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 March 26, 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
March 26, 1994.
Total pages in filing - 11 pages
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 26, 1994 and December 31, 1993
(Thousands of Dollars)
<CAPTION>
Part I - Financial Information
March 26, 1994 December 31, 1993
-------------- -----------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,326 $ 7,110
Short-term investments 194,617 215,902
Receivables, net 100,276 92,714
Inventories 67,119 70,961
Deferred income taxes 6,899 7,671
Other current assets 7,495 8,374
----------- ------------
Total current assets 381,732 402,732
----------- ------------
Investments in and advances to foreign
subsidiaries not consolidated 29,577 28,520
---------- ------------
Property, plant and equipment 365,367 354,932
Accumulated depreciation (155,947) (149,494)
---------- ------------
Net property, plant and equipment 209,420 205,438
---------- ------------
Other assets 11,257 10,642
---------- ------------
Total assets $631,986 $647,332
========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities
of long-term debt $ 12,623 $ 25,272
Accounts payable 34,708 44,787
Income taxes payable 6,003 8,757
Other current liabilities 49,980 47,469
---------- ------------
Total current liabilities 103,314 126,285
---------- ------------
Long-term debt, less current maturities 195,737 194,506
---------- ------------
Deferred income taxes 20,194 20,440
---------- ------------
Accrued pension plan liabilities, net of
current portion 1,747 1,745
---------- ------------
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
Retained earnings 305,066 298,428
---------- ------------
Total stockholders' equity 310,994 304,356
---------- ------------
Total liabilities and stockholders' equity $631,986 $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 March 26, 1994 and March 27, 1993
(Thousands of dollars except per share amounts)
<CAPTION>
March 26, 1994 March 27, 1993
-------------- --------------
<S> <C> <C>
Net sales $257,398 $283,467
Cost of sales and operating expenses 221,329 247,241
---------- ---------
Gross income 36,069 36,226
Selling, general and administrative expenses 24,267 24,379
---------- ---------
Operating income 11,802 11,847
---------- ---------
Other income (expense):
Interest income 1,744 1,132
Interest expense (3,358) (1,498)
Miscellaneous 861 627
---------- ---------
Total other income (expense) (753) 261
---------- ---------
Earnings before income taxes and
cumulative effect of a change
in accounting principle 11,049 12,108
---------- ---------
Income tax expense (benefit):
Current 2,817 4,610
Deferred 756 (633)
----------- ----------
Total income taxes 3,573 3,977
----------- ----------
Earnings before cumulative effect of a change in
accounting principle 7,476 8,131
Cumulative effect on prior years of changing
the method of reporting deferred income taxes - 20,074
----------- ---------
Net earnings $ 7,476 $ 28,205
=========== =========
Earnings per common share:
Income before cumulative effect of a change
in accounting principle $ 5.03 $ 5.47
Cumulative effect on prior years of changing
the method of reporting deferred income
taxes - 13.49
----------- ----------
Earnings per common share $ 5.03 $ 18.96
=========== ==========
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 Cash Flows
Twelve weeks ended March 26, 1994 and March 27, 1993
(Thousands of dollars)
<CAPTION>
March 26, 1994 March 27, 1993
-------------- --------------
<S> <C> <C>
Net cash provided by (used in)operating activities $ 1,164 $ (3,846)
--------- ----------
Cash flows from investing activities:
Purchase of investments (197,599) -
Proceeds from the sale and maturity of
investments 218,188 -
Net proceeds from short-term investments - 13,547
Capital expenditures, net (11,045) (5,378)
Notes receivable 355 (2,172)
Investments and advances to foreign
subsidiaries not consolidated (1,057) 964
Acquisition of business - (5,500)
Cash acquired in acquisition of business - 2,202
Net cash provided by investing -------- --------
activities 8,842 3,663
-------- --------
Cash flows from financing activities:
Notes payable to bank (7,188) 2,994
Proceeds from long-term debt 1,896 -
Principal payments (6,126) (287)
Dividends paid (372) (186)
--------- ----------
Net cash provided by (used in) financing
activities (11,790) 2,521
--------- ----------
Net increase (decrease) in cash and cash equivalents (1,784) 2,338
Cash and cash equivalents at beginning of year 7,110 9,838
--------- ----------
Cash and cash equivalents at end of quarter $ 5,326 $ 12,176
========= ==========
<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 4
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 March 26, 1994, and the results of
operations and cash flows for the twelve weeks ended March 26, 1994
and March 27, 1993, respectively.
Note 2
The results of operations for the twelve weeks ended March 26, 1994
and March 27, 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 March 26, 1994 and
December 31, 1993 (in thousands):
<CAPTION>
March 26, 1994 December 31, 1993
-------------- -----------------
<S> <C> <C>
At lower or last-in, first out (LIFO) cost or market:
Live poultry $23,434 $22,545
Dressed poultry 11,330 8,278
Feed and baking ingredients, packaging
supplies and other 7,452 7,200
--------- --------
42,216 38,023
LIFO allowance (4,305) (3,834)
--------- --------
Total inventories at lower of
LIFO cost or market 37,911 34,189
--------- --------
At lower of first-in, first-out (FIFO) cost or market:
Crops in production, fertilizers and
pesticides 6,997 11,376
Grain, flour and feed 4,684 3,170
Dressed pork 4,890 8,587
Live Hogs 4,431 3,037
Other 7,957 7,467
--------- -------
Total inventories at lower of
FIFO cost or market 28,959 33,637
--------- -------
Grain, at market 249 3,135
--------- -------
Total inventories $67,119 $70,961
========= ========
</TABLE>
Page 5
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
special 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 March 26, 1994, the Company categorized all short-term investments
as Available-for-Sale. The estimated fair value of the short-term
investments amounted to $194,617,000. The effect of applying the
standard in the quarter ended March 26, 1994 was to decrease
stockholders' equity by $466,000, net of $230,000 in deferred income
taxes. The amortized cost, gross unrealized holding gains and losses
and the estimated fair value of the Available-for-Sale debt
securities as of March 26, 1994 are presented in the following table:
Gross Gross
Unrealized Unrealized Estimated
Amortized Holding Holding Fair
(Thousands of Dollars) Cost Gains Losses Value
----------------------------------------------
U.S. Treasury securities
and obligations of U.S.
government agencies $104,992 - (495) 104,497
Obligations of states
and political
subdivisions 65,413 - (221) 65,192
Other debt securities 24,908 20 - 24,928
-----------------------------------------------
Total debt securities $195,313 20 (716) 194,617
===============================================
The gross realized gains on sales of Available-for-Sale securities
totalled $32,000, and the gross realized losses totalled $82,000 for
the quarter ended March 26, 1994.
The Available-for-Sale debt securities are expected to be traded
within one year.
Page 6
First 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 amounts are as
follows:
March 26, 1994 December 31, 1993
---------------- -----------------
Current Ratio 3.69 3.19
Working Capital
(in thousands) $278,418 $276,447
The Company invested $10.7 million in property, plant and equipment
through March 26, 1994 in the food production and processing segment.
Capital expenditures of $2.5 million were for construction
expenditures on the Company's hog production and processing project
in Northeastern Colorado and the Oklahoma Panhandle. Cumulative
capital expenditures on the project since 1992 total $29.1 million.
The Company anticipates remaining expenditures to total $80.4 million
for facilities and working capital. The project will be funded with
existing term debt or future financings.
Capital expenditures of $3.0 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 $9.7 million. Remaining capital expenditures for planned
expansion of the poultry processing facility are expected to total
$1.3 million during 1994 and will be funded with internal cash.
Other capital expenditures in the food production and processing
segment for the first quarter included $5.2 million in general
replacement and upgrade of plant and equipment.
Capital expenditures in the transportation segment of $0.1 million
were for routine replacement and upgrade of equipment used in the
Company's ocean liner service and were funded with working capital.
As of March 26, 1994 and December 31, 1993, the Company had $8.9
million and $16.1 million, respectively, outstanding under the
Company's short-term uncommitted, unsecured credit lines from banks
totalling $132.0 million.
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.
Page 7
Results of Operations
Net sales for the quarter ended March 26, 1994, decreased by $26.1
million compared to the same period one year earlier. Operating
income remained almost unchanged compared to the same period one year
ago.
The segment distribution of the increase (decrease) in sales and
operating income in the first quarter compared to the prior year is
as follows (in thousands):
Net Sales Operating Income
----------- ----------------
Food production and processing $(41,166) $ (1,874)
Transportation 14,589 1,588
Other 508 241
----------- ----------------
$(26,069) $ (45)
=========== ================
The decrease in net sales in the food production and processing
segment is related to reducing the number of hogs slaughtered at the
Company's Minnesota processing plant. By the end of the first quarter
of 1994, the Company had stopped the slaughter of pork and lamb at the
plant. The ongoing operations of the plant will consist 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 the flour
mill in Zaire. Net sales from commodity trading activity decreased
as a result of a decrease in grain sales to the Company's
nonconsolidated flour mills.
Operating income within the food production and processing segment
decreased during the quarter compared to the same quarter one year
earlier. The decrease was primarily related to higher finished feed
costs at the Company's poultry and pork operations. The higher feed
costs were partially offset by the reduced hog kill at the Minnesota
processing plant which resulted in lower operating losses compared to
the same quarter one year ago.
Net sales and operating income in the transportation segment
increased as a result of the new services to Peru and Chile and
increased volume with existing services in Central America.
Page 8
Results of Operations (continued)
Selling, general and administrative expenses remained almost
unchanged during the quarter compared to the same quarter one year
earlier. As a percentage of sales, selling, general and
administrative expenses increased by less than 1% compared to the
same quarter one year ago.
Interest income and interest expense increased $0.6 million and $1.9
million, respectively, compared to the same quarter one year earlier.
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.
The Company does not believe its businesses have been materially
adversely affected by inflation.
Page 9
SEABOARD CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
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 March
26, 1994.
Page 10
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: May 6, 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 11
