UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (913) 676-8800
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No ___.
There were 1,487,520 shares of common stock, $.01 par value
per share, outstanding on April 21, 2000.
Total pages in filing - 16 pages
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
(Thousands of dollars)
(Unaudited)
March 31, December 31,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 20,571 $ 11,039
Short-term investments 237,011 91,609
Receivables, net 194,390 171,931
Inventories 203,631 200,382
Deferred income taxes 17,328 15,031
Prepaid expenses and deposits 22,667 20,395
Current assets of discontinued operations - 103,464
Total current assets 695,598 613,851
Investments in and advances to foreign affiliates 35,355 28,449
Net property, plant and equipment 557,312 480,415
Other assets 29,829 30,204
Non-current assets of discontinued operations - 132,407
Total assets $1,318,094 $1,285,326
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks $ 100,602 $ 221,353
Current maturities of long-term debt 13,508 11,487
Accounts payable 53,040 61,529
Other current liabilities 169,592 106,334
Current liabilities of discontinued operations - 24,013
Total current liabilities 336,742 424,716
Long-term debt, less current maturities 342,365 318,017
Deferred income taxes 53,571 41,589
Other liabilities 34,884 34,924
Non-current liabilities of discontinued operations - 16,824
Total non-current and deferred liabilities 430,820 411,354
Minority interest 565 831
Stockholders' equity:
Common stock of $1 par value,
Authorized 4,000,000 shares;
issued 1,789,599 shares 1,790 1,790
Less 302,079 shares held in treasury (302) (302)
1,488 1,488
Additional capital 13,214 13,214
Accumulated other comprehensive income 480 (201)
Retained earnings 534,785 433,924
Total stockholders' equity 549,967 448,425
Total liabilities and stockholders' equity $1,318,094 $1,285,326
See notes to condensed consolidated financial statements.
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three months ended March 31, 2000 and 1999
(Thousands of dollars except per share amounts)
(Unaudited)
March 31, March 31,
2000 1999
Net sales $ 361,523 $ 256,936
Cost of sales and operating expenses 315,767 232,858
Gross income 45,756 24,078
Selling, general and administrative expenses 27,410 23,206
Operating income 18,346 872
Other income (expense):
Interest income 4,352 1,852
Interest expense (9,286) (8,472)
Income (loss) from foreign affiliates (589) 85
Minority interest 266 474
Miscellaneous 4,045 578
Total other income (expense), net (1,212) (5,483)
Earnings (loss) from continuing operations
before income taxes 17,134 (4,611)
Income tax (expense) benefit (7,073) 483
Earnings (loss) from continuing operations 10,061 (4,128)
Earnings from discontinued operations,
net of income taxes of $2,320 - 3,820
Gain on disposal of discontinued operations,
net of income taxes of $56,560 91,172 -
Net earnings (loss) $ 101,233 $ (308)
Earnings (loss) per common share
from continuing operations $ 6.76 $ (2.78)
Earnings per common share
from discontinued operations 61.29 2.57
Earnings (loss) per common share $ 68.05 $ (.21)
Dividends declared per common share $ .25 $ .25
Average number of shares outstanding 1,487,520 1,487,520
See notes to condensed consolidated financial statements.
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and 1999
(Thousands of dollars)
(Unaudited)
March 31, March 31,
2000 1999
Cash flows from operating activities:
Net earnings $101,233 $ (308)
Adjustments to reconcile net earnings to
cash from operating activities:
Net earnings from discontinued
operations - (3,820)
Net gain on disposal of discontinued
operations (91,172) -
Depreciation and amortization 11,891 10,465
(Income) loss from foreign affiliates 589 (85)
Gain from sale of fixed assets (448) (575)
Gain from recognition of deferred
swap proceeds (2,010) -
Deferred income taxes 4,494 1,469
Changes in current assets and liabilities
(net of businesses acquired and disposed):
Receivables, net of allowance (22,459) 2,311
Inventories 8,608 (23,470)
Prepaid expenses and deposits (2,272) (7,892)
Current liabilities exclusive of debt (13,918) 2,577
Other, net (1,097) (2,309)
Net cash from operating activities (6,561) (21,637)
Cash flows from investing activities:
Purchase of investments (788,879) (99,497)
Proceeds from the sale or maturity of investments 644,593 125,286
Capital expenditures (28,349) (11,570)
Proceeds from sale of fixed assets 2,700 1,478
Additional investment in a controlled subsidiary - (2,202)
Investments in and advances to foreign affiliates (7,495) 94
Acquisition of business (34,134) -
Proceeds from disposal of discontinued operations,
net of cash expenditures 356,107 -
Net cash from investing activities 144,543 13,589
Cash flows from financing activities:
Notes payable to bank, net (120,751) 3,632
Principal payments of long-term debt (7,327) (114)
Dividends paid (372) (372)
Net cash from financing activities (128,450) 3,146
Net cash flows from discontinued operations - 894
Net change in cash and cash equivalents 9,532 (4,008)
Cash and cash equivalents at beginning of year 11,039 20,716
Cash and cash equivalents at end of quarter $ 20,571 $ 16,708
See notes to condensed consolidated financial statements.
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1 - Accounting Policies and Basis of Presentation
The consolidated financial statements include the accounts of Seaboard
Corporation and its domestic and foreign subsidiaries (the "Company").
As more fully described in Note 2, the Company sold its Poultry
Division effective January 3, 2000. Accordingly, comparative 1999
financial results and notes have been restated to reflect the Poultry
Division as a discontinued operation. All significant intercompany
balances and transactions have been eliminated in consolidation. The
Company's investments in non-controlled affiliates are accounted for
by the equity method. The unaudited consolidated financial statements
should be read in conjunction with the consolidated financial
statements of the Company for the year ended December 31, 1999 as
filed in its Annual Report on Form 10-K.
The accompanying unaudited consolidated financial statements include
all adjustments (consisting only of normal recurring accruals) which,
in the opinion of management, are necessary for a fair presentation of
financial position, results of operations and cash flows. Results of
operations for interim periods are not necessarily indicative of
results to be expected for a full year.
For the three months ended March 31, 2000 and 1999, other
comprehensive income adjustments consisted of an immaterial unrealized
gain on available-for-sale securities and foreign currency cumulative
translation adjustment, net of tax.
As more fully described in Note 2, during the first quarter of 2000
the Company sold its Poultry Division and acquired the assets of an
existing hog production operation. The following table summarizes the
noncash transactions resulting from the Poultry Division sale:
Three Months Ended
(Thousands of dollars) March 31, 2000
Decrease in net assets of discontinued operation $195,034
Decrease in net working capital (including current
income tax liability) 65,145
Increase in deferred income tax liability 4,756
Gain on disposition, net of income taxes 91,172
Proceeds from disposition, net of cash expenditures $356,107
The following table summarizes the noncash transactions resulting from
the acquisition of the hog production operation:
Three Months Ended
(Thousands of dollars) March 31, 2000
Increase in net working capital $ 8,033
Increase in fixed assets 62,797
Increase in long-term debt (33,696)
Increase in other liabilities (3,000)
Cash paid $ 34,134
Note 2 - Acquisitions and Dispositions of Businesses
Effective January 3, 2000, the Company completed the sale of its
Poultry Division to ConAgra, Inc. for $375 million, consisting of the
assumption of approximately $16 million in indebtedness and the
remainder in cash, subject to certain adjustments. The sale resulted
in a pre-tax gain of approximately $148 million ($91 million after
taxes). This gain is based on certain estimates including a final
working capital adjustment and construction costs the Company is
required to fund in 2000 to complete certain expansion projects on
behalf of the buyer. Any differences between these estimates and
their actual settlement will change the gain accordingly.
The Company's 1999 financial results have been restated to reflect the
Poultry Division as a discontinued operation. The amounts exclude
general corporate overhead previously allocated to the Poultry
Division for segment reporting purposes. The amounts include interest
on debt at the Poultry Division assumed by the buyer and an allocation
of the interest on the Company's general credit facilities based on a
ratio of the net assets of the discontinued operations to the total
net assets of the Company plus existing debt under the Company's
general credit facilities.
During the first quarter of 2000, the Company purchased the assets of
an existing hog production operation for approximately $75 million,
consisting of $34 million in cash and the assumption of $34 million in
debt, $4 million of currently payable liabilities and $3 million
payable over the next four years. The transaction was accounted for
using the purchase method and would not have significantly affected
net earnings or earnings per share on a pro forma basis.
Note 3 - Inventories
During 1999 the Company changed its method of accounting for certain
inventories of the Pork Division from FIFO to LIFO, retroactive to
January 1, 1999. The following is a summary of inventories at March
31, 2000 and December 31, 1999 (in thousands):
March 31, December 31,
2000 1999
At lower of LIFO cost or market:
Live hogs and related materials $ 93,600 $ 75,662
Dressed pork and related materials 6,027 8,360
99,627 84,022
LIFO allowance 6,572 4,026
Total inventories at lower of LIFO cost
or market 106,199 88,048
At lower of FIFO cost or market:
Grain, flour and feed 33,057 41,772
Sugar produced and in process 21,232 22,398
Crops in production and related materials 11,984 14,121
Wine and spirits, finished and in process 13,331 12,555
Other 17,828 21,488
Total inventories at lower of FIFO cost
or market 97,432 112,334
Total inventories $203,631 $200,382
Low commodity prices during 2000 and 1999 have eliminated the LIFO
allowance as overall pork feed costs have decreased below base year
levels. This change in LIFO allowance is reflected in earnings as a
reduction in cost of sales.
Note 4 - Contingencies
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 $47.6 million are alleged. The Company recently received a
ruling in the arbitration proceeding in its favor which dismisses the
principal theory of recovery although the ruling has been appealed.
The Company believes that the ruling will be upheld on appeal and it
will have no responsibility for the loss.
During the first quarter of 2000, the Company resolved to the mutual
satisfaction of all parties litigation brought in federal court by a
third-party hog supplier claiming breach of agreement, common law
fraud and violation of the federal RICO statute and the Company's
counterclaims in this litigation. The resolution did not have a
material effect on the Company's financial position, results of
operations or cash flows.
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 5 - Segment Information
The following tables set forth specific financial information about
each segment as reviewed by the Company's management. Operating
income for segment reporting is prepared on the same basis as that
used for consolidated operating income. Operating income is used as
the measure of evaluating segment performance because management does
not consider interest and income tax expense on a segment basis.
During the fourth quarter of 1999, the Company changed its method of
accounting for certain inventories of the Pork segment from FIFO to
LIFO, retroactively effective as of January 1, 1999. Quarterly data
for 1999 has been restated accordingly.
The Sugar and Citrus segment represents Ingenio y Refineria San Martin
del Tabacal S.A. (Tabacal), an Argentine company primarily engaged in
growing and refining sugarcane and, to a lesser extent, citrus
production. The entire Argentine sugar industry is experiencing
financial difficulties, with Tabacal and certain large competitors
incurring operating losses because Argentine sugar prices are below
historical levels. As a result of these recent operating losses for
Tabacal, at year-end 1999 the Company evaluated the recoverability of
Tabacal's long-lived assets and believes that the value of those
assets are presently recoverable. However, any further decline in
sugar prices would likely result in the carrying values not being
recoverable, which would result in a material charge to earnings for
the impairment of these assets.
Sales to External Customers:
Three Months Ended March 31,
(Thousands of dollars) 2000 1999
Pork $ 175,258 $ 120,163
Marine 76,851 70,221
Commodity Trading and Milling 79,850 41,699
Sugar and Citrus 9,759 5,132
Power 6,606 4,948
Wine 2,104 3,360
All Other 11,095 11,413
Segment/Consolidated Totals $ 361,523 $ 256,936
Operating Income
Three Months Ended March 31,
(Thousands of dollars) 2000 1999
Pork $ 22,510 $ 2,593
Marine (524) 2,355
Commodity Trading and Milling 921 1,338
Sugar and Citrus (2,668) (3,878)
Power 1,387 1,265
Wine (1,895) (1,043)
All Other (478) (26)
Segment Totals 19,253 2,604
Corporate Items (907) (1,732)
Consolidated Totals $ 18,346 $ 872
Total Assets
March 31, December 31,
(Thousands of dollars) 2000 1999
Pork $ 484,934 $ 401,316
Marine 102,580 97,561
Commodity Trading and Milling 150,218 161,477
Sugar and Citrus 165,545 167,972
Power 47,319 21,068
Wine 26,101 29,156
All Other 44,818 46,466
Segment Totals 1,021,515 925,016
Corporate items 296,579 124,439
Discontinued Poultry Operations - 235,871
Consolidated Totals $1,318,094 $1,285,326
Administrative services provided by the corporate office are primarily
allocated to the individual segments based on the size and nature of
their operations. Corporate assets include short-term investments,
certain investments in and advances to foreign affiliates, fixed
assets, deferred tax amounts and other miscellaneous items. Corporate
operating losses represent certain operating costs not specifically
allocated to individual segments and, in 1999, general corporate
overhead previously allocated to the discontinued Poultry operations
as discussed in Note 2.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
As more fully described in Note 2 to the Condensed Consolidated
Financial Statements, the Company completed the sale of its Poultry
Division to ConAgra, Inc. effective January 3, 2000. As a result, the
Company's 1999 financial results have been restated to reflect the
Poultry Division as a discontinued operation. The discussions and
figures below are based on this restated presentation.
LIQUIDITY AND CAPITAL RESOURCES
March 31, December 31,
2000 1999
Current ratio 2.07:1 1.45:1
Working capital $358.9 $189.1
Cash from operating activities for the three months ended March 31,
2000, increased $15.1 million compared to the same period one year
earlier. The increase in cash flows was primarily related to an
increase in net earnings from continuing operations, partially offset
by changes in components of working capital. Changes in components of
working capital are primarily related to the timing of normal
transactions for voyage settlements, trade payables and receivables.
Within the Commodity Trading and Milling segment there was a lower
value of inventory in transit at March 31, 2000 than at December 31,
1999 resulting in decreases in grain inventory and a partially
offsetting decrease in deferred revenue balances. At March 31, 1999,
there was a higher value of inventory in transit than at December 31,
1998, resulting in an increase in inventory balances and a partially
offsetting increase in deferred revenue balances.
Cash from investing activities for the three months ended March 31,
2000 increased $131.0 million primarily related to proceeds from the
sale of discontinued poultry operations, partially offset by
acquisitions, capital expenditures and net purchases of investments.
See Note 2 to the Condensed Consolidated Financial Statements for
further discussion of the Poultry Division sale and acquisition of the
assets of an existing hog production operation.
The Company invested $28.3 million in property, plant and equipment
for the three months ended March 31, 2000, of which $4.8 million was
expended in the Pork segment, $2.5 million in the Sugar and Citrus
segment, $19.1 million in the Power segment and $1.9 million in other
businesses of the Company.
The Company invested $4.8 million primarily for expansion of existing
hog production facilities and for improvements to the pork processing
plant. The Company plans to invest $5.2 million over the next nine
months for general upgrades to the pork processing plant and continued
expansion of hog production facilities.
The Company invested $2.5 million in the Sugar and Citrus segment
primarily for improvements to existing facilities and sugarcane
fields. Over the next nine months, the Company anticipates spending
$8.5 million for additional improvements.
The Company invested $19.1 million in the Power segment primarily for
the construction of a 71.2 megawatt barge-mounted power plant to be
located in the Dominican Republic. Construction costs are expected to
total approximately $50 million.
During the first quarter of 2000, the Company purchased a minority
interest in a flour and feed mill operation in Kenya for $7.5 million.
This transaction is being accounted for using the equity method.
In the first quarter of 2000, the Company's one-year revolving credit
facilities totaling $153.3 million maturing in the first quarter of
2000 were reduced to $141.0 million and extended for an additional
year and the short-term uncommitted credit lines totaling $145.0
million were reduced to $132.5 million. As of March 31, 2000, the
Company had $77.6 million outstanding under one-year revolving credit
facilities and $23.0 million outstanding under short-term uncommitted
credit lines. During the first quarter of 2000, the Company repaid
approximately $128.1 million in notes payable and industrial
development revenue bonds, primarily with proceeds from the Poultry
Division sale. As a result of these repayments, approximately $2.0
million in unamortized proceeds from prior terminations of interest
rate agreements related to these notes were recognized as
miscellaneous income. In early April 2000, the Company repaid an
additional $11.0 million in industrial revenue bonds from the proceeds
of the Poultry Division sale.
Management intends to continue seeking opportunities for expansion in
the industries in which it operates and believes that the Company's
liquidity, capital resources and borrowing capabilities are adequate
for its current and intended operations.
RESULTS OF OPERATIONS
Net sales for the three months ended March 31, 2000 increased by
$104.6 million compared to the three months ended March 31, 1999.
Operating income increased by $17.5 million compared to the same
quarter one year ago.
Pork Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 175.3 120.2
Operating income $ 22.5 2.6
Net sales for the Pork segment increased $55.1 million in the first
quarter of 2000 compared to the first quarter of 1999, as a result of
higher pork prices and an increase in sales volume. An excess supply
of hogs had depressed pork prices through the first half of 1999. The
excess has since declined resulting in improved prices. Sales volume
increased as the plant ran extended shifts to take advantage of
positive margins. Although management cannot predict pork prices, it
is anticipated that market conditions will continue to be favorable
during the remainder of 2000.
Operating income for the Pork segment increased $19.9 million in the
first quarter of 2000 compared to the first quarter of 1999, primarily
as a result of improved sales prices and volumes as discussed above.
The Company also continues to benefit from low grain prices for
Company raised hogs, while the cost of third-party hogs has increased.
Management is unable to predict future market prices for these items
but anticipates overall margins will remain favorable during the
remainder of 2000.
Marine Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 76.9 70.2
Operating income $ (0.5) 2.4
Net sales for the Marine segment increased $6.7 million in the first
quarter of 2000 compared to the first quarter of 1999. The increase
resulted from a significant increase in volume, largely offset by a
general decrease in cargo rates. Management believes that weak
economic conditions in certain South American markets continue to
depress rates, however, volumes have begun to increase. A new
shipping law, The Ocean Reform Act of 1998, went into effect in May
1999 and permits shipping companies to enter into unregulated
confidential rate agreements with shippers. Management is not able to
determine the impact, if any, this new law has had on financial
results.
Operating income from the Marine segment decreased $2.9 million in the
first quarter of 2000 compared to the first quarter of 1999, primarily
as a result of the lower cargo rates discussed above and higher fuel
costs. Management anticipates that these conditions will improve for
the remainder of 2000 compared to 1999.
Commodity Trading and Milling Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 79.9 41.7
Operating income $ 0.9 1.3
Net sales for the Commodity Trading and Milling segment increased
$38.2 million in the first quarter of 2000 compared to the first
quarter of 1999. The increase is primarily a result of increased
commodity sales to third-parties and certain foreign affiliates.
Operating income for this segment decreased $0.4 million in the first
quarter of 2000 compared to the first quarter of 1999, primarily due
to losses incurred from the Zambia milling operations partially offset
by increases from commodity sales.
Sugar and Citrus Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 9.8 5.1
Operating income $ (2.7) (3.9)
Net sales for the Sugar and Citrus segment increased $4.7 million in
the first quarter of 2000 compared to the first quarter of 1999,
primarily as a result of higher sales volumes. Operating income for
this segment increased $1.2 million from improved margins and lower
operating costs. Although management cannot predict future sugar
prices, it is anticipated that sugar prices during the remainder of
2000 will remain at levels that result in operating losses for the
Company.
As a result of recent operating results for Tabacal, at year-end 1999
the Company evaluated the recoverability of Tabacal's long-lived
assets and believes that the value of those assets are presently
recoverable. However, any further decline in sugar prices would
likely result in the carrying values not being recoverable, which
would result in a material charge to earnings for the impairment of
these assets.
Power Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 6.6 4.9
Operating income $ 1.4 1.3
Net sales for the Power segment increased $1.7 million in the first
quarter of 2000 compared to the first quarter of 1999, primarily as a
result of higher rates and, to a lesser extent, an increase in demand.
Rates have increased as a result of a fuel adjustment clause allowing
the Company to pass on higher fuel costs. Operating income for this
segment increased $0.1 million due to the increase in demand.
Wine Segment
Three Months Ended March 31,
(Dollars in millions) 2000 1999
Net sales $ 2.1 3.4
Operating income $ (1.9) (1.0)
Net sales for the Wine segment decreased $1.3 million in the first
quarter of 2000 compared to the first quarter of 1999, primarily as a
result of a decrease in sales volumes in certain European markets.
Operating income for this segment decreased $0.9 million as a result
of the cost of acquiring wine materials on the open market to
supplement local grape shortages and increasing reserves for
uncollectible advances for raw materials. Although management is not
able to predict the amount of operating losses for 2000, it is
anticipated that operating losses will continue during 2000.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses increased $4.2
million to $27.4 million for the first quarter of 2000 compared to the
first quarter of 1999. The increase is primarily a result of higher
sales volumes in the Pork and Marine segments. As a percentage of
revenues, SG&A decreased to 7.6% in the first quarter of 2000 from
9.0% in the first quarter of 1999, primarily due to the increase in
revenues in the Commodity Trading and Milling segment without a
corresponding increase in SG&A costs.
Interest Income
Interest income increased $2.5 million in the first quarter of 2000
compared to the first quarter of 1999. The increase reflects an
increase in average funds invested and, to a lesser extent, an
increase in interest rates. Average funds invested increased
primarily from proceeds from the sale of the Poultry Division in
January 2000.
Interest Expense
Interest expense increased $0.8 million in the first quarter of 2000
compared to the first quarter of 1999. The increase is primarily a
result of higher short-term borrowing rates.
Income (loss) from Foreign Affiliates
Income from foreign affiliates decreased $0.7 million for the first
quarter of 2000 compared to the first quarter of 1999, primarily from
lower earnings at certain milling operations in Africa.
Miscellaneous Income
Miscellaneous income increased $3.5 million for the first quarter of
2000 compared to the first quarter of 1999. As discussed in Liquidity
and Capital Resources above, $2.0 million of this increase resulted
from the recognition of unamortized proceeds from prior terminations
of interest rate agreements associated with debt repaid during the
quarter. The remaining increase is primarily attributable to a sales
tax refund in the Pork Division.
Income Tax Expense
For the three months ended March 31, 1999, the Company incurred a tax
benefit resulting from net losses at its domestic entities. For the
three months ended March 31, 2000, the Company's tax expense is
primarily attributable to net income from domestic entities,
primarily the Pork Segment.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to various types of market risks from its day-
to-day operations. Primary market risk exposures result from changing
interest rates and commodity prices. Changes in interest rates impact
the cash required to service variable rate debt. From time to time,
the Company uses interest rate swaps to manage risks of increasing
interest rates. Changes in commodity prices impact the cost of
necessary raw materials as well as the selling prices of finished
products. The Company uses corn, wheat, soybean and soybean meal
futures and options to manage risks of increasing prices of raw
materials. The Company uses hog futures and options to manage risks
of fluctuating prices of third party hogs acquired for processing.
The Company is also subject to foreign currency exchange rate risk on
a short-term note payable denominated in foreign currency. This risk
is managed through the use of a foreign currency forward exchange
agreement. The Company's market risk exposure related to these items
has not changed materially since December 31, 1999.
SEABOARD CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On March 23, 2000, the Company resolved to the mutual satisfaction of
all parties litigation brought in federal court by a third-party hog
supplier claiming breach of agreement, common law fraud and violation
of the federal RICO statute and the Company's counterclaims in this
litigation. The resolution did not have a material effect on the
Company's financial position, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders was held on April 24, 2000 in
Newton, Massachusetts. Two items were submitted to a vote of
stockholders as described in the Company's Proxy Statement dated March
10, 2000. The table below briefly describes the proposals and results
of the stockholders' vote.
Votes in Votes
Favor Against Abstain
1. To elect:
H. Harry Bresky 1,441,011.75 0 6,488
Joe E. Rodrigues 1,407,221.75 0 40,278
David A. Adamsen 1,441,771.75 0 5,728
and Thomas J. Shields 1,442,011.75 0 5,488
as directors.
2. To ratify selection of
KPMG LLP
as independent auditors. 1,441,129.75 1,775 4,595
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K. On January 18, 2000 the Registrant filed a
report on Form 8-K, dated January 3, 2000, disclosing the sale of
its Poultry businesses. This sale is further described in Note 2
to the Condensed Consolidated Financial Statements.
This Form 10-Q contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, which 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-Q 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 cost to
purchase third-party hogs for slaughter at the Company's hog
processing facility and the sale price for pork products from such
operations, (v) the price for the Company's products and services,
(vi) the effect of Tabacal and/or the Wine segment on the consolidated
financial statements of the Company, or (vii) 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-Q
under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" identifies important factors
which could cause such differences.
PART II - OTHER INFORMATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DATE: April 28, 2000
Seaboard Corporation
by: /s/ Robert L. Steer
Robert L. Steer, Vice President-Chief
Financial Officer (Authorized officer
and principal financial and accounting
officer)
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
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