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 September 10, 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
incorporation or organization). Identification 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 September 10, 1994.
Total pages in filing - 13 pages
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 10, 1994 and December 31, 1993
(Thousands of Dollars)
<CAPTION>
Part 1 - Financial Information September 10, December 31,
1994 1993
------------- ------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,790 $ 7,110
Short-term investments 227,412 215,902
Receivables, net 96,284 92,714
Inventories 68,148 70,961
Deferred income taxes 7,899 7,671
Other current assets 10,783 8,374
---------- ---------
Total current assets 415,316 402,732
---------- ---------
Investments in and advances to foreign
subsidiaries not consolidated 28,492 28,520
---------- ---------
Property, plant and equipment 383,737 354,932
Accumulated depreciation (165,881) (149,494)
---------- ---------
Net property, plant and equipment 217,856 205,438
---------- ---------
Other assets 9,928 10,642
---------- ---------
Total assets $ 671,592 $ 647,332
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities
of long-term debt $ 18,194 $ 25,272
Accounts payable 37,080 44,787
Income taxes payable 12,270 8,757
Other current liabilities 49,525 47,469
-------- -------
Total current liabilities 117,069 126,285
Long-term debt, less current maturities 196,360 194,506
Deferred income taxes 21,555 20,440
Deferred grants 4,481 -
Accrued pension plan liabilities, net of
current portion 5,296 1,745
-------- --------
Total liabilities 344,761 342,976
-------- --------
Stockholders' equity:
Common stock of $1 par value.
Authorized 4,000,000 shares;
issued 1,789,599 shares 1,790 1,790
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 $350) (678) -
Retained earnings 321,581 298,428
-------- --------
Total stockholders' equity 326,831 304,356
-------- --------
Total liabilities and stockholders' equity $ 671,592 $ 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 September 10, 1994 and September 11, 1993
(Thousands of dollars except per share amounts)
<CAPTION>
September 10, September 11,
1994 1993
------------- -------------
<S> <C> <C>
Net sales $ 214,952 $ 250,197
Cost of sales and operating expenses 183,405 225,317
------------- -----------
Gross income 31,547 24,880
------------ -----------
Selling, general and administrative expenses 22,939 22,027
------------ -----------
Operating income 8,608 2,853
------------ -----------
Other income (expense):
Interest income 2,068 1,469
Interest expense (2,713) (1,840)
Miscellaneous (288) 1,038
------------ ------------
Total other income (expense) (933) 667
------------ ------------
Earnings before income taxes 7,675 3,520
------------ ------------
Income tax expense (benefit):
Current 1,380 2,935
Deferred 646 (1,064)
------------ ------------
Total income taxes 2,026 1,871
------------ ------------
Net earnings $ 5,649 $ 1,649
============ ============
Earnings per common share $ 3.80 $ 1.11
============ ============
Dividends declared per common share $ .25 $ .25
============ ============
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
Thirty-six weeks ended September 10, 1994 and September 11, 1993
(Thousands of dollars except per share amounts)
<CAPTION>
September 10, September 11,
1994 1993
------------- -------------
<S> <C> <C>
Net sales $ 687,366 $ 791,918
Cost of sales and operating expenses 579,818 700,961
------------- ---------
Gross income 107,548 90,957
------------- ---------
Selling, general and administrative expenses 71,678 69,308
------------- ---------
Operating income 35,870 21,649
------------- ---------
Other income (expense):
Interest income 5,727 5,241
Interest expense (9,262) (4,727)
Miscellaneous 3,556 354
------------- ---------
Total other income 21 868
------------- ---------
Earnings before income taxes and
cumulative effect of a change
in accounting principle 35,891 22,517
------------- ---------
Income tax expense (benefit):
Current 10,385 9,613
Deferred 1,237 (1,682)
------------- ---------
Total income taxes 11,622 7,931
------------- ---------
Earnings before cumulative effect of
a change in accounting principle 24,269 14,586
Cumulative effect on prior years of
changing the method of accounting for
deferred income taxes - 20,074
------------- ---------
Net earnings $ 24,269 $ 34,660
============= =========
Earnings per common share:
Income before cumulative effect of
a change in accounting principle $ 16.32 $ 9.81
Cumulative effect on prior years of
changing the method of reporting
deferred income taxes - 13.49
------------- ---------
Earnings per common share $ 16.32 $ 23.30
============= =========
Dividends declared per common share $ .75 $ .75
============= =========
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
Thirty-six weeks ended September 10, 1994 and September 11, 1993
(Thousands of Dollars)
<CAPTION>
September 10, September 11,
1994 1993
------------- -------------
<S> <C> <C>
Net cash provided by operating
activities $ 43,676 $ 41,769
---------- ---------
Cash flows from investing activities:
Purchase of investments (586,700) -
Proceeds from the sale and maturity
of investments 574,162 -
Net (investment in) short-term
investments - (2,258)
Capital expenditures, net (34,316) (56,195)
Notes receivable 2,689 (3,622)
Investments and advances to foreign
subsidiaries not consolidated 28 (539)
Acquisition of business - (5,500)
Cash acquired in acquisition of business - 2,202
------------ ---------
Net cash used by investing
activities (44,137) (65,912)
----------- ----------
Cash flows from financing activities:
Notes payable to bank (1,552) 5,181
Proceeds from long-term debt 3,792 26,500
Principal payments (7,464) (849)
Deferred grants 4,481 -
Dividends paid (1,116) (744)
----------- ----------
Net cash (used) provided by
financing activities (1,859) 30,088
----------- ----------
Net increase (decrease) in cash
and cash equivalents (2,320) 5,945
Cash and cash equivalents at
beginning of year 7,110 9,838
----------- ----------
Cash and cash equivalents at end of
quarter $ 4,790 $ 15,783
============ ========
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.
<FN>
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 September 10, 1994, the results of operations for the twelve and
thirty-six weeks and the statement of cash flows for the thirty-six weeks
ended September 10, 1994 and September 11, 1993, respectively.
Note 2
- - ------
The results of operations for the twelve and thirty-six weeks ended
September 10, 1994 and September 11, 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 September 10, 1994 and
December 31, 1993 (in thousands):
<CAPTION>
September 10, December 31,
1994 1993
----------- -----------
<S> <C> <C>
At lower of last-in, first-out (LIFO) cost or market:
Live poultry $ 22,652 $ 22,545
Dressed poultry 12,699 8,278
Feed and baking ingredients, packaging
supplies and other 6,380 7,200
--------- --------
41,731 38,023
LIFO allowance (2,528) (3,834)
--------- --------
Total inventories at lower of LIFO
cost or market 39,203 34,189
-------- --------
At lower of first-in, first-out (FIFO) cost or market:
Crops in production, fertilizers
and pesticides 6,079 11,376
Grain, flour and feed 6,643 3,170
Dressed pork 3,276 8,587
Live hogs 6,465 3,037
Other 6,482 7,467
------- -------
Total inventories at lower of FIFO
cost or market 28,945 33,637
--------- --------
Grain, at market - 3,135
----------- -----------
Total inventories $ 68,148 $ 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 September 10, 1994, the Company categorized all short-term
investments as Available-for-Sale.
Note 5
- - ------
On or about August 31, 1994, the Company mailed to its stockholders a Summary
of a Proposed Settlement in the stockholder derivative action brought by Alan
R. Kahn against the Company and certain subsidiaries, its parent Seaboard
Flour Corporation and Messrs. H. Harry Bresky, Otto Bresky, Jr. and Charles
M. Goldman in their capacity as Directors of the Company at the time of the
related party transactions complained of. This action is pending in Delaware
Chancery Court. On October 13, 1994, a hearing was held in Delaware Chancery
Court on the proposed settlement, under which the defendants would pay the
Company $10.8 million in full settlement of all claims. The Company would
pay, from such amount, plaintiff's legal fees in the amount of $2.0 million if
approved by Delaware Chancery Court. An Objection to the Proposed Settlement
was filed by stockholders of Seaboard Flour Corporation (SFC) who objected to
the terms of the proposed Release to be given as part of the Stipulation of
Settlement on the ground that it might be construed to bar certain claims by
SFC or its shareholders. The objectors did not object to the terms of the
settlement other than the scope of the Release, and the Court indicated its
tentative approval of the unobjected to portion of the Settlement. Final
approval of the Settlement by Delaware Chancery Court has been deferred
pending a resolution of the Objection.
Page 7
Third 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:
September 10, 1994 December 31, 1993
------------------ -----------------
Current Ratio 3.55 3.19
Working Capital $298,247 $276,447
(in thousands)
The Company invested $34.1 million in property, plant and equipment through
September 10, 1994 in the food production and processing segment. Capital
expenditures of $14.0 million were for construction of hog production
facilities in Northeastern Colorado and the Oklahoma Panhandle and a hog
processing plant in Guymon, Oklahoma. Cumulative capital expenditures for
these facilities have totaled $40.3 million since 1992. The Company expects
additional expenditures for facilities and working capital to total $83.2
million in the next two years, of which approximately $27.6 million is
currently under contract. This expansion will be funded primarily with term
debt.
Through September 10, 1994 capital expenditures of $4.3 million were made at
the Company's poultry processing plant in Western Kentucky to complete an
expansion of processing capacity. Cumulative capital expenditures related to
the expansion totaled $11.2 million and were funded with cash.
Other capital expenditures in the food production and processing segment
through September 10, 1994 included $15.8 million in general replacement and
upgrade of plant and equipment.
Capital expenditures in the transportation segment through September 10, 1994,
totaled $5.3 million and were for routine replacement and upgrade of
equipment used in the Company's ocean liner service and were funded with cash.
Subsequent to September 10, 1994, the Company purchased a cargo vessel for
$13.4 million in cash to be used in its ocean liner service.
As of September 10, 1994 and December 31, 1993, the Company had $14.5 million
and $16.1 million, respectively, outstanding under the Company's short-term
uncommitted, unsecured credit lines from banks totalling $132.0 million.
Page 8
Liquidity and Capital Resources (continued)
- - -------------------------------
Deferred grants totalling $4.5 million at September 10, 1994, represent
economic development funds donated to the Company by local government
agencies. Use of these funds is limited to construction of a hog processing
facility in Guymon, Oklahoma. Deferred grants will be amortized over the
life of the assets acquired with the funds. The Company expects to receive
additional grant funds of $8.0 million for future construction expenditures.
The Company has entered into operating lease agreements for certain buildings
and equipment to be used in hog production. Total rentals are expected to be
approximately $3.5 million annually beginning in 1995. Most farm leases are
for a five year term and are renewable month-to-month after the initial
lease term.
Superior Farms, L.L.C., a newly formed subsidiary of the Company, has
commenced site selection for hog production facilities that will supply hogs
to the Guymon processing plant. These facilities would be located in
Southwest Kansas, Southeast Colorado and the Oklahoma Panhandle. Construction
of the facilities, equipment and working capital requirements would total
approximately $207.0 million. The Company plans to provide $26.0 million of
equity for a one-third interest subject to Superior Farms raising through a
private placement offering an additional $52.0 million of equity. The
balance of $132.0 million would be obtained through long-term financing.
Cumulative expenditures for these facilities have been immaterial, and no
material construction commitments have been made.
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 thirty-six weeks ended September 10, 1994
decreased by $35.2 million and $104.6 million, respectively, compared to the
same periods one year earlier. Operating income increased by $5.8 million in
the third quarter and $14.2 million 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 $(45,018) $(140,291) $ 3,407 $ 4,154
Transportation 8,156 30,536 1,008 7,849
Other 1,617 5,203 1,340 2,218
--------- ---------- -------- --------
$(35,245) $(104,552) $ 5,755 $14,221
========= ========== ======== ========
Page 9
Results of Operations (continued)
- - ---------------------
Food Production and Processing Segment
The decrease in net sales in the food production and processing segment is
primarily the result of discontinuing the slaughter of hogs and lambs at the
Company's Minnesota processing plant in March, 1994. In addition, sales from
a flour mill in Zaire are no longer included in the Company's consolidation
after the Company sold shares, reducing the investment to a minority
interest. Beginning in December 1993, the Company began using the equity
method of accounting for the mill in Zaire.
Net sales of poultry products increased during the quarter and year-to-date,
partially offsetting the decreases described above. The increase in net
sales of poultry products was primarily related to increased sales volume
while average sales prices remained comparable to previous periods. The
increase in production 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 compared to the same quarter one year earlier. Decreasing
corn and soybean meal prices have resulted in lower finished feed cost during
the quarter compared to the same quarter one year ago. Production of poultry
products increased compared to the same period one year ago resulting in
further increases to operating income.
Year-to-date operating income increased compared to the same period one year
earlier primarily as a result of increased production of poultry products
during the second and third quarter of 1994. The increased production and
third quarter declines in corn and soybean meal prices have resulted in
improved margins on the Company's products. Prior year operating income
reflects operating losses from the Minnesota processing plant's hog kill.
The hog kill was discontinued in March, 1994.
Transportation Segment
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 scheduled services to South America and the
Caribbean Basin and increased Southbound volume within existing services in
Central America.
Recent economic instability in Venezuela has resulted in lower cargo volume
from that market. The Company has been successful in replacing the volume in
other markets, therefore, the effect of the Venezuelan economic situation on
the Company's sales and operating income has not been material.
Page 10
Results of Operations (continued)
- - ---------------------
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $0.9 million and
$2.4 million for the quarter and year-to-date, respectively, compared to the
same periods one year earlier. The increase is primarily related to general
price level increases and additional marketing and administrative support of
expanded shipping routes and product lines.
Other
Interest expense increased for the quarter and year-to-date by $0.9 million
and $4.5 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.
Miscellaneous income includes a $2.9 million gain from liquidating an
interest rate exchange agreement during the second quarter. The Company
entered into the interest rate exchange agreement as an anticipatory hedge
against interest rate risk associated with variable rate financing. The
anticipated liability to be hedged was not entered into and the Company
currently has no plans to incur any other variable rate debt with similar
characteristics. Accordingly, the Company terminated the agreement and
discontinued deferral accounting.
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 1. Legal Proceedings.
-----------------
See Note 5 of the Notes to Condensed Consolidated Financial Statements.
Item 5. Other Information
-----------------
During the twelve-week period ending September 10, 1994, Director Robert
J. McDonough passed away. The Board of Directors intends to elect a replace-
ment as soon as possible.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits required to be filed by item 601 of Regulation S-K and
by Item 6(a) of Instruction.
10.1 Seaboard Corporation Executive Retirement Plan dated October
18, 1994.
10.2 Summary of Benefits for Excess 401(k) Contributions.
27 Financial Data Schedule
(b) Reports on Form 8-K. Seaboard Corporation has not filed any reports on
Form 8-K during the twelve week period ended September 10, 1994.
Page 12
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: October 24, 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 13
SEABOARD CORPORATION
EXECUTIVE RETIREMENT PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE OF PLAN
Section 1.1. Plan Establishment.
Seaboard Corporation, a Delaware corporation, hereby
establishes the Seaboard Corporation Executive Retirement Plan
effective January 1, 1994.
Section 1.2. Purpose of Plan.
The purpose of the Seaboard Corporation Executive Retirement
Plan is to provide supplemental retirement benefits to certain
employees of Seaboard Corporation or certain affiliated companies
who are members of a select group of management or highly
compensated employees and who are designated by the President or
Executive Vice President of Seaboard Corporation as Participants
hereunder.
ARTICLE II
DEFINITIONS
As used herein:
Section 2.1. "Accrued Benefit" shall mean the aggregate of
the benefits accrued each year by a Participant under the
provisions of Section 4.1.
Section 2.2. "Actuarial (or Actuarially) Equivalent" shall
have the meaning given to such term in the Seaboard Corporation
Pension Plan dated June 28, 1994, as may be amended from time to
time.
Section 2.3. "Code" shall mean the Internal Revenue Code of
1986, as from time to time amended.
Section 2.4. "Committee" shall mean the committee
established by the Company to administer the Plan.
Section 2.5. "Company" shall mean Seaboard Corporation.
Section 2.6. "Compensation" shall mean the total salary and
bonus received by the Participant from the Company for the
Participant's services in a given Year. Compensation shall
include the amount of any elective deferrals made by the
Participant in such Year pursuant to any plan if such amount is
not includible in gross income under Code Sections 125 or 401(k).
Notwithstanding the foregoing, a Participant's Compensation in
any Year shall not exceed the sum of $300,000, with said sum to
be adjusted on or before the first day of each Year commencing
January 1, 1995 to such amount as is determined by the Committee
from time to time.
Section 2.7. "Designated Beneficiary" shall mean the
individual identified by the Participant on a form furnished by
the Committee and delivered to the Committee as the Participant's
beneficiary under optional payment forms described in
Sections 6.5 (b) and (c), if either of such optional payment
forms is chosen.
Section 2.8. "Disabled" or "Disability" means having a
physical or mental condition resulting from bodily injury,
disease or mental disorder which renders a Participant incapable
of continuing any gainful occupation and which condition
constitutes total disability under the federal Social Security
Act.
Section 2.9. "Eligible Employee" shall mean an employee of
the Company or other Employer whom the Committee determines to be
in a select group of management or highly compensated employees
within the meaning of the Employee Retirement Income Security Act
of 1974 as from time to time amended. An employee shall no
longer constitute an Eligible Employee if such employee is no
longer employed by the Company or other Employer, even if
transferred to the employ of a Related Company which is not an
Employer.
Section 2.10. "Employer" shall mean the companies set forth
on Exhibit A attached hereto, as may be amended from time to
time.
Section 2.11. "Participant" shall mean an Employee who has
met the requirements for participation under Article III
hereunder.
Section 2.12. "Plan" shall mean the Seaboard Corporation
Executive Retirement Plan as contained herein and as from time to
time amended.
Section 2.13. "Related Company" shall mean any company
which is a member of a controlled group of corporations, within
the meaning of Code 414(b), of which the Company is a member.
Section 2.14. "Ten Year C & C Annuity" shall mean an
annuity payable to the Participant monthly for the Participant's
life with 120 monthly payments guaranteed to the Participant or
to the Participant's Designated Beneficiary in the event of the
Participant's death prior to the completion of 120 monthly
payments.
Section 2.15. "Vest" shall have the meaning set forth in
Section 4.2 below.
Section 2.16 "Year" shall mean a 12-month period beginning
each January 1 and ending each succeeding December 31.
Section 2.17. "Year of Service" shall mean each whole or
partial Year during which a Participant is employed by the
Company or a Related Company and during which the Participant
completes at least 1,000 hours of service with the Company or
such Related Company.
ARTICLE III
PARTICIPATION
Section 3.1. Commencement of Participation. An Eligible
Employee who is designated by the President or Executive Vice
President of the Company as a Participant in the Plan shall
accrue a benefit as provided in Section 4.1 below effective as of
the date specified by the President or Executive Vice President.
Such Participant shall not accrue any benefit under the Seaboard
Corporation Pension Plan dated June 28, 1994, as may be amended,
while accruing a benefit as a Participant in this Plan.
Section 3.2. Termination of Participation. If a
Participant is no longer an Eligible Employee, as determined by
the Committee, or if the President or Executive Vice President of
the Company determines that a Participant shall no longer be a
Participant in the Plan, then the Participant shall cease to
accrue a benefit under the Plan. Notwithstanding that the
participation of a Participant in the Plan is terminated
hereunder, the Participant shall continue to be a Participant
hereunder only with respect to the Accrued Benefit of the
Participant which was accrued prior to such termination.
ARTICLE IV
DETERMINATION OF BENEFIT
Section 4.1. Accrual of Benefit. A Participant will accrue
an annual benefit (the "Accrued Benefit") each year in an amount
equal to 2 1/2% of the Participant's Compensation for such Year.
Section 4.2. Entitlement to Benefit. The Accrued Benefit
shall Vest and thus be payable as provided herein when a
Participant has completed five (5) or more Years of Service or
has attained age 55. A Participant shall be credited with a Year
of Service (for purposes of Vesting) for service provided during
the initial Year of being employed regardless of the number of
hours of service provided by the Participant during such Year and
even though such Eligible Employee was not a Participant in the
Plan during such Year. The Accrued Benefit shall also
automatically Vest in a Participant upon the Participant becoming
Disabled, or upon the Participant's death provided that such
Participant is survived by a spouse at the time of such death.
Any Participant whose Accrued Benefit does not Vest as provided
above shall not be entitled to any benefit under this Plan.
ARTICLE V
FORMS OF PAYMENT OF BENEFIT ACCRUED BEFORE AGE 62 YEAR-END
Section 5.1. Benefit Based on Ten Year C & C Annuity. As
soon as practicable after the end of each Year in which a
Participant is entitled to a benefit under the provisions of
Section 4.2 above, the Company shall purchase for the benefit of
such Participant an annuity contract (or add to an existing
annuity contract) from an insurance company having an A.M. Best
rating of at least A which would provide beginning at age 62 for
an annual payment under a Ten Year C & C Annuity payment option
of an amount which the Committee determines would approximate the
Accrued Benefit for the Year then ended. The Accrued Benefit
with respect to the period before a Participant is Vested shall
upon such Participant becoming Vested be included in the annuity
which is purchased for the Year in which the Participant became
Vested. Participants shall not be paid any benefits as provided
in this Article V for service provided after December 31 of the
year in which the Participant reaches age 62, which benefit shall
be paid exclusively as provided in Article VI below.
When purchasing annuity contracts hereunder, the Committee
shall take into account that a portion of the annuity payments
will not be subject to federal or state income taxes. The
Committee shall take this fact into account by assuming that the
combined federal and state marginal income tax rate during the
period in which the annuity will be paid will be equal to the
current combined federal and state income tax rate for the Year
the annuity is earned (using the income tax rate for the state in
which the compensation was earned) based on income equal to 60%
of such Participant's Compensation for such Year and by
considering what portion of the annuity will not be subject to
federal or state income taxes. The determination by the
Committee as to the amount of the annuity which will approximate
each Accrued Benefit shall be final and conclusive and the
Company shall not have any liability to the Participants, even if
the assumptions as to income tax rates and the amount which is
free from income taxes turn out to be erroneous assumptions.
All annuity contracts purchased by the Company for a
Participant shall be exclusively owned by such Participant. Upon
the purchase of an annuity contract for a Participant hereunder,
the Company shall have no further liability to the Participant
with respect to the Accrued Benefit for which the annuity
contract was purchased.
Section 5.2. Participant Option to Elect Variable Annuity.
The Committee shall give Participants the right to elect to
receive an annuity or similar product that the Committee deems
viable whereby the amount of the annuity will vary depending upon
the return achieved on the principal of the annuity. The amount
paid into such annuity or other similar product shall be equal to
the amount that would have been paid to purchase the annuity
defined in Section 5.1 above.
Section 5.3. Income Tax Considerations. In addition to the
purchase of the annuity contract for the benefit of Participants
pursuant to Section 5.1 above, the Company shall pay to each
Participant (which amount will be withheld and paid to the
appropriate taxing authorities) the amount of income taxes (both
state and federal) which the Committee estimates the Participant
will pay on account of the receipt of such annuity contract (the
"Gross-Up"). The determination by the Committee as to the amount
of the Gross-Up shall be final and conclusive and the Company
shall not have any liability to the Participants, even if the
assumptions as to income tax rates are not accurate.
Section 5.4. Optional Form of Benefit. Notwithstanding
that the Accrued Benefit is to be based on a Ten Year C & C
Annuity, the Participant shall have the right to elect any other
payout option which is available pursuant to the terms of the
annuity purchased for such Participant.
ARTICLE VI
FORMS OF PAYMENT OF BENEFIT ACCRUED AFTER AGE 62 YEAR-END
Section 6.1. Benefit Based on Ten Year C & C Annuity. For
service provided after December 31 of the Year in which the
Participant reaches age 62, beginning the first of the next month
after the Participant's retirement from the Company, the
Participant shall receive a Company life annuity providing for an
annual payment in the form specified in this Article VI but in an
amount which is the Actuarial Equivalent of the payment of the Accrued
Benefit pursuant to a Ten Year C & C Annuity payment
option.
Section 6.2. Automatic Form for Married Participants. If a
Participant is married at retirement, the annuity to be paid
hereunder shall be in the form of a joint and survivor annuity
whereby a monthly annuity shall be paid to the Participant for
his lifetime, and his spouse, if surviving at the Participant's
death, shall be entitled to receive thereafter a lifetime annuity
in an amount which is 50% of the monthly amount which had been
payable to the Participant. The amount payable to the
Participant shall be determined so that the aggregate annuity
payments expected to be made to the Participant and his spouse
shall be the Actuarial Equivalent of the Participant's benefit
determined under Section 6.1.
Section 6.3. Spouse's Death Benefit. A Participant who
dies after reaching age 62 but prior to retirement and who is
survived by a spouse shall have his death benefit paid to his
surviving spouse in the form of a pre-retirement survivor
annuity. The pre-retirement death benefit will be that payable
to the spouse as if the Participant had retired and elected to
receive his annuity in the form of a 100% joint and survivor
annuity on the day before he died. The pre-retirement survivor
annuity shall commence the month following the Participant's
death.
Section 6.4. Automatic Form for Unmarried Participants. If
a Participant is not married at age 62, then the annuity to be
paid hereunder shall be in the form of a single life annuity
payable monthly which shall be the Actuarial Equivalent of the
Participant's benefit determined under Section 6.1.
Section 6.5. Optional Form of Benefit. Subject to the
requirements of Section 6.6 below, a Participant can elect for
the payment option of the annuity to be in one of the following
forms of payment in lieu of the form otherwise specified above:
(a) A single life annuity payable no less frequently than
annually.
(b) A Ten Year C & C Annuity.
(c) If the Participant is married, a life annuity payable
no less frequently than annually for the life of the
Participant and with a survivor annuity payable no less
frequently than annually for the remaining life of the
Participant's spouse which survivor annuity is either
75% or 100% of the annuity during the Participant's
life.
Benefits paid under any of the foregoing options will be the
Actuarial Equivalent of the Participant's benefit determined
under Section 6.1. The foregoing options must be elected before
the Participant reaches the age of 62; provided, however, an
election can be made or amended thereafter in the event of a
change of circumstances with respect to the Participant, such as
a change in marital or health status.
Section 6.6. Election Not to Take the 50% Joint and
Survivor Annuity. No Participant who is married as of the date
payment of such benefit will commence can elect to receive his
benefit in any form other than in the form of a 50% joint and
survivor annuity under Section 6.2 unless such Participant's
spouse has executed a written waiver consenting to any such
election.
Section 6.7. Spendthrift. The interest in this Plan, or
any benefits provided under this Article VI, of or to any
Participant or his beneficiary shall in no event be subject to
sale, assignment, hypothecation, or transfer by such Participant
or his beneficiary, and each Participant or his beneficiary is
hereby prohibited from anticipating, pledging, assigning or
alienating his interest in this Plan or in any account or benefit
hereunder. The interest of any Participant or of his beneficiary
shall not be liable or subject to the debts, liabilities, or
obligations of the Participant or the beneficiary, nor shall the
same or any part thereof be subject to any judgment rendered nor
to any levy, execution, attachment, garnishment, or other legal
process.
ARTICLE VII
ADMINISTRATION
The Company shall appoint a Committee to administer the
Plan. The Committee shall consist of one or more individuals who
may or may not be employees of the Company. The Committee shall
have the sole and absolute discretion to interpret the Plan and
determine the benefits hereunder. The Committee shall be
authorized to establish rules and procedures as it deems
advisable or necessary for the administration of the Plan. The
Committee shall establish a reasonable claims procedure which
shall include a procedure for the appeal of a denied claim. All
decisions of the Committee shall be final, conclusive, and
binding upon all persons having any interest in the Plan. In the
administration of the Plan, the Committee may, from time to time,
(i) delegate its duties, (ii) employ agents and delegate to them
such duties as it sees fit, and (iii) consult with legal counsel,
who may be legal counsel to the Company.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Employment. The adoption of the Plan does not
give any person any right to be retained in the employ of the
Company, and no rights granted under the Plan shall be construed
as creating a contract of employment. The right and power of the
Company to dismiss or discharge any person is expressly reserved.
Section 8.2. No Trust Relationship. Nothing contained
herein and no actions taken pursuant to the Plan shall create or
be construed to create a trust of any kind or a fiduciary
relationship between the Company and any Participant. The
Company shall not be considered a trustee by reason of the Plan.
Section 8.3. Amendment and Termination. The Company can
amend or terminate the Plan at any time in its sole discretion;
provided, however, no amendment or termination of the Plan shall
affect the rights of any Participant to the payment of benefits
which have accrued at the time of such amendment or termination.
Section 8.4. Governing Law. The provisions of the Plan
shall be governed, construed, enforced, and administered in
accordance with the laws of the State of Kansas.
Section 8.5. Headings. The headings have been inserted for
convenience only and shall not affect the meaning or
interpretation of the Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed as of this 18th day of October, 1994, by its duly
authorized agent.
SEABOARD CORPORATION
By: /s/ Rick J. Hoffman
_____________________
Rick J. Hoffman
Vice President
EXHIBIT A
Seaboard Corporation
Seaboard Trading & Shipping (Division)
A & W Interlining Services Corporation
Lewis Pad & Binding Company (Division)
Seaboard Overseas Limited
Seaboard Export Corporation
Seaboard Marine Ltd.
Port of Miami Cold Storage, Inc. (formerly Dodge Island Terminal)
Chestnut Hill Farms, Inc.
Seaboard Ship Management, Inc.
Harinas de Puerto Rico, Inc.
Seaboard Farms (Poultry Division Companies)
Seaboard Farms of Oklahoma, Inc. (Pork Division)
SUMMARY OF BENEFITS FOR EXCESS 401K CONTRIBUTIONS
- - --------------------------------------------------
The executive officers of the Company, along with certain
other management employees of the Company, receive, as
additional compensation, an amount equal to three percent
on an after tax basis of each such participant's eligible
compensation in excess of $150,000, but not on any such
earnings in excess of $300,000; and in addition, each such
participant receives from the Company a "gross up" payment
to reimburse such participant for the estimated federal and
state income taxes such participant will have to pay on
account of receipt of this benefit.
This benefit was established effective January 1, 1994.
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