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
For the fiscal year ended December 31, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ____________________
Commission file number 1-3390
Seaboard Corporation
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(Exact name of registrant as specified in its charter)
Delaware 04-2260388
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 676-8800
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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
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(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
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.
$136,365,227 (March 6, 1998). On such date, 332,193 shares were
held by non-affiliates, and the stock was sold at $410.50 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 6, 1998.
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 1998 annual meeting of stockholders (the "1998
Proxy Statement").
This Form 10-K and its Exhibits (Form 10-K) contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, which may include statements concerning projection of revenues,
income or loss, capital expenditures, capital structure or other financial
items, statements regarding the plans and objectives of management for future
operations, statements of future economic performance, statements of the
assumptions underlying or relating to any of the foregoing statements and
other statements which are other than statements of historical fact. These
statements appear in a number of places in this Form 10-K and include
statements regarding the intent, belief or current expectations of the Company
and its management with respect to (i) the cost and timing of the completion
of new or expanded facilities, (ii) the Company's financing plans, (iii) the
price of feed stocks and other materials used by the Company, (iv) price for
the Company's products and services, or (v) other trends affecting the
Company's financial condition or results of operations. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially as a result of various factors. The accompanying information
contained in this Form 10-K, including without limitation, the information
under the headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations", identifies important factors which
could cause such differences.
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 which is primarily engaged in domestic pork and poultry production
and processing, commodity merchandising, baking, flour milling and
shipping. Overseas, the Company is primarily engaged in flour and feed
milling, shrimp and produce farming and electric power generation. See Item
1(c) (1) (ii) below for a discussion of developments in specific segments.
(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 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 hogs and processes pork in the United States and
sells fresh pork to further processors, foodservice and retail, primarily in
the western half of the United States and foreign markets. Hogs produced at
Company owned or leased facilities are processed at the Company's
processing plant.
Registrant produces and processes poultry in the United States and sells
processed chicken and chicken parts, both directly and through commercial
distributors, foodservice and institutional markets, to retail, primarily in
the eastern half of the United States and foreign markets.
Registrant operates an ocean liner service for containerized cargo
between Florida and ports in the Caribbean Basin and South America.
Registrant also operates bulk carriers primarily in the Atlantic Basin.
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 food
service and retail outlets.
Registrant trades commodities, such as bulk grains and oil seeds,
primarily in the Eastern Mediterranean and the Atlantic Basin.
Registrant, by itself or through non-controlled subsidiaries, produces
and processes produce and shrimp in Central and South America, primarily
for export to the U.S. and Europe. Registrant also brokers fruits, vegetables
and shrimp for independent growers. The majority of these products are
transported using the Registrant's shipping line and distribution facility in
Miami, Florida.
Registrant, by itself or through non-controlled subsidiaries, also
produces polypropylene bags, operates power generating facilities, operates
flour and animal feed mills, produces and refines sugarcane and citrus and
produces 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 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 pork and poultry production and processing
facilities. The Registrant has announced plans to construct a second pork
processing plant capable of processing over four million hogs annually. In
addition, the Registrant plans to construct facilities to produce an
additional two million market hogs per year. This expansion is anticipated
to include two feed mills and additional hog farrowing, nursing and finishing
buildings. During 1997, the Registrant expanded and converted its largest
poultry processing plant, located in Athens, Georgia, from retail tray-pack
to food service production and added an additional cooking line at the
Elberton, Georgia, facility.
The State of Oklahoma has recently enacted a moratorium on the
issuance of permits for pork facilities not yet operating. Under the present
legislation, the moratorium will remain in effect for one year unless earlier
repealed. The effect of the moratorium could be to delay the Company's
expansion plans or to increase related development costs.
The Registrant's Argentinean affiliate continues to make improvements
to existing operations and expand the sugarcane and citrus fields.
(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 and Easy Entrees for
retail sales of poultry products. Registrant uses three trademarks, Season
Sweet, Chestnut Hill Farms and Cumars Best in marketing fresh fruits,
vegetables and shrimp in the United States. Registrant's Puerto Rican Baking
business uses three registered trademarks; Holsum, Country Hearth and
Bimbo.
Patents, trademarks, franchises, licenses and concessions are not
material to any of Registrant's other businesses.
(v) Seasonal Business
Profits from processed pork are generally higher in the fall months.
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.
(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 October
1997 issue of Successful Farming, an industry trade publication, the
Registrant was ranked in the top ten pork producers in the United States
based on sows in production. In the January 1998 issue of Broiler Industry, an
industry trade publication, the Registrant was ranked as one of the top ten
largest poultry processors in the United States based on average weekly
production of ready-to-cook chicken.
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.
(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, 1997, Registrant, excluding non-controlled, non-
consolidated foreign subsidiaries, had 12,031 employees, of whom 10,230
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 export sales is
hereby incorporated by reference to note 13 of Registrant's Consolidated
Financial Statements appearing on pages 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. Foreign sales, including
sales to non-consolidated 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, war, insurrection, civil strife and
revolution, currency inconvertibility and devaluation, and currency exchange
controls. To minimize these risks, Registrant has insured certain investments
in and loans to its flour mill and shrimp farm in Ecuador and its flour mill in
Democratic Republic of Congo (formerly Zaire) to the extent deemed
appropriate against certain of these risks with the Overseas Private
Investment Corporation, an agency of the United States Government. In
addition, the Company has purchased commercial insurance to cover certain
forms of political risk if physical damage is done to facilities abroad.
Item 2. Properties
The Registrant currently has production and distribution facilities in the
following states: Alabama, Colorado, Florida, Georgia, Kansas, Kentucky,
Maine, Oklahoma, Pennsylvania, New Jersey, North Carolina, Tennessee and
Texas. Additionally, the Registrant has wholly or partially owned facilities
in Argentina, Chile, Colombia, Costa Rica, Democratic Republic of Congo,
Dominican Republic, Ecuador, Guatemala, Guyana, Honduras, Mozambique,
Nigeria, Panama, Peru, Puerto Rico, Sierra Leone and Venezuela.
(1) Food Production and Processing
The Registrant owns a hog processing plant in Oklahoma with a double
shift capacity of four million hogs per year. The plant reached double shift
capacity in the fourth quarter of 1997. Hog production facilities currently
consist of a combination of owned and leased farrowing, nursery and finishing
units to support 110,000 sows. Registrant owns three feed mills which have
a combined capacity to produce 850,000 tons of feed annually to support the
hog production. These facilities are located in Oklahoma, Texas, Kansas and
Colorado.
The principal poultry operations of the Registrant consists of five
owned and one leased 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 244
million birds per year. To support these facilities, the Registrant operates
four feed mills, four hatcheries and a network of 680 contract growers that
supply pullet, breeder and broiler farms. These facilities are located in
Alabama, Georgia, Kentucky and Tennessee.
The Registrant owns in whole or in part seven flour mills with capacity
to produce 49,400 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. The flour mills, located in Democratic Republic of Congo,
Ecuador, Guyana, Mozambique, Nigeria, Puerto Rico and Sierra Leone, and
the feed mills located in Democratic Republic of Congo, Ecuador and Nigeria
are owned except for a flour mill in Sierra Leone which is located on land
which the Government of Sierra Leone has agreed to lease for a remaining
term of 16 years, and a Nigerian flour and feed mill with a remaining lease
term of 77 years and renewal option of 75 years.
The Registrant owns two bakeries in Puerto Rico.
The Registrant, by itself or through non-controlled subsidiaries,
operates approximately 3,100 acres of shrimp ponds in Honduras and
Ecuador. Approximately 2,400 acres are leased for a eighteen year term and
the rest are owned.
The Registrant owns a non-controlling interest in an Argentinean
company which owns approximately 37,000 acres of planted sugarcane and
approximately 4,200 acres of planted citrus. In addition, this company owns
a sugar mill with a capacity to process 140,000 tons of sugar per year.
(2) Transportation
Registrant leases a 166,400 square foot warehouse, office space and
port terminal land and facilities in Florida which are used in its
containerized cargo operations.
The Registrant owns six 9,000 metric-ton deadweight dry bulk carriers
and three containerized ocean cargo vessels with deadweights ranging from
6,818 to 12,648 metric-tons. In addition, Registrant timecharters, under
short-term agreements, between fifteen and eighteen containerized ocean
cargo vessels with deadweights ranging from 2,488 to 9,200 metric-tons.
Registrant also bare boat charters, under long-term lease agreements,
three containerized ocean cargo vessels with deadweights ranging from
12,169 to 12,648 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. Registrant manages a second power
generating facility capable of producing 17.5 megawatts of power also
located in the 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.
Item 3. Legal Proceedings
The Company is subject to legal proceedings related to the normal
conduct of its business. Although 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, the
Company is a defendant in a maritime arbitration claim more fully described
in Note 12 of the consolidated financial statements.
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 (72) President of Registrant;
President and Treasurer of
Seaboard Flour Corporation
(SFC)
Joe E. Rodrigues (61) Executive Vice President and
Treasurer
Rick J. Hoffman (43) Vice President
Steven J. Bresky (44) Vice President
Robert L. Steer (38) Vice President - Finance
Douglas W. Schult (41) Vice President - Human
Resources
David M. Becker (36) Assistant Secretary and
Director of Legal Affairs
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.
Mr. Rodrigues has served as Executive Vice President and Treasurer of
Registrant since December 1986.
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. Steer has served as Vice President - Finance of Registrant since
April 1996. He has been employed with the Registrant since 1984.
Mr. Schult has served as Vice President - Human Resources of
Registrant since April 1996. He has been employed with the Registrant since
February 1995, by M.G. Waldbaum from January 1993 to January 1995 and
prior to that by IBP, Inc.
Mr. Becker has served as Assistant Secretary of Registrant since May
1994. He has been employed with the Registrant since 1993 and prior to that
was employed by the law firm Stinson Mag and Fizzell PC.
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 "Stock Listing" and "Quarterly Financial Data" appearing on pages 48 and
28, 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 4 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 Operations" appearing on pages 22 through 27 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," "Independent Auditors' Report,"
"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.
PART III
Item 10. Directors and Executive Officers of Registrant
Refer to "Executive Officers of Registrant" in Part I.
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, 1997, 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 1998 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 last paragraph on page 2 of the Registrant's 1998 Proxy
Statement.
Item 11. Executive Compensation
This item has been omitted since Registrant filed a definitive proxy
statement within 120 days after December 31, 1997, the close of its fiscal
year. The information required by this item is incorporated by reference to
"Executive Compensation and Other Information," "Retirement Plans" and
"Compensation Committee Interlocks and Insider Participation" appearing on
pages 5, 6, 7 and 9 of the 1998 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, 1997, 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
page 3 of the 1998 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, 1997, the close of its fiscal
year. The information required by this item is incorporated by reference to
"Compensation Committee Interlocks and Insider Participation" appearing on
page 9 of the 1998 Proxy Statement.
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.
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 Registrant'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.
4.3 Note Purchase Agreement dated June 1, 1995 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 4.3 of Registrant's Form 10-Q for the quarter ended
September 9, 1995.
4.4 Seaboard Corporation 7.88% Senior Note Due June 1, 2007
issued pursuant to the Note Purchase Agreement described
above. Incorporated by reference to Exhibit 4.4 of Registrant's
Form 10-Q for the quarter ended September 9, 1995.
4.5 - Seaboard Corporation Note Agreement dated as of December 1,
1993 ($100,000,000 Senior Notes due December 1, 2005).
First Amendment to Note Agreement. Incorporated by reference
to Exhibit 4.7 of Registrant's Form 10-Q for the quarter ended
March 23, 1996.
4.6 - Seaboard Corporation Note Agreement dates as of June 1, 1995
($125,000,000 Senior Notes due June 1, 2007). First
Amendment to Note Agreement. Incorporated by reference to
Exhibit 4.8 of Registrant's Form 10-Q for the quarter ended
March 23, 1996.
* 10.1 Registrant's Executive Retirement Plan dated January 1, 1997
amending and restating Registrant's Executive Retirement Plan,
as amended, dated October 14, 1994 previously filed as
incorporated by reference to Exhibit 10.1 of Registrant's Form
10-Q for the quarter ended September 10, 1994. The addenda
have been omitted from the filing, but will be provided
supplementary upon request of the Commission.
* 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. Incorporated by reference
to Exhibit 10.3 of Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995.
* 10.4 Employment Agreement for Joe E. Rodrigues dated July 9, 1986
and amended August 10, 1990. Incorporated by reference to
Exhibit 10.5 of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
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).
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Registrant during the last quarter
of the fiscal year covered by this report.
(c) Exhibits
Exhibits begin on page 16.
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/Robert L. Steer
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H. Harry Bresky, President R.L. Steer, Vice President -
(principal executive officer) Finance (principal financial
and accounting officer)
Date: March 26, 1998 Date: March 26, 1998
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
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H. Harry Bresky, Director J. E. Rodrigues, Director
Date: March 26, 1998 Date: March 26, 1998
/s/David A. Adamsen /s/Thomas J. Shields
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David A. Adamsen, Director Thomas J. Shields, Director
Date: March 26, 1998 Date: March 26, 1998
SEABOARD CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements and Schedule
(Form 10-K)
Securities and Exchange Commission
For the year ended December 31, 1997
(With Independent Auditors' Report Thereon)
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
--------------------
Stockholders'
Annual Report Page
------------------
Independent Auditors' Report 34
Consolidated Balance Sheets as of December 31, 1997
and December 31, 1996 37
Consolidated Statements of Earnings for the years
ended December 31, 1997, December 31, 1996 and
December 31, 1995 35
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1997, December 31, 1996 and
December 31, 1995 36
Consolidated Statements of Cash Flows for the years
ended December 31, 1997, December 31, 1996 and
December 31, 1995 39
Notes to Consolidated Financial Statements 40
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; and (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 compared to the average income for
the last five fiscal years.
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 Schedule
Schedule
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Page
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II - Valuation and Qualifying Accounts for the years ended
December 31, 1997, 1996 and 1995 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 6, 1998, we reported on the
consolidated balance sheets of Seaboard Corporation and
subsidiaries as of December 31, 1997 and 1996, 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, 1997, as contained in the December 31, 1997
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, 1997. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated 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 5 to the consolidated financial
statements, the Company changed its method of accounting for
spare parts and supplies inventories in 1996.
KPMG Peat Marwick LLP
Kansas City, Missouri
March 6, 1998
F-3
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Write-offs Balance
beginning Provision net of at end
of year (1) recoveries of year
----------- --------- ---------- --------
Year ended December 31, 1997:
Allowance for doubtful
accounts $ 19,448 3,845 2,635 $ 20,658
=========== ========= ========== ========
Year ended December 31, 1996:
Allowance for doubtful
accounts $ 17,088 4,122 1,762 $ 19,448
=========== ======== ========== ========
Year ended December 31, 1995:
Allowance for doubtful
accounts $ 9,196 10,554 2,662 $ 17,088
=========== ======== ========== ========
(1) Charged to selling, general and administrative expenses.
F-4
<TABLE>
Summary of Selected Financial Data
Seaboard Corporation and Subsidiaries
<CAPTION>
- --------------------------------------------------------------------------------------------------
(Thousands of dollars except per share amounts) Years ended December 31,
- --------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Net sales $ 1,780,333 $ 1,464,362 $ 1,173,977 $ 983,804 $ 1,142,144
==================================================================================================
Net earnings $ 30,574 $ 5,846 $ 20,202 $ 35,201 $ 35,891
==================================================================================================
Earnings per common share $ 20.55 $ 3.93 $ 13.58 $ 23.67 $ 24.13
==================================================================================================
Total assets $ 1,124,385 $ 1,004,685 $ 878,132 $ 675,211 $ 647,332
==================================================================================================
Long-term debt $ 306,666 $ 297,719 $ 297,440 $ 177,666 $ 194,506
==================================================================================================
Stockholders' equity $ 399,015 $ 369,934 $ 365,810 $ 346,080 $ 304,356
==================================================================================================
Dividends per common share $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ .75
==================================================================================================
<FN>
In 1997, the Company retroactively adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share," which revised the
calculation and presentation provisions regarding earnings per share. The
adoption of this statement had no effect on previously reported earnings per
common share. Basic and diluted earnings per share are the same for all
periods presented.
As described in Note 5 to the consolidated financial statements, the
Company changed its method of accounting for spare parts and supplies
inventories in 1996. The cumulative effect of this change at January 1, 1996
was to increase net earnings by $3,006,000 or $2.02 per common share. In
addition, the net effect of this change in 1996, exclusive of the cumulative
effect, was to increase net earnings by $788,000 or $.53 per common share.
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 common share increased by
$6.10 as a result of this reversal of deferred taxes.
</TABLE>
(Graphs omitted from this page, see appendix.)
Seaboard Corporation and Subsidiaries
Financial Summary
(Graphs omitted from this page, see appendix.)
Management's Discussion and Analysis
Liquidity and Capital Resources
- ------------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1995
- ------------------------------------------------------------------------------
Current ratio 1.47:1 1.71:1 2.25:1
Working capital $ 168.3 $ 204.2 $ 219.0
Cash from operating activities $ 121.1 $ (72.8) $ 42.2
Capital expenditures $ 85.5 $ 110.5 $ 229.5
Long-term debt, exclusive of
current maturities $ 306.7 $ 297.7 $ 297.4
Total capitalization* $ 763.5 $ 715.5 $ 703.4
- ------------------------------------------------------------------------------
* Total capitalization is defined as stockholders' equity and noncurrent
liabilities.
Cash provided by operating activities increased $193.9 million compared
to 1996 primarily as a result of a large increase in current liabilities,
smaller increases in accounts receivable and inventories, and an increase
in net earnings during 1997 compared to 1996. The increase in current
liabilities consists primarily of deferred revenues on incomplete voyages
and various increases in other accrued liabilities. The smaller increase
in receivables during 1997 was primarily the result of smaller increases
in pork and poultry receivables and improved collections in the
transportation and power divisions during 1997. The smaller increase in
inventory was primarily a result of the pork division experiencing a
larger build-up of hog inventories during 1996 than 1997.
The decline in cash provided by operating activities of $115.0 million
in 1996 compared to 1995 was primarily attributable to lower earnings and
increased inventories and receivables. Inventories increased primarily as
a result of the expansion of the live hog herd and finished product at the
pork processing plant, which began operating in December 1995, and higher
priced feed raw materials. Inventories of dressed poultry also increased
due to the timing of export sales. Inventories also increased $6.2
million as a result of the Company changing its method of accounting for
spare parts and supplies used in its poultry and pork processing
operations (see Note 5 to consolidated financial statements for further
discussion). The increase in receivables was primarily related to
increased sales of pork and poultry products and advances to foreign
affiliates.
The Company invested $85.5 million in property, plant and equipment
during 1997, of which $73.0 million was expended in the food production and
processing segment, $9.4 million in the transportation segment and $3.1
million in other areas of the Company's business.
During 1997, the Company invested $31.9 million for the completion of
previously planned hog farrowing and finishing facilities and improvements
to the pork processing plant. The Company has announced plans to
construct a second pork processing plant with a double shift capacity in
excess of four million hogs annually. In addition, the Company plans to
construct additional hog facilities, including two feed mills, to produce
an additional two million hogs per year. Construction of live hog
production facilities has begun in 1998 and is expected to be completed
around the time the second processing plant commences operations,
currently planned for 2001. The processing plant is expected to cost
approximately $75 million with an additional $270 million for the live hog
facilities. During 1998, approximately $64 million is expected to be
spent on these expansion plans along with an additional $20 million for
existing facilities. Approximately $65 million of the 1998 costs are
expected to be financed through operating lease agreements. Management is
currently evaluating alternative methods of implementing future expansion,
including constructing additional company-owned facilities, utilizing
contract growers and adding more leased facilities. Facilities
constructed by the Company will be financed with internally generated cash
or through the Company's additional borrowing capacity.
During 1997, the Company invested $37.2 million primarily to expand and
convert the Athens, Georgia, poultry facility from retail tray-pack
production to food service production and to add an additional cooking
line at the Elberton, Georgia, poultry facility. During 1998, the Company
anticipates spending $20 million to complete these expansions and make
general upgrades to other poultry facilities. Management anticipates
these expenditures will be financed by internally generated cash.
Other capital expenditures in the food production and processing
segment for 1997 consisted of $3.9 million in general modernization and
efficiency upgrades of plant and equipment.
Capital expenditures in the transportation segment during 1997 totaled
$9.4 million for general replacement and upgrades of property and
equipment.
The Company invested $110.5 million in property, plant and equipment
during 1996, of which $99.1 million was expended in the food production
and processing segment, $8.6 million in the transportation segment and
$2.8 million in other areas of the Company's business.
During 1996, capital expenditures for hog farrowing and finishing
facilities, two feed mills and a pork processing plant amounted
to $83 million. Other capital expenditures in the food
production and processing segment for 1996 consisted of $16.1
million in expanding processing capacity, general modernization
and efficiency upgrades of plant and equipment.
Capital expenditures in the transportation segment during 1996 totaled
$8.6 million for general replacement and upgrades of property and
equipment.
In January 1998, the Company invested $2.5 million for a minority
interest in a new limited liability company in Maine. The new company acquired
the assets of an existing seafood company which processes and distributes
prepackaged smoked seafood and related products, more fully integrating
the Company's salmon business. The investment is being accounted for
using the equity method.
During the fourth quarter of 1997, the Company won a bid to acquire up
to a 50% interest in a flour mill in Lesotho for approximately $5 million.
In addition, the Company, along with two partners in a consortium, won a
bid to acquire an interest in a flour mill in Haiti. The Company will
acquire a minority interest for approximately $4 million by investing in a
joint venture, which will operate the flour mill in Haiti. These
transactions are anticipated to close during the first half of 1998.
These investments will be accounted for using the equity method.
In October 1996, the Company acquired a 50% interest in a flour mill
located in Mozambique for $4.6 million with $1 million paid at closing and
the balance to be paid in installments over the next six years. The
investment is being accounted for using the equity method.
In August 1996, the Company sold three vessels used in the
transportation segment to a third party for $28.5 million. The vessels have
been chartered from the third party for terms ranging from seven to ten years.
The Company realized a $5.9 million gain on the sale of the vessels which
was deferred and will be recognized over the term of the charter
agreements. The charters are accounted for as operating leases.
In July 1996, the Company purchased for $8.8 million a non-controlling
interest in Ingenio y Refineria San Martin del Tabacal S.A. (Tabacal).
Tabacal is an Argentinean company primarily engaged in growing and
refining sugarcane and citrus production for consumption in Argentina and
for export. The investment is being accounted for using the equity
method. As of December 31, 1997, net advances and non-voting investments
totaled $67.6 million for improvements of existing operations, expanding
sugarcane and citrus fields and working capital requirements. During the
second quarter of 1997, the Company determined that these advances would
not be repaid on a short-term basis and, accordingly, such advances are
recorded as long-term investments in and advances to foreign affiliates at
December 31, 1997. During the next year, the Company anticipates
guaranteeing loans made to Tabacal by third parties and/or making
additional advances to and/or non-voting investments in Tabacal of
approximately $20 million.
During 1997, the Company's one-year revolving credit facilities were
increased to $160 million as a result of the extension and increase of
existing facilities and the establishment of a new facility. At December
31, 1997, the Company had $142.0 million outstanding under the one-year
revolving credit facilities and $15.4 million outstanding under the short-
term uncommitted credit lines totaling $114.5 million. Subsequent to
year-end, the Company's one-year revolving credit facilities maturing in
the first quarter of 1998 were extended for an additional year.
In the first quarter of 1997, the Company borrowed the proceeds of $10
million of Adjustable Rate, Seven-Day Demand Exempt Facility Revenue Bonds
issued by the Oklahoma Development Finance Authority. These funds were
used to finance certain costs associated with hog production facilities.
In addition, the existing five-year revolving credit facility was extended
and reduced from $50 million to $25 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 totaled $1,780.3 million for the year ended December 31,
1997, an increase of $315.9 million compared to the year ended December 31,
1996. Operating income of $77.1 million for 1997 increased $57.4 million
compared to 1996.
Net sales totaled $1,464.4 million for the year ended December 31,
1996, an increase of $290.4 million compared to the year ended December 31,
1995. Operating income of $19.7 million for 1996 decreased $11.5 million
compared to 1995
Food Production and Processing Segment
- ---------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1995
- ---------------------------------------------------------------------------
Net sales $ 1,117.6 844.5 652.5
Operating income $ 35.4 (3.9) 10.1
- ---------------------------------------------------------------------------
In 1997, net sales for the food production and processing segment
increased $273.1 million compared to 1996 as a result of increased
utilization of the pork processing plant during 1997. Operating income
increased $39.3 million in 1997 compared to 1996 primarily as a result of
efficiencies created by increased production at the pork processing plant
and live hog production facilities and, to a lesser extent, lower grain
prices. Management cannot predict whether grain prices will remain at
current levels during the next year.
Net sales for the pork operations increased $297.3 million to $531.6
million in 1997 compared to 1996. This increase is primarily the result
of increased sales of pork at the hog processing plant, which reached full
single-shift capacity during the second half of 1996 and commenced double-
shift operations during the second quarter of 1997. In addition, pork
prices were higher for the majority of 1997 compared to 1996. Management
expects continued increases in sales volume during 1998 as the hog
processing plant operates for a full year at double-shift capacity. Gross
income for the pork operations increased $51.2 million to $54.3 million in
1997 compared to 1996. This increase is primarily the result of increased
utilization of the pork processing plant along with increased production
and weight per hog at the hog production facilities. The anticipated
increase in sales volume and related gross income for 1998 may be
partially offset by lower pork prices. During the fourth quarter of 1997,
pork prices declined primarily as a result of increased hog production in
the United States and the impact of the Asian economic crisis on exports.
Management anticipates that these lower pork prices will continue for the
first part of 1998 and will have a negative effect on financial results
during 1998 compared to 1997.
Net sales for the poultry operations decreased $25.1 million to $476.6
million and gross income decreased $7.0 million to $21.5 million in 1997
compared to 1996. These decreases were a result of downtime and start-up
costs associated with converting the Company's largest plant, located in
Athens, Georgia, from retail tray-pack to food service production. In
addition, there was a general decrease in poultry markets, especially leg
quarter prices, during 1997 compared to 1996. The decrease in gross
income was partially offset by lower finished feed costs, primarily corn,
and a reduction in packaging costs, primarily as a result of product mix.
Management expects to complete the expansion of its further processing
capacity in early 1998, which should increase sales during the next year.
Management believes that these lower poultry markets will continue to
have a negative effect on financial results during the first half of 1998
compared to 1997.
In 1996, net sales for the food production and processing segment
increased $192.0 million compared to 1995 as a result of increased poultry
and pork sales. Operating income for 1996 decreased $14.0 million
compared to 1995 as a result of significantly higher grain prices during
most of 1996. As described in Note 5 to the consolidated financial
statements, the Company changed its method of accounting for spare parts
and supplies inventories in 1996. The effect of this change was to
decrease the operating loss in the food production and processing segment
in 1996 by $1.3 million.
Net sales for the poultry division increased $43.1 million to $501.7
million in 1996 compared to 1995. The increase was primarily related to
increased production resulting from expanded processing capacity and an
increase in the average selling price of poultry products. The increased
sales prices were partially attributable to higher poultry markets and
changes in product mix. Gross income from poultry products decreased $26.6
million to $28.5 million in 1996 compared to 1995. The decrease in gross
income was primarily related to higher finished feed costs.
Net sales within the pork operations increased $142.7 million to $234.3
million in 1996 compared to 1995. The increase is related to sales of
pork as a result of the new hog processing plant reaching full single-
shift capacity during 1996. The market hogs produced at the Company's live
hog operations are slaughtered at the pork processing plant. The increase
in sales was partially offset by a $56.1 million decrease in sales
resulting from discontinuing the operations at the Albert Lea, Minnesota,
pork processing plant in December 1995.
Gross income for the pork operations increased $6.7 million to $3.1
million in 1996 compared to 1995. The increase in gross income is
primarily related to large increases in hog production and reaching full
single-shift capacity at the new hog processing plant in 1996 along with
the discontinuation of unprofitable operations at the Albert Lea plant in
December 1995. The increase was partially offset by higher finished feed
costs and start-up costs associated with the processing plant.
Commodity Trading and Milling Segment
- --------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1995
- --------------------------------------------------------------------------
Net sales $ 313.9 315.6 208.0
Operating income $ 9.3 18.1 8.5
- --------------------------------------------------------------------------
Net sales from commodity trading and milling activities decreased $1.7
million in 1997 compared to 1996. This decrease is primarily the result
of a decrease in commodity prices, mainly wheat and corn, sold in foreign
markets partially offset by an increase in tonnage shipped. Operating
income decreased $8.8 million in 1997 compared to 1996, primarily as a
result of lower millfeed prices in foreign markets and increased reserves
on certain foreign receivables.
Net sales from commodity trading and milling increased by $107.6
million in 1996 compared to 1995. The increase is primarily related to
increased sales of wheat and other grains in foreign markets. Operating income
from commodity trading increased by $9.6 million compared to 1995, primarily as
a result of improved margins due to lower unit freight costs.
Transportation Segment
- ----------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1995
- ----------------------------------------------------------------------------
Net sales $ 313.0 266.6 277.1
Operating income $ 30.7 6.5 16.9
- ----------------------------------------------------------------------------
Net sales from containerized cargo operations increased $46.4 million
and operating income increased $24.2 million in 1997 compared to 1996. These
increases are primarily the result of increased unit cargo volumes shipped
in certain markets that the Company serves and, to a lesser extent,
modestly higher container rates. During 1996, container rates were under
significant competitive pressure but stabilized and began to improve
during the fourth quarter of 1996. Management cannot predict whether
rates will continue to improve during the next year.
Net sales and operating income from containerized cargo operations
decreased by $10.5 million and $10.4 million, respectively, in 1996
compared to 1995. The decrease in sales was primarily related to lower
container rates resulting from increased competition in certain markets
serviced by the Company compared to the same period one year earlier. The
decrease in sales was partially offset by the increase in unit cargo
volumes shipped. The decrease in operating income was partially offset by
lower overhead expenses as a result of improving efficiency levels.
Other Operations
- --------------------------------------------------------------------------
(Dollars in millions) 1997 1996 1995
- --------------------------------------------------------------------------
Net sales $ 35.8 37.7 36.3
Operating income $ 7.1 5.1 1.0
- --------------------------------------------------------------------------
Net sales from other operations were almost unchanged in 1997 compared
to 1996. Operating income increased by $2.0 million compared to 1996 as a
result of improved collections on foreign receivables.
Net sales from other operations were almost unchanged in 1996 compared
to 1995. Operating income increased by $4.1 million compared to 1995 as a
result of a reduction in operating expenses resulting from lower
maintenance costs in electric power generation and improved receivable
collections.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) totaled $142.0
million, $128.8 million and $139.2 million for the years ended December
31, 1997, 1996 and 1995, respectively. As a percent of revenues, SG&A
decreased to 8.0% in 1997 compared to 8.8% in 1996 as a result of
increased pork production and lower expenses in the transportation
segment. The decrease in 1996 compared to 1995 reflects the Company's
focus on cost controls, improved receivable collections, and start-up of
pork processing operations.
Interest Income
Interest income totaled $6.1 million, $9.1 million and $11.5 million
for the years ended December 31, 1997, 1996 and 1995, respectively. The
decreases in 1997 and 1996 are primarily the result of a decrease in
average invested funds.
Interest Expense
Interest expense totaled $31.1 million, $26.9 million and $15.7 million
for the years ended December 31, 1997, 1996 and 1995, respectively. The
increase during 1997 compared to 1996 was primarily a result of increased
short-term borrowings during the year. The increase during 1996 compared
to 1995 was primarily the result of increased short-term borrowings and
the issuance of long-term debt in June 1995.
Income (Loss) from Foreign Affiliates
Income (loss) from foreign affiliates totaled $(8.7) million, $(3.0)
million and $2.0 million for the years ended December 31, 1997, 1996 and
1995, respectively. The losses in 1997 and 1996 are primarily
attributable to the operations of Tabacal, a non-controlling interest in
which was acquired by the Company in July 1996. During 1997, losses
increased from Tabacal primarily as a result of the costs of upgrading and
expanding operations. Management plans for improved results in 1998 but
expects continued losses during the next year as upgrading and expansion
plans continue.
Income Tax Expense
The effective tax rate for 1997 decreased compared to 1996. This
decrease was a result of increased permanently deferred foreign tax earnings
during 1997 and the effect of certain other permanent differences on the
increased level of income for 1997 compared to 1996. The difference in
the effective tax rate for 1996 compared to 1995 is primarily related to
the effect of certain permanent differences on the lower level of income
for 1996 compared to 1995.
Derivative Financial Information
The Company enters into forward purchase and sale contracts, futures
and options to manage its exposure to price fluctuations in the commodity
markets. These commodity instruments generally involve the anticipated
purchase of feed grains and the sale of hogs. At December 31, 1997, the
Company had net contracts to purchase 20.2 million bushels of grain and
there were no open contracts for hogs. Realized losses from commodity
contracts reported in operating income for the years ended December 31,
1997 and 1996 were $1.6 million and $12.9 million, respectively.
From time to time, the Company enters into interest rate exchange
agreements in the management of interest rate risk. These agreements
effectively convert specifically identified variable rate debt into fixed
rate debt. At December 31, 1997, the Company had interest rate exchange
agreements in place effectively fixing the interest rate on $200 million
of variable rate debt to a fixed weighted average rate of 6.3%. These
contracts expire in 2007. The use of these types of contracts did not
have a material effect on the 1997 and 1996 results of operations.
Other Financial Information
The Company is subject to various federal and state regulations
regarding environmental protection and land use. Among other things, these
regulations affect the disposal of livestock waste and corporate farming
matters in general. Management believes it is in compliance with all such
regulations. Laws and regulations in the states where the Company
currently conducts its pork operations are becoming more restrictive. The
State of Oklahoma has recently enacted a moratorium on the issuance of any
further permits for pork facilities not yet operating. Under the present
legislation, the moratorium will remain in effect for one year unless
earlier repealed. The effect of the moratorium could be to delay the
Company's expansion plans or to increase related development costs.
Future changes in environmental or corporate farming laws could affect the
manner in which the Company operates its business and its cost structure.
The Company has completed an assessment of the impact of the Year 2000
on its computer systems, both hardware and software, and expects to complete
addressing these issues, including all necessary testing, during 1998.
The Company currently believes that the remaining costs to complete
addressing these issues will not be material to the Company's consolidated
financial position, results of operations or cash flows. Such
expenditures are being charged to expense as incurred.
The Company has not communicated with all of its significant suppliers
to determine the extent to which the Company is vulnerable to failure of
those third parties to remediate their own Year 2000 issues. The Company
does not anticipate the cost of Year 2000 compliance by suppliers to be
passed on to the Company. The Company does not believe that failure to
address the Year 2000 issue by a third party on whom the Company's systems
rely would have a material adverse effect on the Company.
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information." These statements, which are effective for
periods beginning after December 15, 1997, expand or modify disclosures
and, accordingly, will have no impact on the Company's reported financial
position, results of operations or cash flows. The Company will adopt
SFAS No. 130 during its first quarter of 1998. The Company will adopt
SFAS No. 131 for the year ending December 31, 1998.
The Company does not believe its businesses have been materially
adversely affected by general inflation.
<TABLE>
Quarterly Financial Data
(Unaudited)
Seaboard Corporation and Subsidiaries
<CAPTION>
- -------------------------------------------------------------------------------
(Thousands of dollars 1st 2nd 3rd 4th Total for
except per share amounts) Quarter Quarter Quarter Quarter the Year
- -------------------------------------------------------------------------------
1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 400,180 449,366 429,610 501,177 1,780,333
Operating income $ 16,120 24,209 23,234 13,512 77,075
Net earnings $ 5,336 10,505 10,508 4,225 30,574
Earnings per common
share $ 3.59 7.06 7.06 2.84 20.55
Dividends per common
share $ .25 .25 .25 .25 1.00
Market price range per common share:
High $ 268 292 316 453
Low $ 230 1/4 247 1/2 264 309
===============================================================================
<CAPTION>
- -------------------------------------------------------------------------------
1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 297,631 330,503 350,739 485,489 1,464,362
Operating income $ (7,242) (3,668) 9,606 18,083 16,779
Net earnings $ (7,706) (4,149) 3,316 14,385 5,846
Earnings per common
share $ (5.18) (2.79) 2.23 9.67 3.93
Dividends per common
share $ .25 .25 .25 .25 1.00
Market price range per common share:
High $ 270 246 3/4 221 266
Low $ 233 203 196 210
===============================================================================
In 1997, the Company changed its accounting periods to four three-month
quarters from three twelve-week periods and one sixteen-week period (fourth
quarter of 1996). Accordingly, the quarters for 1997 are not directly
comparable to the quarters for 1996.
In the fourth quarter of 1997, the Company retroactively adopted SFAS
No.128, "Earnings Per Share." The adoption of this statement had no effect on
previously reported earnings per common share. Basic and diluted earnings are
the same for all periods presented.
As described in Note 5 to the consolidated financial statements, the
Company changed its method of accounting for spare parts and supplies
inventories during the fourth quarter of 1996. The cumulative effect of this
change at January 1, 1996 was to increase net earnings by $3,006,000 or $2.02
per common share for the first quarter of 1996.
</TABLE>
This Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which may include statements
concerning projection of revenues, income or loss, capital expenditures,
capital structure or other financial items, statements regarding the plans and
objectives of management for future operations, statements of future economic
performance, statements of the assumptions underlying or relating to any of the
foregoing statements and other statements which are other than statements of
historical fact. These statements appear in a number of places in this Report
and include statements regarding the intent, belief or current expectations of
the Company and its management with respect to (i) the cost and timing of the
completion of new or expanded facilities, (ii) the Company's financing plans,
(iii) the price of feed stocks and other materials used by the Company, (iv)
the price for the Company's products and services, or (v) other trends
affecting the Company's financial condition or results of operations. Readers
are cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual results
may differ materially as a result of various factors. The accompanying
information contained in this report including without limitation the
information under the headings "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Letter to Stockholders"
identifies important factors which could cause such differences.
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 judgments
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,
transactions are executed in accordance with Company policy and are properly
recorded, and 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 such evaluations require estimates and
judgments. 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 annually 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
We have audited the accompanying consolidated balance sheets of
Seaboard Corporation and subsidiaries as of December 31, 1997 and 1996, 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, 1997.
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
also 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, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1997, in conformity with generally accepted
accounting principles.
As discussed in Note 5 to the consolidated financial statements, the
Company changed its method of accounting for spare parts and supplies
inventories in 1996.
KPMG Peat
Marwick LLP
Kansas City, Missouri
March 6, 1998
<TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Statements of Earnings
(Thousands of dollars except per share amounts)
<CAPTION>
Years ended December 31,
------------------------------------------
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Net sales $ 1,780,333 $ 1,464,362 $ 1,173,977
Cost of sales and operating expenses 1,561,265 1,315,782 1,003,604
------------- ------------ ------------
Gross income 219,068 148,580 170,373
Selling, general and administrative
expenses 141,993 128,835 139,169
------------- ------------ ------------
Operating income 77,075 19,745 31,204
Other income (expense):
Interest income 6,127 9,095 11,506
Interest expense (31,108) (26,864) (15,686)
Income (loss) from foreign
affiliates (8,733) (2,966) 2,035
Miscellaneous 1,221 1,292 (440)
------------- ------------ ------------
Total other income (expense), net (32,493) (19,443) (2,585)
------------- ------------ ------------
Earnings before income taxes
and cumulative effect of a
change in accounting principle 44,582 302 28,619
Income tax (expense) benefit (14,008) 2,538 (8,417)
------------- ------------ ------------
Earnings before cumulative
effect of a change in
accounting principle 30,574 2,840 20,202
Cumulative effect of changing the
accounting for inventories, net of
income tax expense of $1,922 -- 3,006 --
------------- ------------ ------------
Net earnings $ 30,574 $ 5,846 $ 20,202
============= ============ ============
Earnings per common share:
Earnings before cumulative effect
of a change in accounting
principle $ 20.55 $ 1.91 $ 13.58
Cumulative effect of changing the
accounting for inventories -- 2.02 --
------------- ------------ ------------
Earnings per common share $ 20.55 $ 3.93 $ 13.58
============= ============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Thousands of dollars except per share amounts)
Years ended December 31, 1997, 1996 and 1995
<CAPTION>
Unrealized
Gain (Loss)
Common Treasury Additional on Debt Retained
Stock Stock Capital Securities Earnings
------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1995 $ 1,790 $ (302) $ 13,214 $ (764) $ 332,142
Net unrealized gain on
marketable debt
securities, net of income
tax expense of $616 _ _ _ 1,015 -
Net earnings - - - - 20,202
Dividends on common stock
($1.00 per share) - - - - (1,487)
------- -------- ---------- ---------- ----------
Balances,December 31, 1995 1,790 (302) 13,214 251 350,857
Net unrealized loss on
marketable debt
securities, net of
income tax benefit
of $142 - - - (235) _
Net earnings _ _ _ _ 5,846
Dividends on common stock
($1.00 per share) - - - - (1,487)
------- -------- ---------- ---------- -----------
Balances,December 31, 1996 1,790 (302) 13,214 16 355,216
Net unrealized loss on
marketable debt
securities, net of
income tax benefit
of $3 - - - (6) _
Net earnings _ _ _ _ 30,574
Dividends on common stock
($1.00 per share) - - - - (1,487)
-------- -------- ---------- --------- -----------
Balances,December 31, 1997 $ 1,790 $ (302) $ 13,214 $ 10 $ 384,303
======== ======== ========== ========= ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Balance Sheets
(Thousands of dollars)
<CAPTION>
December 31,
----------------------------
1997 1996
Assets ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,552 $ 11,467
Short-term investments 108,744 90,373
Receivables:
Trade 169,990 151,380
Due from foreign affiliates 16,041 37,995
Other 10,267 14,357
------------ ------------
196,298 203,732
Allowance for doubtful receivables (20,658) (19,448)
------------ ------------
Net receivables 175,640 184,284
Inventories 211,024 185,701
Deferred income taxes 9,730 7,224
Prepaid expenses and deposits 15,545 14,330
------------ ------------
Total current assets 529,235 493,379
Investments in and advances to foreign
affiliates 93,668 32,212
Net property, plant and equipment 486,373 466,161
Other assets 15,109 12,933
------------ ------------
Total Assets $ 1,124,385 $ 1,004,685
============ ============
<FN>
See accompanying notes to consolidated financial statements.
<CAPTION>
Seaboard Corporation and Subsidiaries
Consolidated Balance Sheets
(Thousands of dollars)
December 31,
----------------------------
Liabilities and Stockholders' Equity 1997 1996
------------ ------------
<S> <C> <C>
Current liabilities:
Notes payable to banks $ 157,445 $ 150,157
Current maturities of long-term debt 6,843 6,900
Accounts payable 78,805 72,398
Accrued liabilities 55,520 34,586
Deferred revenues 42,958 9,001
Accrued payroll 19,331 16,100
------------ ------------
Total current liabilities 360,902 289,142
------------ ------------
Long-term debt, less current maturities 306,666 297,719
Deferred income taxes 27,943 22,721
Other liabilities 29,859 25,169
------------ ------------
Total non-current and deferred liabilities 364,468 345,609
------------ ------------
Commitments and contingent liabilities
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 (302) (302)
------------ ------------
1,488 1,488
Additional capital 13,214 13,214
Unrealized gain on debt securities, net of
income tax expense of $5 and $8 in 1997
and 1996, respectively 10 16
Retained earnings 384,303 355,216
------------ ------------
Total stockholders' equity 399,015 369,934
------------ ------------
Total Liabilities and Stockholders' Equity $ 1,124,385 $ 1,004,685
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Thousands of dollars)
<CAPTION>
Years ended December 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 30,574 $ 5,846 $ 20,202
Adjustments to reconcile net earnings
to cash from operating activities:
Depreciation and amortization 56,896 50,914 44,944
Equity in (earnings) losses of foreign
affiliates 8,733 2,966 (2,035)
Deferred income taxes 2,719 9,301 (6,175)
Changes in current assets and liabilities
(net of businesses acquired):
Receivables, net of allowance (19,711) (66,575) (13,014)
Inventories (25,323) (72,858) (39,600)
Prepaid expenses and deposits (1,215) (79) (6,546)
Current liabilities exclusive of debt 64,529 (1,825) 46,889
Other, net 3,908 (452) (2,420)
------------ ------------ ------------
Net cash from operating activities 121,110 (72,762) 42,245
------------ ------------ ------------
Cash flows from investing activities:
Purchase of investments (277,437) (327,020) (691,590)
Proceeds from the sale of investments 193,303 300,265 423,358
Proceeds from maturity of investments 65,754 71,202 309,331
Capital expenditures (85,482) (110,491) (229,499)
Investments and advances to foreign
affiliates (41,834) (6,476) 6,349
Proceeds from the sale of equipment 7,872 31,831 4,711
Notes receivable 163 719 1,300
Acquisition of businesses -- -- (3,500)
------------ ------------ -------------
Net cash from investing activities (137,661) (39,970) (179,540)
------------ ------------ -------------
Cash flows from financing activities:
Notes payable to banks, net 7,288 116,342 13,239
Proceeds from issuance of long-term debt 10,213 10,000 142,471
Principal payments of long-term debt (1,323) (12,394) (19,094)
Deferred grant revenue -- 350 3,927
Dividends paid (1,487) (1,487) (1,487)
Bond construction fund (1,055) 5,859 (1,005)
------------ ------------ -------------
Net cash from financing activities 13,636 118,670 138,051
------------ ------------ -------------
Net increase (decrease) in cash and cash
equivalents (2,915) 5,938 756
Cash and cash equivalents at beginning of year 11,467 5,529 4,773
------------ ------------ -------------
Cash and cash equivalents at end of year $ 8,552 $ 11,467 $ 5,529
============ ============ =============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
Seaboard Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1997, 1996 and 1995
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 which is
primarily engaged in domestic pork and poultry production and processing,
commodity merchandising, baking, flour milling and shipping. Overseas, the
Company is primarily engaged in flour and feed milling, shrimp and produce
farming and electric power generation.
Principles of Consolidation and Investments 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, non-controlled
foreign affiliates are accounted for by the equity method.
Short-Term Investments
- ----------------------
The short-term investments are retained for future use in the business
and include time deposits, commercial paper, tax-exempt bonds, corporate bonds
and U.S. government obligations. 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, as a separate component
of stockholders' equity. 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, grain inventories held in milling operations, seafood, and parts
and supplies inventories are valued at the lower of first-in, first-out (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 improvements are
capitalized.
Deferred Grant Revenue
- ----------------------
Included in other liabilities at December 31, 1997 and 1996 is
$11,550,000 and $11,974,000, respectively, of deferred grant revenue. Deferred
grant revenue represents economic development funds contributed to the Company
by government entities that were limited to construction of a hog processing
facility in Guymon, Oklahoma. Deferred grants are being amortized to income
over the life of the assets acquired with the funds.
Income Taxes
- ------------
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.
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.
Use of Estimates
- ----------------
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Impairment of Long-Lived Assets
- -------------------------------
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of the asset to
future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
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, 1997, 1996 and 1995, respectively.
In the fourth quarter of the year ended December 31, 1997, the Company
retroactively adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," which revised the calculation and presentation provisions
of Accounting Principles Board Opinion No. 15 and related interpretations. The
adoption of this statement had no effect on the previously reported earnings
per share. Basic and diluted earnings per share are the same for all periods
presented.
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 $22,487,000 and $20,820,000 at December 31, 1997 and 1996, respectively.
The amounts paid (received) for income taxes and interest are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
- ---------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Interest (net of amounts capitalized) $ 30,284 $ 27,120 $ 14,598
========= ========= =========
Income taxes $ (6,817) $ (10,362) $ 25,384
========= ========= =========
</TABLE>
See Note 6 for non-cash financing for an investment in foreign affiliates.
Foreign Currency
- ----------------
The Company has operations in and transactions with customers in a
number of foreign countries. The currencies of the 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. In addition, the
value of the U.S. dollar fluctuates in relation to the currencies of countries
where the Company's foreign subsidiaries and affiliates conduct business. These
fluctuations result in exchange gains and losses. The activities of these
foreign subsidiaries and affiliates are primarily conducted with U.S.
affiliates or they operate in hyper-inflationary environments. As a result, the
Company translates the financial statements of foreign subsidiaries using the
U.S. dollar as the functional currency. The gains and losses that result from
remeasurement are reported in earnings and are not material for the years ended
December 31, 1997, 1996 and 1995. Foreign currency exchange restrictions
imposed upon the Company's wholly owned foreign subsidiaries and certain
minority-owned foreign affiliates do not have a significant effect on the
consolidated financial position of the Company.
Financial Instruments
- ---------------------
The Company enters into interest rate exchange agreements which
involve the exchange of fixed-rate and variable-rate interest payments over the
life of the agreements without the exchange of the underlying notional amounts
to hedge the effects of fluctuations in interest rates. The difference to be
paid or received is accrued as interest rates change and is recognized as an
adjustment to interest expense. These agreements effectively convert
specifically identified, variable-rate debt into fixed-rate debt.
Gains and losses on termination of interest rate exchange agreements
are deferred and recognized over the term of the underlying debt instrument as
an adjustment to interest expense. At December 31, 1997 and 1996, net deferred
gains on terminated interest rate exchange agreements were not material. In
cases where there is no remaining underlying debt instrument, gains and losses
on termination are recognized currently in miscellaneous income (expense). See
Note 9 for a description of outstanding interest exchange rate agreements.
Commodity Contracts
- -------------------
The Company enters into forward purchase and sale contracts, futures
and options to manage its exposure to price fluctuations in the commodity
markets. These commodity instruments generally involve the anticipated purchase
of feed grains and the sale of hogs. At December 31, 1997, the Company had net
contracts to purchase 20.2 million bushels of grain and there were no open
contracts for hogs.
Gains and losses on commodity instruments designated as hedges and
for which there is high correlation between changes in the value of the
instrument and changes in the value of the hedged commodity are deferred and
ultimately recognized in operations as part of the cost of the commodity.
Gains and losses on qualifying hedges of firm commitments or probable
anticipated transactions are also deferred and recognized as adjustments of the
carrying amounts of the commodities when the hedged transaction occurs. When a
qualifying hedge is terminated or ceases to meet the specific criteria for use
of hedge accounting, any deferred gains or losses through that date continue to
be deferred. Commodity instruments not qualifying as hedges for financial
reporting purposes are marked to market and included in cost of sales and
operating expenses in the consolidated statements of earnings. At
December 31, 1997 and 1996, the net deferred loss on commodity instruments was
$689,000 and $6,402,000, respectively, and is included in deferred revenues in
the consolidated balance sheets. Cash flows from commodity instruments are
classified in the same category as cash flows from the hedged commodities in
the consolidated statements of cash flows.
Reclassifications
- -----------------
Certain 1996 and 1995 amounts have been reclassified to conform with
the 1997 presentations.
Note 2
Acquisitions
- -------------------------------------------------------------------------------
In January 1995, the Company acquired for $3,500,000 all the
outstanding common stock of a hatchery company which previously sold day old
chicks to the Company's poultry operations. The acquisition did not
significantly affect net earnings or earnings per share on a pro forma 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, 1997 and 1996,
the Company had a net receivable balance from the Parent Company of $270,000
and $53,000, respectively. Interest on receivables is charged at the prime rate
and for the years ended December 31, 1997, 1996 and 1995, amounted to $7,100,
$37,000, and $275,000, respectively.
<TABLE>
Note 4
Short-Term Investments
- -----------------------------------------------------------------------------
<CAPTION>
The following is a summary of available-for-sale securities
at December 31, 1997:
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Estimated
(Thousands of dollars) Cost Gains Losses Fair Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government agencies $ 27,309 12 -- $ 27,321
Obligations of states and
political subdivisions 50,587 -- -- 50,587
Other debt securities 30,833 3 -- 30,836
- -----------------------------------------------------------------------------
Total debt securities $ 108,729 15 -- $ 108,744
=============================================================================
<FN>
</TABLE>
<TABLE>
<CAPTION>
The following is a summary of available-for-sale securities
at December 31, 1996:
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Estimated
(Thousands of dollars) Cost Gains Losses Fair Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of U.S.
government agencies $ 20,353 -- 4 $ 20,349
Obligations of states and
political subdivisions 41,506 -- -- 41,506
Other debt securities 28,490 28 -- 28,518
- -----------------------------------------------------------------------------
Total debt securities $ 90,349 28 4 $ 90,373
=============================================================================
<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, 1997 and 1996 are $1,371,000 and
$315,000, respectively, 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.
The gross realized gains on sales of available-for-sale securities
totaled $3,000, $143,000 and $296,000 and the gross realized losses totaled
$14,000, $45,000 and $174,000 for the years ended December 31, 1997, 1996
and 1995, respectively.
</TABLE>
Note 5
Inventories
- -------------------------------------------------------------------------------
During the fourth quarter of 1996, the Company changed its method of
accounting for spare parts and supplies used in its poultry and pork processing
operations, retroactively effective as of January 1, 1996. Previously, these
spare parts and supplies were expensed when purchased. Under the new method,
such purchases are recorded as inventory and charged to operations when used.
Due to the growth of these inventories, primarily as a result of completion of
the new pork processing plant in Oklahoma, the Company believes the new method
is preferable as it provides a better matching of revenues and expenses. The
cumulative effect of this accounting change at January 1, 1996 was to increase
net earnings by $3,006,000 or $2.02 per common share. The net effect of this
accounting change was to increase earnings before cumulative effect of change
in accounting principle by $788,000 or $.53 per common share for the year ended
December 31, 1996. The pro forma effect of retroactive application of this new
method of accounting would not materially affect the results of operations for
the year ended December 31, 1995.
<TABLE>
<CAPTION>
A summary of inventories at the end of each year is as follows:
December 31,
- ------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
At lower of LIFO cost or market:
Live poultry $ 27,116 $ 27,610
Dressed poultry 32,496 29,295
Feed and baking ingredients, packaging
supplies and other 6,970 7,353
- ------------------------------------------------------------------------------
66,582 64,258
LIFO allowance (4,744) (6,000)
- ------------------------------------------------------------------------------
Total inventories at lower of LIFO cost
or market 61,838 58,258
- ------------------------------------------------------------------------------
At lower of FIFO cost or market:
Live hogs 76,484 68,409
Grain, flour and feed 37,575 30,461
Crops in production, fertilizers and pesticides 11,166 10,097
Dressed pork 8,388 4,709
Other 15,573 13,767
- ------------------------------------------------------------------------------
Total inventories at lower of FIFO cost
or market 149,186 127,443
- ------------------------------------------------------------------------------
Total inventories $ 211,024 $ 185,701
==============================================================================
<FN>
The use of the LIFO method increased net earnings in 1997 and 1996 by
$766,000 ($.52 per share) and $589,000 ($.40 per share), respectively, and
decreased net earnings in 1995 by $3,401,000 ($2.29 per share). The increases
in net earnings during 1997 and 1996 were primarily the result of declining
purchase prices. If the FIFO method had been used, inventories would have been
$4,744,000 and $6,000,000 higher than those reported at December 31, 1997 and
1996, respectively.
</TABLE>
Note 6
Investments in and Advances to Foreign Affiliates
- -------------------------------------------------------------------------------
The Company has made investments in and advances to minority-owned,
non-controlled foreign flour milling, feed milling, sugar refining,
polypropylene bag manufacturing, and shrimp farming affiliates. The affiliates
are located in Democratic Republic of Congo, Mozambique, Nigeria and Sierra
Leone in Africa, Argentina and Ecuador in South America and are accounted for
by the equity method.
The Company's investments in foreign affiliates are primarily carried
at the Company's equity in the underlying net assets of each subsidiary.
Certain of these foreign affiliates 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 1995.
In July 1996, the Company purchased for $8,800,000 a non-controlling
interest in Ingenio y Refineria San Martin del Tabacal S.A. (Tabacal). Tabacal
is an Argentinean company primarily engaged in growing and refining sugarcane
and citrus production. The Company accounts for this investment using the
equity method. At December 31, 1997, the Company has made net advances to and
non-voting investments in Tabacal of $67,598,000 for improvements of existing
operations, expanding sugarcane and citrus fields and working capital. During
the second quarter of 1997, it was determined that these advances, including
$28,355,000 at December 31, 1996, would not be repaid on a short-term basis
and, accordingly, such advances are recorded as long-term investments in and
advances to foreign affiliates at December 31, 1997.
In October 1996, the Company acquired for $4,600,000 a non-controlling
interest in a flour mill located in Mozambique. The Company paid $1,000,000 at
closing with the balance to be paid in installments over the next six years.
The Company accounts for this investment using the equity method.
Sales of grain and supplies to non-consolidated foreign affiliates are
included in consolidated net sales for the years ended December 31, 1997, 1996
and 1995, and amounted to $79,946,000, $83,007,000 and $29,585,000
respectively.
Combined condensed financial information of the minority-owned, non-
controlled, non-consolidated foreign affiliates for their fiscal periods ended
within each of the Company's years ended are as follows:
<TABLE>
<CAPTION>
December 31,
- -----------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 208,340 $ 191,600 $ 139,209
Net earnings (loss) (13,831) (6,089) 3,776
Total assets 240,511 215,512 83,771
Total liabilities 193,094 157,484 37,359
Total equity $ 47,417 $ 58,028 $ 46,412
=============================================================================
</TABLE>
Note 7
<TABLE>
<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) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Land and improvements $ 49,031 $ 47,022
Buildings and improvements 173,031 163,153
Machinery and equipment 411,037 398,887
Transportation equipment 84,614 82,808
Office furniture and fixtures 13,604 11,807
Construction in progress 39,971 9,606
- -----------------------------------------------------------------------------
771,288 713,283
Accumulated depreciation and amortization (284,915) (247,122)
- -----------------------------------------------------------------------------
Net property, plant and equipment $ 486,373 $ 466,161
=============================================================================
<FN>
Approximately $184,000, $855,000 and $3,414,000 of interest costs were
capitalized as part of property, plant and equipment in the years ended
December 31, 1997, 1996 and 1995, respectively.
</TABLE>
Note 8
Income Taxes
- ------------------------------------------------------------------------------
Total income taxes for the years ended December 31, 1997, 1996 and
1995 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) 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed tax expense on earnings
before income taxes and cumulative
effect of a change in accounting
principle $ 15,604 $ 105 $ 10,017
Adjustments to tax expense attributable
to:
Foreign tax differences 705 (3,789) (1,066)
Tax-exempt investment income (621) (603) (1,122)
State income taxes, net of Federal
benefit 700 820 475
Other (2,380) 929 113
- ------------------------------------------------------------------------------
$ 14,008 $ (2,538) $ 8,417
==============================================================================
<FN>
The components of total income taxes are as follows:
<CAPTION>
Years Ended December 31,
- ------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 10,810 $ (12,450) $ 13,498
State and local 479 611 1,094
Deferred 2,719 9,301 (6,175)
- ------------------------------------------------------------------------------
Income tax expense (benefit) 14,008 (2,538) 8,417
Cumulative effect of changing the
accounting for inventories -- 1,922 --
Stockholders' equity, for unrealized
change in debt securities (3) (142) 616
- ------------------------------------------------------------------------------
Total income taxes $ 14,005 $ (758) $ 9,033
==============================================================================
<CAPTION>
Components of the net deferred income tax liability at the end of each year
are as follows :
December 31,
- -----------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax liabilities:
Cash basis farming adjustment $ 19,036 $ 19,036
Deferred earnings of foreign
subsidiaries 1,688 2,218
Depreciation 39,840 25,111
Other 581 1,774
- -----------------------------------------------------------------------------
61,145 48,139
- -----------------------------------------------------------------------------
Deferred income tax assets:
Reserves/accruals 29,492 19,032
Foreign losses 3,606 4,651
Other 11,984 11,530
- -----------------------------------------------------------------------------
45,082 35,213
Valuation allowance 2,150 2,571
- -----------------------------------------------------------------------------
Net deferred income tax liability $ 18,213 $ 15,497
=============================================================================
</TABLE>
The Company believes that its future taxable income will be sufficient
for full realization of the net deferred tax asset. The valuation allowance
represents accumulated losses on certain foreign subsidiaries that will not be
recognized without future liquidation or sale of these subsidiaries.
At December 31, 1997 current income taxes payable totaled $7,422,000
and at December 31, 1996, current income taxes receivable totaled $4,000,000.
At December 31, 1997 and 1996, 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 the Company 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 $36,000,000.
Note 9
Notes Payable and Long-Term Debt
- -------------------------------------------------------------------------------
Notes payable amounting to $157,445,000 and $150,157,000 at December
31, 1997 and 1996, respectively, consisted of obligations due banks within one
year. At December 31, 1996, these funds were outstanding under the Company's
one-year revolving credit facilities totaling $90 million and short-term
uncommitted credit lines from banks totaling $115 million. During 1997, the
Company's one-year revolving credit facilities were increased to $160 million
as a result of the extension of existing facilities and the establishment of a
new facility. As of December 31, 1997, the Company's short-term uncommitted
credit lines from banks totaled $114.5 million, less outstanding letters of
credit commitments totaling $1.2 million. Subsequent to year-end, the
Company's one-year revolving credit facilities maturing in the first quarter of
1998 were extended for an additional year. Weighted average interest rates on
the notes payable were 6.63% and 6.11% at December 31, 1997 and 1996,
respectively.
During 1996, the Company entered into a five-year $50 million revolving
credit facility. During 1997, the revolving credit facility was extended and
reduced to $25 million. Also during 1997, the Company borrowed proceeds of
$10 million of Adjustable Rate, Seven-Day Demand Exempt Facility Revenue Bonds.
Notes payable, the revolving credit facilities and uncommitted credit
lines from banks are unsecured and do not require compensating balances.
Facility fees on these agreements are not material.
A summary of long-term debt at the end of each year is as follows:
<TABLE>
<CAPTION>
December 31,
- -----------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Private placements:
6.49% senior notes, due 2001 through 2005 $ 100,000 $ 100,000
7.88% senior notes, due 2003 through 2007 125,000 125,000
Industrial Development Revenue Bonds (IDRB's),
floating rates (4.25% -4.73% at December 31,
1997) due through 2027 62,900 52,900
Revolving credit facility, floating rate
(6.14% at December 31, 1997) due 2002 10,000 10,000
Term loan, 3.92%, due 1998 5,700 5,700
Capital lease obligations and other 9,909 11,019
- -----------------------------------------------------------------------------
313,509 304,619
Current maturities of long-term debt (6,843) (6,900)
- -----------------------------------------------------------------------------
Long-term debt, less current maturities $ 306,666 $ 297,719
=============================================================================
</TABLE>
Redemption of the IDRB's is assured under irrevocable bank letters of
credit issued by major banks. Although those IDRB's mature between 2004 and
2027, the bonds are deemed to mature between 1999 and 2001, the years in
which the bank letters of credit and committed extensions thereto expire.
Poultry processing facilities, having a depreciated cost of $20,449,000 at
December 31, 1997, secure certain bond issues.
The terms of the note agreements pursuant to which the Senior Notes,
IDRB's, Term Loan and revolving credit facilities 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
$250,000,000. The Company is in compliance with all restrictive debt covenants
relating to these agreements as of December 31, 1997.
At December 31, 1997, the Company had interest rate exchange
agreements in place effectively fixing the interest rate on $200 million of
variable rate debt to a fixed, weighted-average rate of 6.33%. These contracts
expire in 2007. The Company monitors the risk of default by the counterparty
and does not anticipate nonperformance. At December 31, 1996, the Company had
no interest rate exchange agreements outstanding.
Annual maturities of long-term debt at December 31, 1997 are as
follows: $6,843,000 in 1998, $22,717,000 in 1999, $17,046,000 in 2000,
$55,661,000 in 2001, $20,873,000 in 2002, and $190,369,000 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, 1997 and 1996 the fair value of the Company's short-term
investments was $108,744,000 and $90,373,000, respectively, with an amortized
cost of $108,729,000 and $90,349,000 at December 31, 1997 and 1996,
respectively.
The fair value of long-term debt is determined by comparing interest
rates for debt with similar terms and maturities. At December 31, 1997 and 1996
the fair value of the Company's long-term debt was $316,746,000 and
$300,075,000, respectively, with a carrying value of $313,509,000 and
$304,619,000 at December 31, 1997 and 1996, respectively. The fair values of
interest rate exchange agreements are obtained from dealer quotes. These
values represent the estimated amount the Company would receive or pay to
terminate the agreements. The Company would be required to pay an estimated
$1,700,000 to terminate the exchange agreements at December 31, 1997.
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 Company also sponsors non-
qualified, unfunded supplemental executive plans. 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. The Company bases pension
contributions on funding standards established by the Employee Retirement
Income Security Act of 1974. Benefits are generally based upon the number of
years of service and a percentage of final average pay. 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) 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during
the period $ 2,670 $ 1,874 $ 1,303
Interest cost on projected benefit
obligation 2,403 2,204 2,233
Actual return on assets (4,121) (3,498) (3,964)
Net amortization and deferral 1,491 1,291 1,916
- -------------------------------------------------------------------------------
Net periodic pension cost $ 2,443 $ 1,871 $ 1,488
===============================================================================
</TABLE>
<TABLE>
Assumptions used in determining pension information were:
<CAPTION>
Years ended December 31,
- -------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected long-term rate of return on
assets 8.75% 8.50-9.00% 8.50-9.00%
Discount rate 7.50% 7.75% 7.00%
Long-term rate of increase in
compensation levels 4.25-4.50% 4.25-4.50% 4.25-4.50%
- -------------------------------------------------------------------------------
<FN>
The funded status and accrued pension cost at December 31, 1997 and 1996
for all defined benefit plans is shown below:
<CAPTION>
December 31,
- -------------------------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996
- -------------------------------------------------------------------------------------------------
Assets exceed Accumulated Assets exceed Accumulated
accumulated benefits exceed accumulated benefits exceed
benefits assets benefits assets
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of
value of benefit obligations:
Vested benefit obligation $ 22,336 $ 8,666 $ 19,978 $ 6,728
Nonvested benefit obligation 1,942 439 1,460 62
- -------------------------------------------------------------------------------------------------
Accumulated benefit obligation 24,278 9,105 21,438 6,790
Effects of projected future
compensation levels 2,671 1,618 1,767 1,111
- -------------------------------------------------------------------------------------------------
Projected benefit obligation 26,949 10,723 23,205 7,901
Plan assets at fair value 26,514 5,877 24,224 5,584
- -------------------------------------------------------------------------------------------------
Projected benefit obligation
greater than (less than) plan
assets 435 4,846 (1,019) 2,317
Recognized minimum liability -- 931 -- 387
Unrecognized net liability at
transition (1,151) (249) (1,298) (39)
Unrecognized prior service cost 2,411 (479) 2,634 (544)
Unrecognized net gain (loss) 3,780 (1,620) 4,356 (915)
- -------------------------------------------------------------------------------------------------
Accrued pension cost $ 5,475 $ 3,429 $ 4,673 $ 1,206
- -------------------------------------------------------------------------------------------------
</TABLE>
During 1997, a new non-qualified, unfunded supplemental executive
retirement plan was adopted amending and restating a previous plan. For
disclosure purposes, the new plan is included in the 1997 section of the
defined benefit table above while expenses and liabilities related to the prior
plan are included in the 1996 and 1995 supplemental discussion below.
The Company has certain individual, non-qualified, unfunded
supplemental retirement agreements for certain executive employees. Pension
expense for these plans was $574,000, $3,128,000, and $3,073,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. Included in other
liabilities at December 31, 1997 and 1996 is $8,903,000 and $10,347,000,
respectively, representing the accrued benefit obligation for these plans.
The Company maintains a defined contribution 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 $1,466,000,
$1,294,000 and $1,265,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
Note 12
Commitments and Contingencies
- -------------------------------------------------------------------------------
The Company leases various ships, facilities and equipment under
noncancelable operating lease agreements.
In addition, the Company is a party to a master lease program with a limited
partnership which owns certain of the facilities used by the Company in
connection with its hog production. This arrangement is accounted for as an
operating lease. Under this arrangement, the Company has certain rights to
acquire any or all of the leased properties at the conclusion of their
respective lease terms at a price based on estimated fair market value of the
property. In the event the Company does not acquire any property which it has
ceased to lease, the Company has a limited obligation to the lessor for any
deficiency between the amortized cost of the property and the price for which
it is sold up to a specific amount.
Rental expense for operating leases amounted to $50,436,000,
$45,591,000, and $40,521,000 in 1997, 1996 and 1995, respectively. Minimum
lease commitments under noncancelable leases with initial terms greater than
one year at December 31, 1997, were $26,621,000 for 1998, $11,951,000 for
1999, $7,659,000 for 2000, $6,129,000 for 2001, $5,839,000 for 2002 and
$9,420,000 thereafter. It is expected that, in the ordinary course of business,
leases will be renewed or replaced.
The Company is a defendant in a pending arbitration proceeding and
related litigation in Puerto Rico brought by the owner of a chartered barge and
tug which were damaged by fire after delivery of the cargo. Damages of
$47,600,000 are alleged. The Company is vigorously defending the action and
believes that it has no responsibility for the loss. The Company also believes
that it would have a claim for indemnity if it were held liable for any loss.
The Company is subject to various other 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 three business segments: food
production and processing, commodity trading and milling 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. As described in Note 5, the Company changed its
method of accounting for spare parts and supplies inventories in 1996. The
effect of this change was to decrease the operating loss in the food production
and processing segment in 1996 by $1,293,000. Business segment information for
the years ended December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of dollars) 1997
- -----------------------------------------------------------------------------------------------------------------------
Food Commodity Unallocated
Production Trading Corporate
and and Items and
Processing Milling Transportation Other Eliminations Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $1,117,598 313,901 313,005 35,829 -- $ 1,780,333
Intersegment sales -- -- 4,794 -- (4,794) --
- -----------------------------------------------------------------------------------------------------------------------
Net sales $1,117,598 313,901 317,799 35,829 (4,794) $ 1,780,333
=======================================================================================================================
Operating income (loss) $ 35,367 9,254 30,672 7,144 (5,362) 77,075
====================================================================================================
Loss from foreign affiliates (8,733)
Interest income 6,127
Interest expense (31,108)
Other corporate income 1,221
- -----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes
and cumulative effect of changing
the accounting for inventories $ 44,582
=======================================================================================================================
Identifiable assets $ 668,419 113,511 107,402 42,832 -- 932,164
====================================================================================================
Corporate assets 192,221
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 1,124,385
=======================================================================================================================
Depreciation and amortization $ 41,475 3,037 9,574 1,637 1,173 $ 56,896
=======================================================================================================================
Capital expenditures $ 72,950 1,464 9,430 1,409 229 $ 85,482
=======================================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of dollars) 1996
- -----------------------------------------------------------------------------------------------------------------------
Food Commodity Unallocated
Production Trading Corporate
and and Items and
Processing Milling Transportation Other Eliminations Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 844,460 315,609 266,571 37,722 -- $ 1,464,362
Intersegment sales -- -- 3,717 -- (3,717) --
- -----------------------------------------------------------------------------------------------------------------------
Net sales $ 844,460 315,609 270,288 37,722 (3,717) $ 1,464,362
=======================================================================================================================
Operating income (loss) $ (3,920) 18,119 6,475 5,124 (6,053) 19,745
====================================================================================================
Loss from foreign affiliates (2,966)
Interest income 9,095
Interest expense (26,864)
Other corporate income 1,292
- -----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes
and cumulative effect of changing
the accounting for inventories $ 302
=======================================================================================================================
Identifiable assets $ 610,486 119,722 98,756 30,208 -- 859,172
====================================================================================================
Corporate assets 145,513
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 1,004,685
=======================================================================================================================
Depreciation and amortization $ 33,222 3,196 11,850 1,583 1,063 $ 50,914
=======================================================================================================================
Capital expenditures $ 99,143 1,935 8,598 25 790 $ 110,491
=======================================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of dollars) 1995
- -----------------------------------------------------------------------------------------------------------------------
Food Commodity Unallocated
Production Trading Corporate
and and Items and
Processing Milling Transportation Other Eliminations Total
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 652,537 207,987 277,130 36,323 -- $ 1,173,977
Intersegment sales -- -- 4,676 -- (4,676) --
- -----------------------------------------------------------------------------------------------------------------------
Net sales $ 652,537 207,987 281,806 36,323 (4,676) $ 1,173,977
=======================================================================================================================
Operating income (loss) $ 10,121 8,462 16,936 980 (5,295) 31,204
====================================================================================================
Income from foreign affiliates 2,035
Interest income 11,506
Interest expense (15,686)
Other corporate expense (440)
- -----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes
and cumulative effect of changing
the accounting for inventories $ 28,619
=======================================================================================================================
Identifiable assets $ 471,120 59,460 120,435 25,153 -- 676,168
====================================================================================================
Corporate assets 201,964
- -----------------------------------------------------------------------------------------------------------------------
Total assets $ 878,132
=======================================================================================================================
Depreciation and amortization $ 25,746 2,941 13,711 1,521 1,025 $ 44,944
=======================================================================================================================
Capital expenditures (excluding
acquisitions) $ 192,246 1,228 34,136 965 924 $ 229,499
======================================================================================================================
</TABLE>
<TABLE>
Export sales by geographic area are as follows:
<CAPTION>
Years ended December 31,
- --------------------------------------------------------------------------------
(Thousands of dollars) 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Africa $ 82,997 $ 145,486 $ 85,915
Caribbean and South America 129,014 63,853 43,494
Europe 54,070 41,811 20,628
Eastern Mediterranean 43,145 33,502 37,405
Pacific Basin and Far East 98,071 33,069 7,155
Other 29,294 24,923 28,449
- --------------------------------------------------------------------------------
Total export sales $ 436,591 $ 342,644 $ 223,046
================================================================================
<FN>
At December 31, 1997 and 1996 the Company had approximately $77,472,000 and
$70,044,000 of foreign receivables, excluding receivables due from foreign
affiliates, which represents 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,
1993 1994 1995 1996 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Selected Financial Data:
TOTAL ASSETS (THOUSANDS OF DOLLARS) $ 647,332 675,211 878,132 1,004,685 1,124,385
STOCKHOLDERS' EQUITY (THOUSANDS OF
DOLLARS) $ 304,356 346,080 365,810 369,934 399,015
EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $ 16.73 23.67 13.58 1.91 20.55
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE 7.40 2.02
------------------------------------------------------------
EARNINGS PER COMMON SHARE (DOLLARS) $ 24.13 23.67 13.58 3.93 20.55
Financial Summary:
CURRENT RATIO 3.29:1 3.31:1 2.25:1 1.71:1 1.47:1
CAPITAL EXPENDITURES (THOUSANDS OF
DOLLARS) $ 87,328 87,583 229,499 110,491 85,482
NET SALES (THOUSANDS OF DOLLARS) $1,142,144 983,804 1,173,977 1,464,362 1,780,333
WORKING CAPITAL
(THOUSANDS OF DOLLARS) $ 280,466 259,521 219,024 204,237 168,333
DEPRECIATION AND AMORTIZATION
(THOUSANDS OF DOLLARS) 34,429 33,403 44,944 50,914 56,896
NET EARNINGS(THOUSANDS OF DOLLARS) 35,891 35,201 20,202 5,846 30,574
</TABLE>
EXHIBIT 21
SUBSIDIARIES NAMES UNDER STATE OR OTHER
OF THE WHICH SUBSIDIARIES JURISDICTION
REGISTRANT DO BUSINESS OF INCORPORATION
A & W Interlining American Interlining Maryland
Services Corp. Company
Western Coat Pad Company
Acuacultura y Tecnologia Acuatecsa Ecuador
Acuatecsa S.A.*
African Camellia Shipping Ltd. Same Liberia
African Coffee Company, S.P.R.L.* ACC Democratic
Republic of
Congo
African Dahlia Shipping Ltd. Same Liberia
African Evergreen Shipping Ltd. Same Liberia
African Fern Shipping Ltd. Same Liberia
African Gardenia Shipping Ltd. Same Liberia
Agencia Maritima del Istmo, S.A. Same Costa Rica
Agencias Generales Conaven, C.A. Conaven Venezuela
Agro Internacional de Honduras, Same Honduras
S.A. de C.V.
Almacenadora Conaven, S.A. Same Venezuela
Atlantic Salmon (Maine) Limited Same Maine
Liability Company*
Buttercup Shipping Limited Same Liberia
Cape Fear Railways, Inc. Same North Carolina
Cayman Freight Shipping Same Cayman Islands
Services, Ltd.*
Chestnut Hill Farms, Inc. Same Florida
Chestnut Hill Farms Honduras, Same Honduras
S.A. de C.V.
Citrus Export S.A. de C.V. CITREX Honduras
Consorcio Naviero de Conaven Venezuela
Occidente, C.A.
Continental de Ventas y Contiventas, S.A. Ecuador
Mercadeo S.A.*
Cultivos Marinos, S.A. de C.V. CUMAR Honduras
Delta Packaging Company Ltd. Same Nigeria
Desarrollo Industrial DIBSA Ecuador
Bioacuatico, S.A.*
Empacadora Litoral, S.A. Same Honduras
de C.V.
Frutas de Rancho Nuevo Litonil, S.A. Same Costa Rica
Globe International Holdings, S.A.* Same Nigeria
Granjas Porcinas del Ecuador
(Granporsa) S.A.* Granporsa Ecuador
Guymon Housing Partners Limited Same Oklahoma
Partnership*
Guymon Development Company Same Oklahoma
L.L.C.*
H& O Shipping Limited Same Liberia
Harinas de Puerto Rico, Inc. Same Delaware
Holsum Bakers of Puerto Rico Same Division of
Seaboard
Corporation
Ingenio Y Refineria San Martin
del Tabacal* Tabacal Argentina
Interamericana de Tejidos, C.A.* Interama Ecuador
Inversiones y Servicios
Diversos, S.A. Inversa Guatemala
Life Flour Mill Ltd.* Same Nigeria
Life Shipping Company Limited* Same Nigeria
Minoterie De Matadi, S.A.R.L.* Same Democratic
Republic of
Congo
Mobeira, S.A.* Same Mozambique
Molinos Champion, S.A.* Mochasa Ecuador
Molinos Equarivort, C.A.* Same Ecuador
Molinos del Ecuador, C.A.* Molidor Ecuador
National Milling Company of Same Guyana
Guyana, Ltd.
Port of Miami Cold Storage, Inc. Same Florida
Representaciones Maritimas y Remarsa Guatemala
Aereas, S.A.
SASCO Engineering Co./ Same Bermuda
Seaboard Sales Corporation
Sandy Isle Food Imports, N.V. Same St. Maarten,
Netherlands,
Antilles
Sea Cargo, S.A. Same Panama
Seaboard Bakeries, Inc. Same Delaware
Seaboard Export Corporation Same Delaware
Seaboard Express Ltd. Same Bermuda
Seaboard de Colombia, S.A. Same Colombia
Seaboard de Honduras, S.A. de C.V. Same Honduras
Seaboard del Peru, S.A. Same Peru
Seaboard Farms of Seaboard Farms of Georgia
Athens, Inc. Athens, Inc.
Jordan Hatchery
Seaboard Farms of Same Tennessee
Chattanooga, Inc.
Seaboard Farms of Seaboard Farms of Georgia
Elberton, Inc. Elberton, Inc.
Seaboard Farms of
Canton
Seaboard Farms of Same Kentucky
Kentucky, Inc.
Seaboard Farms of Same Minnesota
Minnesota, Inc.
Seaboard Farms of Same Florida
Orlando, Inc.
Seaboard Farms, Inc. Same Oklahoma
Seaboard Florida Ltd. Same Bermuda
Seaboard Guyana, Ltd. Same Bermuda
Seaboard Holdings Ltd. Same British Virgin
Islands
Seaboard Intrepid, Ltd. Same Bermuda
Seaboard Marine Bahamas, Ltd. Same Bahamas
Seaboard Marine Ltd. Same Liberia
Seaboard Marine of Florida, Inc. Same Florida
Seaboard (Nigeria) Limited Same Nigeria
Seaboard Overseas Limited Same Bahamas
S.B.D., Inc. Same Delaware
Seaboard Ship Management Inc. Same Florida
Seaboard Shipping Services
(PTY) Ltd. Same South Africa
Seaboard Trading and Shipping Ltd. Same Minnesota
Seaboard Trading de Mexico,
S.A. de C.V. Same Mexico
Seaboard Transport Inc. Same Oklahoma
Seaboard Voyager Ltd. Same Bermuda
Seaboard West Africa Limited Same Sierra Leone
Seadom, S.A.* Same Dominican
Republic
Secuador Limited Same Bermuda
Shilton Limited Same Cayman Islands
Top Feeds Limited* Same Nigeria
Transcontinental Capital Corp. Same Bermuda
(Bermuda) Ltd.
Zenith Investments, Ltd.* Same Nigeria
*Represents a minority-owned, non-controlled, non-consolidated subsidiary.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FISCAL
1997 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 8552
<SECURITIES> 108744
<RECEIVABLES> 196298
<ALLOWANCES> 20658
<INVENTORY> 211024
<CURRENT-ASSETS> 529235
<PP&E> 771288
<DEPRECIATION> 284915
<TOTAL-ASSETS> 1124385
<CURRENT-LIABILITIES> 360902
<BONDS> 306666
0
0
<COMMON> 1488
<OTHER-SE> 397527
<TOTAL-LIABILITY-AND-EQUITY> 1124385
<SALES> 1780333
<TOTAL-REVENUES> 1780333
<CGS> 1561265
<TOTAL-COSTS> 1561265
<OTHER-EXPENSES> 141993
<LOSS-PROVISION> 3845
<INTEREST-EXPENSE> 31108
<INCOME-PRETAX> 44582
<INCOME-TAX> 14008
<INCOME-CONTINUING> 30574
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30574
<EPS-PRIMARY> 20.55
<EPS-DILUTED> 20.55
</TABLE>
SEABOARD CORPORATION
BY-LAWS
OFFICES
1. The principal office shall be in the City of
Wilmington, County of New Castle, State of Delaware, and the name
of the resident agent in charge thereof is The Corporation Trust
Company.
2. The corporation may also have an office in Chestnut Hill,
Massachusetts, and also offices at such other places as the board of
directors may from time to time determine or the business of the
corporation may require.
STOCKHOLDERS' MEETINGS
3. All meetings of the stockholders for the election of
directors shall be held in the City of Boston, Commonwealth of
Massachusetts, at such place as may be fixed from time to time by the
board of directors, or at such other place either within or without the
State of Delaware as shall be designated from time to time by the board
of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice
of the meeting or a duly executed waiver of notice thereof.
4. An annual meeting of stockholders, commencing with the
year 1989, shall be held on the fourth Monday of April in each year, if
not a legal holiday, and if a legal holiday then on the next secular day
following, at 10 o'clock A.M., at which they shall elect, by a plurality
vote, a Board of Directors, and transact such other business as may
properly be brought before the meeting.
5. Written notice of the annual meeting shall be served upon
or mailed to each stockholder entitled to vote thereat at such address as
appears on the books of the corporation, at least ten days prior to the
meeting.
6. At least ten days before every election of directors, a
complete list of the stockholders entitled to vote at said election,
arranged in alphabetical order, with the residence of each and the number
of voting shares held by each, shall be prepared by the secretary. Such
list shall be open at the place where the election is to be held for said
ten days, to the examination of any stockholder, and shall be produced
and kept at the time and place of election during the whole time thereof,
and subject to the inspection of any stockholder who may be present.
7. Special meetings of the stockholders for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the
board of directors, or at the request in writing of three or more
stockholders owning in amount one tenth of the entire capital stock of
the corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
8. Written notice of a special meeting of stockholders,
stating the time and place and object thereof, shall be served upon or
mailed to each stockholder entitled to vote thereat at such address as
appears on the books of the corporation, at least ten days before such
meeting.
9. Business transacted at all special meetings shall be
confined to the objects stated in the call.
10. The holders of a majority in amount of the stock issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum at
all meetings of the stockholders for the transaction of business except
as otherwise provided by statute, by the certificate of incorporation
or by these by-laws. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders,
entitled to vote thereat, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have
been transacted at the meeting as originally notified.
11. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of
the statutes or of the certificate of incorporation or of these by-laws,
a different vote is required in which case such express provision shall
govern and control the decision of such question.
12. At any meeting of the stockholders every stockholder
having the right to vote shall be entitled to vote in person, or by proxy
appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than six months prior to said meeting, unless
said instrument provides for a longer period. Each stockholder shall have
one vote for each share of stock having voting power, registered in his
name on the books of the corporation, and except where the transfer books
of the corporation shall have been closed or a date shall have been fixed
as a record date for the determination of its stockholders entitled to
vote, no share of stock shall be voted on at any election of directors
which shall have been transferred on the books of the corporation within
twenty days next preceding such election of directors.
13. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action
by any provisions of the statutes or of the certificate of incorporation
or of these by-laws, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who would have been entitled to
vote upon the action if such meeting were held, shall consent in writing
to such corporate action being taken.
DIRECTORS
14. The number of directors of the corporation constituting
the full board of directors shall be no less than three (3) and no more
than fifteen (15), the exact number to be determined by the Board of
Directors from time to time. Within the foregoing limits, between
elections by stockholders the board of directors may change the number of
directors constituting the full board of directors. Directors need not be
stockholders of the corporation. Each director, including a director
elected to fill a vacancy, shall hold office until his successor has been
duly elected and qualified unless he sooner shall have resigned or been
removed from office.
15. The directors may hold their meetings and keep the books
of the corporation, except the original or duplicate stock ledger,
outside of Delaware, at the office of the corporation in Chestnut Hill,
Massachusetts or at such other places as they may from time to time
determine.
16. A vacancy or newly created directorship, as the case may
be, shall be deemed to exist in the Board of Directors in case of the
death, resignation, disqualification, or removal of any director, or if
the authorized number of directors is increased, or if the stockholders
fail at any meeting of stockholders at which directors are to be elected
to elect the full authorized number of directors to be elected at that
meeting. Vacancies and newly created directorships in the board of
directors may be filled by a majority of the remaining directors, though
fewer than a quorum, or by a sole remaining director. Upon the
resignation of one or more directors from the board of directors to be
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations become effective. No reduction of the
authorized number of directors shall have the effect of removing any
director prior to the expiration of his term of office; provided,
however, that such director, or the entire board of directors, may be
removed from office, with or without cause, by the holders of a majority
of shares then entitled to vote at an election of directors.
17. The property and business of the corporation shall
be managed by its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by statute or by the certificate of incorporation or by
these by-laws directed or required to be exercised or done by the
stockholders.
COMMITTEES OF DIRECTORS
18. The board of directors may, by vote of a majority
of their entire number, elect from their own number an executive
committee of not less than three nor more than five members, which
committee may be vested with the management of the current and
ordinary business of the corporation, including the declaration of
dividends, the fixing and altering of the powers and duties of the
several officers and agents of the corporation, the election of
additional officers and agents, and the filling of vacancies other
than in the board of directors, and with power to authorize
purchases, sales, contracts, offers, conveyances, transfers and
negotiable instruments. A majority of the executive committee
shall constitute a quorum for the transaction of business but a
less number may adjourn any meeting from time to time, and the
meeting may be held as adjourned without further notice. The
executive committee may make rules not inconsistent herewith for
the holding and conduct of its meetings.
19. The board of directors may, by resolution or
resolutions passed by a majority of the whole board, designate
other committees, each committee to consist of three or more of
the directors of the corporation, which to the extent provided in
said resolution or resolutions, shall have and may exercise the
powers of the board of directors in the management of the business
and affairs of the corporation, and may have power to authorize
the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted
by the board of directors.
20. All committees shall keep their regular minutes of
their proceedings and report the same to the board, who shall have
power to rescind any vote or resolution passed by any committee
but no such rescission shall have retroactive effect.
COMPENSATION OF DIRECTORS
21. Directors, as such, shall not receive any stated
salary for their services, but, by resolution of the board a fixed
sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the board;
provided that nothing herein contained shall be construed to
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
22. Members of Executive or other committees may be
allowed like compensation for attending committee meetings.
MEETINGS OF THE BOARD
23. The first meeting of each newly elected board shall
be held at such time and place either within or without the State
of Delaware as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to
constitute the meeting provided a quorum shall be present, or they
may meet at such place and time as shall be fixed by the consent
in writing of all the directors.
24. Regular meetings of the board may be held without
notice at such time and place either within or without the State
of Delaware as shall from time to time be determined by the board.
25. Special meetings of the board may be called by the
president on two days' notice to each director, either personally
or by mail or bv telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the
written request of two directors.
26. At all meetings of the board a majority of the
entire board shall be necessary and sufficient to constitute a
quorum for the transaction of business and the act of a majority
of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate
of incorporation or by these by-laws. If a quorum shall not be
present at any meeting of directors the directors present thereat
may adjourn the meeting from time to time without notice other
than announcement at the meeting, until a quorum shall be present.
27. No notice of directors' meeting shall be necessary
if all directors are present or waive notice of the meeting.
NOTICES
28. Whenever under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall not
be construed to mean personal notice, but such notice may be given
in writing, by mail, by depositing the same in a post office or
letter box, in a post-paid sealed wrapper, addressed to such
director or stockholder at such address as appears on the books of
the corporation, or, in default of other address, to such director
or stockholder at the General Post Office in the City of
Wilmington, Delaware, and such notice shall be deemed to be given
at the time when the same shall be thus mailed.
29. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of
incorporation, or of these by-laws, a waiver thereof in writing
signed by the Person or Persons entitled to said notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto.
OFFICERS
30. The officers of the corporation shall be chosen by
the directors and shall be a president, a secretary and a
treasurer. Two or more offices may be held by the same person,
except that where the offices of president and secretary are held
by the same person, such person shall not hold any other office.
31. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president from
its members, a secretary and a treasurer, none of whom need be a
member of the board.
32. The board of directors or Executive Committee may
appoint such other officers and agents as it shall deem necessary,
who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from
time to time by the board or Executive Committee.
33. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
34. The officers of the corporation shall hold office
until their successors are chosen and qualify in their stead. Any
officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the
whole board of directors. If the office of any officer becomes
vacant for any reason, the vacancy shall be filled by the board of
directors.
THE PRESIDENT
35. The president shall be the chief executive officer
of the corporation; he shall preside at all meetings of the
stockholders and directors, shall be ex oficio a member of all
standing committees, shall have general and active management of
the business of the corporation, and shall see that all orders and
resolutions of the board are carried into effect.
36. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation,
except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
VICE-PRESIDENTS
37. Any vice-presidents in the order of their seniority
shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall perform
such other duties as the board of directors or Executive Committee
shall prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
38. The secretary shall attend all sessions of the
board and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he shall be. He shall keep in safe custody the seal
of the corporation and, when authorized by the board, affix the
same to any instrument requiring it and, when so affixed, it shall
be attested by his signature or by the signature of the treasurer
or an assistant secretary.
39. Any assistant secretaries in order of their
seniority shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and
shall perform such other duties as the board of directors or
Executive Committee shall prescribe.
THE TREASURER AND ASSISTANT TREASURERS
40. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
41. He shall disburse the funds of the corporation
as may be ordered by the board, or Executive Committee, taking
proper vouchers for such disbursements, and shall render to the
president and directors, at the regular meetings of the board, or
whenever they may require it, an account of all his transactions
as treasurer and of the financial condition of the corporation.
42. If required by the board of directors, he shall
give the corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the
duties of his office and for the restoration to the corporation,
in case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money other property of
whatever kind in his possession or under control belonging to the
corporation.
43. Any assistant treasurers in the order of their
seniority shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer and
shall perform such other duties as the board of directors or
Executive Committee shall prescribe.
CERTIFICATES OF STOCK
44. The certificates of stock of the corporation shall
be numbered and shall be entered in the books of the corporation
as they are issued. They shall exhibit the holder's name and
number of shares and shall be signed by the president and the
treasurer. If any stock certificate is signed (1) by a transfer
agent or an assistant transfer agent or (2) by a transfer clerk
acting on behalf of the corporation and a registrar, the signature
of any such officer may be facsimile.
TRANSFERS OF STOCK
45. Upon surrender to the corporation or any transfer
agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
46. The board of directors shall have power to close
the stock transfer books of the corporation for a period not
exceeding fifty days preceding the date of any meeting of
stockholders or the date for payment of any dividend or the date
for the allotment of rights or the date when any change or
conversion or exchange of capital stock shall go into effect or
for a period of not exceeding fifty days in connection with
obtaining the consent of stockholders for any purpose; provided,
however, that in lieu of closing the stock transfer books as
aforesaid, the board of directors may fix in advance a date, not
exceeding fifty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, or
a date in connection with obtaining such consent, as a record date
for the determination of the stockholders entitled to notice of,
and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such
stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the
corporation after any such.record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
47. The corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws
of Delaware.
LOST CERTIFICATE
48. The board of directors or Executive Committee may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon making of
an affidavit of that fact by the person claiming the certificate
of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the board of directors or
Executive Committee may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost
or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been
lost or destroyed.
DIVIDENDS
49. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors
at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
50. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
51. The board of directors shall present at each
annual meeting and when called for by vote of the stockholders
at any special meeting of the stockholders, a full and clear
statement of the business and condition of the corporation.
CHECKS
52. All checks or demands for money and notes the
corporation shall be signed by such officer or officers such
other person or persons as the board of directors or Executive
Committee may from time to time designate.
FISCAL YEAR
53. The fiscal year shall be the calendar year,
beginning with the calendar year ending December 31, 1986.
SEAL
54. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
AMENDMENTS
55. These by-laws may be altered or repealed at any
regular meeting of the stockholders or at any special meeting of
the stockholders at which a quorum is present or represented,
provided notice of the proposed alteration or repeal be
contained in the notice of such special meeting, by the
affirmative vote of a majority of the stock entitled to vote at
such meeting and present or represented thereat, or by the
affirmative vote of a majority of the board of directors at any
regular meeting of the board or at any special meeting of the
board if notice of the proposed alteration or repeal be
contained in the notice of such special meeting; provided,
however, that no change of the time or place of the meeting for
the election of directors shall be made within sixty days next
before the day on which such meeting is to be held, and that in
case of any change of such time or place, notice thereof shall
be given to each stockholder in person or by letter mailed to
his last known post office address at least twenty days before
the meeting is held.
INDEMNIFICATION
56. Mandatory Indemnification of Officers and
Directors. The Corporation shall indemnify and reimburse each
director and officer of the Corporation, and each director and
officer of a subsidiary whose election or appointment it has
voted for or expressly approved, who is elected, appointed or
continued in office after February 22, 1993, for and against all
liabilities and expenses imposed upon or reasonably incurred by
him in connection with any action, suit or proceeding in which
he may be involved or with which he may be threatened by reason
of his being or having been a director or officer of the
Corporation or of a subsidiary or his acts and omissions as such
officer or director of the Corporation or of a subsidiary. The
right of indemnity and reimbursement of each such person shall
continue whether or not he continues to be such director or
officer at the time such liabilities or expense are imposed upon
or incurred by him and shall include, without being limited to,
attorney's fees, court costs, judgments and compromise
settlements. The right of reimbursement for liabilities and
expenses so imposed or incurred shall include the right to
receive such reimbursement in advance of the final disposition
of any such action, suit or proceeding upon the Corporation's
receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall be ultimately
determined that he is not entitled to be indemnified by the
Corporation pursuant to law or this paragraph.
In no case shall such indemnification and reimbursement
cover (a) liabilities or expenses imposed or incurred in
connection with any matter as to which such director or officer
shall be finally determined in such action, suit or proceeding
to be liable by reason of his having been derelict in the
performance of his duty as such director or officer, or (b)
amounts paid to the Corporation or to a subsidiary and expenses
incurred in connection with the proceeding or claim on account
of which such payment is made, unless such reimbursement is
provided for in compromise settlement approved in a manner
described in clause (c) next following, or (c) liabilities or
expenses imposed or incurred in connection with any matter which
shall be settled by compromise (including settlement by consent
decree or judgment) if under such compromise such director or
officer is required to make any payment, unless such compromise
shall, after notice that it involves such reimbursement, be
approved as in the best interest of the Corporation by vote of
the board of directors of the Corporation at a meeting in which
no director against whom any action, suit or proceeding on the
same or similar grounds is then pending participates, or by vote
or written approval of the holders of a majority of the shares
of stock of the Corporation then outstanding and entitled to
vote, for this purpose not counting as outstanding any shares of
stock held or controlled by any such director or officer of the
Corporation against whom any action, suit or proceeding on the
same or similar grounds is then pending; provided, however, that
no indemnification shall be made in respect of any claim, issue
or matter as to which such a person shall have been adjudged to
be liable for negligence or misconduct in the performance of his
or her duty to the Corporation unless and only to the extent
that the Court of Chancery of the State of Delaware or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery of the State of Delaware or such other court
shall deem proper.
The rights of indemnification and reimbursement hereby
provided shall not be exclusive of other rights to which any
director or officer may be entitled. As used in this paragraph
the terms "director" and "officer" shall include their
respective heirs, executors and administrators.
57. Discretionary Indemnification.
(1) Actions By Third Parties. The Corporation
shall have the right, but not the obligation, to indemnify, up
to and including the full extent set forth in this paragraph,
any person who was or is a party, or is threatened to be made a
party to, or is otherwise involved in, any pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he or
she is or was an employee or agent of the Corporation, or was
serving at the request of the Corporation as a director,
officer, partner, member, trustee, employee or agent of another
corporation, partnership, joint venture, limited liability
company, trust or other enterprise (whether or not for profit)
including serving as Trustee of an employee benefit plan of the
Corporation or other entity described in this subparagraph,
(whether or not such employee benefit plan is governed by
ERISA), against all liability, losses, expenses (including
attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or
proceeding against any such person by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that he
or she did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interest
of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
(2) Actions by or on Behalf of the Corporation.
The Corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the
fact that he or she is or was an employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee,
employee or agent of another corporation, partnership, joint
venture, limited liability company, trust or other enterprise or
entity (whether or not for profit) against expenses (including
attorneys' fees) actually and reasonably incurred by him or her
in connection with the defense or settlement of such action or
suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such a person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty
to the Corporation unless and only to the extent that the Court
of Chancery of the State of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnify for such expenses which the
Court of Chancery of the State of Delaware or such other court
shall deem proper.
(3) Indemnification for Expenses of Successful
Defense. To the extent that (i) in the case of actions, suits
or proceedings relating to acts or omissions occurring prior to
July 1, 1997, any director, officer, employee or agent of the
Corporation, or (ii) in the case of actions, suits or
proceedings relating to acts or omissions occurring on or after
such date, any present or former director or officer of this
Corporation or of a subsidiary has been successful on the merits
or otherwise in defense of any action, suit or proceeding
referred to in paragraphs 56 or 57(b) of these Bylaws, or in
defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection
with such defense. The Corporation shall have the right, but
not the obligation, to indemnify any person described in
paragraphs 57(a) or (b) who has been successful on the merits or
otherwise in defense of any action, suit or proceeding for which
indemnification has been provided under paragraphs 57(a) or (b),
or in defense of any claim, issue or matter therein, against
expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with such defense.
(4) Authorization. Any indemnification under
paragraphs 56 or 57 of these Bylaws (unless ordered by a court)
shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, partner, member, trustee, employee or agent
is proper in the circumstances because such person has met the
applicable standard of conduct set forth in paragraphs 56 or 57,
as the case may be. Such determination shall be made, with
respect to a person who is a director or officer of the
Corporation at the time of such determination: (i) by a majority
vote of the directors who were not parties to such action, suit
or proceeding, even though less than a quorum, (ii) by a
committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (iii) if there are
no such directors, or if such directors so direct, by
independent legal counsel in written opinion, or (iv) by the
stockholders.
(5) Expense Advance. Expenses (including
attorney's fees) incurred by present or former officers or
directors of the Corporation in defending any civil, criminal,
administrative or investigative action, suit or proceeding may
be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized in one of the
manners provided in paragraph 57(d) of these Bylaws upon receipt
of an undertaking by or on behalf of such person to repay such
amount, if it shall ultimately be determined that he or she is
not entitled to be indemnified by the Corporation as authorized
in these Bylaws. Such expenses (including attorneys' fees)
incurred by other employees or agents of the Corporation may be
so paid upon such terms and conditions, if any, as the
Corporation deems appropriate.
(6) Nonexclusivity. The indemnification and
advancement of expenses provided by, or granted pursuant to,
these Bylaws shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of
expenses may be entitled under any statute, bylaw, agreement,
vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in
another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer,
partner, member, trustee, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(7) Insurance. The Corporation shall have power
to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, member, trustee,
employee or agent of another corporation, partnership, joint
venture, limited liability company, trust or other enterprise or
non-profit entity against any liability asserted against, and
incurred by, him or her in any such capacity, or arising out of
his or her status as such, whether or not the Corporation would
have the power to indemnify such person against such liability
under the provisions of these Bylaws or Section 145 of the
Delaware General Corporation Law.
(8) "The Corporation". For the purposes of
paragraphs 56 or 57 of these Bylaws references to "the
Corporation" shall include, in addition to the resulting
corporation and, to the extent that the Board of Directors of
the resulting corporation so decides, any constituent
corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents, so
that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at
the request of such constituent corporation as director,
officer, partner, member, trustee, employee or agent of another
corporation, partnership, joint venture, limited liability
company, trust or other enterprise or non-profit entity, shall
stand in the same position under the provisions of these Bylaws
with respect to the resulting or surviving corporation as he or
she would have had with respect to such constituent corporation
if its separate existence had continued.
(9) Other Indemnification. The Corporation's
obligation, if any, to indemnify any person who was or is
serving at its request as a director, officer, partner, member,
trustee, employee or agent of another corporation, partnership,
joint venture, limited liability company, trust or other
enterprise or non-profit entity shall be reduced by any amount
such person may collect as indemnification from such other
corporation, partnership, joint venture, limited liability
company, trust or other enterprise or non-profit entity or from
insurance.
(10) Other Definitions. For purposes of
paragraphs 56 or 57 of these Bylaws references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving
at the request of the Corporation" shall include any service as
a director, officer, partner, member, trustee, employee or agent
of the Corporation which imposes duties on, or involves services
by, such director, officer, partner, member, trustee, employee,
or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good
faith and in a manner he or she reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to
in these Bylaws.
(11) Continuation of Indemnification. The
indemnification and advancement of expenses provided by, or
granted pursuant to, these Bylaws shall, unless otherwise
provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, officer, partner,
member, trustee, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
(12) Amendment or Repeal. Neither the amendment
nor repeal of paragraphs 56 or 57 of these Bylaws nor the
adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with paragraphs 56 or 57 of these
Bylaws shall reduce, eliminate or adversely affect any right or
protection hereunder of any person in respect of any act or
omission occurring prior to the effectiveness of such amendment,
repeal or adoption.
SEABOARD CORPORATION
EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED JANUARY 1, 1997
SEABOARD CORPORATION
EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
PURPOSE AND BACKGROUND...............................................1
DEFINITIONS..........................................................2
2.1 Actuarial Equivalent.........................................2
2.2 Actuarial Value..............................................2
2.3 Beneficiary..................................................2
2.4 Benefit Accrual Service......................................2
2.5 Benefit Commencement Date....................................2
2.6 Board........................................................2
2.7 Committee....................................................2
2.8 Company......................................................2
2.9 Disability Retirement Date...................................2
2.10 Early Retirement Date........................................2
2.11 Earnings.....................................................3
2.12 Eligible Spouse..............................................3
2.13 ERISA........................................................3
2.14 Final Average Earnings.......................................3
2.15 Internal Revenue Code........................................3
2.16 Late Retirement Date.........................................3
2.17 Normal Retirement Date.......................................3
2.18 Participant..................................................3
2.19 Plan Administrator...........................................3
2.20 Plan Year....................................................3
2.21 Termination Date.............................................3
2.22 Vesting Service..............................................3
PARTICIPATION........................................................5
3.1 Eligibility for Participation................................5
3.2 Participation not Contract of Employment.....................5
RETIREMENT BENEFITS..................................................6
4.1 Accrued Benefit..............................................6
4.2 Early Retirement Benefit.....................................7
PAYMENT OF BENEFITS..................................................8
5.1 Fully Vested Benefits........................................8
5.2 Forfeitures..................................................8
5.3 Form of Payment..............................................8
5.4 Designation of Beneficiaries................................10
WITHHOLDING OF TAXES................................................12
6.1 Tax Withholding.............................................12
PLAN ADMINISTRATOR..................................................13
7.1 Membership and Authority....................................13
7.2 Delegation..................................................13
7.3 Information to be Furnished.................................13
7.4 Plan Administrator's Decision Final.........................13
7.5 Remuneration and Expenses...................................13
7.6 Indemnification of Committee Member.........................14
7.7 Resignation or Removal of Committee Member..................14
7.8 Appointment of Successor Committee Members..................14
7.9 Interested Committee Member.................................14
CLAIMS PROCEDURE....................................................15
8.1 Claim.......................................................15
8.2 Denial of Claim.............................................15
8.3 Review of Claim.............................................15
8.4 Final Decision..............................................15
AMENDMENTS OF THE PLAN..............................................16
9.1 Board.......................................................16
PERMANENCY OF THE PLAN..............................................17
10.1 Termination of Plan.........................................17
MISCELLANEOUS.......................................................18
11.1 Captions....................................................18
11.2 Company Action..............................................18
11.3 Company Records.............................................18
11.4 Evidence....................................................18
11.5 Gender and Number...........................................18
11.6 Governing Law...............................................18
11.7 Nonassignability............................................18
11.8 Participant Cooperation.....................................18
11.9 Successors..................................................18
11.10 Unfunded Plan...............................................19
11.11 Unsecured General Creditor..................................19
11.12 Validity....................................................19
11.13 Waiver of Notice............................................19
ADDENDUM A - PARTICIPATING EMPLOYERS................................20
ADDENDUM B - PARTICIPANTS...........................................21
ADDENDUM C - SEABOARD FARMS CHANGES.................................23
ADDENDUM D - PRE-1997 FROZEN BENEFITS...............................24
ADDENDUM E - PRE-1997 NONVESTED BENEFITS............................25
SEABOARD CORPORATION
EXECUTIVE RETIREMENT PLAN
ARTICLE I
PURPOSE AND BACKGROUND
Seaboard Corporation adopted the Seaboard Corporation Executive
Retirement Plan (the "Plan") effective January 1, 1994. Seaboard Farms
("Seaboard Farms") adopted the Seaboard Farms Executive Retirement Plan
(the "Seaboard Farms Plan") effective January 1, 1994.
Effective January 1, 1997, the Seaboard Farms Plan merged into the Plan.
Also effective January 1, 1997, the Plan is hereby restated and amended
in its entirety.
The purpose of the Plan is to provide a certain level of retirement
income for a select group of management or highly compensated employees
(and their beneficiaries) of Seaboard Corporation and certain affiliated
companies. It is intended that the Plan will aid in retaining and
attracting employees by providing such individuals with these benefits.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, the following words and phrases shall have
the meaning indicated, unless the context clearly indicates otherwise:
2.1 Actuarial Equivalent shall have the same meaning as such term has
in the Seaboard Corporation Pension Plan.
2.2 Actuarial Value shall have the same meaning as such term has in
the Seaboard Corporation Pension Plan.
2.3 Beneficiary means the person, persons, or entity designated by the
Participant as provided in Section 5.4 of the Plan, to receive any
Accrued Benefit after the Participant's death.
2.4 Benefit Accrual Service shall be equal to Years of Accrual Service
as provided in the Seaboard Corporation Pension Plan, except that:
(a) one full year of Benefit Accrual Service shall be earned in
the Plan Year in which the Participant begins participation
in the Plan (or began Participation in the Seaboard Farms
Plan) regardless of the number of hours of service such
Participant is credited with during such Plan Year; and
(b) no Benefit Accrual Service shall be taken into account prior
to the later of:
(i) the Participant's entry into the Plan; or
(ii) January 1, 1997
2.5 Benefit Commencement Date shall mean the first day of the month on
or next following the Participant's Normal Retirement Date, Late
Retirement Date, Disability Retirement Date, Early Retirement Date or
the Participant's date of death, whichever is applicable.
2.6 Board means the Board of Directors of the Seaboard Corporation.
2.7 Committee means the committee appointed to administer this Plan
pursuant to Article VII.
2.8 Company shall refer to Seaboard Corporation, a Delaware
corporation, or any of its subsidiaries or affiliates set forth on
Addendum A attached hereto or any successors to the business thereof.
2.9 Disability Retirement Date means the date the Participant is
retired from the employ of the Company because of disability,
irrespective of his or her age. A Participant will be considered
disabled for purposes of the Plan if the Participant is entitled to a
Disability Retirement Pension under the Seaboard Corporation Pension
Plan.
2.10 Early Retirement Date shall have the same meaning as such term has
in the Seaboard Corporation Pension Plan.
2.11 Earnings shall mean the total salary and bonus received by the
Participant from the Company for the Participant's services during the
Plan Year. Earnings shall include the amount of any elective deferrals
made by the Participant in such Plan Year pursuant to any plan if such
amount is not includable in gross income under Code Section 125 or
401(k).
2.12 Eligible Spouse means the spouse of a Participant to whom the
Participant was married at the time of the annuity starting date or the
date of the Participant's death. The length of the marriage prior to
either of such dates shall not be taken into consideration.
2.13 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. This Plan, a non-qualified deferred
compensation plan, is not intended to be subject to ERISA except for the
limited reporting and disclosure requirements established by the
Department of Labor.
2.14 Final Average Earnings shall have the same meaning as such term
has in the Seaboard Corporation Pension Plan.
2.15 Internal Revenue Code or Code shall mean the Internal Revenue Code
of 1986, as amended from time to time. References to any Section of the
Internal Revenue Code shall include any successor provision thereto.
2.16 Late Retirement Date means the first day of the calendar month
coinciding with or next following the date the Participant actually
retires after his Normal Retirement Date.
2.17 Normal Retirement Date means the first day of the calendar month
coinciding with or next following the date the Participant attains age
sixty-two (62).
2.18 Participant shall mean any individual who is participating in the
Plan as provided in Article III.
2.19 Plan Administrator shall mean the Company. The Company has the
right to designate a Committee to serve in this capacity.
2.20 Plan Year shall be the 12 month period beginning January 1 and
ending December 31.
2.21 Termination Date means the Participant's date of Normal
Retirement, Late Retirement, Early Retirement, Disability Retirement,
termination or death, as applicable to such Participant. Solely for
purposes herein, it shall also refer to any date upon which this Plan is
terminated or Participation hereunder is terminated, regardless of
whether the Participant actually leaves the employ of the Company.
2.22 Vesting Service shall mean the following:
(a) For those Participants who entered the Plan prior to January
1, 1997, each whole or partial Plan Year during which a
Participant is employed by the Company and during which the
Participant completes at least 1,000 hours of service with
the Company. However, one full year of Vesting Service shall
be earned during the Plan Year in which the Participant
begins employment with the Company regardless of the number
of hours of service such Participant is credited with during
such Plan Year; or
(b) For those Participants who entered the Plan on January 1,
1997 or later, each whole or partial Plan Year during which a
Participant is participating in the Plan and during which the
Participant completes at least 1,000 hours of service with
the Company. However, one full year of Vesting Service shall
be earned during the Plan Year in which the Participant
begins participation in the Plan regardless of the number of
hours of service such Participant is credited with during
such Plan Year.
ARTICLE III
PARTICIPATION
3.1 Eligibility for Participation. All employees participating in
the Plan or the Seaboard Farms Plan, prior to January 1, 1997 shall
continue to participate in the Plan. For all employees who were not
Participants in the Plan or the Seaboard Farms Plan prior to January 1,
1997, eligibility to participate in the Plan is designated by the
President or Executive Vice President of the Company or Seaboard
Corporation effective as of the date specified by the President or
Executive Vice President. Eligibility does not guarantee any
Participant the right to receive any benefit hereunder or to continued
participation hereunder. (See Addendum B for employees that are
eligible to participate in the Plan.)
3.2 Participation not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the Plan will
not give any Participant the right to continue in the employ of the
Company or to provide services thereto or shall interfere in any way
with the right of the Company to terminate the employment of the
Participant or give any right or claim to any benefit under the terms of
the Plan unless such right or claim is specifically vested under the
terms of the Plan.
ARTICLE IV
RETIREMENT BENEFITS
4.1 Accrued Benefit.
(a) Participants in the Plan Prior to 1997. For those
Participants who entered the Plan prior to January 1, 1997,
their Accrued Benefit shall be equal to 2.5% times Final
Average Earnings times Benefit Accrual Service, reduced by the
Seaboard Corporation Pension Plan offset (see 4.1(c) below).
For those Participants who entered the Plan prior to January 1,
1997 and who are employed with Seaboard Farms, their Accrued
Benefit shall be equal to 1.55% times Final Average Earnings
times Benefit Accrual Service reduced by the Seaboard
Corporation Pension Plan offset (see 4.1(c) below). However,
effective January 1, 1997, the following Seaboard Farms
participants stated in Addendum C will have their percentage
changed in the benefit formula from 1.55% to 2.5%.
This Section 4.1(a) shall only be applicable to the Accrued
Benefit these Participants earn after December 31, 1996. The
Accrued Benefit these Participants earned prior to January 1,
1997, shall continue to be determined by the provisions of the
Plan prior to its restatement or the Seaboard Farms Plan,
respectively.
The Participants stated in Addendum D, shall have their Accrued
Benefit earned prior to January 1, 1997 frozen. The benefits
determined in this Section 4.1(a) will be added to the December
31, 1996 frozen accrued benefits as stated in Addendum D. Upon
becoming vested, the Participants stated in Addendum E shall
have the benefits they earned from 1994 through 1996 paid to
them as stated in Section 5.3(h).
(b) Participants Entering the Plan in 1997 and Later. For those
Participants who enter the Plan on or after January 1, 1997,
the following is their Accrued Benefit:
(1) For Participants with less than 10 years of Vesting Service
at their Early Retirement Date, Disability Retirement Date,
termination, or death, their Accrued Benefit shall be equal
to 2.0% times Final Average Earnings times Benefit Accrual
Service, reduced by the Seaboard Corporation Pension Plan
offset (see 4.1(c) below).
(2) For Participants with at least 10 years of Vesting Service
at their Early Retirement Date, Disability Retirement Date,
termination, or death, or who have reached their Normal
Retirement Date, their Accrued Benefit shall be equal to 2.5%
times Final Average Earnings times Benefit Accrual Service,
reduced by their Accrued Benefit under the Seaboard
Corporation Pension Plan offset (see 4.1(c) below).
(c) Seaboard Corporation Pension Plan Offset. For purposes
of Section 4.1 of the Plan, the Seaboard Corporation Pension
Plan offset shall be equal to the Participant's Accrued Benefit
under the Seaboard Corporation Pension Plan, with the exception
that in determining the Accrued Benefit under the Seaboard
Corporation Pension Plan, Years of Accrual Service, as that
term is defined in the Seaboard Corporation Pension Plan, shall
be calculated beginning with the later of the Participant's
entry into the Plan or January 1, 1997 and without taking into
account the 35 year service limit.
4.2 Early Retirement Benefit. Participants may be eligible for an
Early Retirement Benefit which shall equal the Participant's Accrued
Benefit as determined under Section 4.1 of this Plan, reduced by 4% for
each year by which the Participant's Early Retirement Date precedes the
Participant's Normal Retirement Date.
ARTICLE V
PAYMENT OF BENEFITS
5.1 Fully Vested Benefits. Participants shall be fully vested in
their Accrued Benefit at the earlier of the:
(a) Attainment of their Normal Retirement Date, Disability
Retirement Date or death if the Participant has a surviving
Eligible Spouse; or
(b) Completion of five years of Vesting Service; or
(c) Upon a partial plan termination in the Seaboard Corporation
Pension Plan.
5.2 Forfeitures Upon termination of employment, except for
terminations under Section 5.1, all non-vested benefits shall be
forfeited.
5.3. Form of Payment.
(a) Automatic Form for Married Participants: If a Participant is
married on the date his Pension payments commence, then subject
to the provisions of this Section 5.3(d), his Pension shall be
paid in the form of a 50 percent joint and survivor pension.
Under this joint and survivor pension, a monthly annuity shall
be paid to the Participant for his lifetime, and his Eligible
Spouse, if surviving at the Participant's death, shall be
entitled to receive thereafter a lifetime annuity in a monthly
amount equal to 50 percent of the monthly amount which had been
payable to the Participant. The amount payable to the
Participant shall be determined so that the aggregate of the
Pension payments expected to be made to the Participant and his
Eligible Spouse shall be the Actuarial Equivalent of the
Accrued Benefit determined under Section 4.1.
(b) Automatic Form for Unmarried Participants: If a Participant is
not married on the date his Pension payments commence, then
unless he elects an optional form of benefit under Section
5.3(c) his Accrued Benefit will be paid in the form of a single
life annuity which shall be the Actuarial Equivalent of the
Accrued Benefit determined under Section 4.1.
(c) Optional Forms of Benefit: Subject to the requirements of
Section 5.3(d), a Participant can elect that his Pension be
paid in one of the following forms in lieu of the form
otherwise specified in Section 5.3(a) or Section 5.3(b)
(whichever applicable):
(1) A married Participant may elect to receive his Accrued
Benefit in the form of a joint and survivor pension, with a
life annuity payable for the life of the Participant and with
a survivor annuity payable for the remaining life of the
Participant's Eligible Spouse, which survivor annuity is
either 75 percent or 100 percent of the annuity payable
during the Participant's life.
(2) A married or unmarried Participant may elect to receive his
Accrued Benefit in the form of a single life annuity.
(3) A married or unmarried Participant may elect to receive his
Accrued Benefit in the form a single life annuity, with a
term certain of 10 years guaranteed.
(4) A married or unmarried Participant may elect to receive his
Accrued Benefit in the form of a lump sum if the monthly
benefit the Participant would otherwise receive under Section
5.3(a) or Section 5.3(b) (whichever is applicable) would be
less than $75.00. Any lump sum distribution shall be paid as
soon as administratively feasible after the Participant
terminates employment.
Benefits paid under any of the foregoing options will be the
Actuarial Equivalent of the Participant's Accrued Benefit
determined under Section 4.1.
(d) Election Not to Take the 50 Percent Joint and Survivor Pension: A
Participant may make an election to waive payment in the form of a
50 percent joint and survivor pension under Section 5.3(a) at any
time during the election period. In the case of an election to
waive the 50 percent joint and survivor pension, the applicable
election period shall be the 90-day period ending on the Benefit
Commencement Date. A Participant may revoke any election under
this Section 5.3(d) and thereafter may make a new election at any
time within the election period.
Not earlier than 90 days, but not later than 30 days, before a
married Participant's annuity starting date, the Committee shall
furnish to the Participant a written general description of the 50
percent joint and survivor pension, the circumstances under which
the Plan will provide the 50 percent joint and survivor pension,
the material features of and the relative values of the optional
forms of benefit, the availability of the election to waive the 50
percent joint and survivor pension, the rights of the
Participant's Eligible Spouse, the right to revoke such an
election and the effect of such revocation. A Participant's
waiver election is not valid unless the Participant makes the
waiver election within the election period and the Participant's
Eligible Spouse has consented in writing to the waiver election,
such election designates a beneficiary or a form of benefits which
may not be changed without the consent of the Eligible Spouse (or
the consent of the Eligible Spouse expressly permits designations
by the Participant without any requirement of further consent by
the Eligible Spouse), the Eligible Spouse's consent acknowledges
the effect of the election, and a notary public or a member of the
Committee witnesses the Eligible Spouse's consent. The
Participant's Eligible Spouse's consent to a waiver of the joint
and survivor pension shall be irrevocable. The Committee may
accept as valid a waiver election which does not satisfy the
spousal consent requirements hereunder if the Committee
establishes that the Participant does not have an Eligible Spouse,
the Committee is not able to locate the Participant's Eligible
Spouse, or other circumstances exist under which the Secretary of
the Treasury will excuse the consent requirement.
(d) Other Death Benefit: Upon the death after the Benefit
Commencement Date of a Participant who has a nonforfeitable
Accrued Benefit, his beneficiary, if any, under the applicable
benefit payment form shall receive the benefits under such form.
(e) Death Before Benefit Commencement Date: A Participant who dies
before the Benefit Commencement Date and who is survived by an
Eligible Spouse shall have his death benefit paid to his surviving
Eligible Spouse in the form of a pre-retirement survivor annuity.
In the case of a Participant who dies after the earliest
retirement date under the Plan, the annuity payments paid to the
Eligible Spouse shall be equal to the amount which would be
payable to the Eligible Spouse had the Participant retired on the
day before the Participant's date of death and elected to receive
his Pension in the form of a 100 percent joint and survivor
annuity. In the case of a Participant who dies on or before the
earliest retirement date under the Plan, the annuity payments paid
to the Eligible Spouse shall be the amount which would be payable
to the Eligible Spouse had the Participant separated from service
on the date of his death, survived to the earliest retirement date
under the Plan, elected to receive his Accrued Benefit in the form
of a 100 percent joint and survivor annuity at his earliest
retirement date, and died on the day after the day on which the
Participant would have attained the earliest retirement date under
the Plan. The "earliest retirement date under the Plan" is the
earliest date on which the Plan permits the Participant to elect
to receive his Accrued Benefit.
The Participant's Eligible Spouse may direct that payment of the
pre-retirement survivor annuity commence in the month in which the
Participant would have attained the earliest retirement date under
the Plan. If the Eligible Spouse does not so direct, payment of
such benefit will commence at the time the Participant would have
attained his Normal Retirement Age. If commencement of payment of
the pre-retirement survivor annuity is on a date other than the
later of the day after the Participant's earliest retirement date
under the Plan or the date of the Participant's death, then the
annuity amount payable to the Eligible Spouse shall be the amount
which would be payable to the Eligible Spouse had the Participant
separated from service on the date of his death, survived to this
date, elected to receive his Accrued Benefit in the form of a 100
percent joint and survivor annuity, and died on the day after this
date.
(g) Mandatory Lump Sum Payment: If the Actuarial Value of a
Participant's nonforfeitable Accrued Benefit or a Participant's
Eligible Spouse pre-retirement survivor annuity is $5,000 or less
at the time of the termination of the Participant's employment,
the Committee shall direct that as soon as administratively
feasible after the Participant terminates employment such Accrued
Benefit be paid in the form of a lump sum cash payment; provided,
however, that no lump sum cash payment shall be made hereunder
after the Benefit Commencement Date unless the Participant and the
Participant's Eligible Spouse, if any, consent thereto in writing.
For purposes of this Section 5.3(g), if the Actuarial Value of a
Participant's nonforfeitable Accrued Benefit exceeds $5,000 at the
time of any distribution, the Actuarial Value of such
nonforfeitable Accrued Benefit at any subsequent time shall be
deemed to exceed $5,000. For purposes of Section 5.3(g),
Actuarial Value has the same meaning such term has in the Seaboard
Corporation Pension Plan.
(h) Participants Entering the Plan Prior to 1997: This Section
5.3 shall only be applicable to the Accrued Benefit these
Participants earn after December 31, 1996. The form of payment
for the Accrued Benefit these Participants earned prior to January
1, 1997, shall be determined by the provisions of the Plan prior
to its restatement or the Seaboard Farms Plan, respectively.
5.4 Designation of Beneficiaries. Each Participant from time to time,
by signing a form furnished by the Plan Administrator, may designate any
person or persons (who may be designated concurrently, contingently or
successively) to whom his or her benefits under the Plan are to be paid
if he or she dies before the Participant receives all such benefits. A
Beneficiary designation form will be effective only when the form is
filed in writing with the Plan Administrator while the Participant is
alive and will cancel all Beneficiary designation forms previously
signed and filed by the Participant. A designation of a beneficiary
other than the Eligible Spouse must be consented to in writing by the
Eligible Spouse.
If a Participant fails to designate a Beneficiary before his or her
death as provided above, or if the Beneficiary designated by a deceased
Participant dies before the Participant, the Plan Administrator, in its
discretion, may direct the Trustee to make distribution of the
Participant's benefits as follows:
(a) First, to the Participant's Eligible Spouse,
(b) Then, if there is no Eligible Spouse,
(i) To or for the benefit of any one or more of his or her
relatives by adoption, blood or marriage, and in such
proportions as the Plan Administrator determines; or
(ii) To the legal representative or representatives of the
estate of the last to die of the Participant and his or her
designated beneficiary.
ARTICLE VI
WITHHOLDING OF TAXES
6.1 Tax Withholding. The Company shall have the right to retain and
withhold from payment of the vested portion of any distribution, the
amount of taxes required by any government to be withheld or otherwise
be deducted and paid with respect to such payment.
ARTICLE VII
PLAN ADMINISTRATOR
7.1 Membership and Authority. The Committee shall consist of the Vice
President of Human Resources and others as he may appoint. Except as
otherwise specifically provided for in this Article VII, in controlling
and managing the operation and administration of the Plan, the
Committee shall act by a majority of its then members, by meeting or by
writing filed without meeting, and the Plan Administrator, or the
Committee, whichever is applicable, shall have the following powers,
rights and duties in addition to those vested in it elsewhere in the
Plan:
(a) To adopt such rules of procedure and regulations as, in its
opinion, may be necessary for the proper and efficient
administration of the Plan and as are consistent with the
provisions of the Plan.
(b) To enforce the Plan in accordance with its terms and with
such applicable rules and regulations as may be adopted.
(c) To determine all questions arising under the Plan, including
the power to determine the rights or eligibility of employees
or Participants and their Beneficiaries and their respective
benefits, and to remedy ambiguities, inconsistencies or
omissions.
(d) To maintain and keep adequate records concerning the Plan and
concerning its proceedings and acts in such form and detail
as the Plan Administrator may decide.
(e) To direct all payments of benefits under the Plan. The
certificate of a majority of the members of the Committee, if
any, that the Committee has taken or authorized any action
shall be conclusive in favor of any person relying on the
certificate.
7.2 Delegation. In exercising its authority to control and manage the
operation and administration of the Plan, the Plan Administrator may
employ agents and counsel (who may also be employed by the Company) and
to delegate to them such powers as the Plan Administrator deems
desirable.
7.3 Information to be Furnished. The Company shall furnish the Plan
Administrator such data and information as may be required. The records
of the Company as to an employee's or Participant's period of
employment, termination of employment and the reason therefore, leave of
absence and compensation will be conclusive on all persons unless
determined to be incorrect.
7.4 Plan Administrator's Decision Final. To the extent permitted by
law, any interpretation of the Plan and any decision on any matter
within the discretion of the Plan Administrator made in good faith is
binding on all persons. A misstatement or other mistake of fact shall
be corrected when it becomes known, and the Plan Administrator shall
make such adjustment on account thereof as it considers equitable and
practicable.
7.5 Remuneration and Expenses. No remuneration shall be paid to the
Plan Administrator (or any Committee member) as such. However, the
reasonable expenses of the Plan Administrator (or a Committee member)
incurred in the performance of the administration of the Plan shall be
reimbursed by the Company.
7.6 Indemnification of Committee Member. The Committee and the
individual members thereof shall be indemnified by the Company against
any and all liabilities, losses, costs, and expenses (including fees and
expenses) of whatsoever kind and nature which may be imposed on,
incurred by or asserted against the Committee or the members by reason
of the performance of a Committee function if the Committee or such
members did not act dishonestly or in willful or negligent violation of
the law or regulations under which such liability, loss, cost or expense
arises.
7.7 Resignation or Removal of Committee Member. A Committee member
may resign at any time by giving ten (10) days advance written notice to
the Company and the other Committee members. The Company may remove a
Committee member by giving advance written notice to him or her, and the
other Committee members.
7.8 Appointment of Successor Committee Members. The Company may fill
any vacancy in the membership of the Committee and shall give prompt
written notice thereof to the other Committee members. While there is a
vacancy in the membership of the Committee, the remaining Committee
members shall have the same powers as the full Committee until the
vacancy is filled.
7.9 Interested Committee Member. A member of the Committee may not
decide or determine any matter or question concerning his or her own
benefits under the Plan or as to how he or she is to be paid unless such
decision could be made by him or her under the Plan if he were not a
member of the Committee.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claim. Any person claiming a benefit, requesting an interpretation
or ruling under the Plan, or requesting information under the Plan shall
present the request in writing to the Committee which shall respond in
writing as soon as practicable.
8.2 Denial of Claim. If the claim or request is denied, the written
notice of denial shall be made within ninety (90) days of the date of
receipt of such claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 Review of Claim. Any person whose claim or request is denied or
who has not received a response within ninety (90) days may request
review by notice given in writing to the Committee within sixty (60)
days of receiving a response or one hundred fifty (150) days from the
date the claim was received by the Committee. The claim or request
shall be reviewed by the Committee who may, but shall not be required
to, grant the claimant a hearing. On review, the claimant may have
representation, examine pertinent documents, and submit issues and
comments in writing.
8.4 Final Decision. The decision on review shall normally be made
within sixty (60) days after the Committee's receipt of a request for
review. If an extension of time is required for a hearing or other
special circumstances, the claimant shall be notified and the time limit
shall be one hundred twenty (120) days after the Committee's receipt of
a request for review. The decision shall be in writing and shall state
the reasons and relevant plan provisions. All decisions on review shall
be final and bind all parties concerned.
ARTICLE IX
AMENDMENTS OF THE PLAN
9.1 Board. The Board may, at any time, amend the Plan, in whole or in
part, pursuant to written resolutions adopted by such Board provided,
however, that no amendment shall be effective to decrease or restrict
any Participant's Accrued Benefit which, at the time of the amendment,
was nonforfeitable in accordance with the vesting schedule under Section
5.1 of the Plan.
ARTICLE X
PERMANENCY OF THE PLAN
10.1 Termination of Plan. The Company contemplates that the Plan shall
be permanent. Nevertheless, in recognition of the fact that future
conditions and circumstances cannot now be entirely foreseen, the
Company reserves the right to terminate the Plan by action of the Board.
If the Plan is terminated by action of the Board, all Participants shall
become fully vested in their then Accrued Benefit at which time all
benefit accruals shall cease. Payment of benefits upon Plan termination
shall be at the sole discretion of the Board but no later than the
Benefit Commencement Date.
ARTICLE XI
MISCELLANEOUS
11.1 Captions. The captions of articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
11.2 Company Action. Except as may be specifically provided herein,
any action required or permitted to be taken by the Company may be taken
on behalf of the Company by any officer of the Company.
11.3 Company Records. Records of the Company as to an employee's or
Participant's period of employment, termination of employment and the
reason therefore, leaves of absence, reemployment and compensation will
be conclusive on all persons, unless determined to be incorrect.
11.4 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and may be signed, made
or presented by the proper party or parties.
11.5 Gender and Number. Where the context permits, words in the
masculine gender shall include the feminine and neuter genders, the
plural shall include the singular, and the singular shall include the
plural.
11.6 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the state of Delaware.
11.7 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or
convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure or separation for the payment of any debts, judgments, alimony
or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of a Participant's or
another person's bankruptcy or insolvency.
11.8 Participant Cooperation. A Participant will cooperate with the
Company by furnishing any and all information requested by the Company
in order to facilitate the payment of benefits hereunder and such other
action as may be requested by the Company.
11.9 Successors. The provisions of this Plan shall bind and inure to
the benefit of the Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business
entity which shall, whether by merger, consolidation, purchase or
otherwise acquire all or substantially all of the business and assets of
the Company, and successors of any such corporation or other business
entity.
If the Plan is terminated by action of the board of any successor
company, all Participants shall become fully vested in their then
Accrued Benefit at which time all benefit accruals shall cease. Payment
of benefits upon Plan termination shall be at the sole discretion of the
board but no later than the Benefit Commencement Date.
11.10 Unfunded Plan. This Plan is intended to be an unfunded plan
maintained primarily to provide benefits for a select group of
management employees or highly compensated employees. Eligible
individuals are select members of management who, by virtue of their
position with the Company, are uniquely informed as to the Company's
operations and have the ability to materially affect the Company's
profitability and operations.
11.11 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors, and assigns shall have no secured interest or claim
in any property or assets of the Company. The assets of the Company may
be held under a grantor trust established by the Company under which the
Company is the grantor trust for the benefit of Participants, their
Beneficiaries, heirs, successors, or assigns. However, the Company
assets may not be held in any way as collateral security for the
fulfilling of the obligations of the Company under this Plan. Any and
all of the Company's assets shall be, and remain, the general,
unpledged, unrestricted assets of the Company. The Company's obligation
under the Plan shall be merely that of an unfunded and unsecured promise
of the Company to pay money in the future. No Company shall have any
obligation under this Plan with respect to individuals other than that
Company's employees, directors or consultants.
11.12 Validity. In case any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining parts hereof, but this Plan shall be construed
and enforced as if such illegal and invalid provision had never been
inserted herein.
11.13 Waiver of Notice. Any notice required under the Plan may be
waived by the person entitled to notice.
The Company hereby agrees to the provisions of this Plan, and, in
Witness Thereof, the Company causes this Agreement to be executed on
this 28th day of December, 1997.
SEABOARD CORPORATION
By: /s/ J.E. Rodrigues
