partnering for the future 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. In addition, we have issued parent level guarantees for the repay- ment of certain senior notes and senior credit facilities which were issued or entered into by our wholly owned subsidiaries, with a carrying amount of $2,278 million at December 31, 2004. All outstanding debt related to these guarantees is included in the consolidated balance sheets at December 31, 2004. There are no significant restrictions on the ability of Bunge Limited Finance Corp. or any of our other subsidiaries to transfer funds to us. Also, certain of our subsidiaries have provided guarantees of indebtedness of certain of their subsidiaries under certain lines of credit with various institutions. The total borrowing capacity under these lines of credit was $327 million as of December 31, 2004, of which $6 million was outstanding as of such date. 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 comprehen- sive 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. capital expenditures Our capital expenditures were $437 million in 2004, $304 million in 2003 and $240 million in 2002. In 2004, major capital projects included the expansion of our Brazilian fertilizer mixing and phosphoric acid production capacity, expansion of our grain origination operations in Brazil (including additional investments in logistics), investments in export terminal opera- tions in Argentina, expansion of our oilseed processing capacity in Eastern Europe and acquisitions of port facilities. guarantees We have issued or were party to the following  third-party guarantees at December 31, 2004: In 2003, major projects included expansion of our edible oil products facilities in Europe, the construction of a new margarine plant and an oilseed processing plant in Brazil, logistics investments, primarily in Brazil, expansion of our grain origination facilities in Brazil and expansion of our fertilizer mixing capacity. In addition, we expanded our Indian operations through the buyout of a joint venture partner in India and the purchase of a small crushing and refining facility. In 2002, we completed upgrades to several of our oilseed processing and corn dry milling facilities in Brazil and the United States and the modernization of an acidulation plant for fertilizers in Brazil. Although we have no specific material commitments for capital expenditures, we intend to invest approximately $410 million  to $460 million in 2005. The majority will be used to improve oilseed processing logistics and plant operating efficiencies in Europe, expand and upgrade our mining and port facilities in Brazil, expand or acquire grain origination facilities in the United States and Europe and modernize certain of our edible oil refineries in the United States and Europe. We intend to fund these capital expenditures with cash flows from operations and available borrowings. Maximum Potential (US$ in millions) Future Payments Operating lease residual values (1) $$ 6699 Unconsolidated affiliates financing (2) 2222 Customer financing (3) 116666 Total $$ 225577 (1) Prior to January 1, 2003, we entered into synthetic lease agreements for barges and railcars originally owned by us and subsequently sold to third parties. The leases are classified as operating leases in accordance with  SFAS No. 13,  Accounting for Leases. Any gains on the sales were deferred and are being recognized ratably over the initial lease terms. We have the option under each lease to purchase the barges or railcars at fixed amounts, based  on estimated fair values or to sell the assets. If we elect to sell, we receive proceeds up to fixed amounts specified in the agreements. If the proceeds of such sales are less than the specified fixed amounts, we would be obligated under a guarantee to pay supplemental rent for the deficiency in proceeds up to a maximum of approximately $69 million at December 31, 2004. The operating leases expire through 2007. There are no recourse provisions or collateral that would enable us to recover any amounts paid under this guarantee. (2) Prior to January 1, 2003, we issued a guarantee to a financial institution related to debt of our joint ventures in Argentina, which are our unconsolidated affiliates. The term of the guarantee is equal to the term of the related financing, which matures in 2009. There are no recourse provisions or collateral that would enable us to recover any amounts paid under this guarantee. (3) We issued guarantees to a financial institution in Brazil related to amounts owed the institution by certain of our customers. The terms of the guarantees are equal to the terms of the related financing arrangements, which can be as short as 120 days or as long as 360 days. In the event that the customers default on their payments to the institutions and we would be required to perform under the guarantees, we have obtained collateral from the customers. At December 31, 2004, $64 million of these financing arrangements were collateralized by tangible property. We have determined the fair value of these guarantees to be immaterial at December 31, 2004. 43