FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 18, 1994
.................................................................
Commission file number 1-3390
.................................................................
Seaboard Corporation
.................................................................
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
.................................................................
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization). No.)
200 Boylston Street, Newton, MA 02167
.................................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 617-332-8492
...........................
.................................................................
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x. No ___.
Indicate number of shares outstanding of each of the
issuer's classes of common stock, as of latest practicable date.
Common stock of $1 par value, 1,487,520 shares outstanding, as of
June 18, 1994.
Total pages in filing - 12 pages
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 18, 1994 and December 31, 1993
(Thousands of Dollars)
<CAPTION>
Part I - Financial Information
June 18, 1994 December 31, 1993
--------------- ------------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,284 $ 7,110
Short-term investments 202,614 215,902
Receivables, net 105,300 92,714
Inventories 72,341 70,961
Deferred income taxes 6,522 7,671
Other current assets 7,637 8,374
--------- ---------
Total current assets 398,698 402,732
--------- ---------
Investments in and advances to foreign
subsidiaries not consolidated 28,638 28,520
--------- ---------
Property, plant and equipment 379,568 354,932
Accumulated depreciation (160,297) (149,494)
--------- ---------
Net property, plant and equipment 219,271 205,438
--------- ---------
Other assets 8,854 10,642
--------- ---------
Total assets $655,461 $647,332
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities
of long-term debt $ 13,752 $ 25,272
Accounts payable 35,543 44,787
Income taxes payable 12,085 8,757
Other current liabilities 46,708 47,469
--------- ---------
Total current liabilities 108,088 126,285
Long-term debt, less current maturities 196,945 194,506
Deferred income taxes 19,565 20,440
Deferred grants 4,341 -
Accrued pension plan liabilities, net of
current portion 4,926 1,745
--------- ---------
Total liabilities 333,865 342,976
--------- ---------
Stockholders' equity:
Common stock of $1 par value.
Authorized 4,000,000 shares;
issued 1,789,599 shares 1,790 1,790
Less 302,079 shares held in treasury,
at par value 302 302
------- --------
1,488 1,488
Additional capital 4,440 4,440
Unrealized loss on debt securities,
(net of deferred income taxes
of $317) (636) -
Retained earnings 316,304 298,428
--------- ---------
Total stockholders' equity 321,596 304,356
--------- ---------
Total liabilities and stockholders' equity $655,461 $647,332
========= =========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 2
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Twelve weeks ended June 18, 1994 and June 19, 1993
(Thousands of dollars except per share amounts)
<CAPTION>
June 18, 1994 June 19, 1993
-------------- --------------
<S> <C> <C>
Net sales $215,016 $258,254
Cost of sales and operating expenses 175,084 228,403
--------- ---------
Gross income 39,932 29,851
Selling, general and administrative expenses 24,472 22,902
--------- ---------
Operating income 15,460 6,949
--------- ---------
Other income (expense):
Interest income 1,915 2,640
Interest expense (3,191) (1,389)
Miscellaneous 2,983 (1,311)
--------- ----------
Total other income (expense) 1,707 (60)
--------- ----------
Earnings before income taxes 17,167 6,889
---------- ----------
Income tax expense (benefit):
Current 6,188 2,068
Deferred (165) 15
---------- ----------
Total income taxes 6,023 2,083
---------- ----------
Net earnings $ 11,144 $ 4,806
========== ==========
Earnings per common share $ 7.49 $ 3.23
========== ==========
Dividends declared per common share $ .25 $ .125
========== ==========
Average number of shares outstanding 1,487,520 1,487,520
========== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 3
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Twenty-four weeks ended June 18, 1994 and June 19, 1993
(Thousands of dollars except per share amounts)
<CAPTION>
June 18, 1994 June 19, 1993
------------- -------------
<S> <C> <C>
Net sales $472,414 $541,721
Cost of sales and operating expenses 396,413 475,644
--------- --------
Gross income 76,001 66,077
Selling, general and administrative expenses 48,739 47,281
--------- --------
Operating income 27,262 18,796
--------- --------
Other income (expense):
Interest income 3,659 3,772
Interest expense (6,549) (2,887)
Miscellaneous 3,844 (684)
--------- ---------
Total other income 954 201
--------- ---------
Earnings before income taxes and
cumulative effect of a change
in accounting principle 28,216 18,997
--------- ---------
Income tax expense (benefit):
Current 9,005 6,678
Deferred 591 (618)
--------- ---------
Total income taxes 9,596 6,060
--------- ---------
Earnings before cumulative effect of a change
in accounting principle 18,620 12,937
Cumulative effect on prior years of
changing the method of accounting for
deferred income taxes - 20,074
--------- ---------
Net earnings $ 18,620 $ 33,011
========= =========
Earnings per common share:
Income before cumulative effect of a
change in accounting principle $ 12.52 $ 8.70
Cumulative effect on prior years of
changing the method of reporting
deferred income taxes - 13.49
--------- ---------
Earnings per common share $ 12.52 $ 22.19
========= =========
Dividends declared per common share $ .50 $ .25
========= =========
Average number of shares outstanding 1,487,520 1,487,520
========== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 4
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Twenty-four weeks ended June 18, 1994 and June 19, 1993
(Thousands of Dollars)
<CAPTION>
June 18, 1994 June 19, 1993
------------- -------------
<S> <C> <C>
Net cash provided by operating activities $ 14,367 $ 33,673
-------- --------
Cash flows from investing activities:
Purchase of investments (375,425) -
Proceeds from the sale and maturity of
investments 387,760 -
Net (investment in) short-term investments - (5,736)
Capital expenditures, net (28,057) (28,206)
Notes receivable 4,131 (2,076)
Investments and advances to foreign
subsidiaries not consolidated (118) 352
Acquisition of business - (5,500)
Cash acquired in acquisition of business - 2,202
--------- ---------
Net cash used by investing activities (11,709) (38,964)
--------- ---------
Cash flows from financing activities:
Notes payable to bank (6,178) 1,717
Proceeds from long-term debt 3,792 10,250
Principal payments (6,695) (351)
Deferred grants 4,341 -
Dividends paid (744) (372)
--------- ---------
Net cash provided by (used in) financing
activities (5,484) 11,244
--------- ---------
Net increase (decrease) in cash and cash equivalents (2,826) 5,953
Cash and cash equivalents at beginning of year 7,110 9,838
--------- ----------
Cash and cash equivalents at end of quarter $ 4,284 $ 15,791
========= ==========
<FN>
Disclosure of accounting policy:
For purposes of the Condensed Consolidated Statements of Cash Flows, the Company
considers all demand deposits and overnight investments as cash.
See notes to condensed consolidated financial statements.
</TABLE>
Page 5
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting
of normal recurring accruals) necessary to present fairly the
financial position as of June 18, 1994, the results of operations
for the twelve and twenty-four weeks and the statement
of cash flows for the twenty-four weeks ended June 18, 1994 and June
19, 1993, respectively.
Note 2
The results of operations for the twelve and twenty-four weeks ended
June 18, 1994 and June 19, 1993 are not necessarily indicative of the
results to be expected for the full year.
Note 3
<TABLE>
The following is a summary of inventories at June 18, 1994 and
December 31, 1993 (in thousands):
<CAPTION>
June 18, 1994 December 31, 1993
-------------- ------------------
<S> <C> <C>
At lower of last-in, first-out (LIFO) cost or market:
Live poultry $24,369 $22,545
Dressed poultry 13,441 8,278
Feed and baking ingredients, packaging
supplies and other 6,519 7,200
------- -------
44,329 38,023
LIFO allowance (4,170) (3,834)
-------- --------
Total inventories at lower of
LIFO cost or market 40,159 34,189
-------- --------
At lower of first-in, first-out (FIFO) cost or market:
Crops in production, fertilizers and
pesticides 4,883 11,376
Grain, flour and feed 5,728 3,170
Dressed pork 5,448 8,587
Live Hogs 6,713 3,037
Other 9,410 7,467
-------- --------
Total inventories at lower of
FIFO cost or market 32,182 33,637
-------- --------
Grain, at market - 3,135
-------- --------
Total inventories $72,341 $70,961
======== ========
</TABLE>
Page 6
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 4
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires
certain investments to be categorized as either Trading, Available-
for-Sale, or Held-to-Maturity. Investments in the Trading category
are carried at fair value with unrealized gains and losses included
in income. Investments in the Available-for-Sale category are
carried at fair value with unrealized gains and losses recorded as a
separate component of stockholders' equity. Investments in the Held-
to-Maturity category are carried at amortized cost. Short-term
investments at January 1, 1994 included $215,902,000 in debt
securities, for which cost approximated fair value and, therefore,
the impact of adopting this standard was not material to the
consolidated financial statements of the Company. At June 18, 1994,
the Company categorized all short-term investments as Available-for-
Sale.
Note 5
Subsequent to June 18, 1994, the Company entered into a tentative
settlement of a derivative action commenced in April 1990 by a
stockholder naming the Company, the Parent Company and the then
three directors of the Company as defendants. Under the terms of
the settlement, the Company would receive a payment of $10.8
million from which it would be required to pay plaintiff's legal costs.
This settlement is subject to approval of the Delaware Chancery Court.
Page 7
Second Quarter 1994
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
- - -------------------------------
Liquidity, as measured by current ratio and working capital, has
increased since December 31, 1993. Comparative figures are as
follows:
June 18, 1994 December 31, 1993
-------------- -----------------
Current Ratio 3.69 3.19
Working Capital
(in thousands) $290,610 $276,447
Net cash provided by operating activities for the twenty-four weeks
ended June 18, 1994 decreased compared to the same period one year
ago primarily due to increased short-term advances and deposits
related to the construction of hog production facilities.
The Company invested $24.8 million in property, plant and equipment
through June 18, 1994 in the food production and processing segment.
Capital expenditures of $11.1 million were for construction
expenditures on the Company's hog production and pork processing project
in Northeastern Colorado and the Oklahoma Panhandle. Cumulative
capital expenditures for hog facilities have totalled $37.6 million
since 1992. The company expects expenditures for facilities and
working capital to total $71.9 million in the next two years, of
which approximately $33.8 million is currently under contract. This
expansion will be funded primarily with term debt.
Through June 18, 1994, capital expenditures of $4.1 million were made
at the Company's poultry processing plant in Western Kentucky to
expand processing capacity. Cumulative capital expenditures related
to the expansion total $11.0 million. Remaining capital expenditures
for planned expansion of the poultry processing facility are expected
to total $1.0 million during 1994 and will be funded with internal
cash.
Other capital expenditures in the food production and processing
segment through June 18, 1994 included $9.6 million in general
replacement and upgrade of plant and equipment.
Capital expenditures in the transportation segment through June 18,
1994, totalled $3.1 million and were for routine replacement and
upgrade of equipment used in the Company's ocean liner service and
were funded with internal cash. Subsequent to June 18, 1994, the
Company committed to purchase a cargo vessel to be used in its ocean
liner service. The purchase price will be approximately $15 million
and will be funded with internal cash.
Page 8
Liquidity and Capital Resources (continued)
- - -------------------------------
As of June 18, 1994 and December 31, 1993, the Company had $9.9
million and $16.1 million, respectively, outstanding under the
Company's short-term uncommitted, unsecured credit lines from banks
totalling $132.0 million.
Deferred grants represent economic development grant funds
provided by local government agencies. Use of these funds is limited
to construction of a hog processing facility in Guymon, Oklahoma.
Deferred incentive grants will be amortized over the life of the
assets acquired with the funds. As of June 18, 1994, the Company had
used $4.3 million of grant funds, approximately $8.2 million of grant
funds remain available for construction expenditures.
Management intends to continue its policy of expansion and growth in
the agribusiness and ocean transportation industries and believes the
Company's liquidity and capital resources are adequate for its
intended operations.
Results of Operations
- - ---------------------
Net sales for the twelve and twenty-four weeks ended June 18, 1994
decreased by $43.2 million and $69.3 million, respectively, compared
to the same periods one year earlier. Operating income increased by
$8.5 million in the second quarter and year-to-date compared to the
same periods one year ago.
The segment distribution of the increase (decrease) in net sales and
operating income compared to the prior year is as follows (in
thousands):
Net Sales Operating Income
--------------------- ---------------------
Quarter Year-to-Date Quarter Year-to-Date
--------- ------------ --------- ------------
Food production and
processing $(54,107) $(95,273) $ 2,660 $ 747
Transportation 7,791 22,380 5,253 6,841
Other 3,078 3,586 598 878
--------- --------- -------- --------
$(43,238) $(69,307) $ 8,511 $ 8,466
========= ========= ======== ========
The decrease in net sales in the food production and processing
segment is the result of discontinuing the slaughter of hogs and
lambs at the Company's Minnesota processing plant. Since March,
1994, the ongoing operations of the plant have consisted of further
processing fresh pork products purchased from third parties. In
addition, sales from the flour mill in Zaire are no longer included
in the Company's consolidation after a sale of shares reduced the
investment to a minority interest. Beginning in December 1993, the
Company began using the equity method of accounting for Zaire. Net
Page 9
Results of Operations (continued)
- - ---------------------
sales from the commodity trading activity decreased as a result of a
decrease in grain sales to the Company's nonconsolidated flour mills.
These decreases were partially offset by increases in poultry sales
attributable to an increase in average sales price and pounds sold of
poultry products. The increase in pounds sold resulted primarily
from the expansion of the company's poultry processing plant in
Western Kentucky.
Operating income within the food production and processing segment
increased during the quarter and year-to-date compared to the same
periods one year earlier. The improved operating results were
primarily due to higher average sales prices for the Company's
poultry products. Finished feed costs remain higher for the quarter
and year-to-date compared to the same periods last year. Year-to-
date operating income has been further increased by discontinuing the
hog kill at the Minnesota processing plant which has resulted in
lower operating losses compared to the same period one year ago.
Net sales and operating income in the transportation segment
increased for the quarter and year-to-date compared to the same
periods one year earlier. The increases resulted from new services
to Peru and Chile and increased southbound volume within existing
services in the Eastern Caribbean, particularly in the second
quarter. The Company expects recent political and economic
instability in Venezuela to have a negative effect on net sales and
operating income. At this time, the Company does not believe the
effect will be material.
Selling, general and administrative expenses increased by $1.6
million and $1.5 million for the quarter and year-to-date,
respectively, compared to the same periods one year earlier. The
increase is primarily related to expanded services in the
transportation segment and expansion of the Company's hog production
business.
Interest income decreased for the quarter and year-to-date by $0.7
million and $0.1 million, respectively, compared to the same periods
one year earlier. The decrease is primarily a result of having
accrued $1.4 million of interest on refunds of Federal income tax in
the second quarter of 1993.
Interest expense increased for the quarter and year-to-date by $1.8
million and $3.7 million, respectively, compared to the same periods
one year ago. The increase is primarily related to the issuance of
$100.0 million in Senior Notes in December 1993, the proceeds of
which were invested in short-term investments.
Page 10
Results of Operations (continued)
- - ---------------------
Miscellaneous income includes a $2.9 million gain from liquidating an
interest rate exchange agreement during the quarter. The Company
entered into the interest rate exchange agreement as an anticipatory
hedge against interest rate risk associated with variable rate
financing. Subsequent to obtaining the interest rate exchange
agreement the Company received commitments for fixed rate financing
and, therefore, terminated the agreement.
The Company does not believe its businesses have been materially
adversely affected by inflation.
Page 11
SEABOARD CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders was held on April 25, 1994 in
Newton, Massachusetts. Two items were submitted to a vote of
stockholders as described in the Company's Proxy Statement dated
March 31, 1994. The table below briefly describes the proposals and
results of the stockholders' vote:
Votes in Votes Broker
Favor Against Abstain Nonvotes
---------- ---------- ---------- ----------
1. To elect:
H. Harry Bresky, 1,425,991 0 550 0
Joe E. Rodrigues, 1,425,991 0 550 0
Robert J.
McDonough, and 1,425,891 0 650 0
Thomas J. Shields 1,425,981 0 560 0
as directors.
2. To ratify
selection of
KPMG Peat Marwick
as independent
auditors 1,426,036 175 330 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K. Seaboard Corporation has not filed any
reports on Form 8-K during the twelve week period ended June
18, 1994.
Page 11
PART II - OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DATE: August 1, 1994
Seaboard Corporation
by: /s/ Rick J. Hoffman
Rick J. Hoffman, Vice President
by: /s/ Jesse H. Bechtold
Jesse H. Bechtold, Chief Accounting
Officer
Page 12
