | — |
| | — |
| | 16 |
| Energy | | 20 |
| | — |
| | — |
| | 20 |
| | 23 |
| | 1 |
| | — |
| | 24 |
| Deferred purchase price receivable (Note 13 ) | | — |
| | 123 |
| | — |
| | 123 |
| | — |
| | 87 |
| | — |
| | 87 |
| Other (3) | | 14 |
| | 684 |
| | — |
| | 698 |
| | 18 |
| | 108 |
| | — |
| | 126 |
| Total assets | | $ | 166 |
| | $ | 5,793 |
| | $ | 594 |
| | $ | 6,553 |
| | $ | 478 |
| | $ | 4,594 |
| | $ | 333 |
| | $ | 5,405 |
| Liabilities: | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Trade accounts payable (1) | | $ | — |
| | $ | 676 |
| | $ | 249 |
| | $ | 925 |
| | $ | — |
| | $ | 478 |
| | $ | 44 |
| | $ | 522 |
| Unrealized loss on designated derivative contracts (4): | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Interest rate | | — |
| | 20 |
| | — |
| | 20 |
| | — |
| | 18 |
| | — |
| | 18 |
| Unrealized loss on undesignated derivative contracts (4): | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Interest rate | | — |
| | 1 |
| | — |
| | 1 |
| | — |
| | — |
| | — |
| | — |
| Foreign exchange | | — |
| | 419 |
| | — |
| | 419 |
| | — |
| | 233 |
| | — |
| | 233 |
| Commodities | | 141 |
| | 432 |
| | 20 |
| | 593 |
| | 356 |
| | 444 |
| | 144 |
| | 944 |
| Freight | | 19 |
| | — |
| | 5 |
| | 24 |
| | 14 |
| | — |
| | 1 |
| | 15 |
| Energy | | 14 |
| | — |
| | 3 |
| | 17 |
| | 9 |
| | — |
| | 2 |
| | 11 |
| Total liabilities | | $ | 174 |
| | $ | 1,548 |
| | $ | 277 |
| | $ | 1,999 |
| | $ | 379 |
| | $ | 1,173 |
| | $ | 191 |
| | $ | 1,743 |
|
| | (1) | Trade accounts receivable and payable are generally stated at historical amounts, net of write-offs and allowances, with the exception of $6 million and $925 million, respectively, at September 30, 2017 and $6 million and $522 million, respectively, at December 31, 2016, related to certain delivered inventory for which the receivable and payable fluctuate based on changes in commodity prices. These receivables and payables are hybrid financial instruments for which Bunge has elected the fair value option. |
| | (2) | Unrealized gains on designated and undesignated derivative contracts are generally included in other current assets. There are nil and $5 million included in other non-current assets at September 30, 2017 and December 31, 2016, respectively. |
| | (3) | Other includes the fair values of marketable securities and investments in other current assets and other non-current assets. |
| | (4) | Unrealized losses on designated and undesignated derivative contracts are generally included in other current liabilities. There are $20 million and $18 million included in other non-current liabilities at September 30, 2017 and December 31, 2016, respectively. |
|
| Reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) |
The tables below present reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2017 and 2016. These instruments were valued using pricing models that management believes reflect the assumptions that would be used by a marketplace participant. | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2017 | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable/ Payable, Net | | Total | Balance, July 1, 2017 | | $ | — |
| | $ | 623 |
| | $ | (453 | ) | | $ | 170 |
| Total gains and (losses), realized/unrealized included in cost of goods sold | | (4 | ) | | 23 |
| | (2 | ) | | 17 |
| Purchases | | 3 |
| | 233 |
| | (5 | ) | | 231 |
| Sales | | — |
| | (443 | ) | | — |
| | (443 | ) | Issuances | | (3 | ) | | — |
| | — |
| | (3 | ) | Settlements | | (1 | ) | | — |
| | 214 |
| | 213 |
| Transfers into Level 3 | | (1 | ) | | 162 |
| | (4 | ) | | 157 |
| Transfers out of Level 3 | | 3 |
| | (29 | ) | | 1 |
| | (25 | ) | Balance, September 30, 2017 | | $ | (3 | ) | | $ | 569 |
| | $ | (249 | ) | | $ | 317 |
|
| | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2016 | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable/ Payable, Net | | Total | Balance, July 1, 2016 | | $ | 127 |
| | $ | 917 |
| | $ | (188 | ) | | $ | 856 |
| Total gains and (losses), realized/unrealized included in cost of goods sold | | (120 | ) | | 12 |
| | 7 |
| | (101 | ) | Purchases | | — |
| | 171 |
| | (8 | ) | | 163 |
| Sales | | — |
| | (517 | ) | | — |
| | (517 | ) | Issuances | | — |
| | — |
| | — |
| | — |
| Settlements | | (37 | ) | | — |
| | 95 |
| | 58 |
| Transfers into Level 3 | | (5 | ) | | 208 |
| | — |
| | 203 |
| Transfers out of Level 3 | | (1 | ) | | (499 | ) | | 51 |
| | (449 | ) | Balance, September 30, 2016 | | $ | (36 | ) | | $ | 292 |
| | $ | (43 | ) | | $ | 213 |
|
| | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2017 | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable/ Payable, Net | | Total | Balance, January 1, 2017 | | $ | (51 | ) | | $ | 237 |
| | $ | (44 | ) | | $ | 142 |
| Total gains and losses (realized/unrealized) included in cost of goods sold | | (36 | ) | | 95 |
| | 9 |
| | 68 |
| Purchases | | 8 |
| | 1,376 |
| | (460 | ) | | 924 |
| Sales | | — |
| | (1,472 | ) | | — |
| | (1,472 | ) | Issuances | | (8 | ) | | — |
| | — |
| | (8 | ) | Settlements | | 70 |
| | — |
| | 305 |
| | 375 |
| Transfers into Level 3 | | (8 | ) | | 503 |
| | (59 | ) | | 436 |
| Transfers out of Level 3 | | 22 |
| | (170 | ) | | — |
| | (148 | ) | Balance, September 30, 2017 | | $ | (3 | ) | | $ | 569 |
| | $ | (249 | ) | | $ | 317 |
|
| | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2016 | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable/ Payable, Net | | Total | Balance, January 1, 2016 | | $ | 167 |
| | $ | 245 |
| | $ | (44 | ) | | $ | 368 |
| Total gains and losses (realized/unrealized) included in cost of goods sold | | (87 | ) | | 143 |
| | 15 |
| | 71 |
| Purchases | | — |
| | 904 |
| | (220 | ) | | 684 |
| Sales | | — |
| | (1,022 | ) | | — |
| | (1,022 | ) | Issuances | | (1 | ) | | — |
| | — |
| | (1 | ) | Settlements | | (110 | ) | | — |
| | 195 |
| | 85 |
| Transfers into Level 3 | | (7 | ) | | 569 |
| | (59 | ) | | 503 |
| Transfers out of Level 3 | | 2 |
| | (547 | ) | | 70 |
| | (475 | ) | Balance, September 30, 2016 | | $ | (36 | ) | | $ | 292 |
| | $ | (43 | ) | | $ | 213 |
|
|
| Summary of changes in unrealized gains or (losses) recorded in earnings for Level 3 assets and liabilities |
The tables below summarize changes in unrealized gains or (losses) recorded in earnings during the three and nine months ended September 30, 2017 and 2016 for Level 3 assets and liabilities that were held at September 30, 2017 and 2016. | | | | | | | | | | | | | | | | | | | | Three Months Ended | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable and Payable, Net | | Total | Changes in unrealized gains and (losses) relating to assets and liabilities held at September 30, 2017 | | |
| | |
| | |
| | |
| Cost of goods sold | | $ | (2 | ) | | $ | 11 |
| | $ | (3 | ) | | $ | 6 |
| Changes in unrealized gains and (losses) relating to assets and liabilities held at September 30, 2016 | | |
| | |
| | |
| | |
| Cost of goods sold | | $ | (127 | ) | | $ | (12 | ) | | $ | 2 |
| | $ | (137 | ) |
| | | | | | | | | | | | | | | | | | | | Nine Months Ended | (US$ in millions) | | Derivatives, Net | | Readily Marketable Inventories | | Trade Accounts Receivable and Payable, Net | | Total | Changes in unrealized gains and (losses) relating to assets and liabilities held at September 30, 2017 | | |
| | |
| | |
| | |
| Cost of goods sold | | $ | (6 | ) | | $ | (19 | ) | | $ | 3 |
| | $ | (22 | ) | Changes in unrealized gains and (losses) relating to assets and liabilities held at September 30, 2016 | | |
| | |
| | |
| | |
| Cost of goods sold | | $ | 9 |
| | $ | (26 | ) | | $ | 1 |
| | $ | (16 | ) |
|
| Summary of effect of derivative instruments designated as fair value hedges and undesignated derivative instruments on condensed consolidated statements of income |
The table below summarizes the net effect of derivative instruments that are designated as fair value hedges and the related hedged items, and also derivative instruments that are undesignated on the condensed consolidated statements of income for the nine months ended September 30, 2017 and 2016. | | | | | | | | | | | | | | | | Gain or (Loss) Recognized in Income on Derivative Instruments | | | | | Nine Months Ended September 30, | (US$ in millions) | | Location | | 2017 | | 2016 | Designated Derivative Contracts: | | | | |
| | |
| Interest Rate | | Interest expense | | $ | 11 |
| | $ | 3 |
| Total | | | | $ | 11 |
| | $ | 3 |
| Undesignated Derivative Contracts: | | | | |
| | |
| Interest Rate | | Interest income (expense) | | $ | — |
| | $ | (4 | ) | Foreign Exchange | | Foreign exchange gains (losses) | | 82 |
| | 262 |
| Foreign Exchange | | Cost of goods sold | | 62 |
| | 646 |
| Commodities | | Cost of goods sold | | 514 |
| | (531 | ) | Freight | | Cost of goods sold | | 4 |
| | (1 | ) | Energy | | Cost of goods sold | | (6 | ) | | 12 |
| Total | | | | $ | 656 |
| | $ | 384 |
|
|
| Summary of effect of financial instruments designated as cash flow and net investment hedges |
The table below summarizes the effect of derivative instruments that are designated and qualify as cash flow and net investment hedges on the condensed consolidated statement of income for the nine months ended September 30, 2017. | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2017 | | | Notional | | Gain or (Loss) Recognized in Accumulated | | Gain or (Loss) Reclassified from Accumulated OCI into Income (1) | | Gain or (Loss) Recognized in Income on Derivatives | (US$ in millions) | | Amount | | OCI (1) | | Location | | Amount | | Location | | Amount (2) | Cash Flow Hedge: | | |
| | |
| | | | |
| | | | |
| Foreign exchange (3) | | $ | 339 |
| | $ | 15 |
| | Foreign exchange gains (losses) | | $ | 27 |
| | Foreign exchange gains (losses) | | $ | — |
| Total | | $ | 339 |
| | $ | 15 |
| | | | $ | 27 |
| | | | $ | — |
| | | | | | | | | | | | | | Net Investment Hedge: | | |
| | |
| | | | |
| | | | |
| Foreign currency denominated debt (4) | | $ | 786 |
| | $ | (101 | ) | | Foreign currency denominated debt | | $ | — |
| | Foreign currency denominated debt | | $ | — |
| Foreign exchange (3) | | 516 |
| | (21 | ) | | Foreign exchange gains (losses) | | — |
| | Foreign exchange gains (losses) | | — |
| Total | | $ | 1,302 |
| | $ | (122 | ) | | | | $ | — |
| | | | $ | — |
|
| | (1) | The gain (loss) recognized in OCI relates to the effective portion of the hedging relationship. At September 30, 2017, Bunge expects to reclassify into income in the next 12 months the full $15 million of after-tax gain (loss) related to its foreign exchange cash flow hedges and nil for net investment hedges. |
| | (2) | There was no gain or loss recognized in income relating to the ineffective portion of the hedging relationships or relating to amounts excluded from the assessment of hedge effectiveness. |
| | (3) | The foreign exchange contracts mature at various dates through June 2018. |
| | (4) | The euro-denominated loans mature in 2023. |
The table below summarizes the effect of derivative instruments that are designated and qualify as cash flow and net investment hedges on the condensed consolidated statement of income for the nine months ended September 30, 2016. | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2016 | | | Notional | | Gain or
(Loss)
Recognized in
Accumulated | | Gain or (Loss) Reclassified from Accumulated OCI into Income (1) | | Gain or (Loss) Recognized in Income on Derivatives | (US$ in millions) | | Amount | | OCI (1) | | Location | | Amount | | Location | | Amount (2) | Cash Flow Hedge: | | |
| | |
| | | | |
| | | | |
| Foreign exchange (3) | | $ | 166 |
| | $ | 43 |
| | Foreign exchange gains (losses) | | $ | 13 |
| | Foreign exchange gains (losses) | | $ | — |
| Total | | $ | 166 |
| | $ | 43 |
| | | | $ | 13 |
| | | | $ | — |
| | | | | | | | | | | | | | Net Investment Hedge: | | |
| | |
| | | | |
| | | | |
| Foreign currency denominated debt (4) | | $ | 663 |
| | $ | 1 |
| | Foreign currency denominated debt | | $ | — |
| | Foreign currency denominated debt | | $ | — |
| Foreign exchange (3) | | 653 |
| | (384 | ) | | Foreign exchange gains (losses) | | — |
| | Foreign exchange gains (losses) | | — |
| Total | | $ | 1,316 |
| | $ | (383 | ) | | | | $ | — |
| | | | $ | — |
|
| | (1) | The gain or (loss) recognized in OCI relates to the effective portion of the hedging relationship. At September 30, 2016, Bunge expected to reclassify into income in the next 12 months approximately $31 million of after-tax gains (losses) related to its foreign exchange cash flow hedges and nil for net investment hedges. |
| | (2) | There was no gain or loss recognized in income relating to the ineffective portion of the hedging relationships or relating to amounts excluded from the assessment of hedge effectiveness. |
| | (3) | The foreign exchange contracts mature at various dates through 2018. |
| | (4) | The euro-denominated loans mature in 2023. |
|
| Interest rate |
|
| Derivative Instruments |
|
| Summary of outstanding derivative instruments |
Below is a summary of Bunge’s current interest rate swap agreements designated as fair value hedging instruments as of September 30, 2017. | | | | | | | | | | | | | | | Notional
Amount of
Hedged Obligation |
| Notional
Amount of
Derivative |
| Maturity Date |
| Payment
Weighted Average
Rate Payable |
| Fixed Rate
Receivable | $ | 500 |
| | $ | 500 |
| | November 24, 2020 | | 3 month LIBOR plus 1.91% | | 3.50 | % | € | 800 |
| | € | 800 |
| | June 16, 2023 | | 6 month EURIBOR plus 1.64% | | 1.85 | % | $ | 550 |
| | $ | 550 |
| | August 15, 2026 | | 3 month LIBOR plus 1.12% | | 3.25 | % |
Bunge may also enter into various interest rate derivatives that do not qualify for hedge accounting and, therefore, Bunge has not designated these as hedging instruments for accounting purposes. These interest rate derivatives have been recorded at fair value in the condensed consolidated balance sheets with changes in fair value recorded in earnings. Below is a summary of Bunge's outstanding interest rate derivatives that do not qualify for hedge accounting. | | | | | | | | | | | | | | | September 30, 2017 | | | Exchange Traded | | | | | | | | | Net (Short) | | Non-exchange Traded | | Unit of | (US$ in millions) | | & Long | | (Short) | | Long | | Measure | Interest Rate | | | | | | | | | Swaps | | — |
| | (1,574 | ) | | — |
| | Notional | Forward Rate Agreements | | — |
| | (800 | ) | | — |
| | Notional |
|
| Foreign exchange |
|
| Derivative Instruments |
|
| Summary of outstanding derivative instruments |
The table below summarizes the notional amounts of open foreign exchange positions. | | | | | | | | | | | | | | | | | | September 30, 2017 | | | Exchange Traded | | | | | | | | | Net (Short) | | Non-exchange Traded | | Unit of | (US$ in millions) | | & Long | | (Short) | | Long | | Measure | Foreign Exchange | | |
| | |
| | |
| | | Options | | $ | — |
| | $ | (368 | ) | | $ | 430 |
| | Delta | Forwards | | — |
| | (10,824 | ) | | 10,548 |
| | Notional | Futures | | (10 | ) | |
|
| |
|
| | Notional | Swaps | | — |
| | (552 | ) | | 593 |
| | Notional |
|
| Commodities |
|
| Derivative Instruments |
|
| Summary of outstanding derivative instruments |
The table below summarizes the volumes of open agricultural commodity derivative contracts. | | | | | | | | | | | | | | | September 30, 2017 | | | Exchange Traded | | | | | | | | | Net (Short) | | Non-exchange Traded | | Unit of | | | & Long | | (Short) | | Long | | Measure | Agricultural Commodities | | |
| | |
| | |
| | | Futures | | 2,244,228 |
| | — |
| | — |
| | Metric Tons | Options | | 63,027 |
| | — |
| | — |
| | Metric Tons | Forwards | | — |
| | (31,604,107 | ) | | 22,381,787 |
| | Metric Tons | Swaps | | — |
| | (6,483,877 | ) | | 300,458 |
| | Metric Tons |
|
| Freight |
|
| Derivative Instruments |
|
| Summary of outstanding derivative instruments |
The table below summarizes the open ocean freight positions. | | | | | | | | | | | | | | | September 30, 2017 | | | Exchange Cleared | | | | | | | | | Net (Short) | | Non-exchange Cleared | | Unit of | | | & Long | | (Short) | | Long | | Measure | Ocean Freight | | |
| | |
| | |
| | | FFA | | (2,098 | ) | | — |
| | — |
| | Hire Days | FFA Options | | 315 |
| | — |
| | — |
| | Hire Days |
|
| Energy |
|
| Derivative Instruments |
|
| Summary of outstanding derivative instruments |
The table below summarizes the open energy positions. | | | | | | | | | | | | | | | September 30, 2017 | | | Exchange Traded / Cleared | | | | | | | | | Net (Short) | | Non-exchange Traded | | Unit of | | | & Long | | (Short) | | Long | | Measure (1) | Natural Gas | | |
| | |
| | |
| | | Futures | | 4,553,161 |
| | — |
| | — |
| | MMBtus | Swaps | | — |
| | — |
| | 635,687 |
| | MMBtus | Energy—Other | | |
| | |
| | |
| | | Futures | | 351,786 |
| | — |
| | — |
| | Metric Tons | Forwards | | — |
| | — |
| | 6,048,869 |
| | Metric Tons | Swaps | | 227,600 |
| | — |
| | — |
| | Metric Tons |
| | (1) | Million British Thermal Units ("MMBtus") are standard units of measurement used to denote an amount of natural gas. |
|