FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 17, 1995
.................................................................
Commission file number 1-3390
.................................................................
Seaboard Corporation
.................................................................
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
.................................................................
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization). No.)
9000 W. 67th Street, Shawnee Mission, KS 66202
.................................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code 913-676-8800
...........................
.................................................................
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No ___.
Indicate number of shares outstanding of each of the
issuer's classes of common stock, as of latest practicable date.
Common stock of $1 par value, 1,487,520 shares outstanding, as of
June 17, 1995.
Total pages in filing - 12 pages
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 17, 1995 and December 31, 1994
(Thousands of Dollars)
<CAPTION>
Part I - Financial Information
June 17, December 31,
1995 1994
----------- ------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,276 $ 4,773
Short-term investments 250,657 174,665
Receivables, net 114,973 104,695
Inventories 93,123 73,243
Deferred income taxes 7,878 6,914
Prepaid expenses and deposits 15,040 7,705
----------- -----------
Total current assets 484,947 371,995
----------- -----------
Investments in and advances to foreign
subsidiaries not consolidated 26,110 30,453
----------- -----------
Property, plant and equipment 518,206 430,151
Accumulated depreciation (189,669) (175,080)
----------- -----------
Net property, plant and equipment 328,537 255,071
----------- -----------
Other assets 17,891 17,692
----------- -----------
Total assets $857,485 $675,211
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable and current maturities
of long-term debt $ 34,753 $ 23,984
Accounts payable 46,969 42,560
Income taxes payable 4,222 11,931
Other current liabilities 59,112 33,999
----------- -----------
Total current liabilities 145,056 112,474
----------- -----------
Long-term debt, less current maturities 307,115 177,666
----------- -----------
Deferred income taxes 19,843 18,810
----------- -----------
Other liabilities 24,415 20,181
----------- -----------
Stockholders' equity:
Common stock of $1 par value,
Authorized 4,000,000 shares;
issued 1,789,599 shares 1,790 1,790
Less 302,079 shares held in treasury,
at par value 302 302
----------- -----------
1,488 1,488
Additional capital 13,214 13,214
Unrealized gain (loss) on debt
securities, (net of deferred income
taxes of $92 and $466 at June 17, 1995
and December 31, 1994, respectively.) 152 (764)
Retained earnings 346,202 332,142
----------- -----------
Total stockholders' equity 361,056 346,080
----------- -----------
Total liabilities and stockholders' equity $857,485 $675,211
=========== ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 2
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Twelve weeks ended June 17, 1995 and June 18, 1994
(Thousands of dollars except per share amounts)
<CAPTION>
June 17, June 18,
1995 1994
----------- -----------
<S> <C> <C>
Net sales $255,402 $215,016
Cost of sales and operating expenses 215,189 175,084
----------- -----------
Gross income 40,213 39,932
Selling, general and administrative expenses 31,101 24,472
----------- -----------
Operating income 9,112 15,460
----------- -----------
Income from foreign subsidiaries not
consolidated 1,275 370
----------- -----------
Other income (expense):
Interest income 2,458 1,915
Interest expense (3,228) (3,191)
Miscellaneous (83) 2,613
----------- -----------
Total other income (expense) (853) 1,337
----------- -----------
Earnings before income taxes 9,534 17,167
----------- -----------
Income tax expense(benefit):
Current 3,094 6,188
Deferred (324) (165)
----------- -----------
Total income taxes 2,770 6,023
----------- -----------
Net earnings $ 6,764 $ 11,144
=========== ===========
Earnings per common share $ 4.55 $ 7.49
=========== ===========
Dividends declared per common share $ .25 $ .25
=========== ===========
Average number of shares outstanding 1,487,520 1,487,520
=========== ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 3
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Twenty-four weeks ended June 17, 1995 and June 18, 1994
(Thousands of dollars except per share amounts)
<CAPTION>
June 17, June 18,
1995 1994
----------- -----------
<S> <C> <C>
Net sales $491,325 $472,414
Cost of sales and operating expenses 409,025 396,413
----------- -----------
Gross income 82,300 76,001
Selling, general and administrative expenses 59,499 48,739
----------- -----------
Operating income 22,801 27,262
----------- -----------
Income from foreign subsidiaries not
consolidated 256 1,169
----------- -----------
Other income(expense):
Interest income 4,759 3,659
Interest expense (5,762) (6,549)
Miscellaneous (130) 2,675
----------- -----------
Total other income (expense) (1,133) (215)
----------- -----------
Earnings before income taxes 21,924 28,216
----------- -----------
Income tax expense(benefit):
Current 7,625 9,005
Deferred (505) 591
----------- -----------
Total income taxes 7,120 9,596
----------- -----------
Net earnings $ 14,804 $ 18,620
=========== ===========
Earnings per common share $ 9.95 $ 12.52
=========== ===========
Dividends declared per common share $ .50 $ .50
=========== ===========
Average number of shares outstanding 1,487,520 1,487,520
=========== ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
Page 4
<TABLE>
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Twenty-four weeks ended June 17, 1995 and June 18, 1994
(Thousands of Dollars)
<CAPTION>
June 17, June 18,
1995 1994
----------- -----------
<S> <C> <C>
Net cash provided by
operating activities $ 14,160 $ 14,367
----------- -----------
Cash flows from investing activities:
Purchase of investments (299,928) (375,425)
Proceeds from the sale or maturity of
investments 225,410 387,760
Capital expenditures (91,411) (28,057)
Notes receivable 646 4,131
Investments and advances to foreign
subsidiaries not consolidated 4,599 (118)
----------- -----------
Net cash used in investing
activities (160,684) (11,709)
----------- -----------
Cash flows from financing activities:
Notes payable to bank 11,064 (6,178)
Proceeds from long-term debt 131,269 3,792
Principal payments (2,115) (6,695)
Deferred grants 3,927 4,341
Bond construction fund 1,626 --
Dividends paid (744) (744)
----------- -----------
Net cash provided by (used in)
financing activities 145,027 (5,484)
----------- -----------
Net decrease in cash and cash
equivalents (1,497) (2,826)
Cash and cash equivalents at beginning of
year 4,773 7,110
----------- -----------
Cash and cash equivalents at end of quarter $ 3,276 $ 4,284
=========== ===========
<FN>
Disclosure of accounting policy:
For purposes of the Condensed Consolidated Statements of Cash Flows, the
Company considers all demand deposits and overnight investments as cash and
cash equivalents.
See notes to condensed consolidated financial statements.
</TABLE>
Page 5
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1
------
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
as of June 17, 1995, and the results of operations and cash flows for the
twenty-four weeks ended June 17, 1995 and June 18, 1994.
Note 2
------
The results of operations for the twenty-four weeks ended June 17, 1995 and
June 18, 1994 are not necessarily indicative of the results to be expected
for the full year.
Note 3
------
<TABLE>
The following is a summary of inventories at June 17, 1995 and December 31,
1994 (in thousands):
<CAPTION>
June 17, December 31,
1995 1994
----------- ------------
<S> <C> <C>
At lower of last-in, first-out
(LIFO) cost or market:
Live poultry $23,805 $22,230
Dressed poultry 14,699 13,344
Feed and baking ingredients,
packaging supplies and other 7,280 6,121
----------- ------------
45,784 41,695
LIFO allowance (3,021) (1,390)
----------- ------------
Total inventories at lower of
LIFO cost or market 42,763 40,305
----------- ------------
At lower of first-in, first-out
(FIFO) cost or market:
Live hogs 14,275 10,122
Grain, flour and feed 19,787 7,622
Crops in production, fertilizers
and pesticides 5,295 6,132
Dressed pork 2,615 2,523
Other 8,388 6,539
----------- ------------
Total inventories at lower of
FIFO cost or market 50,360 32,938
----------- ------------
Total inventories $93,123 $73,243
=========== ============
</TABLE>
Page 6
Second Quarter 1995
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
-------------------------------
Liquidity, as measured by current ratio and working capital, is presented
as follows:
June 17, 1995 December 31, 1994
------------- -----------------
Current Ratio 3.34 3.31
Working Capital $339,891 $259,521
(in thousands)
Significant increases in accounts receivable, inventories and current
liabilities resulted from expanded commodity trading activities in the
second quarter of 1995. At the end of the quarter, certain commodity
trades had not been completed. Accordingly, these commodities were still
in inventory and advance payments received were included in current
liabilities. The increase in receivables also includes higher poultry
export and transportation sales which have longer collection terms.
The Company invested $69.4 million in property, plant and equipment through
June 17, 1995 in the food production and processing segment. Capital
expenditures of $52.6 million were for construction of hog farrowing and
finishing facilities, a feedmill and a pork processing plant. The
facilities are located in Oklahoma, Colorado and Kansas. Cumulative capital
expenditures on these facilities since 1992 total $117.7 million. The
Company expects additional expenditures for facilities and working capital
to total approximately $149 million in the next two years, of which
approximately $45 million is currently under contract. Management anticipates
the facilities will be financed from the proceeds of the senior notes issued
in June, 1995, described below, and cash generated from operations.
Other capital expenditures in the food production and processing segment
through June 17, 1995 consisted of $16.8 million in general modernization and
efficiency upgrades of plant and equipment.
Capital expenditures in the transportation segment through June 17, 1995
totaled $24.0 million. The Company purchased two cargo vessels for $14.7
million for use in the ocean liner service and other capital expenditures
Page 7
Liquidity and Capital Resources (continued)
-------------------------------------------
of $9.3 million were for general replacement and upgrades of property and
equipment. $2.6 million of the capital expenditures were financed through
a capitalized lease and the balance was paid with cash.
In June 1995, the Company issued $125.0 million in unsecured Senior Notes
to various lenders, the proceeds of which will be used for the construction
of hog production facilities, a pork processing plant and for general
corporate purposes. The notes bear interest at 7.88% and mature in equal
installments of $25.0 million on June 1, 2003, 2004, 2005, 2006 and 2007.
The Company borrowed the proceeds of $3.3 million in Adjustable rate, 7-Day
Demand Revenue Bonds issued by the Guymon Utilities Authority. The funds
are being used to construct a waste pre-treatment facility for the Company's
pork processing plant currently under construction in Guymon, Oklahoma.
As of June 17, 1995 and December 31, 1994, the Company had $31.6 million and
$20.6 million, respectively, outstanding under the Company's short-term
uncommitted, unsecured credit lines from banks totaling $122.0 million.
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 for the twelve and twenty-four weeks ended June 17, 1995 increased
by $40.4 million and $18.9 million, respectively, compared to the same
periods one year earlier. Operating income for the twelve and twenty-four
weeks ended decreased by $6.3 million and $4.5 million, respectively,
compared to the same periods one year ago.
The segment distribution of the increase (decrease) in net sales and operating
income compared to the prior year are as follows (in thousands):
Net Sales Operating Income
--------------------- -------------------------
Quarter Year-to-date Quarter Year-to-date
-------- ------------ --------- --------------
Food production
and processing $14,220 $ (18,780) $ (5,292) $(2,261)
Transportation 26,023 34,769 555 (1,278)
Other 143 2,922 (1,611) (922)
-------- ------------ --------- --------------
$40,386 $ 18,911 $ (6,348) $(4,461)
======== ============ ========= ==============
Page 8
Results of Operations (continued)
---------------------------------
Food Production and Processing Segment
Net sales of pork products and live hogs for the twelve and twenty-four
weeks ended June 17, 1995 totaled $16.6 million and $34.7 million,
respectively. Year-to-date net sales from pork products declined by $36.3
million primarily from discontinuing the fresh pork operations at the
Company's Minnesota processing plant in March, 1994. Gross income in pork
operations for the twelve and twenty-four weeks ended June 17, 1995 were a
negative $1.3 million and $1.7 million, respectively. The margins declined
for the quarter and year to date by $0.1 million and $1.8 million,
respectively, compared to the same periods one year earlier. The decline
is primarily due to start-up costs of the pork operations located in Western
Oklahoma and Southwest Kansas. Management expects Third and Fourth Quarter
results to continue to be adversely effected by costs associated with the
start-up of its hog processing plant in Guymon, Oklahoma in October, 1995.
Net sales of poultry products for the twelve and twenty-four weeks ended
June 17, 1995 were $106.9 million and $202.7 million, respectively. Net
sales increased for the quarter and year to date by $6.7 million and $12.7
million, respectively, compared to the same periods one year earlier. The
increase in net sales of poultry products was primarily related to increased
production at the Company's poultry processing plant in Western Kentucky
and higher volume of further processed and export products which have higher
sales prices relative to other products. Gross income on poultry products
for the twelve and twenty-four weeks ended was $10.7 million and $21.9
million, respectively. Gross income decreased for the twelve weeks ended
June 17, 1995 by $4.1 million compared to the same period one year earlier
despite significantly lower finished feed costs. The decline was primarily
related to a decrease in the average selling price of poultry products and
higher processing costs. Year-to-date gross income increased by $0.8 million
compared to the same period one year ago.
Operating income within the food production and processing segment decreased
compared to the same quarter one year earlier. The decrease is primarily
related to a decline in the average sales price of poultry products,
increased processing costs on poultry products and operating losses from
the pork operations resulting from expenses incurred in advance of the
opening of the processing plant now being constructed in Guymon, Oklahoma.
Higher grain costs are expected to increase the cost of production at the
Company's live hog and poultry operations in the second half of 1995.
Transportation Segment
Net sales in the transportation segment increased for the twelve and
twenty-four weeks ended June 17, 1995 compared to the same period one year
earlier. The increase resulted from new services to South America and the
Caribbean Basin and increased volume within existing services in Central
America.
Operating income for the twenty-four weeks ended decreased compared to the
same period one year ago. The decrease is primarily related to the
increased operating costs resulting from new services.
Page 9
Results of Operations (continued)
The U. S. Congress is currently considering the elimination of the Federal
Maritime Commission. Management cannot yet determine the impact of this,
however, it could result in greater competition from larger shipping lines and
lower freight rates.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the twelve and
twenty-four weeks ended June 17, 1995 by $6.6 million and $10.8 million,
respectively, compared to the same period one year earlier. The increase
is primarily attributable to staffing and expenses relating to start-up of
the pork operations in Western Oklahoma and Southwest Kansas. In addition,
selling, general and administrative costs increased as a result of reserving
for certain foreign accounts receivable and increased marketing and
administrative support of expanded shipping routes and product lines.
Other
Interest income increased during the twelve and twenty-four weeks ended
June 17, 1995 compared to the same period one year earlier. The increase
is primarily related to increased rates on invested funds.
Interest expense decreased for the twenty-four weeks ended June 17, 1995
compared to the same period one year ago principally because the Company
retired $26.3 million of long-term debt in the fourth quarter of 1994. 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. Interest rate exchange agreements resulted in additional
interest expense of $0.5 million in the first quarter of 1994.
Miscellaneous income in the second quarter of 1994 includes a $2.9 million
gain from liquidating an interest rate exchange agreement. The Company
entered into the interest rate exchange agreement as an anticipatory hedge
against interest rate risk associated with variable rate financing.
Subsequent to obtaining the interest rate exchange agreement the Company
received commitments for fixed rate financing and, therefore, terminated
the agreement.
Foreign currency gains and losses included in earnings for the first quarter
of 1995 and 1994 were not material.
The effective tax rate for the quarter declined compared to the same period
one year earlier. The decrease is attributable to an increase in tax exempt
interest income, utilization of foreign tax credits, increases in foreign
sales corporation (FSC) income which is taxed at substantially lower rates
and increased earnings of nonconsolidated subsidiaries which are recorded
net of tax. The expiration of the Targeted Jobs Tax Credit in 1995 partially
offset the decline in the effective tax rate.
The Company does not believe its businesses have been materially adversely
affected by inflation.
Page 10
SEABOARD CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K. Seaboard Corporation has not filed any reports
on Form 8-K during the twelve week period ended June 17, 1995.
Page 11
PART II - OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: July 31, 1995
Seaboard Corporation
by: /s/ Rick J. Hoffman
-------------------------------------
Rick J. Hoffman, Vice President
by: /s/ Jesse H. Bechtold
------------------------------------
Jesse H. Bechtold, Chief Accounting Officer
Page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FIRST QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000088121
<NAME> SEABOARD CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-17-1995
<CASH> 3276
<SECURITIES> 250657
<RECEIVABLES> 114973
<ALLOWANCES> 13905
<INVENTORY> 93123
<CURRENT-ASSETS> 484947
<PP&E> 518206
<DEPRECIATION> 189669
<TOTAL-ASSETS> 857485
<CURRENT-LIABILITIES> 145056
<BONDS> 307115
<COMMON> 1488
0
0
<OTHER-SE> 359568
<TOTAL-LIABILITY-AND-EQUITY> 857485
<SALES> 491325
<TOTAL-REVENUES> 491325
<CGS> 409025
<TOTAL-COSTS> 409025
<OTHER-EXPENSES> 59499
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4759
<INCOME-PRETAX> 21924
<INCOME-TAX> 7120
<INCOME-CONTINUING> 14804
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14804
<EPS-PRIMARY> 9.95
<EPS-DILUTED> 9.95
</TABLE>
