bunge 2004 annual report management’s discussion and analysis of financial condition and results of operations Below is a reconciliation of income from continuing operations before income tax and minority interest to total segment  operating profit: Selling, general and administrative expenses (SG&A) increased 42% primarily due to increases in bad debt expenses associated with higher commodity prices, increased variable employee compensation expense relating to the improved financial results, increased legal and tax provisions and an increase in the work force in our international marketing business. SG&A in 2003 benefited from a $5 million curtailment gain relating to certain postretirement healthcare benefit plans. Foreign exchange losses for 2004 were $17 million compared  to foreign exchange gains of $89 million in 2003. Through the first six months of 2004, the Brazilian  real devalued against the U.S. dollar, resulting in exchange losses on our U.S. dollar net monetary liability position in Brazil. Our U.S. dollar monetary exposure in Brazil is typically at its highest level during the first half of the year. During the second half of 2004, the Brazilian real appreciated, resulting in exchange gains on our U.S. dollar net monetary liability position in Brazil. However, the exposure  to the U.S. dollar was lower and thus the related exchange gains recorded in the second half of 2004 were not enough to offset the exchange losses recorded through the first six months of 2004. The exchange gains in 2003 resulted from the apprecia- tion of the Brazilian  real . Foreign exchange gains and losses are substantially offset by inventory marked-to-market adjustments, which are included in cost of goods sold. Agribusiness Segment Agribusiness segment net sales increased 10% due to higher average selling prices for soy commodity products and a 2% increase in volumes. Selling prices for soy commodity products increased compared to last year primarily due to the shortage associated with the reduced 2003–2004 U.S. soybean crop. Prices of our softseed products also increased following the trend of soybean product prices. Volume increases were driven mainly by higher origination volumes in North America and South America. (1) Unallocated (income) expense—net includes interest income, interest expense, foreign exchange gains and losses and other income and expense not directly attributable to our operating segments. Year Ended December 31, (US$ in millions) 2004 2003 2002 Income from continuing operations before income tax and minority interest $ 9 90 04 4 $ 723 $ 481 Unallocated (income)  expense—net (1) ((5 54 4)) 6 40 Gain on sale of soy  ingredients business – (111) – Total segment operating profit $ 8 85 50 0 $ 618 $ 521 2004 compared to 2003 Interest expense increased 39% primarily due to higher average levels of operating working capital, as a result of the higher commodity prices experienced during most of the year. Cost of goods sold increased 8% due to higher raw material costs, increased volumes and provisions related to the values  of certain forward sales contracts for agricultural commodity products due to nonperformance by counter-parties. Included in cost of goods sold in 2004 were $10 million of non-cash impair- ment charges on long-lived assets and $7 million of restructuring charges relating to our Western European oilseed processing operations. Included in cost of goods sold in 2003 were $56 million of non-cash impairment charges on long-lived assets in our European oilseed processing operations, a $39 million decline  in our allowance for recoverable taxes as a result of either cash received by us or compensation against taxes owed by us to  the Argentine government and a curtailment gain of $15 million relating to the reduction of pension and postretirement health- care benefits of certain U.S. employees. Segment operating profit increased 42% primarily due to the improvements in margins and volume growth. Fertilizer Segment Fertilizer segment net sales increased 32% due to higher average selling prices. Selling prices benefited from higher international selling prices for imported fertilizers and raw materials, which helped increase local sales prices  as local fertilizer products are priced to import parity. Although volumes in 2004 were flat versus 2003, retail fertilizer sales volumes increased 7% as a result of a slight increase in market share. However, the retail fertilizer volume growth in 2004 was offset by a decrease in sales volumes of lower margin fertilizer byproducts, such as gypsum. Gross profit increased 70% due to improvements in margins which resulted from effective freight and risk management, strong softseed profitability, efficiency improvements in logistics and higher volumes. Cost of goods sold increased 25% due to higher imported  raw material costs mitigated in part by lower local production 36