UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to _____________
Commission file number 1-3390
Seaboard Corporation
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913)676-8800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock American Stock Exchange
$1.00 Par Value
Securities registered pursuant of Section 12(g) of the Act:
None
(Title of class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. X
(continued)
FORM 10-K
SEABOARD CORPORATION
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant. The aggregate market value shall
be computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within 60 days prior to the date of filing.
$63,173,670 (March 15, 1995). On such date, 332,493 shares were
held by non-affiliates, and the stock was sold at $190 per share.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date: 1,487,519.75 shares of Common Stock as of
March 24, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Part I, item 1(b), a part of item 1(c)(1) and the financial
information required by item 1(d) and Part II, items 5, 6, 7 and
8 are incorporated by reference to the Registrant's Annual Report
to Stockholders furnished to the Commission pursuant to Rule 14a-
3(b).
Part III, a part of item 10 and items 11, 12 and 13 are
incorporated by reference to the Registrant's definitive proxy
statement filed pursuant to Regulation 14A for the 1995 annual
meeting of stockholders (the "1995 Proxy Statement").
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FORM 10-K
SEABOARD CORPORATION
PART I
Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, the successor
corporation to a company first incorporated in 1928, and
subsidiaries ("Registrant"), is a diversified international
agribusiness and transportation company engaged domestically in
poultry and pork production and processing, commodity
merchandising, baking, flour milling, shipping and produce
storage and distribution. Overseas, Registrant engages in fruit,
vegetable and shrimp production and processing, flour milling,
animal feed production, polypropylene bag manufacturing and
electric power production.
(b) Financial Information about Industry Segments
The information required by Item 1 relating to Industry Segments
is hereby incorporated by reference to note 13 of Registrant's
Consolidated Financial Statements appearing on pages 44, 45, 46
and 47 of the Registrant's Annual Report to Stockholders
furnished to the Commission pursuant to Rule 14a-3(b) and
attached as Exhibit 13 to this Report.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done by the Registrant
(i) Principal Products and Services
Registrant produces and processes poultry in the United States
and sells processed chicken and chicken parts, both directly and
through commercial distributors, to retail, foodservice and
institutional markets, primarily in the eastern half of the
United States.
Registrant produces and further processes pork. Hog farrowing
facilities in Colorado and Oklahoma produce breeding stock and
marketable feeder pigs. The feeder pigs are raised to market
hogs at Company owned or managed farms for subsequent sale or
processing. Pork products are marketed to retail and foodservice
customers, primarily in the north-central United States.
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SEABOARD CORPORATION
Registrant is engaged in Puerto Rico in the milling of flour and
the production and distribution of a full line of baked goods.
These goods are distributed directly within Puerto Rico and
neighboring islands to foodservice and retail outlets.
Registrant operates an ocean liner service for containerized
cargo between Florida and ports in Central and South America and
the Caribbean Basin. Registrant also operates bulk carriers in
the Atlantic Basin.
Registrant trades commodities, primarily bulk grains and oil
seeds, in the Atlantic Basin.
Registrant produces and processes fruits, vegetables and shrimp
in several countries located in the Caribbean Basin and South
America, primarily for export to the U.S. The Registrant
transports the majority of these products using its shipping
line, and distributes them from its facility in Miami, Florida.
Registrant also produces polypropylene bags, operates a power
barge, operates flour and animal feed mills, and produces pen-
raised salmon.
The information required by Item 1 with respect to the amount or
percentage of total revenue contributed by any class of similar
products or services which account for 10% or more of
consolidated revenue in any of the last three fiscal years is
hereby incorporated by reference to note 13 of Registrant's
Consolidated Financial Statements appearing on pages 44, 45, 46
and 47 of the Registrant's Annual Report to Stockholders
furnished to the Commission pursuant to rule 14a-3(b) and
attached as Exhibit 13 to this report.
(ii) Status of Product or Segment
Registrant continues to expand its food production and processing
segment by further investing in poultry, hog farrowing and
finishing and pork processing facilities. The Registrant is
currently constructing integrated hog production and processing
facilities in Oklahoma, Texas, Kansas and Colorado. These
facilities will include hog farrowing, nursing and finishing
buildings, feedmills and a processing plant which will produce
fresh and processed pork to be marketed primarily in the
Southwest United States and for export.
Registrant discontinued fresh pork operations at its plant in
Albert Lea, Minnesota as of March 25, 1994. The ongoing
operations of the plant consist of producing processed meats.
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SEABOARD CORPORATION
(iii) Sources and Availability of Raw Materials
None of Registrant's businesses utilize material amounts of raw
materials that are dependent on purchases from one supplier or a
small group of dominant suppliers.
(iv) Patents, Trademarks, Licenses, Franchises and Concessions
Registrant uses two trademarks; Gold-n-Fresh(R) and Farmstead(R)
Fresh for retail sales of poultry products. Registrant uses five
trademarks; Farmstead(R), Lakeview(R), Laurel(R), Farmstead(R) Preferred
and Oh So Tender(R) in its retail sales of pork. Registrant uses
two trademarks, Season Sweet(R), and Chestnut Hill Farms(R) in
marketing fresh fruits and vegetables in the United States.
Registrant's Puerto Rican Baking business uses three trademarks
registered to a third party; Holsum(R), Country Hearth(R) and Olympic
Kids(R); under a licensing agreement.
Patents, trademarks, franchises, licenses and concessions are not
material to any of Registrant's other businesses.
(v) Seasonal Business
Profitability of the poultry operations is generally higher in
the summer months. Produce operations are seasonal, depending on
the crop being grown. Generally, crops which are exported to the
United States are only in production from November through May.
The Registrant's other businesses are not seasonally dependent.
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of
Registrant relating to working capital items.
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SEABOARD CORPORATION
(vii) Depending on a Single Customer or Few Customers
Registrant does not have sales to any one customer equal to 10%
or more of Registrant's consolidated revenues, nor sales to a few
customers which, if lost, would have a material adverse effect on
any such segment or on Registrant taken as a whole.
(viii) Backlog
Backlog is not material to Registrant's businesses.
(ix) Government Contracts
No material portion of Registrant's business involved government
contracts.
(x) Competitive Conditions
Competition in Registrant's food production and processing
segment comes from a variety of national and regional producers
and is based primarily on product performance, customer service
and price. In the January 1995 issue of Broiler Industry, an
industry trade publication, the Registrant was ranked as the
eighth largest poultry processor in the United States based on
average weekly production of ready-to-cook chicken. In the
October 1994 issue of Successful Farming, an industry trade
publication, the Registrant was ranked as the twelfth largest
pork producer in the United States based on sows in production.
Registrant's Puerto Rican baking business is the largest bakery
in Puerto Rico. Competition, based on price and product
performance, comes primarily from imported baked goods in the
cookie and donut lines, and from one Puerto Rican sliced bread
baker.
Registrant's ocean liner service for containerized cargoes faces
competition based on price and customer service. Registrant
believes it is among the top five ranking ocean liner services
for containerized cargoes in the Caribbean Basin.
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SEABOARD CORPORATION
(xi) Research and Development Activities
Registrant does not engage in material research and development
activities.
(xii) Environmental Compliance
Registrant believes that it is in substantial compliance with
applicable Federal, state and local provisions relating to
environmental protection, and no significant capital expenditures
are contemplated in this area.
(xiii) Number of Persons Employed by Registrant
As of December 31, 1994, Registrant had 10,256 employees, of whom
7,014 were employed in the United States (including Puerto Rico).
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
The financial information required by Item 1 relating to Foreign
and Domestic Operation is hereby incorporated by reference to
note 13 of Registrant's Consolidated Financial Statements
appearing on pages 44, 45, 46 and 47 of Registrant's Annual
Report to Stockholders furnished to the Commission pursuant to
Rule 14a-3(b) and attached as Exhibit 13 to this report. Export
sales, including sales to nonconsolidated foreign subsidiaries,
represent less than 10% of Registrant's consolidated revenue.
Registrant did not have a material amount of sales or transfers
between geographic areas for the periods reported on herein.
Registrant considers its relations with the governments of the
countries in which its foreign subsidiaries are located to be
satisfactory, but these foreign operations are subject to the
normal risks of doing business abroad, including expropriation,
confiscation, currency inconvertibility and devaluation, and
currency exchange controls. To minimize these risks, Registrant
has insured certain investments in and loans to the flour mill
and shrimp farm in Ecuador and the flour mill in Zaire to the
extent deemed appropriate against certain of these risks with the
Overseas Private Investment Corporation, an agency of the United
States Government. The Registrant elected to discontinue political
risk insurance on the power barge in the Dominican Republic
during 1994.
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SEABOARD CORPORATION
Item 2. Properties
The Registrant currently has production and distribution
facilities in the following states: Alabama, Colorado, Florida,
Georgia, Kansas, Kentucky, Maine, Minnesota, Oklahoma, New
Jersey, North Carolina and Texas. Additionally, the Registrant
has wholly or partially owned facilities in Chile, Columbia,
Costa Rica, Dominican Republic, Ecuador, Guatemala, Guyana,
Honduras, Nigeria, Panama, Peru, Puerto Rico, Sierra Leone,
Venezuela and Zaire.
(1) Food Production and Processing
The principal poultry operations of the Registrant consists of
five processing plants. These plants are devoted to various
phases of slaughtering, dressing, cutting, packing, deboning or
further-processing chickens. The total slaughter capacity is
approximately 212 million head per year. To support these
facilities, the Registrant operates four feed mills, four
hatcheries and a network of 725 contract growers that supply
pullet, breeder and broiler farms. These facilities are located
in Alabama, Georgia, Kentucky and Tennessee.
The Registrant's pork operations consist of a plant dedicated to
further processing fresh pork into smoked and cooked hams, bacon
and other prepared foods. This plant has an annual capacity of
approximately 45 million pounds. Currently, a processing plant
with a double shift capacity of four million hogs per year is
under construction. Single shift operations are expected to
begin in the Fall of 1995. Hog production facilities currently
consist of a combination of owned and leased farrowing, nursery
and finishing units to support 30,200 sows. These facilities are
located in Colorado and Oklahoma.
The Registrant owns in whole or in part six flour mills with
capacity to produce 46,700 cwts of bakery flour and mill feed per
day. In addition, Registrant has feed mill capacity of 35 tons
per hour to produce formula animal feed. These mills, located in
Puerto Rico, Guyana, Ecuador, Sierra Leone, Nigeria and Zaire are
owned in fee except for a flour mill in Sierra Leone which is on
land which the Government of Sierra Leone has agreed to lease for
a remaining term of 19 years, and a Nigerian flour and feed mill
with a remaining lease term of 80 years and renewal option of 75
years.
The Registrant owns two bakeries in Puerto Rico.
The Registrant operates approximately 4,000 acres of shrimp ponds
in Honduras and Ecuador. Approximately 2,400 acres are leased
for a twenty year term and the rest are owned.
(2) Transportation
The Registrant owns six 9,000 metric-ton deadweight dry bulk
carriers and six containerized ocean cargo vessels with
deadweights ranging from 949 to 12,648 metric-tons. In addition,
Registrant timecharters, under short-term agreements, twelve
additional containerized ocean cargo vessels with deadweights
ranging from 2,152 to 12,290 metric-tons.
(3) Other
Registrant owns a floating power generating facility, capable of
producing 40 megawatts of power, located in the Port of Rio Haino
in Santo Domingo, Dominican Republic.
Management believes that the Registrant's present facilities are
generally adequate and suitable for its current purposes. In
general, facilities are fully utilized; however, seasonal
fluctuations in inventories and production may occur as a
reaction to market demands for certain products. Certain foreign
flour mills may operate at less than full capacity due to
unavailability of foreign exchange to pay for imported raw
materials.
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FORM 10-K
SEABOARD CORPORATION
Item 3. Legal Proceedings
In April 1990, a derivative action was commenced in Delaware
Chancery Court by a minority stockholder of the Company against
the Company, Seaboard Flour Corporation, and the three then
Directors of the Company, including Mr. H. Bresky, alleging
breaches of fiduciary duty by the Directors of the Company in
connection with three transactions with Seaboard Flour
Corporation, and seeking monetary damages and other relief. This
action was settled and dismissed during fiscal year 1994. Under
the settlement, the Company received $10,800,000 from Seaboard
Flour Corporation and the Directors of which $2,026,000 was paid
to the plaintiff's counsel.
The Company is subject to other legal proceedings related to the
normal conduct of its business. In the opinion of management,
none of these actions are expected to result in a final judgement
having a materially adverse effect on the consolidated financial
statements of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the last quarter of the fiscal
year covered by this report to a vote of security holders.
Executive Officers of Registrant
The following table lists the executive officers and certain
significant employees of Registrant. Generally, each executive
officer is elected at the Annual Meeting of the Board of
Directors following the Annual Meeting of Stockholders and holds
his office until the next such annual meeting or until his
successor is duly chosen and qualified. There are no
arrangements or understandings pursuant to which any executive
officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
H. Harry Bresky (69) President of Registrant; President and
Treasurer of Seaboard Flour Corporation (SFC)
Joe E. Rodrigues (58) Executive Vice President, Treasurer and
Chief Financial Officer of Registrant
Jack S. Miller (66) Vice President - Operations/Administration
of Registrant
Rick J. Hoffman (40) Vice President of Registrant
Steven J. Bresky (41) Vice President of Registrant
Jesse H. Bechtold (37) Controller and Assistant Treasurer
Mr. H. Harry Bresky has served as President of Registrant since
1967 and as President of SFC since 1987, and as Treasurer of SFC
since 1973. Mr. Bresky is the father of Steven J. Bresky.
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FORM 10-K
SEABOARD CORPORATION
Mr. Rodrigues has served as Executive Vice President and
Treasurer of Registrant since December 1986 and Chief Financial
Officer since March 1987.
Mr. Miller has served as a Vice President of Registrant since
1971.
Mr. Hoffman has served as Vice President of Registrant since
April 1989.
Mr. Steven J. Bresky has served as Vice President of Registrant
since April 1989.
Mr. Bechtold became Controller of the Registrant in March of
1992. He has been employed with the Registrant since 1990 and
prior to that was employed by KPMG Peat Marwick LLP.
10
FORM 10-K
SEABOARD CORPORATION
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information required by Item 5 is hereby incorporated by
reference to "Stockholder Information" and "Quarterly Financial
Data" appearing on pages 48 and 25, respectively, of Registrant's
Annual Report to Stockholders furnished to the Commission
pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this
Report.
Item 6. Selected Financial Data
The information required by Item 6 is hereby incorporated by
reference to the "Summary of Selected Financial Data" appearing
on page 1 of Registrant's Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as
Exhibit 13 of this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 is hereby incorporated by
reference to "Management's Discussion and Analysis of Financial
Condition and Results of Operation" appearing on pages 20 through
24 of Registrant's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this Report.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 is hereby incorporated by
reference to Registrant's "Quarterly Financial Data,"
"Consolidated Statements of Earnings," "Consolidated Statements
of Stockholders' Equity," " Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows" and "Notes to Consolidated
Financial Statements" appearing on pages 28 through 47 of
Registrant's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
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FORM 10-K
SEABOARD CORPORATION
PART III
Item 10. Directors and Executive Officers of Registrant
Refer to "Executive Officers of Registrant" in Part 1.
Information required by this item relating to directors of
Registrant has been omitted since Registrant filed a definitive
proxy statement within 120 days after December 31, 1994, the
close of its fiscal year. The information required by this item
relating to directors is incorporated by reference to "Item 1"
appearing on pages 3 and 4 of the 1995 Proxy Statement. The
information required by this item relating to late filings of
reports required under Section 16(a) of the Securities Exchange
Act of 1934 is incorporated by reference to the first paragraph
on page 3 of the Registrant's 1995 Proxy Statement.
Item 11. Executive Compensation
This item has been omitted since Registrant filed a definitive
proxy statement within 120 days after December 31, 1994, the
close of its fiscal year. The information required by this item
is incorporated by reference to "Executive Compensation and Other
Information" and "Retirement Plans" appearing on pages 5, 6 and 7
of the 1995 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
This item has been omitted since Registrant filed a definitive
proxy statement within 120 days after December 31, 1994, the
close of its fiscal year. The information required by this item
is incorporated by reference to "Principal Stockholders"
appearing on page 2 and "Election of Directors" on pages 3 and 4
of the 1995 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
This item has been omitted since Registrant filed a definitive
proxy statement within 120 days after December 31, 1994, the
close of its fiscal year. The information required by this item
is incorporated by reference to "Compensation Committee
Interlocks and Insider Participation" and "Interests of
Management and Others in Certain Transactions" appearing on page
9 of the 1995 Proxy Statement.
12
FORM 10-K
SEABOARD CORPORATION
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
1. Consolidated financial statements.
See Index to Consolidated Financial Statements on page F-1.
2. Consolidated financial statement schedules.
See Index to Consolidated Financial Statements on page F-2.
3. Exhibits.
3.1 - Registrant's Certificate of Incorporation, as amended,
incorporated by reference to Exhibit 3.1 of Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
3.2 - Registrant's By-laws, as amended - incorporated by
reference to Exhibit 3.2 of Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1992.
4.1 - Note Purchase Agreement dated December 1, 1993 between the
Registrant and various purchasers as listed in the exhibit. The
Annexes and Exhibits to the Note Purchase Agreement have been
omitted from the filing, but will be provided supplementally upon
request of the Commission. Incorporated by reference to Exhibit
4.1 of Registrants's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
4.2 Seaboard Corporation 6.49% Senior Note Due December 1, 2005
issued pursuant to the Note Purchase Agreement described above.
Incorporated by reference to Exhibit 4.2 of Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.
*10.1 Registrant's Executive Retirement Plan dated October 18,
1994. Incorporated by reference to Exhibit 10.1 of Registrant's
Form 10-Q for the quarter ended September 10, 1994.
*10.2 Registrant's Summary of Benefits for Excess 401(k)
Contributions (Supplemental Executive Retirement Plan).
Incorporated by reference to Exhibit 10.2 of Registrant's Form
10-Q for the quarter ended September 10, 1994.
*10.3 Registrant's Supplemental Executive Retirement Plan for H.
Harry Bresky dated March 21, 1995.
*10.4 Registrant's Supplemental Executive Retirement Plan for
Jack S. Miller dated March 21, 1995.
*10.5 Employment Agreement for Joe E. Rodrigues dated July 9, 1986
and amended August 10, 1990.
13 - Sections of Annual Report to security holders incorporated
by reference herein.
21 - List of subsidiaries.
27 - Financial Data Schedule (included in electronic copy only).
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FORM 10-K
SEABOARD CORPORATION
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
On November 9, 1994 the Registrant filed a report on Form 8-K
disclosing the settlement of a stockholders' derivative action.
This settlement is further described in Item 3. Legal Proceedings
on page 9 of this filing.
(c) Exhibits
Exhibits begin on page 16.
14
Form 10-K
SEABOARD CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SEABOARD CORPORATION
By /s/H. Harry Bresky By /s/J. E. Rodrigues
H. Harry Bresky, J. E. Rodigues,
President Executive Vice President,
(principal executive and Treasurer (principal
officer) financial officer)
Date: March 30, 1995 Date: March 30, 1995
By /s/Jesse H. Bechtold
Jesse H. Bechtold
Controller
(principal accounting
officer)
Date: March 30, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of Registrant and in the capacities and on the dates
indicated.
/s/H. Harry Bresky /s/J. E. Rodrigues
H. Harry Bresky, Director J. E. Rodrigues, Director
Date: March 30, 1995 Date: March 30, 1995
/s/David A. Adamsen /s/Thomas J. Shields
David A. Adamsen, Director Thomas J. Shields, Director
Date: March 30, 1995 Date: March 30, 1995
15
SEABOARD CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements and Schedules
(Form 10-K)
Securities and Exchange Commission
For the year ended December 31, 1994
(With Independent Auditors' Report Thereon)
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Financial Statements
Stockholders'
Annual Report Page
Independent Auditors' Report 27
Consolidated Balance Sheets as of
December 31, 1994 and
December 31, 1993 30
Consolidated Statements of Earnings
for the years ended December 31, 1994,
December 31, 1993 and December 31, 1992 28
Consolidated Statements of Stockholders'
Equity for the years ended December 31,
1994, December 31, 1993 and
December 31, 1992 29
Consolidated Statements of Cash Flows
for the years ended December 31, 1994,
December 31, 1993 and December 31, 1992 32
Notes to Consolidated Financial Statements 33
The foregoing are incorporated by reference.
The individual financial statements of the minority-owned
nonconsolidated foreign subsidiaries which would be required if
each such foreign subsidiary were a Registrant are omitted,
because (a) the Registrant's and its other subsidiaries'
investments in and advances to such foreign subsidiaries do not
exceed 20% of the total assets as shown by the most recent
consolidated balance sheet; (b) the Registrant's and its other
subsidiaries' proportionate share of the total assets (after
intercompany eliminations) of such foreign subsidiaries do not
exceed 20% of the total assets as shown by the most recent
consolidated balance sheet; or (c) the Registrant's and its other
subsidiaries' equity in the earnings before income taxes and
extraordinary items of the foreign subsidiaries does not exceed
20% of such income of the Registrant and consolidated
subsidiaries for the most recent fiscal year.
Combined condensed financial information as to assets,
liabilities and results of operations have been presented for
minority-owned nonconsolidated foreign subsidiaries in note 6 of
"Notes to the Consolidated Financial Statements."
F-1
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Schedules
Page
II - Valuation and Qualifying Accounts
for the years ended December 31,
1994, 1993 and 1992 F-4
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related consolidated notes.
F-2
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Seaboard Corporation:
Under date of March 3, 1995, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements
of earnings, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1994, as
contained in the December 31, 1994 annual report to stockholders.
These consolidated financial statements and our report thereon
are incorporated by reference in the annual report on Form 10-K
for the year ended December 31, 1994. In connection with our
audits of the aforementioned consolidated financial statements,
we also audited the financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
As discussed in note 1 to the consolidated financial statements,
the Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", in 1994 and Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," in
1993.
KPMG Peat Marwick LLP
March 3 , 1995
F-3
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Provision Write-offs net Balance at
beginning of year (1) of recoveries end of year
Year ended
December 31,
1994:
Allowance for
doubtful
accounts $6,556 2,910 270 9,196
Year ended
December 31,
1993:
Allowance for
doubtful
accounts $5,653 2,600 1,697 6,556
Year ended
December 31,
1992:
Allowance for
doubtful
accounts $4,227 3,763 2,337 5,653
(1) Charged to selling, general and administrative expenses.
F-4
EXHIBIT 10.3
H. HARRY BRESKY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
UNDER THE
SEABOARD CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE OF PLAN
Section 1.01. Plan Establishment.
Seaboard Corporation, a Delaware corporation (the
"Company"), hereby establishes the H. Harry Bresky Supplemental
Executive Retirement Plan (the "Plan"), effective January 1,
1995, pursuant to the Company's Supplemental Executive Retirement
Plan.
Section 1.02. Purpose.
The Plan is intended to constitute an unfunded pension plan
of a highly compensated, select management employee for the
purpose of providing supplemental retirement benefits to H. Harry
Bresky (the "Executive").
ARTICLE II
BENEFITS
Section 2.01. Retirement Benefits.
Beginning with the first day of the month following the
Executive's retirement from the Company after attaining age 65,
he will be entitled to a benefit of a ten-year certain and
continuous life annuity in the amount of $34,174 per month. In
the event of the Executive's death during the ten-year certain
period, the balance of the payments for such period shall be paid
to his beneficiary designated in writing and filed with the
Company's Vice President-Finance and, in default thereof, to his
estate. If the Executive shall die either while employed by the
Company or after his retirement but before the commencement of
benefits hereunder, monthly payments in the amount of $34,174
shall be made to the Executive's beneficiary as designated
pursuant to the preceding sentence or his estate, as the case may
be, for a period of ten years beginning with the first day of the
month following the Executive's death. In the event of the
Executive's termination of employment other than by reason of his
retirement or death, no benefits will be payable hereunder.
ARTICLE III
ADMINISTRATION, FUNDING AND MISCELLANEOUS
Section 3.01. Administration.
(a) The Plan will be administered by the Board of Directors
of the Company (the "Board") which shall have the sole discretion
to interpret the Plan and determine eligibility for benefits
hereunder. All decisions of the Board shall be final,
conclusive, and binding upon all persons having any interest in
the Plan.
(b) In the administration of the Plan, the Board may, from
time to time, (i) delegate its duties to any individual or
committee, (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.
Section 3.02. Funding.
The Plan shall be unfunded, and all benefit payments
provided hereunder shall be paid from the general assets of the
Company. The Executive and any of his beneficiaries will be
considered to be general unsecured creditors of the Company with
respect to benefits under the Plan. The Company may cause the
payments to the Executive or his beneficiaries to be made from
the assets of an irrevocable grantor trust maintained by the
Company and may purchase an insurance policy or policies insuring
the life of the Executive or an annuity policy or policies to
enable the Company to pay the costs of providing the benefits
hereunder. Neither the Executive nor his beneficiaries shall
have any rights whatsoever to the assets of the trust or any
insurance or annuity policies. The insurance or annuity policies
may be owned by the trust, in lieu of the Company, in which case
the trust shall be the sole owner and beneficiary of the policy
or policies and shall possess and may exercise all incidents of
ownership in such policy or policies, except as otherwise
provided in the trust.
Section 3.03. Claims Procedure.
The Executive and any beneficiary of his may apply to the
Board for consideration of any claim for benefit under the Plan.
If a claim is denied in whole or in part, the Executive or his
beneficiary will receive written notification. The notification
will include the specific reasons for the denial, with specific
reference to the pertinent provisions of the Plan on which the
denial was based, a description of any additional material or
information needed to perfect the claim and why such material or
information is necessary, and an explanation of the claims review
procedure. If the Board fails to respond to the claim within
ninety (90) days, the claim is treated as denied. Within sixty
(60) days after denial, the Executive or his beneficiary may
submit a written request for reconsideration of the claim to the
Board. Any such request should be accompanied by documents or
records in support of the claim. The Executive or his
beneficiary may review pertinent documents and submit issues and
comments in writing. The Board will review the claim and
provide, within sixty (60) days, a written response to the
claimant. (This period may be extended an additional sixty (60)
days under certain circumstances.) In its response, the Board
will give specific reasons for its decision, written in a manner
calculated to be understood by the claimant, with specific
reference to the pertinent provisions of the Plan on which the
decision is based.
Section 3.04. Non-Alienation of Participant's Benefits.
Except as required by law, no amount payable under this Plan
shall be subject in any manner to alienation by anticipation,
sale, transfer, assignment, bankruptcy, pledge, attachment,
charge or encumbrance of any kind nor in any manner be subject to
the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or
hereafter payable, shall be void.
Section 3.05. Employment.
Participation in the Plan does not give the Executive 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 the Executive is expressly reserved.
Section 3.06. 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 the
Executive. The Company shall not be considered a trustee by
reason of the Plan.
Section 3.07. Amendment, Modification and Termination.
No amendment, modification or termination of the Plan shall
be made without the prior written approval of the Executive,
other than as may be required by governing law.
Section 3.08. Benefits and Burdens.
The Plan shall be binding upon and inure to the benefit of
the Executive and his beneficiaries and the Company and its
successors and assigns.
Section 3.09. Governing Law.
The provisions of the Plan shall be governed, construed,
enforced and administered in accordance with the laws of Kansas
and, to the extent applicable, by the Employee Retirement Income
Security Act of 1974, as amended, and other applicable federal
law.
Section 3.10. 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 this ___ day of March, 1995, by its duly authorized
officer.
SEABOARD CORPORATION
By: ___________________________
J. E. Rodrigues
Executive Vice President
EXHIBIT 10.4
JACK S. MILLER
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
UNDER THE
SEABOARD CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE OF PLAN
Section 1.01. Plan Establishment.
Seaboard Corporation, a Delaware corporation (the
"Company"), hereby establishes the Jack S. Miller Supplemental
Executive Retirement Plan (the "Plan"), effective January 1,
1995, pursuant to the Company's Supplemental Executive Retirement
Plan.
Section 1.02. Purpose.
The Plan is intended to constitute an unfunded pension plan
of a highly compensated, select management employee for the
purpose of providing supplemental retirement benefits to Jack S.
Miller (the "Executive").
ARTICLE II
BENEFITS
Section 2.01. Retirement Benefits.
Beginning with the first day of the month following the
Executive's retirement from the Company after attaining age 65,
he will be entitled to a benefit of a ten-year certain and
continuous life annuity in the amount of $8,333 per month. In
the event of the Executive's death during the ten-year certain
period, the balance of the payments for such period shall be paid
to his beneficiary designated in writing and filed with the
Company's Vice President-Finance and, in default thereof, to his
estate. If the Executive shall die either while employed by the
Company or after his retirement but before the commencement of
benefits hereunder, monthly payments in the amount of $8,333
shall be made to the Executive's beneficiary as designated
pursuant to the preceding sentence or his estate, as the case may
be, for a period of ten years beginning with the first day of the
month following the Executive's death. In the event of the
Executive's termination of employment other than by reason of his
retirement or death, no benefits will be payable hereunder.
ARTICLE III
ADMINISTRATION, FUNDING AND MISCELLANEOUS
Section 3.01. Administration.
(a) The Plan will be administered by the Board of Directors
of the Company (the "Board") which shall have the sole discretion
to interpret the Plan and determine eligibility for benefits
hereunder. All decisions of the Board shall be final,
conclusive, and binding upon all persons having any interest in
the Plan.
(b) In the administration of the Plan, the Board may, from
time to time, (i) delegate its duties to any individual or
committee, (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.
Section 3.02. Funding.
The Plan shall be unfunded, and all benefit payments
provided hereunder shall be paid from the general assets of the
Company. The Executive and any of his beneficiaries will be
considered to be general unsecured creditors of the Company with
respect to benefits under the Plan. The Company may cause the
payments to the Executive or his beneficiaries to be made from
the assets of an irrevocable grantor trust maintained by the
Company and may purchase an insurance policy or policies insuring
the life of the Executive or an annuity policy or policies to
enable the Company to pay the costs of providing the benefits
hereunder. Neither the Executive nor his beneficiaries shall
have any rights whatsoever to the assets of the trust or any
insurance or annuity policies. The insurance or annuity policies
may be owned by the trust, in lieu of the Company, in which case
the trust shall be the sole owner and beneficiary of the policy
or policies and shall possess and may exercise all incidents of
ownership in such policy or policies, except as otherwise
provided in the trust.
Section 3.03. Claims Procedure.
The Executive and any beneficiary of his may apply to the
Board for consideration of any claim for benefit under the Plan.
If a claim is denied in whole or in part, the Executive or his
beneficiary will receive written notification. The notification
will include the specific reasons for the denial, with specific
reference to the pertinent provisions of the Plan on which the
denial was based, a description of any additional material or
information needed to perfect the claim and why such material or
information is necessary, and an explanation of the claims review
procedure. If the Board fails to respond to the claim within
ninety (90) days, the claim is treated as denied. Within sixty
(60) days after denial, the Executive or his beneficiary may
submit a written request for reconsideration of the claim to the
Board. Any such request should be accompanied by documents or
records in support of the claim. The Executive or his
beneficiary may review pertinent documents and submit issues and
comments in writing. The Board will review the claim and
provide, within sixty (60) days, a written response to the
claimant. (This period may be extended an additional sixty (60)
days under certain circumstances.) In its response, the Board
will give specific reasons for its decision, written in a manner
calculated to be understood by the claimant, with specific
reference to the pertinent provisions of the Plan on which the
decision is based.
Section 3.04. Non-Alienation of Participant's Benefits.
Except as required by law, no amount payable under this Plan
shall be subject in any manner to alienation by anticipation,
sale, transfer, assignment, bankruptcy, pledge, attachment,
charge or encumbrance of any kind nor in any manner be subject to
the debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or
hereafter payable, shall be void.
Section 3.05. Employment.
Participation in the Plan does not give the Executive 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 the Executive is expressly reserved.
Section 3.06. 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 the
Executive. The Company shall not be considered a trustee by
reason of the Plan.
Section 3.07. Amendment, Modification and Termination.
No amendment, modification or termination of the Plan shall
be made without the prior written approval of the Executive,
other than as may be required by governing law.
Section 3.08. Benefits and Burdens.
The Plan shall be binding upon and inure to the benefit of
the Executive and his beneficiaries and the Company and its
successors and assigns.
Section 3.09. Governing Law.
The provisions of the Plan shall be governed, construed,
enforced and administered in accordance with the laws of Kansas
and, to the extent applicable, by the Employee Retirement Income
Security Act of 1974, as amended, and other applicable federal
law.
Section 3.10. 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 this ___ day of March, 1995, by its duly authorized
officer.
SEABOARD CORPORATION
By: ___________________________
J. E. Rodrigues
Executive Vice President
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
Original July 9, 1986
Amended August 10, 1990
Restated March 29, 1995
Mr. Joe E. Rodrigues
12616 Flint
Overland Park, Kansas 66213
Dear Joe:
In view of the fact that Seaboard Corporation (the Company) wishes to
promote you to the position of Executive Vice President, I am pleased to
confirm your employment terms as follows:
01. Your employment with Seaboard Corporation as Executive Vice President
is to continue for a period of one year starting January 1, 1987, and
ending on (and including) December 31, 1987, and shall be extended from
year to year thereafter, subject to termination by either party at the
end of the one-year period, or any subsequent date, by giving six (6)
months advance written notice. In the event this Agreement should
terminate by reason of your death, your wife will be paid applicable
death benefits to which she may be entitled under the existing benefit
plans of the Company, plus two (2) months salary for each completed year
of service at the salary rate in force at the time of your demise. If you
should become totally and permanently disabled, you will be paid
the applicable disability benefits to which you may be entitled under any
existing benefit plans of the Company, plus two (2) months salary for
each completed year of service at the salary rate in force at the time
when the disability occurs.
02. Your annual base salary shall be the sum of $220,000 per annum, payable
in equal semimonthly installments and shall be reviewed every twelve
months.
03. You will be eligible as additional incentive compensation, to participate
in the Company's Executive Bonus Pool. Such additional incentive
compensation shall have no effect upon the base salary to be paid to
you hereunder.
04. (Amended August 10, 1990) In addition to any pension benefits to
which you may be entitled under any existing pension plans of the
company, the Company will provide you with any annuity plan such that,
either when you decide to retire or this Agreement is terminated by the
Company, you will be paid a supplementary annual pension each year
for the remainder of your life equal to 4% of your total earnings during
your employment with the Company. For example, if you were to retire
now, and assuming that your total earnings up to this date add up to
approximately $2 million, your starting annual pension would be 4% of
$2 million or $80,000. Furthermore, this supplementary annual pension
will be tied to the Consumer Price Index for All Urban Consumers (CPI-U)
and revised annually to offset the effects of inflation.
05. Your existing Life Policy with the Aetna Life Insurance Company shall be
increased from $50,000 to $200,000.
06. You shall be provided with a Company automobile under arrangements at
least equivalent to those currently in effect with respect to other
Company Senior Executives.
07. You will be entitled to three weeks annual vacation time with full pay.
08. You are authorized to incur reasonable expenses for promoting the business
of the Company. At the end of each month, the Company shall reimburse
you for all expenses, including entertainment, travel and miscellaneous
other expenses incurred in promoting the business of the Company and in
performing your duties.
09. Your duties shall be performed principally at the company's offices in
Merriam, Kansas. You will report to the President of the Company. You,
as Executive Vice President of the Company, shall have the
responsibilities as may be assigned to such office by the Board of
Directors, and/or the President of the Company, provided, however, that
the responsibilities assigned to such office shall be of a character
and dignity appropriate to a senior executive of the Company. During
the employment period, you agree to devote substantially all of your
normal business time and attention to the affairs of the Company and the
promotion of its interests.
10. This Agreement shall be binding upon and inure to the benefit of any
successor of the Company and any such successor shall be deemed
substituted for the Company under the terms of this Agreement. The term
"successor" as used herein shall indicate any person, firm, corporation
or other business entity which at any time, by merger, consolidation,
purchase or otherwise, acquires all or substantially all the assets or
business of the Company.
11. The Company may terminate this Agreement in the event of repeated and
demonstrated failure on your part to perform the material duties of your
position in a competent manner and your failure to substantially remedy
such failure within thirty (30) days of receiving specific written notice
of such failure from the Company.
Yours sincerely,
/s/ H. Harry Bresky
H. Harry Bresky
President
Seaboard Corporation
I hereby accept the above terms and conditions.
/s/ Joe E. Rodrigues
Joe E. Rodrigues
Date:Original July 9, 1986
Amended August 10, 1990
Restated March 29, 1995
<TABLE>
S U M M A R Y O F S E L E C T E D F I N A N C I A L D A T A
Seaboard Corporation and Subsidiaries
<CAPTION>
______________________________________________________________________________________________
(Thousands of dollars except per share amounts) Years ended December 31,
______________________________________________________________________________________________
1994 1993 1992 1991 1990
______________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net sales $ 983,804 $1,142,144 $1,053,655 $875,874 $557,328
==============================================================================================
Net earnings $ 35,201 $ 35,891 $ 31,075 $ 21,241 $ 30,049
==============================================================================================
Earnings per common share $ 23.67 $ 24.13 $ 20.89 $ 14.28 $ 20.19
==============================================================================================
Total assets $ 675,211 $ 647,332 $ 485,121 $458,045 $422,488
==============================================================================================
Long-term debt $ 177,666 $ 194,506 $ 78,123 $ 77,119 $ 77,697
==============================================================================================
Stockholders' equity $ 346,080 $ 304,356 $ 269,581 $239,250 $218,753
==============================================================================================
Dividends per common share $ 1.00 $ .75 $ .50 $ .50 $ .50
==============================================================================================
<FN>
Included in Net earnings and Earnings per common share for the year ended December 31, 1993 is
the cumulative effect of changing the method of accounting for income taxes. Net earnings was
increased by $11,000,000 and earnings per common share increased by $7.40 to reflect this
change. Net earnings and earnings per common share for the year ended December 31, 1993 also
include the reversal of deferred taxes on undistributed earnings of certain foreign
subsidiaries that management believes are permanently invested. Net earnings increased by
$9,074,000 and earnings per share increased by $6.10 as a result of this reversal of deferred
taxes.
</TABLE>
(Graphs omitted from this page, see appendix.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Total capitalization as measured by stockholders' equity,
long-term deferred income taxes and long-term liabilities
totaled $562.7 million at December 31, 1994, compared with
$525.1 million and $390.7 million at December 31, 1993, and
December 31, 1992, respectively.
Liquidity at December 31, 1994, 1993 and 1992, as measured
by both current ratio and working capital, is as follows:
-------------------------------------------------------------
Years Ended December 31,
1994 1993 1992
Current ratio 3.31:1 3.29:1 3.22:1
Working capital (in thousands) $259,521 $280,466 $209,811
-------------------------------------------------------------
The Company generated $50.3 million of cash from operating
activities in 1994, a decrease of $4.7 million compared to
1993. The change is primarily attributable to increased
receivables resulting from higher export and transportation
sales which have longer collection terms and lower pork sales
which have shorter collection terms.
The increased liquidity at December 31, 1993, compared to
December 31, 1992, is due to $100 million in cash proceeds
received in December 1993, from an issuance of long-term debt
that was invested in short-term investments. Cash provided
by operating activities increased for the year ended December
31, 1993, compared to 1992 as accounts receivable and
inventory for new and expanded businesses reached normal
operating levels.
Economic incentive grants totaling $8.1 million were used
to fund construction in 1994. Use of these funds,
contributed by government entities, is limited to
construction of a hog-processing facility in Guymon,
Oklahoma. For accounting purposes, these grants have been
recorded in Other Liabilities and will be amortized over the
life of the assets acquired with the funds. The Company
expects to receive $3.9 million in additional grant funds in
1995 for construction expenditures.
During 1994, the Company borrowed the proceeds of $7.5
million in Industrial Development Revenue Bonds issued by the
Optima Municipal Authority. The funds are being used to
construct a feed mill for the Company's pork operations.
During 1994, net proceeds of $8.8 million were received
as a result of the Delaware Chancery Court approving the
settlement of a stockholders' derivative action brought in
1990 against the Company and certain subsidiaries, the Parent
Company and the directors of the Company at the time. The
settlement was accounted for as a capital contribution.
Long-term debt of $34.9 million was repaid in 1994. Of
this amount, $26.3 million was retired in advance of its
scheduled maturity.
The Company invested $87.6 million in property, plant and
equipment during 1994, of which $62.6 million was expended in
the food production and processing segment and $23.1 million
in the transportation segment.
During 1994, capital expenditures for hog farrowing and
finishing facilities, a feed mill and a pork-processing plant
located in Guymon, Oklahoma, amounted to $38.5 million.
Cumulative capital expenditures on these facilities since
1992 total $65.1 million. The Company expects additional
expenditures for facilities and working capital to total
approximately $200 million in the next two years, of which
approximately $49 million is currently under contract. The
Company expects to finance the facilities with additional
term loans and cash generated from operations.
Capital expenditures of $5.3 million were incurred to
complete the expansion of the Company's poultry plant in
Mayfield, Kentucky. The expansion cost a total of $12
million over the last two years.
Other capital expenditures in the food production and
processing segment for 1994 included $18.8 million in general
modernization and efficiency upgrades of plant and equipment.
(Graphs omitted from margin, see appendix.)
In January 1995, the Company acquired a hatchery company
for $3.5 million.
Capital expenditures in the transportation segment during
1994 totaled $23.1 million. The Company purchased a cargo
vessel for $13.9 million for use in the ocean liner service,
and other capital expenditures of $9.2 million were for
general replacement and upgrades of property and equipment.
Subsequent to December 31, 1994, the Company agreed to
purchase two containerized cargo vessels to be used in its
ocean liner service. The purchase price of $14.5 million
will be paid with internal cash sources.
Capital expenditures totaled $87.3 million for 1993 of
which $51.1 million was expended in the food production and
processing segment and $35.3 million in the transportation
segment.
During 1993, the Company expended $19 million for
construction of hog farrowing and finishing facilities, $6.7
million to expand the Company's poultry-processing plant in
Mayfield, Kentucky, and $25.4 million in general replacement
and upgrades of plant and equipment within the food
production and processing segment.
Capital expenditures for 1993 in the transportation segment
of $29.6 million were for the purchase of two cargo vessels.
The expenditures were financed with $20.6 million in bank
term loans and $9 million using internal cash sources. Other
capital expenditures included $5.7 million for general
replacement and upgrade of property and equipment.
At December 31, 1994 and 1993, $20.6 million and $16.1
million, respectively, were outstanding under the Company's
short-term uncommitted credit lines from banks totaling
$122 million.
The Company previously disclosed its intent to solicit
equity through a private placement offering to finance
certain hog-production facilities. Subsequently, the Company
decided not to seek the equity.
Management intends to continue seeking opportunities for
expansion in the industries in which it operates and believes
that the Company's liquidity, capital resources and borrowing
capabilities are adequate for its current and intended
operations.
RESULTS OF OPERATIONS
Net sales of $983.8 million for the year ended December 31,
1994, decreased by $158.3 million compared to the year ended
December 31, 1993. Operating income in 1994 increased by
$26.1 million compared to 1993 to total $47.1 million.
Net sales increased $88.5 million over 1992 to total
$1,142.1 million for the year ended December 31, 1993.
Operating income of $21 million in 1993 was $18.5 million
less than in 1992.
Food Production And Processing Segment
Food production and processing segment sales totaled $730.8
million in 1994, a decrease of $209.5 million compared to the
year ended December 31, 1993. Net sales of pork products and
live hogs declined from $287.8 million in 1993 to $98.3
million in 1994. Most of the decline resulted from
discontinuing the unprofitable fresh pork operations at the
Company's Minnesota processing plant in March 1994. The
ongoing operations of the plant consist of processed meats.
Gross income on pork products improved by $10.7 million over
1993's loss of $9.1 million primarily due to the
discontinuation of the fresh pork operations. The Company
had a negative margin of $3.7 million on its live hog
operations in 1994; however, management does not believe this
is indicative of future results because these live operations
are in an early start-up phase.
(Graphs omitted from margin, see appendix.)
Net sales of poultry products increased by $37.9 million
over 1993 to total $426.1 million in 1994. This increase is
due to expanded capacity at the Mayfield, Kentucky plant and to
higher sales prices. Gross income on poultry products
increased from $33.1 million to $50.7 million in 1994. The
higher margins are attributable to expanded processing
capacity and lower finished feed costs in the second half of
1994. Finished feed costs, which vary from period to period,
represent a significant percentage of total poultry product
costs.
Net sales from commodity trading activity declined by
approximately $26.7 million as a result of lower volume.
Sales from a flour mill in Zaire are no longer consolidated.
The Company reduced its investment to a minority interest,
and it now uses the equity method of accounting. In 1993,
sales from the flour mill of $33.1 million were included in
the Company's consolidated financial statements.
Total operating income in the food production and
processing segment increased by $15.3 million, which is
principally attributable to the higher margins described
above.
Net sales totaled $940.4 million for the year ended
December 31, 1993, an increase of $76.5 million compared to
1992. Of the increase, $51.4 million resulted from the first
full year of operation of a flour mill located in Guanica,
Puerto Rico, and the acquisition of a flour mill in Zaire.
Net sales from commodity trading activity increased by $15.9
million as a result of increased sales to the Company's
nonconsolidated flour mills.
Net sales of poultry products totaled $388.2 million for
the year ended December 31, 1993. Sales volume of poultry
products decreased during 1993 compared to 1992, and was
principally attributed to a decline in purchases of fresh
poultry from third parties for further processing. The
average sales price the Company received for its poultry
products increased during 1993, resulting in relatively
unchanged net sales compared to 1992. Gross income on
poultry products increased in 1993 by $4.5 million to total
$33.1 million, primarily as a result of an increase in the
Company's average selling price received for poultry
products.
Net sales of pork products and live hogs totaled $287.8
million during 1993, a decrease of $1 million compared to the
year ended December 31, 1992. Sales volume of the Company's
pork products decreased by 3% during 1993, compared to the
year ended December 31, 1992, as a result of a decline in the
number of hogs processed. Gross income on pork products
during 1993 decreased by $10.5 million compared to 1992.
(Graphs omitted from margin, see appendix.)
Throughout 1993, the Company paid, on average, 7% more for
live hogs than in 1992, while the sales prices did not
increase at the same rate. Of the operating loss reported in
1993, $4.5 million was a reserve established in the fourth
quarter to reduce the carrying value of certain equipment
used in the fresh pork operations to net realizable value
based on estimated net sales proceeds and for other
incremental costs of discontinuing the fresh pork operations.
In 1993, operating income from food production and
processing declined by $12.9 million compared to the year
ended December 31, 1992. The decrease in operating income
was principally attributed to the operations at the Company's
Minnesota pork plant.
Operating income at the Company's flour mills increased by
$3.4 million compared to 1992. The increase is principally
attributed to the first full year of operations of the
Company's flour mill located in Puerto Rico, and the
acquisition of a flour mill located in Zaire. The increase
is also net of a fourth quarter foreign exchange loss
reported by the flour mill in Zaire of $2.9 million
attributable to government-mandated price controls and
monetary reform. Subsequent to December 31, 1993, the
controls imposed by the government were lifted.
Commodity inventories, including feed grains and livestock,
are hedged with forward purchase contracts, futures and
options in order to manage exposure against major price
fluctuations in the commodity markets. These instruments
generally call for the exchange of cash for the commodity at
some future date and contain no other embedded features. At
December 31, 1994, the Company had contracts for the
purchase of 3.7 million bushels of grain and the sale of 24
million pounds of livestock. Unrealized gains and losses on
these contracts are deferred and included in inventory. The
amount of unrealized losses at December 31, 1994 and 1993,
were not material. Commodity contracts did not have a
material effect on operating income for the years ended
December 31, 1994, 1993 and 1992.
Transportation Segment
Transportation sales for the year ended December 31, 1994,
totaled $225.5 million, an increase of $42.9 million compared
to 1993. The increase in net sales resulted from new
services to South America and the Carribean Basin and
increased volume within existing services in Central America.
Operating income for the year ended December 31, 1994,
totaled $29.3 million, an increase of $7.8 million compared
to 1993. The increase is related to new and expanded
services.
Transportation sales for the year ended December 31, 1993,
totaled $182.5 million, an increase of $12 million compared
to 1992. The increase in sales includes new services to Peru
and Chile which started in July 1993. Operating income for
the year ended December 31, 1993, totaled $21.5 million and
remained almost unchanged compared to 1992, primarily as a
result of a different cargo mix with lower margins in certain
markets serviced by the Company.
Other Businesses
In 1994, the Company renegotiated its contract with the
Dominican government relating to an electric power generating
facility located in the Dominican Republic. As a result of
the new contract and lower maintenance costs, operating
income increased by $3.4 million compared to the year ended
December 31, 1993.
During 1993, operating income from the Company's electric
power production facility decreased by $5.2 million as a
result of higher generator maintenance costs and unscheduled
repairs.
(Graphs omitted from margin, see appendix.)
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to
$112.3 million for the year ended December 31, 1994, from
$104.5 million in 1993 and $93.2 million in 1992. The
increase in expenses for the year ended December 31, 1994, is
related to additional marketing and administrative support of
expanded shipping routes and product lines. In addition,
general and administrative costs increased as a result of
staffing and expenses relating to pork operations in advance
of the opening of the processing plant now being constructed
in Guymon, Oklahoma. The increase in 1993 compared to 1992
is principally related to new operations in flour milling and
increased expenses related to the expansion of the Company's
hog production and processing operations.
Other
Interest income totaled $9.7 million, $7 million and $7
million for the years ended December 31, 1994, 1993 and 1992,
respectively. The increase in 1994 of $2.7 million compared
to 1993 is primarily due to an increase in short-term
investments resulting from cash proceeds of $100 million from
the issuance of long-term debt in December 1993, and higher
rates on invested funds.
Interest expense totaled $13.1 million for the year ended
December 31, 1994, compared to $7 million and $6.6 million
for the years ended December 31, 1993 and 1992, respectively.
Interest expense increased in 1994 by 85% compared to 1993,
largely as a result of the issuance of long-term debt and
increased short-term borrowings. A significant portion of
the Company's debt has fixed rates of interest, and therefore
increasing interest rates did not have a significant effect
on interest expense during 1994.
The Company entered into interest rate exchange agreements
in the management of interest rate risk. These agreements
effectively converted specifically identified variable rate
debt into fixed-rate debt. These agreements were terminated
during 1994 and at December 31, 1994, the Company had
unamortized gains of $0.4 million. Amortization of the
unrealized gains is reflected as adjustments to interest
expense over the remaining terms of the respective underlying
debt instruments.
Miscellaneous income in 1994 includes a $2.9 million gain
from liquidating another interest rate exchange agreement
during the second quarter. The Company entered into this
interest rate exchange agreement as an anticipatory hedge
against interest rate risk associated with anticipated
variable rate financing. The anticipated liability to be
hedged was not incurred, and the Company currently has no
plans to incur any other variable rate debt with similar
characteristics.
The interest rate exchange agreements resulted in
additional interest expense of $0.7 million, $2.3 million and
$0.7 million in the years ended December 31, 1994, 1993 and
1992, respectively.
The Company has operations in and transactions with
customers in a number of foreign countries. The currencies
of these countries fluctuate in relation to the U.S. dollar.
Most of the Company's major contracts and transactions,
however, are denominated in U.S. dollars. The Company had no
material foreign currency transaction gains or losses during
the years ended December 31, 1994, 1993 and 1992.
The activities of foreign subsidiaries are primarily
conducted with U.S. affiliates, or they operate in
hyperinflationary environments. As a result, the Company
translates, for consolidation purposes, using the U.S. dollar
as the functional currency. The gains and losses that result
from remeasurement are reported in earnings. Foreign
currency gains (losses) for the years ended December 31,
1994, 1993 and 1992, were $(0.3) million, $(3.1) million and
$0.4 million, respectively. Foreign currency exchange
restrictions imposed upon the Company's wholly owned foreign
subsidiaries and certain minority-owned foreign subsidiaries
do not have a significant effect on the consolidated
financial position of the Company.
The Company does not believe its businesses have been
materially adversely affected by inflation.
(Graphs omitted from margin, see appendix.)
<TABLE>
Q U A R T E R L Y F I N A N C I A L D A T A
Seaboard Corporation and Subsidiaries
(Unaudited)
<CAPTION>
____________________________________________________________________________________________________________
(Thousands of dollars 1st 2nd 3rd 4th Total for
except per share amounts) Quarter Quarter Quarter Quarter the Year
____________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1994
Net sales $257,398 215,016 214,952 296,438 983,804
Operating income $ 11,802 15,460 8,608 11,228 47,098
Net earnings $ 7,476 11,144 5,649 10,932 35,201
Earnings per common share $ 5.03 7.49 3.80 7.35 23.67
Dividends per common share $ .25 .25 .25 .25 1.00
Market price range per common share:
High $ 203 1/2 191 1/2 187 1/2 184 1/2
Low $ 184 173 168 160
___________________________________________________________________________________________________________
1993
Net sales $283,467 258,254 250,197 350,226 1,142,144
Operating income (loss) $ 12,720 6,949 2,853 (1,477) 21,045
Earnings before cumulative effect
of change in accounting principle $ 17,205 4,806 1,649 1,231 24,891
Cumulative effect of changing the
accounting for income taxes 11,000 -- -- -- 11,000
Net earnings $ 28,205 4,806 1,649 1,231 35,891
Earnings per common share:
Earnings before cumulative effect
of change in accounting principle $ 11.56 3.23 1.11 .83 16.73
Cumulative effect of changing the
accounting for income taxes 7.40 -- -- -- 7.40
Earnings per common share $ 18.96 3.23 1.11 .83 24.13
Dividends per common share $ 0.125 0.125 0.25 0.25 0.75
Market price range per common share:
High $ 249 7/8 255 220 196 3/4
Low $ 184 3/4 217 186 175
____________________________________________________________________________________________________________
<FN>
The Company's first three quarters of each fiscal year consist of three four-week periods. The fourth
quarter has four four-week periods.
The cumulative effect of implementing Statement of Financial Accounting Standards (SFAS) No. 109 in the
first quarter of 1993, as previously presented, included $9,074,000, or $6.10 per share, resulting from the reversal of
deferred taxes on undistributed earnings of certain foreign subsidiaries that management
believes are permanently invested. The deferred tax benefit of this reversal has been reclassified as a
component of earnings before cumulative effect of change in accounting principle in the current
presentation.
</TABLE>
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The consolidated financial statements appearing in this annual report have
been prepared by the Company in conformity with generally accepted accounting
principles and necessarily include amounts based upon judgements with due
consideration given to materiality.
The Company relies on a system of internal accounting controls that is
designed to provide reasonable assurance that assets are safeguarded, that
transactions are executed in accordance with Company policy and are properly
recorded, and that accounting records are adequate for preparation of
financial statements and other information. The concept of reasonable
assurance is based on recognition that the cost of a control system should
not exceed the benefits expected to be derived and that such evaluations
require estimates and judgements. The design and effectiveness of the system
are monitored by a professional staff of internal auditors.
The consolidated financial statements have been audited by the independent
accounting firm of KPMG Peat Marwick LLP, whose responsibility is to examine
records and transactions and to gain an understanding of the system of
internal accounting controls to the extent required by generally accepted
auditing standards and render an opinion as to the fair presentation of the
consolidated financial statements.
The board of directors pursues its review of auditing, internal controls
and financial statements through its audit committee, consisting of a majority
of directors who are not employed by the Company. In the exercise of its
responsibilities, the audit committee meets periodically with management,
with the internal auditors and with the independent accountants to review
the scope and results of examinations. Both the internal auditors and
independent accountants have free access to the committee with or without
the presence of management.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Seaboard Corporation:
We have audited the accompanying consolidated balance sheets of Seaboard
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Seaboard
Corporation and subsidiaries as of December 31, 1994 and 1993 and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1994 in conformity with generally accepted
accounting principles.
As discussed in note 1 to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" in 1994 and Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes," in 1993.
KPMG Peat Marwick LLP
Kansas City, Missouri
March 3, 1995
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
Seaboard Corporation and Subsidiaries
<CAPTION>
____________________________________________________________________________________________________
(Thousands of dollars except per share amounts) Years ended December 31,
____________________________________________________________________________________________________
1994 1993 1992
____________________________________________________________________________________________________
<S> <C> <C> <C>
Net sales $ 983,804 $1,142,144 $1,053,655
Cost of sales and operating expenses 824,411 1,016,647 920,929
____________________________________________________________________________________________________
Gross income 159,393 125,497 132,726
Selling, general and administrative expenses 112,295 104,452 93,215
____________________________________________________________________________________________________
Operating income 47,098 21,045 39,511
____________________________________________________________________________________________________
Income from foreign subsidiaries not consolidated 3,113 2,177 4,132
____________________________________________________________________________________________________
50,211 23,222 43,643
____________________________________________________________________________________________________
Other income (expense):
Interest income 9,704 7,037 7,009
Interest expense (13,136) (7,067) (6,580)
Miscellaneous 2,352 (529) (494)
____________________________________________________________________________________________________
Total other income (expense), net (1,080) (559) (65)
____________________________________________________________________________________________________
Earnings before income taxes and
cumulative effect of a change
in accounting principle 49,131 22,663 43,578
Income tax (expense) benefit (13,930) 2,228 (12,503)
____________________________________________________________________________________________________
Earnings before cumulative effect of
a change in accounting principle 35,201 24,891 31,075
Cumulative effect of changing the
accounting for income taxes -- 11,000 --
____________________________________________________________________________________________________
Net earnings $ 35,201 $ 35,891 $ 31,075
====================================================================================================
Earnings per common share:
Earnings before cumulative effect of a change
in accounting principle $ 23.67 $ 16.73 $ 20.89
Cumulative effect of changing the
accounting for income taxes -- 7.40 --
----------------------------------------------------------------------------------------------------
Earnings per common share $ 23.67 $ 24.13 $ 20.89
====================================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Seaboard Corporation and Subsidiaries
<CAPTION>
_____________________________________________________________________________________________________
(Thousands of dollars except per share amounts)
_____________________________________________________________________________________________________
Unrealized
Loss on
Common Treasury Additional Debt Retained
Stock Stock Capital Securities Earnings
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1992 $ 1,790 $ (302) $ 4,440 $ -- $ 233,322
Net earnings -- -- -- -- 31,075
Dividends on common stock -- -- -- -- (744)
($.50 per share)
-----------------------------------------------------------------------------------------------------
Balances, December 31, 1992 1,790 (302) 4,440 -- 263,653
Net earnings -- -- -- -- 35,891
Dividends on common stock -- -- -- -- (1,116)
($.75 per share)
-----------------------------------------------------------------------------------------------------
Balances, December 31, 1993 1,790 (302) 4,440 -- 298,428
Capital contribution -- -- 8,774 -- --
Unrealized loss on marketable debt
securities, net of $466 income
tax benefit -- -- -- (764) --
Net earnings -- -- -- -- 35,201
Dividends on common stock
($1.00 per share) -- -- -- -- (1,487)
-----------------------------------------------------------------------------------------------------
Balances, December 31, 1994 $ 1,790 $ (302) $13,214 $ (764) $ 332,142
=====================================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Seaboard Corporation and Subsidiaries
<CAPTION>
___________________________________________________________________________________________________
(Thousands of dollars) December 31,
___________________________________________________________________________________________________
Assets 1994 1993
___________________________________________________________________________________________________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,773 $ 7,110
Short-term investments 174,665 215,902
Receivables:
Trade 93,216 85,576
Due from foreign subsidiaries not consolidated 6,575 1,385
Other 14,100 12,309
___________________________________________________________________________________________________
113,891 99,270
Allowance for doubtful receivables (9,196) (6,556)
___________________________________________________________________________________________________
Net receivables 104,695 92,714
Inventories 73,243 70,961
Deferred income taxes 6,914 7,671
Prepaid expenses and deposits 7,705 8,374
___________________________________________________________________________________________________
Total current assets 371,995 402,732
___________________________________________________________________________________________________
Investments in and advances to foreign subsidiaries not consolidated 30,453 28,520
___________________________________________________________________________________________________
Net property, plant and equipment 255,071 205,438
___________________________________________________________________________________________________
Other assets 17,692 10,642
___________________________________________________________________________________________________
Total Assets $675,211 $647,332
===================================================================================================
<FN>
See accompanying notes to consolidated financial statements.
<CAPTION>
___________________________________________________________________________________________________
(Thousands of dollars) December 31,
___________________________________________________________________________________________________
Liabilities and Stockholders' Equity 1994 1993
___________________________________________________________________________________________________
<S> <C> <C>
Current liabilities:
Notes payable $20,576 $ 16,055
Current maturities of long-term debt 3,408 9,217
Accounts payable 42,560 44,787
Accrued liabilities 23,976 33,693
Accrued payroll 10,023 9,757
Income taxes payable 11,931 8,757
___________________________________________________________________________________________________
Total current liabilities 112,474 122,266
___________________________________________________________________________________________________
Long-term debt, less current maturities 177,666 194,506
___________________________________________________________________________________________________
Deferred income taxes 18,810 20,440
___________________________________________________________________________________________________
Other liabilities 20,181 5,764
___________________________________________________________________________________________________
Stockholders' equity:
Common stock of $1 par value. Authorized 4,000,000 shares;
issued 1,789,599 shares including 302,079 shares of treasury stock 1,790 1,790
Shares held in treasury, at par value (302) (302)
___________________________________________________________________________________________________
1,488 1,488
Additional capital 13,214 4,440
Unrealized loss on debt securities, net of $466 income tax benefit (764) --
Retained earnings 332,142 298,428
___________________________________________________________________________________________________
Total stockholders' equity 346,080 304,356
Commitments and contingent liabilities
___________________________________________________________________________________________________
Total Liabilities and Stockholders' Equity $675,211 $647,332
===================================================================================================
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Seaboard Corporation and Subsidiaries
<CAPTION>
___________________________________________________________________________________________________________________
(Thousands of dollars) Years ended December 31,
___________________________________________________________________________________________________________________
1994 1993 1992
___________________________________________________________________________________________________________________
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 35,201 $ 35,891 $ 31,075
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 33,403 34,429 29,601
Equity in earnings of nonconsolidated foreign subsidiaries (3,113) (1,497) (2,530)
Deferred income taxes (873) (25,470) (9,877)
Other operating activities 1,420 1,192 (1,035)
Changes in assets and liabilities (net of businesses acquired):
Receivables (11,981) (286) (17,920)
Inventories (2,282) (196) (15,368)
Prepaid expenses and deposits 669 (695) (552)
Liabilities exclusive of debt (2,160) 11,590 13,496
___________________________________________________________________________________________________________________
Net cash provided by operating activities 50,284 54,958 26,890
___________________________________________________________________________________________________________________
Cash flows from investing activities:
Purchase of investments (814,399) - -
Proceeds from the sale of investments 602,580 - -
Proceeds from maturity of investments 251,826 - -
Net investment in short-term investments - (101,141) (23,886)
Capital expenditures (87,583) (87,328) (35,286)
Investments and advances to foreign subsidiaries not consolidated 1,180 1,990 885
Proceeds from the sale of equipment 4,547 1,924 2,385
Notes receivable (2,655) (2,874) 44,767
Acquisition of businesses (180) (5,500) (2,650)
-------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (44,684) (192,929) (13,785)
___________________________________________________________________________________________________________________
Cash flows from financing activities:
Notes payable to banks 4,521 11,357 (664)
Proceeds from issuance of long-term debt 12,202 126,500 13,509
Principal payments of long-term debt (34,851) (1,498) (20,995)
Deferred grant revenue 8,073 - -
Dividends paid (1,487) (1,116) (744)
Capital contribution 8,774 - -
Bond construction fund (5,169) - -
___________________________________________________________________________________________________________________
Net cash provided by (used in) financing activities (7,937) 135,243 (8,894)
___________________________________________________________________________________________________________________
Net increase (decrease) in cash and cash equivalents (2,337) (2,728) 4,211
Cash and cash equivalents at beginning of year 7,110 9,838 5,627
___________________________________________________________________________________________________________________
Cash and cash equivalents at end of year $ 4,773 $ 7,110 $ 9,838
===================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) $ 13,415 $ 6,778 $ 6,266
Income taxes $ 14,464 $ 13,058 $ 17,737
===================================================================================================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Seaboard Corporation and Subsidiaries
December 31, 1994, 1993 and 1992
Note 1
Summary of Significant Accounting Policies
_____________________________________________________________________________
Operations of Seaboard Corporation and its Subsidiaries
Seaboard Corporation and its subsidiaries (the Company) is a diversified
international agribusiness and transportation company engaged domestically in
poultry and pork production and processing, commodity merchandising, baking,
flour milling, shipping and produce storage and distribution. Overseas, the
Company engages in fruit, vegetable and shrimp production and processing, flour
milling, animal feed production, polypropylene bag manufacturing and electric
power production.
Principles of Consolidation and Investment in Affiliates
The consolidated financial statements include the accounts of Seaboard
Corporation and its wholly-owned domestic and foreign subsidiaries. All
significant intercompany balances and transactions have been eliminated
in consolidation. The Company's investments in minority-owned foreign
subsidiaries are accounted for by the equity method.
Short-Term Investments
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115 "Accounting for Certain Investments in
Debt and Equity Securities". In accordance with SFAS No. 115, all
short-term investments held by the Company are categorized as
Available-for-Sale and are reported at fair value with unrealized gains and
losses reported, net of tax, in a separate component of stockholders' equity.
The investments at January 1, 1994 included $215,902,000 in debt securities,
for which cost approximated fair value and, therefore, the initial impact of
adopting this standard was not material.
The short-term investments are retained for future use in the business
and are temporarily invested in time deposits, commercial paper, tax exempt
bonds, corporate bonds and U.S. government obligations. The amortized cost
of debt securities is adjusted for amortization of premiums and accretion
of discounts to maturity. Such amortization is included in interest income.
Inventories
The Company uses the lower of last-in, first-out (LIFO) or market for
determining cost for poultry and baking product inventories. Live hogs,
dressed pork, produce and seafood inventories are valued at the lower
of first-in, first-out (FIFO) cost or market. Grain inventories held in
milling operations are valued at the lower of FIFO cost or market.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and are being
depreciated generally on the straight-line method over useful lives ranging
from 3 to 45 years. Property, plant and equipment leases which are
deemed to be installment purchase obligations have been capitalized and
included in the property, plant and equipment accounts. Maintenance, repairs
and minor renewals are charged to operations while major renewals and
betterments are capitalized.
Deferred Grant Revenue
Included in other liabilities at December 31, 1994 is $8,073,000 of
deferred grant revenue. Deferred grant revenue represents economic
development funds contributed to the Company by government entities. Use of
these funds is limited to construction of a hog processing facility in
Guymon, Oklahoma. Deferred grants will be amortized to income over the life
of the assets acquired with the funds.
Revenue Recognition
The Company recognizes revenue on commercial exchanges at the time title
to the goods transfers to the buyer. Revenue of the Company's ocean freight
service is recognized ratably over the transit time for each voyage.
Income Taxes
The Company adopted SFAS No. 109 "Accounting for Income Taxes", on
January 1, 1993. This Statement required a change from the deferred method
to the asset and liability method of accounting for income taxes. Under the
asset and liability method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities.
The Company has reported the cumulative effect of the change in the
method of accounting for income taxes as of the beginning of the 1993 fiscal
year in the Consolidated Statement of Earnings.
Earnings Per Common Share
Earnings per common share are based upon the average shares outstanding
during the period. Average shares outstanding were 1,487,520 for each of the
three years ended December 31, 1994, 1993 and 1992, respectively.
Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, the Company
considers all demand deposits and overnight investments as cash equivalents.
Included in accounts payable are outstanding checks in excess of cash balances
of $6,788,000 and $12,467,000 at December 31, 1994 and 1993, respectively.
Foreign Currency
The value of the U.S. dollar fluctuates in relation to the currencies of
countries where the Company's foreign subsidiaries conduct business. These
fluctuations result in exchange gains and losses. The activities of these
foreign subsidiaries are primarily conducted with U.S. affiliates or they
operate in hyperinflationary environments. As a result, the Company
translates, for consolidation purposes, using the U.S. dollar as the
functional currency. The gains and losses that result from remeasurement
are reported in earnings. Foreign currency gains (losses) for the years ended
December 31, 1994, 1993 and 1992 were $(267,456), $(3,059,000) and $436,000,
respectively. Foreign currency exchange restrictions imposed upon the
Company's wholly-owned foreign subsidiaries and certain minority-owned
foreign subsidiaries do not have a significant effect on the consolidated
financial position of the Company.
Financial Instruments
The Company entered into interest rate exchange agreements in the
management of interest rate risk. These agreements effectively converted
variable-rate debt into fixed-rate debt. All outstanding agreements were
terminated during 1994 and at December 31, 1994 the Company had unamortized
gains of $446,000. Amortization of these gains are reflected as adjustments
to interest expense over the remaining terms of the respective underlying
debt instruments. At December 31, 1993, the notional principal amount of
these agreements totaled $50,000,000.
During 1994, the Company terminated an interest rate exchange agreement
with a notional principal amount of $30,000,000 that was initially considered
to be an anticipatory hedge. The anticipated liability to be hedged was not
incurred and, accordingly, deferral accounting was discontinued in the second
quarter of 1994. Included in miscellaneous income for 1994 is a $2,911,000
gain related to settling this agreement.
Commodity Contracts
The Company enters into forward purchase contracts, futures and options
to manage its exposure to fluctuations in the commodity markets. These
contracts generally involve the purchase of feed grains and the sale of
livestock. At December 31, 1994, the Company had contracts for 3.7 million
bushels of grain and 24 million pounds of livestock. Based upon the
correlation of commodity types and contract dates with projected
usage, these contracts are accounted for as hedges. Gains and losses on
these contracts are included in inventory and are ultimately recognized in
income as part of the measurement of the hedged transactions. The
amount of deferred losses on commodity contracts at December 31, 1994 and
1993 were not material. Within the Consolidated Statement of Cash Flows,
cash flows from hedging contracts are classified in the same category as
the cash flows from the hedged items.
NOTE 2
Acquisitions
_____________________________________________________________________________
In January 1994, the Company acquired an additional 15% of the
outstanding common stock of Atlantic Salmon (Maine), Inc., for $180,000,
bringing the total investment in the entity to 40%. The Company accounts
for this investment using the equity method. In January 1993, the Company
acquired for $5,500,000 a 51% interest in Minoterie De Matadi, S.A.R.L., a
flour mill located in Matadi, Zaire. The operating results of this
majority owned subsidiary were fully consolidated during 1993. Included in
miscellaneous expense is $138,000 representing the minority share of the
mill's earnings for the year.
In December 1993, the Company reduced its investment to a 49% minority
interest and began using the equity method of accounting.
Subsequent to December 31, 1994, the Company acquired for $3,500,000
all the outstanding common stock of a hatchery company. Through December 31,
1994, the hatchery provided services for the Company's poultry operations.
None of these acquisitions would have significantly affected net
earnings or earnings per share on a proforma basis.
NOTE 3
Transactions with Parent Company
___________________________________________________________________________
Seaboard Flour Corporation (the Parent Company) is the owner of 75.3%
of the Company's outstanding common stock. At December 31, 1994 and 1993,
the Company has a net receivable balance from the Parent Company of
$2,505,000 and $501,000, respectively. Interest on receivables was
charged at the prime rate during 1994. Interest charged on receivables and
advances in 1993 and 1992 approximated U.S. Treasury Bill rates. For
the years ended December 31, 1994, 1993 and 1992 net interest income (expense)
amounted to $217,000, $(19,000), and $(122,000) respectively.
During 1994 the Delaware Chancery Court approved the settlement of a
stockholders' derivative action brought in 1990 against the Company and
certain subsidiaries, the Parent Company and the directors of the Company
at that time. Under the settlement, the Company received $10,800,000 from
the Parent Company and the directors of which $2,026,000 was paid to the
plantiff's counsel. The settlement proceeds to the Company of
$8,774,000 have been recorded as Contributed Capital in Stockholders'
Equity.
<TABLE>
NOTE 4
Short-Term Investments
<CAPTION>
_____________________________________________________________________________________________________________
The following is a summary of available-for-sale securities at December 31, 1994:
Gross Gross
Amortized Unrealized Unrealized Estimated
(Thousands of dollars) Cost Holding Gains Holding Losses Fair Value
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government agencies $ 41,576 - 592 40,984
Obligations of states and
political subdivisions 101,425 - 421 101,004
Other debt securities 32,894 - 217 32,677
----------------------------------------------------------------------------------------------
Total debt securities $ 175,895 - 1,230 174,665
======================================================================
<FN>
Substantially all available-for-sale securities have contractual maturities within two years and are
available to meet current operating needs. Included in Other Assets at December 31, 1994 are $5,169,000 of
unexpended bond proceeds held in trust that are invested in accordance with the bond issuance agreement. The
cost of these investments approximates fair value.
At December 31, 1993, short-term investments were recorded at amortized cost, which approximates
fair value.
The gross realized gains on sales of available-for-sale securities totaled $32,000 and the gross
realized losses totaled $404,000 for the year ended December 31, 1994.
</TABLE>
<TABLE>
NOTE 5
Inventories
<CAPTION>
______________________________________________________________________________________________________________
A summary of inventories at the end of each year is as follows:
December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993
______________________________________________________________________________________________________________
<S> <C> <C>
At lower of LIFO cost or market:
Live poultry $22,230 $22,545
Dressed poultry 13,344 8,278
Feed and baking ingredients, packaging supplies and other 6,121 7,200
______________________________________________________________________________________________________________
41,695 38,023
LIFO allowance (1,390) (3,834)
______________________________________________________________________________________________________________
Total inventories at lower of LIFO cost or market 40,305 34,189
______________________________________________________________________________________________________________
At lower of FIFO cost or market:
Live hogs 10,122 3,037
Grain, flour and feed 7,622 3,170
Crops in production, fertilizers and pesticides 6,132 11,376
Dressed pork 2,523 8,587
Other 6,539 7,467
______________________________________________________________________________________________________________
Total inventories at lower of FIFO cost or market 32,938 33,637
______________________________________________________________________________________________________________
Grain at market -- 3,135
______________________________________________________________________________________________________________
Total inventories $73,243 $70,961
==============================================================================================================
<FN>
The use of the LIFO method increased net earnings in 1994 by $1,515,000 ($1.02 per share), decreased net
earnings in 1993 by $1,806,000 ($1.21 per share) and increased net earnings in 1992 by $384,000 ($.26 per
share). The increases in net earnings in 1994 and 1992 were primarily the result of declining purchase prices.
If the FIFO method had been used, inventories would have been $1,390,000 and $3,834,000 higher than those
reported at December 31, 1994 and 1993, respectively.
</TABLE>
NOTE 6
Investments in and Advances to Foreign Subsidiaries Not Consolidated
_____________________________________________________________________________
The Company has made investments in and advances to minority-owned
foreign flour milling, feed milling, polypropylene bag manufacturing,
prefabricated residential and commercial construction and shrimp farming
subsidiaries. The subsidiaries are located in Sierra Leone, Nigeria and
Zaire in West Africa and Ecuador in South America, and are accounted for
by the equity method. Certain of these subsidiaries operate under
restrictions imposed by local governments which limit the Company's ability
to have significant influence on their operations.
These restrictions have resulted in a loss in value of these investments
and advances that is other than temporary. The Company suspended the use of
the equity method for these investments and recognized the impairment
in value by a charge to earnings in years prior to 1992.
Sales of grain and supplies to nonconsolidated foreign subsidiaries are
included in consolidated net sales for the years ended December 31, 1994,
1993 and 1992, and amounted to $16,255,000, $20,126,000 and $16,765,000,
respectively.
Combined condensed financial information of the minority-owned
nonconsolidated foreign subsidiaries for their fiscal periods ended within
each of the Company's years ended are as follows:
<TABLE>
<CAPTION>
December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993 1992
______________________________________________________________________________________________________________
<S> <C> <C> <C>
Net sales $102,006 $113,743 $124,819
Net earnings 9,220 7,578 6,875
Total assets 150,313 142,776 118,397
Total liabilities 82,522 84,205 74,566
Total equity $ 67,791 $ 58,571 $ 42,481
==============================================================================================================
</TABLE>
<TABLE>
NOTE 7
<CAPTION>
Property, Plant and Equipment
______________________________________________________________________________________________________________
A summary of property, plant and equipment at the end of each year is as follows:
December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993
______________________________________________________________________________________________________________
<S> <C> <C>
Land and improvements $ 23,273 $ 13,208
Buildings and improvements 79,222 66,218
Machinery and equipment 197,947 170,241
Transportation equipment 92,969 76,368
Office furniture and fixtures 8,558 6,669
Construction in progress 28,182 22,228
______________________________________________________________________________________________________________
430,151 354,932
Accumulated depreciation and amortization (175,080) (149,494)
______________________________________________________________________________________________________________
Net property, plant and equipment $255,071 $205,438
==============================================================================================================
<FN>
Approximately $335,000, $297,000 and $145,000 of interest costs were capitalized as part of property,
plant and equipment in the years ended December 31, 1994, 1993 and 1992, respectively.
</TABLE>
NOTE 8
Income Taxes
______________________________________________________________________________
Effective January 1, 1993, the Company adopted SFAS No. 109. The cumulative
effect of implementation resulted in an increase to earnings of $11,000,000
or $7.40 per common share. The increase was principally due to tax rate
decreases. Prior year financial statements have not been restated. Deferred
income taxes for the year ended December 31, 1993 includes $0.6 million due to
an increase in corporate tax rates. The cumulative effect of implementing
SFAS No. 109 as previously presented included $9,074,000 or $6.10 per share
resulting from the reversal of deferred taxes on undistributed earnings of
certain foreign subsidiaries that management believes are permanently
invested.
The deferred tax benefit of this reversal has been reclassified as a
component of 1993 income taxes in the current presentation.
Total income taxes for the years ended December 31, 1994, 1993 and
1992 differ from the amounts computed by applying the statutory U.S.
Federal income tax rate to earnings before income taxes and cumulative
effect of a change in accounting principle for the following reasons:
<TABLE>
<CAPTION>
Years ended December 31,
______________________________________________________________________________________________________________
(Thousands of dollars, except percent amounts) 1994 1993 1992
_______________________________________________ __________________ __________________ ____________________
% of % of % of
Pretax Pretax Pretax
Amount Earnings Amount Earnings Amount Earnings
_______________________________________________ ___________________ ___________________ ___________________
<S> <C> <C> <C> <C> <C> <C>
Computed tax expense on earnings before
income taxes and cumulative effect of
a change in accounting principle $17,196 35.0% $ 7,932 35.0% $14,817 34.0%
Adjustments to tax expense attributable to:
Reversal of previously provided deferred
taxes for foreign earnings permanently
invested overseas -- -- (9,074) (40.0) -- --
Foreign tax differences (2,527) (5.1) (1,181) (5.2) (500) (1.1)
Tax-exempt investment income (845) (1.7) (424) (1.6) (603) (1.4)
Utilization of foreign tax credit
carryforwards -- -- -- -- (889) (2.0)
State income taxes, net of Federal benefit 1,134 2.3 465 1.8 840 1.9
Other (1,028) (2.1) 54 .2 (1,162) (2.7)
________________________________________________ __________________ __________________ ____________________
$13,930 28.4% (2,228) (9.8)% $12,503 28.7%
==============================================================================================================
<FN>
The components of income tax expense for the years ended December 31, 1994, 1993 and 1992 are as follows:
<CAPTION>
Years ended December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993 1992
______________________________________________________________________________________________________________
<S> <C> <C> <C>
Current:
Federal $12,654 $11,017 $20,297
State and local 1,683 1,225 2,083
Deferred benefit (407) (14,470) (9,877)
______________________________________________________________________________________________________________
$13,930 $(2,228) $12,503
===============================================================================================================
</TABLE>
Components of the net deferred income tax liability at December 31, 1994
and December 31, 1993 are as follows (in thousands):
December 31, December 31,
1994 1993
------------ -----------
Deferred income tax liabilities:
Cash basis farming adjustment $19,036 $ 19,036
Deferred earnings of foreign subsidiaries 6,839 2,539
Depreciation 2,297 1,411
Other 3,652 929
------- -------
31,824 23,915
------- -------
Deferred income tax assets:
Reserves/accruals 13,349 9,168
Foreign losses 4,171 2,881
Other 5,164 1,978
------ -------
22,684 14,027
------ -------
Valuation allowance 2,756 2,881
------ -------
Net deferred income tax liability $11,896 $12,769
====== =======
The valuation allowance required under SFAS 109 represents accumulated
losses on certain foreign subsidiaries that will not be recognized without
future liquidation or sale of these subsidiaries.
At December 31, 1994 and 1993, no provision has been made in the
accounts for Federal income taxes which would be payable if the undistributed
earnings of certain foreign subsidiaries were distributed to Seaboard
Corporation since management has determined that the earnings are permanently
invested in these foreign operations. Should such accumulated earnings be
distributed, the resulting Federal income taxes would amount to approximately
$13,500,000.
The sources of deferred income taxes resulting from timing differences
in the recognition of revenue and expense for income tax and financial
statement purposes for the year ended December 31, 1992 is as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1992
-------------------------------------------------------------------------------------------------------------
<S> <C>
Undistributed earnings of foreign consolidated subsidiaries,
net of Federal income taxes currently payable by the Company $ 1,327
Installment sale (9,451)
Accelerated depreciation (310)
Other, net (1,443)
______________________________________________________________________________________________________________
$(9,877)
==============================================================================================================
</TABLE>
NOTE 9
Notes Payable and Long-Term Debt
_____________________________________________________________________________
Notes payable amounting to $20,576,000 and $16,055,000 at December 31,
1994 and 1993, respectively, consisted of obligations due banks within one
year. These funds are outstanding under the Company's short-term uncommitted
credit lines from banks totaling $122,000,000.
Interest rates on the notes payable were 6.6% and 3.65% at December 31,
1994 and 1993, respectively. These notes are unsecured and do not require
compensating balances or fees.
A summary of long-term debt at the end of each year is as follows:
<TABLE>
<CAPTION>
December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993
______________________________________________________________________________________________________________
<S> <C> <C>
Term Loans $133,365 $166,274
Industrial development revenue bonds (IDRB's) 40,000 33,500
Other 7,709 3,949
______________________________________________________________________________________________________________
181,074 203,723
Current maturities of long-term debt (3,408) (9,217)
______________________________________________________________________________________________________________
Long-term debt, less current maturities $177,666 $194,506
==============================================================================================================
</TABLE>
In December, 1993, the Company issued $100,000,000 in unsecured Senior
Notes to various lenders, the proceeds of which are being used for the
construction of hog production and processing facilities and for general
corporate purposes. The notes bear interest at 6.49%.
Variable rate IDRB's were issued in September 1994, by the Optima
Municipal Authority in the amount of $7,500,000. The average interest rate
during the period the IDRB's were outstanding amounted to 3.47%. Proceeds
from the sale of these bonds are being used for the construction of a feed
mill for the Company's pork operations.
During 1994, the Company redeemed $1,000,000 of IDRB's previously
scheduled to mature in 1997. The average interest rate incurred on IDRB's
amounted to 3.00%, 2.52% and $3.10% for the years ended December 31, 1994,
1993 and 1992, respectively. Redemption of the IDRB's is assured under
irrevocable bank letters of credit issued by major banks. Although those
IDRB's mature in 2004, 2005, 2012, 2017, 2019 and 2023, the bonds are deemed
to mature in 1996, 1997, 1998 and 1999, the years in which the bank letters
of credit and committed extensions thereto expire. Poultry processing
facilities, having a depreciated cost of $30,594,000 at December 31, 1994,
secure the bond issues.
The terms of the note agreements pursuant to which the Senior Notes and
the IDRB's were issued require, among other terms, the maintenance of certain
ratios and minimum net worth, the most restrictive of which requires the
ratio of Consolidated Funded Debt to Consolidated Shareholders' Equity, as
defined, not to exceed .90 to 1, and the maintenance of Consolidated Tangible
Net Worth, as defined, of not less than $230,000,000.
At December 31, 1994 and 1993, term loans relating to the acquisition of
two cargo vessels totaled $17,365,000 and $19,645,000, respectively. These
notes bear interest at 1% above the London Interbank Offered Rate and are
secured by a first mortgage on the vessels. The average interest rates for
the years ended December 31, 1994 and 1993 were 7.44% and 6.47%, respectively.
In June, 1993, a term loan of $6,000,000 was obtained as part of the financing
for the hog production and processing facilities. This term loan bears
interest at 3.0%, payable quarterly.
At December 31, 1994 and 1993, $10,000,000 was outstanding under a term
loan used for working capital purposes. This term loan bears interest at 1/2%
above the London Interbank Offered Rate payable quarterly. The average
interest rates for the years ended December 31, 1994, 1993 and 1992 were
4.74%, 3.76% and 4.32%, respectively.
Term loans totaling $30,629,000 at December 31, 1993 were repaid in
1994. The average interest rates on these loans for the years ended December
31, 1993 and 1992 were 5.71% and 6.18%, respectively.
Annual maturities of long-term debt at December 31, 1994 are as
follows: $3,408,000 in 1995, $18,111,000 in 1996, $22,864,000 in 1997,
$10,573,000 in 1998, $14,590,000 in 1999 and $111,528,000 thereafter.
NOTE 10
Fair Value of Financial Instruments
_____________________________________________________________________________
The fair value of the Company's short-term investments is based on
quoted market prices at the reporting date for these or similar investments.
At December 31, 1994, the fair value of the Company's short-term investments
was $174,665,000 with an amortized cost of $175,895,000. At December 31,
1993, the fair value of short-term investments approximated the amortized
cost of $215,902,000.
The fair value of long-term debt is determined by comparing interest
rates for debt with similar terms and maturities. At December 31, 1994 and
1993 the fair value of the Company's long-term debt was $166,382,000
and $202,219,000, respectively, with a carrying value of $181,074,000
and $203,723,000 at December 31, 1994 and 1993, respectively.
Other financial instruments consisting of Cash and Cash Equivalents,
Net Receivables, Notes Payable, and Accounts Payable are carried at cost,
which approximates fair value, as a result of the short-term nature of
the instruments.
NOTE 11
Employee Benefits
_____________________________________________________________________________
The Company maintains defined benefit pension plans for its domestic
salaried, clerical and poultry employees. The plans generally provide for
normal retirement at age 65 and eligibility for participation after one
year's service upon attaining the age of 21. Plan assets are invested in
equity securities, fixed income bonds and short-term cash equivalents. The
net periodic pension cost of these plans was as follows:
<TABLE>
<CAPTION>
Years ended December 31,
______________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993 1992
______________________________________________________________________________________________________________
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,532 $ 2,678 $ 2,653
Interest cost on projected benefit obligation 2,132 1,650 1,382
Actual return on assets (667) (1,714) (1,178)
Net amortization and deferral (1,281) 540 168
______________________________________________________________________________________________________________
Net periodic pension cost $ 1,716 $ 3,154 $ 3,025
==============================================================================================================
</TABLE>
<TABLE>
Assumptions used in determining pension information were:
<CAPTION>
Years ended December 31,
______________________________________________________________________________________________________________
1994 1993 1992
______________________________________________________________________________________________________________
<S> <C> <C> <C>
Expected long-term rate of return on assets 7.50% 8.00% 8.00%
Discount rate 8.75% 7.25% 8.00%
Long-term rate of increase in compensation levels 5.00% 5.00% 6.00%
______________________________________________________________________________________________________________
<FN>
The funded status and accrued pension cost at December 31, 1994 and 1993 for all defined benefit plans is
shown below:
<CAPTION> December 31,
________________________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993
_______________________________________________________ ______________________________ ______________________________
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $25,198 $27,351
Nonvested benefit obligation 1,193 1,927
_______________________________________________________ _______________________________ _____________________________
Accumulated benefit obligation 26,391 29,278
Effects of projected future compensation levels 1,647 1,919
_______________________________________________________ _______________________________ _____________________________
Projected benefit obligation 28,038 31,197
Plan assets at fair value 26,265 25,896
_______________________________________________________ _______________________________ _____________________________
Projected benefit obligation in excess of plan assets 1,773 5,301
Recognized minimum liability - 1,001
Unrecognized net liability at transition (1,710) (1,878)
Unrecognized net gain 4,953 772
_______________________________________________________ _______________________________ _____________________________
Accrued pension cost $ 5,016 $ 5,196
===================================================================================================================
</TABLE>
Effective January 1, 1994, the Company replaced existing defined benefit
plans for domestic salaried and clerical employees with a single new plan
with similar retirement age and eligibility provisions. The benefit formula
has been modified from a percentage of career average pay to a reduced
percentage final average pay. The future benefits available under the plans
as of December 31, 1993 were frozen.
The Company has nonqualified unfunded supplemental retirement plans for
certain executive employees. Pension expense for these plans was $2,760,000,
$216,000 and $171,000 for the years ended December 31, 1994, 1993 and 1992,
respectively. Included in Other Liabilities at December 31, 1994 and 1993
is $6,698,000 and $4,337,000, respectively, representing the accrued benefit
obligation for these plans.
The Company maintains a Thrift Savings Plan covering most of its domestic
salaried and clerical employees. The Company contributes to the plan an amount
equal to 100% of employee contributions up to a maximum of 3% of employee
compensation. Employee vesting is based upon years of service with 20%
vested after one year of service and an additional 20% vesting with each
additional complete year of service. Contribution expense was $1,051,000,
$1,096,000 and $998,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
NOTE 12
Commitments and Contingencies
The Company leases various ships, facilities and equipment under
noncancelable operating lease agreements. Minimum lease commitments under
noncancelable leases with initial terms greater than one year at December 31,
1994, were $10,407,000 for 1995, $6,903,000 for 1996, $5,681,000 for 1997,
$5,471,000 for 1998, $4,423,000 for 1999 and $5,575,000 thereafter. It is
expected that, in the ordinary course of business, leases and time charters
will be renewed or replaced.
The Company is subject to legal proceedings related to the normal
conduct of its business. In the opinion of management, none of these actions
is expected to result in a judgment having a materially adverse effect on
the consolidated financial statements of the Company.
NOTE 13
Segment Information
_____________________________________________________________________________
The Company principally operates in two business segments: food
production and processing and transportation. Corporate assets include cash,
short-term investments, notes receivable, corporate equipment and other
miscellaneous assets which are not related to a specific business segment.
Business segment information for the years ended December 31, 1994, 1993 and
1992 is as follows:
<TABLE>
<CAPTION>
____________________________________________________________________________________________________________________
(Thousands of dollars) 1994
____________________________________________________________________________________________________________________
Food Unallocated
Production Corporate
and Items and
Processing Transportation Other Eliminations Total
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $730,825 225,457 27,522 -- 983,804
Intersegment sales -- 6,372 -- (6,372) --
____________________________________________________________________________________________________________________
Net sales $730,825 231,829 27,522 (6,372) 983,804
====================================================================================================================
Operating income (loss) $ 20,009 29,340 2,895 (5,146) 47,098
=======================================================================================================
Income from foreign subsidiaries
not consolidated 3,113
Interest income 9,704
Interest expense (13,136)
Other corporate income 2,352
____________________________________________________________________________________________________________________
Earnings before income taxes $ 49,131
====================================================================================================================
Identifiable assets $302,618 101,617 28,580 - 432,815
=======================================================================================================
Corporate assets 242,396
____________________________________________________________________________________________________________________
Total assets $675,211
====================================================================================================================
Depreciation and amortization $ 21,075 9,973 1,466 889 33,403
====================================================================================================================
Capital expenditures (excluding
acquisitions) $ 62,607 23,105 635 1,236 87,583
====================================================================================================================
<CAPTION>
____________________________________________________________________________________________________________________
(Thousands of dollars) 1993
____________________________________________________________________________________________________________________
Food Unallocated
Production Corporate
and Items and
Processing Transportation Other Eliminations Total
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $940,369 182,523 19,252 -- 1,142,144
Intersegment sales -- 8,923 -- (8,923) --
_____________________________________________________________________________________________________________________
Net sales $940,369 191,446 19,252 (8,923) 1,142,144
=====================================================================================================================
Operating income (loss) $ 4,733 21,514 (390) (4,812) 21,045
=======================================================================================================
Income from foreign subsidiaries
not consolidated 2,177
Interest income 7,037
Interest expense (7,067)
Other corporate expense (529)
_____________________________________________________________________________________________________________________
Earnings before income taxes and cumulative
effect of a change in accounting principle $ 22,663
=====================================================================================================================
Identifiable assets $273,198 86,597 23,893 - 383,688
=======================================================================================================
Corporate assets 263,644
_____________________________________________________________________________________________________________________
Total assets $647,332
=====================================================================================================================
Depreciation and amortization $ 23,166 9,080 1,450 733 34,429
=====================================================================================================================
Capital expenditures (excluding
acquisitions) $ 51,115 35,291 47 875 87,328
=====================================================================================================================
<CAPTION>
____________________________________________________________________________________________________________________
(Thousands of dollars) 1992
____________________________________________________________________________________________________________________
Food Unallocated
Production Corporate
and Items and
Processing Transportation Other Eliminations Total
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $863,873 170,527 19,255 -- 1,053,655
Intersegment sales -- 8,635 -- (8,635) --
_____________________________________________________________________________________________________________________
Net sales $863,873 179,162 19,255 (8,635) 1,053,655
=====================================================================================================================
Operating income (loss) $ 17,602 21,552 4,371 (4,014) 39,511
=======================================================================================================
Income from foreign subsidiaries
not consolidated 4,132
Interest income 7,009
Interest expense (6,580)
Other corporate expense (494)
_____________________________________________________________________________________________________________________
Earnings before income taxes $ 43,578
=====================================================================================================================
Identifiable assets $255,719 51,600 28,895 - 336,214
=======================================================================================================
Corporate assets 148,907
_____________________________________________________________________________________________________________________
Total assets $485,121
=====================================================================================================================
Depreciation and amortization $ 18,574 8,813 1,511 703 29,601
=====================================================================================================================
Capital expenditures (excluding
acquisitions) $ 30,423 3,817 115 931 35,286
=====================================================================================================================
</TABLE>
The following is a summary of domestic and foreign net sales, operating
income and identifiable assets included in the consolidated financial
statements:
<TABLE>
<CAPTION>
Years ended December 31,
________________________________________________________________________________________________________________________
(Thousands of dollars) 1994 1993 1992
________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Net sales:
Domestic $ 874,080 $ 983,433 $ 962,892
Foreign 109,724 158,711 90,763
________________________________________________________________________________________________________________________
$ 983,804 $1,142,144 $1,053,655
========================================================================================================================
Operating income:
Domestic $ 38,296 $ 15,959 $ 31,469
Foreign 8,802 5,086 8,042
________________________________________________________________________________________________________________________
$ 47,098 $ 21,045 $ 39,511
========================================================================================================================
Identifiable assets:
Domestic $ 564,886 $ 536,223 $ 345,927
Foreign 110,325 111,109 139,194
________________________________________________________________________________________________________________________
$ 675,211 $ 647,332 $ 485,121
========================================================================================================================
<FN>
Included in identifiable assets at December 31, 1994 and 1993 are foreign receivables of approximately $18,764,000
and $21,565,000 which represent more of a collection risk than the Company's domestic receivables. The Company believes
that its allowance for doubtful receivables is adequate.
</TABLE>
<TABLE>
APPENDIX
SEABOARD CORPORATION AND SUBSIDIARIES
<CAPTION>
Graph data
Years ended December 31,
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Summary Of Selected Financial Data:
TOTAL ASSETS (THOUSANDS OF DOLLARS) $422,488 458,045 485,121 647,332 675,211
STOCKHOLDERS' EQUITY (THOUSANDS OF DOLLARS) $218,753 239,250 269,581 304,356 346,080
EARNINGS PER COMMON SHARE (DOLLARS) $ 20.19 14,28 20,89 24.13 23.67
Management's Discussion and Analysis of Financial
Condition and Results of Operations:
TOTAL CAPITALIZATION (THOUSANDS OF DOLLARS) $346,217 357,186 390,676 525,066 562,737
CURRENT RATIO 2.69 :1 2.82 :1 3.22 :1 3.29 :1 3.31 :1
WORKING CAPITAL (THOUSANDS OF DOLLARS) $128,711 183,825 209,811 280,466 259,521
CAPITAL EXPENDITURES (THOUSANDS OF DOLLARS) $ 41,108 20,240 35,286 87,328 87,583
NET SALES (THOUSANDS OF DOLLARS) $557,328 875,874 1,053,655 1,142,144 983,804
NET EARNINGS (THOUSANDS OF DOLLARS) $ 30,049 21,241 31,075 35,891 35,201
</TABLE>
EXHIBIT 21
STATE OR
OTHER
SUBSIDIARIES NAMES UNDER JURISDICTION
OF THE WHICH SUBSIDIARIES OF
REGISTRANT DO BUSINESS INCORPORATION
A & W Interlining American Interlining Maryland
Services Corp. Company
Western Coat Pad
Company
African Camellia Same Liberia
Shipping Ltd.
African Coffee Same Zaire
Company, S.P.R.L.
African Commodities Same Zaire
Company, PLC
African Dahlia Shipping Ltd. Same Liberia
African Evergreen Same Liberia
Shipping Ltd.
African Fern Shipping Ltd. Same Liberia
African Gardenia Same Liberia
Shipping Ltd.
African Hyacinth Same Liberia
Shipping Ltd.
Agencia Maritima del Same Costa
Istmo, S.A. Rica
Agencias Generales Same Venezuela
Conaven, C.A.
Agro Internacional de Same Honduras
Honduras,
S.A. de C.V.
Almacenadora Conaven, Same Venezuela
S.A.
Atlantic Salmon (Maine), Inc. Same Maine
Buttercup Shipping Same Liberia
Limited
Cape Fear Railways, Same North
Inc. Carolina
Chestnut Hill Farms, Same Florida
Inc.
Colina de Almendros Chestnut Hill de Guatemala
de Guatemala, Guatemala, S.A.
S.A.
Chestnut Hill Farms Same Honduras
Honduras,
S.A. de C.V.
Chestnut Hill Farms Same Venezuela
de Venezuela,
S.A.
Consorcio Naviero de Conaven Venezuela
Occidente, C.A.
Cultivos Marinos, CUMAR Honduras
S.A. de C.V.
Delta Packaging Same Nigeria
Company Ltd.
Desarrollo Industrial DIBSA Ecuador
Bioacuatico, S.A.
Empacadora Litoral, Same Honduras
S.A. de C.V.
H & O Shipping Same Liberia
Limited
H.F.P. Engineering Same Nigeria
(Nigeria) Limited
Harinas de Puerto Same Delaware
Rico, Inc.
Holsum Bakers of Same Delaware
Puerto Rico, Inc.
Interamericana de Same Ecuador
Tejidos, C.A.
Jordan Hatchery, Inc. Same Alabama
Life Flour Mill Ltd. Same Nigeria
Minoterie De Matadi, Same Zaire
S.A.R.L.
Molinos Champion, Same Ecuador
S.A.
Molinos del Ecuador, Same Ecuador
C.A.
National Milling Same Guyana
Company of
Guyana, Ltd.
Port of Miami Cold Same Florida
Storage, Inc.
Representaciones Same Guatemala
Maritimas y Aereas,
S.A.
SASCO Engineering Same U.S. Virgin
Co./ Islands
Seaboard Sales
Corporation
Sandy Isle Food Same St.
Imports, N.V. Maarten,
Netherlands,
Antilles
Sea Cargo, S.A. Same Panama
Seaboard Atlantic Same Panama
Trading, Inc.
Seaboard Bakeries, Same Delaware
Inc.
Seaboard Export Same Delaware
Corporation
Seaboard Express Ltd. Same Bermuda
Seaboard de Columbia, Same Columbia
S.A.
Seaboard de Honduras, Same Honduras
S.A. de C.V.
Seaboard de Peru Same Peru
Seaboard Farms of Same Georgia
Athens, Inc.
Seaboard Farms of Same Tennessee
Chattanooga, Inc.
Seaboard Farms of Same Georgia
Elberton, Inc.
Seaboard Farms of Same Kentucky
Kentucky, Inc.
Seaboard Farms of Same Minnesota
Minnesota, Inc.
Seaboard Farms, Inc. Same Oklahoma
Seaboard Holdings Same British
Ltd. Virgin
Islands
Seaboard Intrepid, Same Bermuda
Ltd.
Seaboard Marine Ltd. Same Liberia
Seaboard (Nigeria) Same Nigeria
Limited
Seaboard Overseas Same Bahamas
Limited
S.B.D., Inc. Same Delaware
Seaboard Ship Same Florida
Management Inc.
Seaboard Trading de Same Mexico
Mexico, S.A. de C.V.
Seaboard West Africa Same Sierra
Limited Leone
Seadom, S.A. Same Dominican
Republic
Secuador Limited Same Bermuda
Shilton Limited Same Grand
Cayman
Island
Top Feeds Limited Same Nigeria
Transcontinental Same Bermuda
Capital Corp.
(Bermuda) Ltd.
Zenith Investments, Same Nigeria
Ltd.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FISCAL 1994 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 4773
<SECURITIES> 174665
<RECEIVABLES> 104695
<ALLOWANCES> 9196
<INVENTORY> 73243
<CURRENT-ASSETS> 371995
<PP&E> 430151
<DEPRECIATION> 175080
<TOTAL-ASSETS> 675211
<CURRENT-LIABILITIES> 112474
<BONDS> 177666
<COMMON> 1488
0
0
<OTHER-SE> 344592
<TOTAL-LIABILITY-AND-EQUITY> 675211
<SALES> 983804
<TOTAL-REVENUES> 983804
<CGS> 824411
<TOTAL-COSTS> 824411
<OTHER-EXPENSES> 112295
<LOSS-PROVISION> 2910
<INTEREST-EXPENSE> 13136
<INCOME-PRETAX> 49131
<INCOME-TAX> 13930
<INCOME-CONTINUING> 35201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35201
<EPS-PRIMARY> 23.67
<EPS-DILUTED> 23.67
</TABLE>
