Cash and Readily Marketable Inventories Cash and cash equivalents were $432 million at December 31, 2004 and $489 million at December 31, 2003.Included in our inventories were readily marketable inventories of $1,264 million at December 31, 2004 and $1,846 million at December 31, 2003. Readily marketable inventories are agricultural commodity inventories, financed primarily with debt, which are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms. The decrease in readily marketable inventories was primarily due to lower levels of inventory and a decrease in commodity prices compared to December 31, 2003.

Secured Advances to Suppliers and Prepaid Commodity Contracts We provide financing services to farmers from whom we purchase soybeans through prepaid commodity purchase contracts and advances to farmers. These arrangements are typically secured by the farmer's crop and mortgages on the farmer's land and other assets, carry a market interest rate, and are typically settled through the delivery of the related crop to us upon harvest. At December 31, 2004, we had $932 million in prepaid commodity purchase contracts and advances to farmers compared to $611 million at December 31, 2003. The increase is primarily due to the growth in Brazilian crop production and higher cost of fertilizer, seed, crop chemicals and other inputs. The allowance for uncollectible advances totaled $43 million and $31 million at December 31, 2004 and 2003, respectively.

Long-Term and Short-Term Debt We conduct most of our financing activities through a centralized financing structure, designed to act as our central treasury, which enables us and our subsidiaries to borrow long-term and short-term debt more efficiently. This structure includes a master trust facility, the primary assets of which consist of intercompany loans made to Bunge Limited and its subsidiaries. Bunge Limited's wholly owned financing subsidiaries fund the master trust with long and short-term debt obtained from third parties, including through our commercial paper program.

To finance working capital, we use cash flows generated from operations and short-term borrowings, including our commercial paper program, and various long-term bank facilities and bank credit lines, which are sufficient to meet our business needs. At December 31, 2004, we had approximately $1,900 million of committed borrowing capacity under our commercial paper program, other short-term lines of credit and long-term credit facilities, all of which are with a number of lending institutions. Of this committed capacity, $1,496 million was unused and available at December 31, 2004. In June 2004, we renewed our $460 million three-year U.S. revolving credit facility, increasing the facility to $850 million with a five-year term. In addition, in July 2004 we renewed our $455 million European revolving credit facility with a one-year term.

At December 31, 2004, we had $401 million outstanding under our commercial paper program. Our commercial paper program is our least expensive available short-term funding source. We maintain back-up bank credit lines equal to the maximum capacity of our commercial paper program of $600 million. In June 2004, we renewed these lines for a three-year term expiring in June 2007. If we were unable to access the commercial paper market, we would use these bank credit lines, which would be at a higher cost than our commercial paper. At December 31, 2004, no amounts were outstanding under these back-up bank credit lines.

Our short-term and long-term debt decreased by $113 million at December 31, 2004 from December 31, 2003 primarily due to repayments from cash flows provided by operations.

In April 2004, we completed an offering of $500 million aggregate principal amount of unsecured senior notes bearing interest at a rate of 5.35% per year that mature in April 2014. The notes were issued by our wholly owned finance subsidiary, Bunge Limited Finance Corp. and are fully and unconditionally guaranteed by us. Interest on these unsecured senior notes is payable semi-annually in arrears in April and October of each year, commencing in October 2004. We used the net proceeds of this offering of $496 million for the repayment of other outstanding indebtedness.

Through our subsidiaries, we have various other long-term debt facilities at fixed and variable interest rates denominated in both U.S. dollars and Brazilian reais, most of which mature between 2005 and 2008. At December 31, 2004, we had $383 million outstanding under these long-term debt facilities. Of this amount, at December 31, 2004, $178 million was secured by certain land, property, plant and equipment and investments in our consolidated subsidiaries, having a net carrying value of $633 million.

Our credit facilities and certain senior notes require us to comply with specified financial covenants related to minimum net worth, working capital and a maximum debt to capitalization ratio. We were in compliance with these covenants as of December 31, 2004.

We do not have any ratings downgrade triggers that would accelerate the maturity of our debt. However, a downgrade in our credit ratings could adversely affect our ability to renew existing or to obtain access to new credit facilities in the future and would increase the cost of such facilities to us.

Our credit ratings on our unsecured guaranteed senior notes by Moody's Investors Service, Inc. (Moody's) at December 31, 2004 were "Baa3" with "outlook positive" and "BBB" by Standard & Poor's Rating Services and Fitch Rating Services. Our commercial paper is rated "A-1" by Standard & Poor's Rating Services, and "P-1" by Moody's Investors Service, Inc. and the interest rates on our commercial paper borrowings are indexed to this rating. On March 7, 2005, Moody's upgraded our credit rating on our unsecured guaranteed senior notes to "Baa-2-outlook stable."

In June 2004, we entered into various interest rate swap agreements maturing in 2008 and 2014 for the purpose of managing our interest rate exposure on a portion of our fixed rate debt. In September 2004, these interest rate swaps were terminated and we received cash of $60 million, comprised of $8 million of accrued interest and a $52 million gain on the net settlement of the interest rate swap agreements. The $8 million of interest was included as a reduction to interest expense in 2004 in the consolidated statements of income and the $52 million gain resulted in an adjustment to the carrying value of the associated debt in the consolidated balance sheets. The $52 million gain will be amortized to earnings over the remaining term of the debt, which ranges from four to nine years. The $60 million of cash received was included in the consolidated statements of cash flows as cash provided by operating activities.

Concurrent with the September 2004 termination of certain of our interest rate swap agreements, we entered into new interest rate swap agreements maturing in 2008 and 2014 for the purpose of managing our interest rate exposure on a portion of our fixed rate debt. Under the terms of the new interest rate swaps, we make payments based on six-month LIBOR in arrears, and we will receive fixed interest rates based on our $500 million aggregate principal amount 5.35% senior notes due 2014 and our $500 million aggregate principal amount 4.375% senior notes due 2008. The interest rate swaps settle every six months until expiration. Accrued interest of $6 million relating to these swaps was recorded as a reduction to interest expense in 2004 in the consolidated statements of income.

Redeemable Preferred Stock Minority interest in subsidiaries on the consolidated balance sheets at December 31, 2003 included $170 million of cumulative variable rate redeemable preferred shares issued by our consolidated subsidiary, Bunge First Capital Limited. On November 1, 2004, we redeemed the preferred shares for their face value of $170 million plus accrued dividends of $1 million.

Shareholders' Equity In June 2004, we sold 9,775,000 common shares in a public offering, which resulted in net proceeds of $331 million, after underwriting discounts, commissions and expenses. We used $314 million to acquire an additional 17% interest in the capital stock of Bunge Brasil in the third and fourth quarters of 2004.

Shareholders' equity increased to $3,375 million at December 31, 2004 from $2,377 million at December 31, 2003 as a result of the net proceeds of $331 million from the public offering of common shares, net income of $469 million, other comprehensive income of $229 million, which includes foreign exchange gains of $217 million and $20 million attributable to the issuance of our common shares upon the exercise of employee stock options and the vesting of restricted stock units. This increase was partially offset by dividends paid to shareholders of $51 million.