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, 1999
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock American Stock Exchange
$1.00 Par Value
Securities registered pursuant of Section 12(g) of the Act:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. X
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.
$61,089,875 (March 3, 2000). On such date, 349,085 shares
were held by non-affiliates, and the closing price of the stock
was $175.00 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 3, 2000.
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, 7A
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 2000 annual
meeting of stockholders (the "2000 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) 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 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-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" or "Company"), is a diversified
international agribusiness and transportation company which is
primarily engaged in domestic pork production and processing, and
cargo shipping. Overseas, the Company is primarily engaged in
commodity merchandising, flour and feed milling, produce farming,
sugar production, 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 12 of
Registrant's Consolidated Financial Statements appearing on pages
40 through 42 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 as well as third-party hogs are processed at the
Company's processing plant.
Registrant operates an ocean liner service for containerized
cargo primarily between Florida and ports in the Caribbean Basin
and Central and South America.
Registrant sources and trades commodities, such as bulk
grains and oilseeds, for its subsidiaries, affiliates and third
parties primarily in Africa, the Caribbean, Central and South
America, the Eastern Mediterranean and Europe. Registrant
operates its own bulk carriers primarily in the Atlantic Basin to
conduct a portion of its commodity trading activities.
Registrant, by itself or through non-controlled subsidiaries,
operates flour and feed mills in Africa, the Caribbean and South
America.
Registrant operates a power generating facility in the
Dominican Republic, produces and refines sugarcane and produces
and processes citrus in Argentina, and produces wine in
Bulgaria.
Registrant, by itself or through non-controlled affiliates,
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. The Registrant, through non-controlled
affiliates, produces salmon and processes seafood in Maine.
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 12 of Registrant's
Consolidated Financial Statements appearing on pages 40 through
42 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
In December 1999, the Registrant agreed to sell its domestic
poultry operations. The sale was completed on January 3, 2000.
Registrant continues to expand its pork segment by further
investing in pork production and processing facilities. The
Registrant is currently making arrangements to increase annual
production to approximately three and one-half million hogs per
year. In late February 2000, Registrant signed an agreement to
acquire approximately 22,000 additional sows effective late March
or early April 2000. The Registrant plans to construct a second
vertically integrated pork operation capable of processing over
four million hogs annually although the timing has not been
finalized.
The Registrant's Argentine subsidiary continues to make
improvements to existing facilities and expand the sugarcane
fields.
In January 2000, the Registrant signed a construction
contract to build a 71.2 megawatt barge-mounted power plant to be
located in the Dominican Republic and anticipates supplying power
in the fourth quarter of 2000.
(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
The following names of the Registrant's businesses are
registered trademarks: Seaboard, Seaboard Farms and Seaboard
Marine.
Patents, trademarks, franchises, licenses and concessions
are not material to any of Registrant's other segments.
(v) Seasonal Business
Profits from processed pork are generally higher in the fall
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. Sugar
prices in Argentina are generally lower during the typical sugar
cane harvest period between June and November. The Registrant's
other segments are not seasonally dependent to any material
extent.
(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. All of the
sales of the power segment are to the state-owned electric
company of the Dominican Republic. No other segments have 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 involves
government contracts.
(x) Competitive Conditions
Competition in Registrant's pork segment comes from a
variety of national and regional producers and is based primarily
on product performance, customer service and price. In the
October 1999 issue of Successful Farming, an industry trade
publication, the Registrant was ranked in the top five pork
producers in the United States based on sows in production.
Registrant's ocean liner service for containerized cargoes
faces competition based on price and customer service. A new
U.S. 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 predict the impact of this new law, if
any, on the Registrant. Registrant believes it is among the top
five ranking ocean liner services for containerized cargoes in
the Caribbean Basin based on cargo volume.
Registrant's sugar business faces significant competition
for sugar sales in the local Argentine market. Sugar prices in
Argentina are higher than world markets due to current Argentine
government price protection policies. The entire Argentine sugar
industry is experiencing financial difficulties with Tabacal and
certain large competitors incurring operating losses in part
because Argentine sugar prices are below historical levels.
Registrant's Bulgarian wine production business faces
increasing competition for quality grapes from local grape
suppliers.
(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, 1999, Registrant, excluding non-
controlled, non-consolidated foreign subsidiaries, had 9,763
employees, of whom 4,246 were employed in the United States.
These totals exclude 5,690 employees of the Poultry division
which was sold on January 3, 2000, and presented as a
discontinued operation in the Company's 1999 financial
statements.
(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 12 of
Registrant's Consolidated Financial Statements appearing on pages
40 through 42 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. 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 affiliate shrimp farm in
Ecuador, its winery in Bulgaria and its affiliate flour mills, in
Democratic Republic of Congo, Ecuador, Haiti, Lesotho, Mozambique
and Zambia, 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 its own and
affiliate facilities abroad.
Item 2. Properties
(1) Pork
The Registrant owns a hog processing plant in Oklahoma with
a double shift capacity in excess of four million hogs per year.
Hog production facilities currently consist of a combination of
owned and leased farrowing, nursery and finishing units to
support 160,000 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.
(2) Marine
Registrant leases a 135,000 square foot warehouse and more
than 90 acres of port terminal land and facilities in Florida
which are used in its containerized cargo operations. In
addition, Registrant timecharters, under short-term agreements,
between sixteen and twenty containerized ocean cargo vessels with
deadweights ranging from 2,600 to 17,565 metric-tons. Registrant
also bareboat charters, under long-term lease agreements, three
containerized ocean cargo vessels with deadweights ranging from
12,169 to 12,648 metric tons.
(3) Commodity Trading and Milling
The Registrant owns in whole or in part ten flour mills with
capacity to produce over 5,000 metric tons of flour per day. In
addition, Registrant has feed mill capacity of 75 metric tons per
hour to produce formula animal feed. The flour mills, located in
Angola, Democratic Republic of Congo, Ecuador, Guyana, Haiti,
Lesotho, Mozambique, Nigeria, Sierra Leone and Zambia, and the
feed mills located in Ecuador, Lesotho, Nigeria and Zambia are
owned; in Lesotho, Nigeria and Sierra Leone the land the mills
are located on is leased under long-term agreements. The
Registrant owns seven 9,000 metric-ton deadweight dry bulk
carriers.
(4) Sugar and Citrus
Registrant has a controlling interest in an Argentine
company which owns approximately 33,000 acres of planted
sugarcane and approximately 2,700 acres of planted citrus. In
addition, this company owns a sugar mill with a capacity to
process approximately 165,000 metric tons of sugar per year.
(5) Power
Registrant owns a floating power generating facility,
capable of producing 40 megawatts of power, located in Santo
Domingo, Dominican Republic.
(6) Wine
Registrant owns a controlling interest in a Bulgarian winery
with a capacity to produce approximately 41 million liters of
wine per year. Related facilities are located on approximately
330 acres of owned land.
(7) Other
Registrant leases 1,900 acres in Honduras and 1,000 acres in
Arizona for growing produce. Registrant also leases 40,000
square feet of refrigerated space and 70,000 square feet of dry
space in the Port of Miami for warehousing produce products.
Registrant, by itself or through non-controlled affiliates,
operates approximately 3,100 acres of shrimp ponds in Honduras
and Ecuador. Approximately 1,600 acres are leased and the rest
are owned.
Registrant owns a non-controlling interest in a company in
Maine capable of producing over 11 million pounds of salmon per
year. Registrant owns a non-controlling interest in a company in
Maine with a 20,000 square feet facility for processing seafood
and related products.
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.
Poultry facilities sold in January 2000 consisted of four
fully integrated processing facilities and two further processing
facilities located in Georgia, Tennessee and Kentucky. Each
processing facility contained a hatchery, feed mill and
processing plant.
Item 3. Legal Proceedings
The Company is subject to legal proceedings related to the
normal conduct of its business, including as a defendant in a
maritime arbitration claim and third-party hog supplier claim
more fully described in Note 11 of the consolidated financial
statements. In the opinion of management, none of these actions
are expected to result in a final judgement having a materially
adverse effect on the consolidated financial statements of the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the last quarter of the
fiscal year covered by this report to a vote of security holders.
Executive Officers of Registrant
The following table lists the executive officers and certain
significant employees of Registrant. Generally, each executive
officer is elected at the Annual Meeting of the Board of
Directors following the Annual Meeting of Stockholders and holds
his office until the next such annual meeting or until his
successor is duly chosen and qualified. There are no
arrangements or understandings pursuant to which any executive
officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
H. Harry Bresky (74) President of Registrant; President and Treasurer of
Seaboard Flour Corporation (SFC)
Joe E. Rodrigues (63) Executive Vice President and Treasurer
Rick J. Hoffman (45) Vice President
Steven J. Bresky (46) Vice President
Robert L. Steer (40) Vice President - Chief Financial Officer
Douglas W. Schult (43) Vice President - Human Resources
James L. Gutsch (46) Vice President - Engineering
David M. Becker (38) General Counsel and Assistant Secretary
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 - Chief Financial
Officer of Registrant since April 1998 and previously 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 and by M.G. Waldbaum from January
1993 to January 1995.
Mr. Gutsch has served as Vice President - Engineering of
Registrant since December 1998. He has been employed with the
Registrant since 1984.
Mr. Becker has served as General Counsel and Assistant
Secretary of Registrant since April 1998 and previously Assistant
Secretary of Registrant since May 1994.
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 44 and 15, 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 14 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 16
through 23 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 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A is hereby incorporated
by reference to the material under the captions "Financial
Instruments" and "Commodity Instruments" within Note 1 of the
Registrant's Consolidated Financial Statements appearing on page
33, and to the material under the caption "Derivative
Information" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
22 through 23 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.
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 Balance Sheets," "Consolidated
Statements of Stockholders' Equity," "Consolidated Statements of
Cash Flows" and "Notes to Consolidated Financial Statements"
appearing on pages 15 and 24 through 43 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, 1999, 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 2000 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 2000 Proxy Statement.
Item 11. Executive Compensation
This item has been omitted since Registrant filed a
definitive proxy statement within 120 days after December 31,
1999, 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 through 8 and 10 of the 2000 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,
1999, the close of its fiscal year. The information required by
this item is incorporated by reference to "Principal
Stockholders" appearing on page 2 and "Election of Directors" on
pages 3 and 4 of the 2000 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,
1999, 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 10 of the
2000 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.
2.1 - Asset Purchase Agreement by and between
Seaboard Corporation and ConAgra, Inc., dated
December 6, 1999. Incorporated by reference to
Exhibit 2.1 of Registrant's Form 8-K, dated
January 3, 2000.
2.2 - Addendum to Asset Purchase Agreement dated
December 30, 1999. Incorporated by reference to
Exhibit 2.2 of Registrant's Form 8-K, dated
January 3, 2000.
3.1 - Registrant's Certificate of Incorporation,
as amended, incorporated by reference to Exhibit
3.1 of Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
3.2 - Registrant's By-laws, as amended.
Incorporated by reference to Exhibit 2.1 of
Registrant's Form 10-Q for the quarter ended March
31, 1999.
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. The addenda have been omitted
from the filing, but will be provided
supplementary upon request of the Commission.
Incorporated by reference to Exhibit 10.1 of
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
* 10.2 Registrant's Amended and Restated
Supplemental Executive Retirement Plan.
Incorporated by reference to Exhibit 10.2 of
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
* 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.
* 10.5 Registrant's Executive Deferred
Compensation Plan dated January 1, 1999.
Incorporated by reference to Exhibit 10.1 of
Registrant's Form 10-Q for the quarter ended March
31, 1999.
13 - Sections of Annual Report to security holders
incorporated by reference herein.
18 - Letter regarding change in accounting principles.
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
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 13 to the
Consolidated Financial Statements.
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
H. Harry Bresky, President Robert L. Steer, Vice President - Chief
(principal executive officer) Financial Officer (principal financial and
accounting officer)
Date: March 10, 2000 Date: March 10, 2000
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.
By /s/H. Harry Bresky By /s/J.E. Rodrigues
H. Harry Bresky, Director J.E. Rodrigues, Director
Date: March 10, 2000 Date: March 10, 2000
By /s/David A. Adamsen By /s/Thomas J. Shields
David A. Adamsen, Director Thomas J. Shields, Director
Date: March 10, 2000 Date: March 10, 2000
SEABOARD CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements and Schedule
(Form 10-K)
Securities and Exchange Commission
For the year ended December 31, 1999
(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 24
Consolidated Statements of Earnings for the years
ended December 31, 1999, December 31, 1998 and
December 31, 1997 25
Consolidated Balance Sheets as of December 31, 1999
and December 31, 1998 26
Consolidated Statements of Changes in Equity for the
years ended December 31, 1999, December 31, 1998 and
December 31, 1997 28
Consolidated Statements of Cash Flows for the years
ended December 31, 1999, December 31, 1998 and
December 31, 1997 29
Notes to Consolidated Financial Statements 30
The foregoing are incorporated by reference.
The individual financial statements of the nonconsolidated
foreign affiliates which would be required if each such foreign
affiliate were a Registrant are omitted, because (a) the
Registrant's and its other subsidiaries' investments in and
advances to such foreign affiliates 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 affiliates 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 affiliates 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
nonconsolidated foreign affiliates in Note 5 of "Notes to the
Consolidated Financial Statements."
(Continued)
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Schedule
Page
II - Valuation and Qualifying Accounts for the years ended
December 31, 1999, 1998 and 1997
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 February 28, 2000, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated
statements of earnings, changes in equity and cash flows for each
of the years in the three-year period ended December 31, 1999, as
contained in the December 31, 1999 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, 1999. 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 4 to the consolidated financial statements,
the Company changed its method of accounting for certain
inventories from the first-in, first-out method to the last-in,
first-out method in 1999.
KPMG LLP
Kansas City, Missouri
February 28, 2000
F-3
<TABLE>
<CAPTION>
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at
beginning Provision Write-offs net Aquisitions Balance at
of year (1) of recoveries and Disposals end of year
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999:
Allowance for doubtful accounts $26,117 7,105 4,147 -- $29,075
Year ended December 31, 1998:
Allowance for doubtful accounts $20,658 5,902 1,790 1,347 $26,117
Year ended December 31, 1997:
Allowance for doubtful accounts $19,448 3,845 2,635 -- $20,658
<FN>
(1) Charged to selling, general and administrative expenses.
</TABLE>
F-4
Summary of Selected Financial Data
Seaboard Corporation
(Thousands of dollars except per share amounts)Years ended December 31,
1999 1998 1997 1996 1995
Net sales $1,255,304 $1,265,366 $1,303,753 $ 962,652 $715,362
Earnings (loss) from
continuing operations $ (13,394) $ 32,844 $ 36,565 $ 5,661 $ 4,935
Net earnings $ 240 $ 52,355 $ 30,574 $ 5,846 $ 20,202
Earnings (loss) per
common share from
continuing operations $ (9.00) $ 22.08 $ 24.58 $ 3.81 $ 3.32
Earnings per common share$ 0.16 $ 35.20 $ 20.55 $ 3.93 $ 13.58
Total assets $1,285,326 $1,223,134 $1,124,385 $1,004,685 $878,132
Long-term debt $ 318,017 $ 313,324 $ 290,521 $ 281,574 $281,240
Stockholders' equity $ 448,425 $ 449,792 $ 399,015 $ 369,934 $365,810
Dividends per common
share $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
In December 1999, the Company agreed to sell its Poultry Division. The
sale was completed on January 3, 2000. Accordingly, the Company's financial
statements and data above have been restated to reflect the Poultry Division
as a discontinued operation for all periods presented. See Note 13 to the
consolidated financial statements for further discussion.
As described in Note 4 to the consolidated financial statements, the
Company changed its method of accounting for certain inventories from FIFO
to LIFO in 1999. The net effect of this change in 1999 was to increase net
earnings by $2,456,000 or $1.65 per common share.
In December 1998, the Company sold its baking and flour milling
operations in Puerto Rico, recognizing an after-tax gain of $33,272,000 or
$22.37 per common share. See Note 2 to the consolidated financial
statements for further discussion.
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.
Quarterly Financial Data
(Unaudited)
Seaboard Corporation
(Thousands of dollars 1st 2nd 3rd 4th Total for
except per share amounts) Quarter Quarter Quarter Quarter the Year
1999
Net sales $ 256,936 308,981 318,769 370,618 $1,255,304
Operating income $ 872 905 3,563 7,325 $ 12,665
Earnings (loss) from
continuing operations $ (4,128) (4,297) (3,007) (1,962)$ (13,394)
Net earnings (loss) $ (308) 2,056 2,262 (3,770)$ 240
Earnings (loss) per common
share from continuing
operations $ (2.78) (2.88) (2.03) (1.31)$ (9.00)
Earnings (loss) per common
share $ (0.21) 1.39 1.52 (2.54)$ 0.16
Dividends per common share $ .25 .25 .25 .25 $ 1.00
Market price range per common
share:
High $ 457 340 320 262
Low $ 298 256 216 185 1/4
1998
Net sales $ 321,344 329,949 303,486 310,587 $1,265,366
Operating income $ 10,911 12,446 1,405 7,188 $ 31,950
Earnings (loss) from
continuing operations $ 2,910 4,658 (6,527) 31,803 $ 32,844
Net earnings $ 2,864 7,932 5,018 36,541 $ 52,355
Earnings (loss) per common
share from continuing
operations $ 1.96 3.13 (4.39) 21.38 $ 22.08
Earnings per common share $ 1.93 5.33 3.37 24.57 $ 35.20
Dividends per common share $ .25 .25 .25 .25 $ 1.00
Market price range per common
share:
High $ 435 375 1/16 336 445
Low $ 365 265 1/2 261 256
In December 1999, the Company agreed to sell its Poultry Division. The
sale was completed on January 3, 2000. Accordingly, the Company's financial
statements and data above have been restated to reflect the Poultry Division
as a discontinued operation for all periods presented. See Note 13 to the
consolidated financial statements for further discussion.
As described in Note 4 to the consolidated financial statements, the
Company changed its method of accounting for certain inventories from FIFO
to LIFO during the fourth quarter of 1999. This change has been applied
retroactively to January 1, 1999 and accordingly, the first three quarters
of 1999 have been restated. The effect of this change in 1999 was to
increase (decrease) net earnings and earnings per common share by
$(1,341,000) ($(0.90) per share), $2,995,000 ($2.02 per share), $2,187,000
($1.47 per share) and $(1,385,000) ($(0.94) per share), respectively, for
the first, second, third and fourth quarters of 1999.
In the fourth quarter of 1998, the Company sold its baking and flour
milling operations in Puerto Rico, recognizing an after-tax gain of
$33,272,000 or $22.37 per common share. See Note 2 to the consolidated
financial statements for further discussion.
Management's Discussion and Analysis
As more fully described in Note 13 to the consolidated financial
statements, in December 1999 the Company agreed to sell its Poultry
Division for $375 million, consisting of the assumption of
approximately $16 million in indebtedness and the remainder in cash,
subject to certain adjustments. The sale was completed on January 3,
2000 resulting in a pre-tax gain of approximately $148 million ($90
million after estimated taxes). The Company's financial statements
have been restated to reflect the Poultry Division as a discontinued
operation for all periods presented. As a result, the Poultry
Division is no longer presented as a reportable segment, and two other
divisions, Power and Wine, now qualify as reportable segments of the
Company. Restated Poultry results are presented as earnings (losses)
from discontinued operations, net of applicable income taxes, and
exclude general corporate overhead and certain interest charges
previously allocated to that division. The discussions and figures
below are based on this restated presentation.
Liquidity and Capital Resources
(Dollars in millions) 1999 1998 1997
Current ratio 1.45:1 1.65:1 1.47:1
Working capital $ 189.1 235.8 168.3
Cash from operating activities $ (40.5) 59.5 116.2
Capital expenditures $ 67.7 26.9 48.3
Long-term debt, exclusive of
current maturities $ 318.0 313.3 290.5
Total capitalization* $ 859.8 852.0 763.5
* Total capitalization is defined as stockholders' equity and
noncurrent liabilities.
Cash provided by operating activities for 1999 decreased $100.0
million compared to 1998. The decrease is primarily related to
changes in certain components of working capital, which include
Tabacal for 1999 (see Sugar and Citrus segment discussion below), and
a decrease in net earnings from continuing operations. 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 higher value of inventory in transit at December 31, 1999 than
at December 31, 1998 resulting in increases in grain inventory and
prepaid expense balances and a partially offsetting increase in
deferred revenue balances. Current liabilities exclusive of debt
increased only slightly during 1999 as the Company paid $14.6 million
in taxes related to the 1998 gain from the sale of baking and flour
milling operations in Puerto Rico primarily offsetting the increase in
deferred revenue balances.
Cash provided by operating activities for 1998 decreased $56.7 million
compared to 1997. The decrease in cash flows was primarily related to
a decrease in net earnings from continuing operations and changes in
certain 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 smaller
value of inventory in transit at December 31, 1998 compared to
December 31, 1997 resulting in a decrease in deferred revenue balances
and a partially offsetting decrease in related grain inventories.
Cash from investing activities for 1999 increased $44.7 million
compared to 1998. The increase is primarily related to a net sale and
maturity of investments in 1999 compared to a net purchase of
investments in 1998. The net purchase of investments in 1998 related
to the $72.4 million in cash received from the sale of baking and
flour milling operations. During 1998, investments in and advances to
foreign affiliates included $45.8 million to Tabacal. As further
discussed in Note 5 to the consolidated financial statements, Tabacal
has been consolidated since December 31, 1998. As such, funds
invested in Tabacal during 1999 are reflected within the appropriate
components of the cash flow statements, including capital
expenditures. The Company invested $67.7 million in the property,
plant and equipment of continuing operations during 1999 as described
below.
The Company invested $22.1 million in the Pork segment during 1999
primarily for the expansion of existing hog production facilities and
for improvements to the pork processing plant. The Company plans to
invest $10.0 million in 2000 for general upgrades to the pork
processing plant and continued expansion of existing hog production
facilities. The Company previously disclosed plans to construct a
second vertically integrated pork operation and is currently making
arrangements to increase annual production to approximately three and
one-half million hogs. Management anticipates that this increase in
hog production will primarily be accomplished through a combination of
operating lease arrangements, third party contract growers or the
purchase of existing businesses. The timing of the remaining
expansion plans, primarily related to a second processing plant, has
not been finalized.
Capital expenditures in the Marine segment during 1999 totaled $20.0
million primarily for the purchase of two vessels previously chartered
and for general replacement and upgrades of property and equipment.
During 2000, the Company anticipates spending $7.5 million for general
replacement and upgrades of property and equipment.
Capital expenditures in the Commodity Trading and Milling segment
totaled $4.8 million, including $2.0 million to purchase a previously
chartered bulk carrier vessel from a wholly-owned subsidiary of
Seaboard Flour Corporation, the owner of 75.3% of the Company's
outstanding common stock. During 2000, the Company anticipates
spending $4.2 million for general replacement and upgrades of property
and equipment.
Capital expenditures in the Sugar and Citrus segment totaled $15.0
million primarily for improvements to existing operations and
expansion of sugarcane fields. During 2000, the Company anticipates
spending $14.5 million for improvements to existing operations and
expansion of sugarcane fields.
Capital expenditures in all other segments for 1999 totaled $5.8
million in general modernization and efficiency upgrades of plant and
equipment. Management anticipates that the planned capital
expenditures for 2000 will be financed by internally generated cash.
During 1999, the Company invested $2.8 million to acquire additional
shares of a Bulgarian winery originally acquired in 1998. During
1999, the Company invested $1.7 million for a minority interest in a
flour mill in Angola which is being accounted for using the equity
method.
In January 2000, the Company signed a construction contract to build a
71.2 megawatt barge-mounted power plant for approximately $50 million
to be located in the Dominican Republic. The Company is currently
evaluating financing options including potential leasing alternatives
and expects to begin supplying power during the fourth quarter of
2000.
In February 2000, the Company signed an agreement to purchase assets
of an existing hog production operation for approximately $75 million,
consisting of $36 million in cash, the assumption of $33 million in
debt and $6 million payable over the next four years. The transaction
is expected to close in late March or early second quarter of 2000 and
will be accounted for using the purchase method.
Cash from investing activities in 1998 increased $53.8 compared to
1997, primarily as a result of proceeds received from the disposition
of businesses. On December 30, 1998, the Company completed the sale
of its baking and flour milling businesses in Puerto Rico. These
businesses were sold for $81.4 million and the assumption of $11.8
million of liabilities resulting in a gain of $54.5 million ($33.3
million after taxes). The proceeds from the sale consisted of
approximately $72.4 million in cash and $9.0 million in notes
receivable. See Note 2 to the consolidated financial statements for
further discussion.
During 1998 the Company invested $26.9 million in property, plant and
equipment of continuing operations. Capital expenditures in the Pork
segment totaled $16.3 million primarily for improvements to the pork
processing plant. Capital expenditures in the Marine segment totaled
$5.2 million for general replacement and upgrades of property and
equipment. Capital expenditures in all other segments totaled $5.4
million in general modernization and efficiency upgrades of plant and
equipment. During 1998, the Company made $45.8 million in advances to
and non-voting investments in Tabacal for working capital
requirements, reduction of debt, general modernization, efficiency
upgrades of plant and equipment, and expansion of sugarcane fields.
In November 1998, the Company purchased a milling business in Zambia
by assuming liabilities of $10.2 million. In October 1998, the
Company purchased a controlling interest in an existing Bulgarian
winery by acquiring newly issued shares for $15.0 million. These
acquisitions were accounted for using the purchase method and would
not have significantly affected net earnings or earnings per share on
a pro forma basis.
In July 1998, the Company completed the acquisition of a 50% interest
in a flour mill in Lesotho for approximately $5.0 million. In June
1998, the Company, in a joint venture with two other partners,
completed its acquisition of an interest in a flour mill in Haiti.
The Company made an investment of $3.0 million for a minority interest
in the joint venture, which in turn owns 70% of a Haitian company
which owns the flour mill. These investments are being accounted for
using the equity method.
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 smoked seafood and related products. The investment is
being accounted for using the equity method.
Cash from financing activities in 1999 increased $90.6 million
compared to 1998 primarily related to proceeds from short-term
borrowings and, to a lesser extent, terminating interest rate swap
agreements. See further discussion of terminated swap agreements
under "Derivative Information" below.
During 1999, the Company prepaid at a discount certain long-term debt
obligations assumed with the purchase of the Bulgarian winery in
October 1998 and adjusted certain balances related to the acquisition.
During 1999, the Company also prepaid at a discount other higher cost,
U.S. dollar denominated foreign subsidiary debt obligations. These
prepayments reduced total long-term debt obligations by $13.5 million.
Changes to the preliminary purchase price allocations and other non-
cash adjustments related to these transactions resulted in immaterial
adjustments to several balance sheet line items, primarily reductions
to minority interest, net property, plant and equipment, and long-term
debt.
During 1999, the Company's one-year revolving credit facilities
totaling $145.0 million were increased to $153.3 million and extended
for an additional year. In addition, the existing five-year revolving
credit facility totaling $25.0 million was increased to $26.7 million.
During 1999, the Company repaid the outstanding advances totaling
$10.0 million on the five-year revolving credit facility and
subsequently borrowed the full $26.7 million. As of December 31,
1999, the Company had $150.9 million outstanding under one-year
revolving credit facilities totaling $153.3 million and $70.5 million
outstanding under short-term uncommitted credit lines totaling $145.0
million.
Subsequent to year-end, 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 short-term uncommitted credit lines totaling $145.0 million
were reduced to $132.5 million. During the first several months of
2000 the Company anticipates repaying approximately $118.3 million in
notes payable and industrial development revenue bonds from the
proceeds of the Poultry Division sale.
Cash from financing activities in 1998 decreased $37.6 million
compared to 1997 primarily related to repayments of short-term
borrowings.
Cash used in discontinued poultry operations in 1999 primarily
represents capital expenditures ($52.9 million including expansion
projects) in excess of net operating cash flows. As part of the
agreement to sell the Poultry Division, the Company plans to spend an
additional $13.1 million in 2000 to complete these expansions on
behalf of the buyer. This amount will be included as a reduction of
the gain recorded on the sale in January 2000. Cash provided by
discontinued poultry operations in 1998 primarily represents net
operating cash flows in excess of capital expenditures ($18.6
million). The increase in cash from discontinued operations in 1998
over 1999 and 1997 is primarily a result of higher earnings and lower
capital expenditures in 1998 compared to 1999 and 1997.
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, including
proceeds from the sale of the Poultry Division, are adequate for its
current and intended operations.
Results of Operations
Net sales totaled $1,255.3 million for the year ended December 31,
1999, compared to sales of $1,265.4 million for the year ended
December 31, 1998. Operating income of $12.7 million for 1999
decreased $19.3 million compared to 1998.
Net sales totaled $1,265.4 million for the year ended December 31,
1998, compared to sales of $1,303.8 million for the year ended
December 31, 1997. Operating income of $32.0 million for 1998
decreased $49.2 million compared to 1997.
Pork Segment
(Dollars in millions) 1999 1998 1997
Net sales $ 571.2 500.4 531.6
Operating income $ 37.7 (1.1) 38.4
Net sales increased $70.8 million to $571.2 million in 1999 compared
to 1998. This increase is primarily the result of an increase in
sales volume and, to a lesser extent, improved prices for finished
pork products. The increase in sales volume is the result of the hog
processing plant operating at full capacity on a double-shift basis
during 1999. The plant employed a second shift during the first half
of 1998, but did not achieve full double-shift capacity until the
third quarter of 1998. An excess supply of live hogs depressed pork
prices during 1998 and the first half of 1999. During the second half
of 1999 the excess declined, resulting in improved prices for the
year. Although management cannot predict pork prices for 2000, it is
anticipated that prices for finished pork products will continue to be
favorable.
Operating income increased $38.8 million to $37.7 million in 1999
compared to 1998. This increase is primarily a result of improved
sales prices, and to a lesser extent, a decrease in the cost of
Company raised hogs. The decrease in the cost of Company raised hogs
is primarily the result of lower grain prices. The Company also
continued to benefit from low prices for third-party hogs purchased
during 1999. However, an increase in this cost during the fourth
quarter of 1999 compared to extremely low prices for third-party hogs
during the fourth quarter of 1998 resulted in a slight increase in
this cost for the year. In addition, effective January 1, 1999, the
Company changed its method of accounting for certain pork inventories
from FIFO to LIFO, increasing operating income in 1999 by $4.0
million. Although management cannot predict the cost of third-party
hogs or grain prices for 2000, it is anticipated that market
conditions for these items should continue to be favorable.
Net sales decreased $31.2 million to $500.4 million in 1998 compared
to 1997. This decrease is the result of lower pork prices partially
offset by an increase in sales volume. Lower sales prices for most
pork products resulted from an industry wide excess supply of live
hogs and, to a lesser extent, pricing pressure from the Asian economic
situation. The increase in sales volume is the result of the hog
processing plant operating at double-shift production during all of
1998. The plant did not employ a second shift until part way through
the second quarter of 1997. During the third quarter of 1998, the
plant reached full capacity on a double-shift basis.
Operating income decreased $39.5 million to $(1.1) million in 1998
compared to 1997. This decrease is primarily the result of lower
prices for finished pork products without a comparable decrease in the
cost of production. This decrease was partially offset by an increase
in the percentage of cheaper third-party hogs processed compared to
Company raised hogs.
Marine Segment
(Dollars in millions) 1999 1998 1997
Net sales $ 307.7 310.9 309.3
Operating income $ (1.9) 17.4 27.3
Net sales decreased $3.2 million to $307.7 million in 1999 compared to
1998. Cargo volumes and applicable cargo rates decreased in the first
half of 1999 compared to 1998 primarily as a result of weak economic
conditions in certain South American markets served by the Company.
During the second half of 1999, overall cargo volume increased from
1998 due to improvements in certain markets, but the effect on net
sales was largely offset as rates remained depressed.
Operating income from the Marine segment decreased $19.3 million to
$(1.9) million in 1999 compared to 1998, primarily as a result of
lower cargo rates discussed above. Management expects that these
situations will continue to have a negative effect on financial
results during 2000. A new U.S. 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
had on 1999 financial results.
Net sales increased $1.6 million to $310.9 million in 1998 compared to
1997. During the first half of 1998, the Company experienced higher
cargo volumes in certain markets the Company serves. During the last
half of 1998, cargo volumes and applicable cargo rates decreased
primarily as a result of weakening economic conditions in certain
South American markets the Company serves and, to a lesser extent,
from trade disruptions relating to Hurricane Mitch in Central America
during the fourth quarter of 1998.
Operating income decreased $9.9 million to $17.4 million in 1998
compared to 1997. This decrease is primarily a result of lower cargo
volumes and rates during the last half of 1998, trade disruptions
relating to Hurricane Mitch during the fourth quarter of 1998 and, to
a lesser extent, an increase in various general and administrative
costs.
Commodity Trading and Milling Segment
(Dollars in millions) 1999 1998 1997
Net sales $ 259.5 306.4 313.9
Operating income $ 2.6 10.5 9.5
Net sales decreased $46.9 million to $259.5 million in 1999 compared
to 1998, primarily as a result of lower wheat sales to certain foreign
affiliates, lower soybean sales to third parties and, to a lesser
extent, a decrease in commodity prices sold in foreign markets. Wheat
sales to certain foreign affiliates decreased as political unrest
resulted in economic problems that reduced consumer purchasing power
and thus lowered milling volumes. Such decreases were partially
offset by the addition of sales during 1999 from the Company's milling
operations in Zambia acquired in late 1998.
Operating income decreased $7.9 million to $2.6 million in 1999
compared to 1998, primarily as a result of the decrease in wheat sales
and margins to certain foreign affiliates as discussed above and
operating losses from the Company's milling operations in Zambia
acquired in late 1998. Continued political unrest and economic
problems in countries where the Company does business could continue
to have a negative effect on financial results during 2000.
Net sales decreased $7.5 million to $306.4 million in 1998 compared to
1997. This decrease is primarily the result of a decrease in
commodity prices sold in foreign markets partially offset by an
increase in tonnage sold. Operating income increased $1.0 million to
$10.5 million in 1998 compared to 1997. This increase is primarily
the result of increased income from operating certain mills in foreign
countries.
Sugar and Citrus Segment
(Dollars in millions) 1999 1998 1997
Net sales $ 46.9 -- --
Operating income $ (15.9) -- --
As discussed in Note 5 to the consolidated financial statements,
comparative operating results for the Sugar and Citrus segment are not
presented as Tabacal was accounted for on the equity method in 1998.
However, lower sugar prices have offset increased volumes resulting in
lower revenues and higher losses in 1999 compared to 1998. Lower
sugar prices are primarily the result of an excess supply of sugar in
Argentina and, to a lesser extent, lower sugar prices on the world
market. Also, during the second quarter of 1999 severance charges of
$3.0 million were incurred related to certain employee layoffs enacted
to reduce future operating costs. Although management cannot predict
sugar prices for 2000, it is anticipated that sugar prices will remain
at low levels that result in operating losses for the Company. During
1998, the loss from foreign affiliates attributable to Tabacal was
$15.8 million.
As a result of recent operating results for Tabacal, the Company has
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
(Dollars in millions) 1999 1998 1997
Net sales $ 23.0 26.2 30.3
Operating income $ 7.9 8.8 7.9
Net sales decreased $3.2 million to $23.0 million in 1999 compared to
1998. Operating income decreased $0.9 million to $7.9 million in 1999
compared to 1998. These decreases are primarily a result of the
termination of operations in October 1998 of a customer that was the
only user of service from a generating station owned by the Company.
Net sales decreased $4.1 million to $26.2 million in 1998 compared to
1997, primarily as a result of the customer discussed above decreasing
usage throughout 1998 prior to terminating operations in October.
Despite the decrease in sales, operating income increased $0.9 million
to $8.8 million in 1998 compared to 1997 primarily due to the recovery
of previously written off receivables associated with the termination
of service discussed above.
Wine Segment
(Dollars in millions) 1999 1998 1997
Net sales $ 12.9 -- --
Operating income $ (5.9) -- --
As discussed in Note 2 to the consolidated financial statements, the
Company acquired an existing Bulgarian winery in October 1998. No
results are presented for 1998 as the winery is reported on a three-
month lag. Operating losses in 1999 are primarily a result of
acquiring more expensive wine materials on the open market to
supplement local grape shortages and reserving 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.
Other Operations
(Dollars in millions) 1999 1998 1997
Net sales $ 34.3 121.5 118.6
Operating income $ (4.4) 1.8 1.9
Net sales from other operations decreased $87.2 million to $34.3
million in 1999 compared to 1998, while operating income decreased
$6.2 million to $(4.4) million in 1999 compared to 1998. These
decreases are primarily a result of the sale of the Puerto Rican
baking operations in December 1998 as discussed in Note 2 to the
consolidated financial statements. Changes in net sales and operating
income from other operations in 1998 compared to 1997 were not
significant.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) totaled $107.8
million, $119.3 million and $116.4 million for the years ended
December 31, 1999, 1998 and 1997, respectively. As a percent of
revenues, SG&A decreased to 8.6% in 1999 compared to 9.4% in 1998
primarily as a result of the sale of the Puerto Rican baking
operations in December 1998. This decrease is partially offset by the
consolidation of Tabacal results in 1999, including the $3.0 million
of severance charges discussed above, and the winery and Zambia
milling operations acquired in late 1998. As a percent of revenues,
SG&A increased to 9.4% in 1998 compared to 8.9% in 1997 primarily as a
result of various cost increases in the Marine segment.
Interest Income
Interest income totaled $7.4 million, $7.1 million and $6.1 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
The increase in 1999 reflects an increase in interest rates partially
offset by a decrease in average funds invested. The increase in 1998
is primarily the result of an increase in average funds invested.
Interest Expense
Interest expense totaled $31.4 million, $26.4 million and $25.6
million for the years ended December 31, 1999, 1998 and 1997,
respectively. The increase during 1999 over 1998 reflects an increase
in both long-term and short-term average borrowings and an increase in
interest rates. The increase in average borrowings during 1999 is
primarily attributable to the consolidation of Tabacal in December
1998.
Loss from Foreign Affiliates
Loss from foreign affiliates totaled $1.4 million, $17.1 million and
$8.7 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Losses during 1998 and 1997 are primarily attributable
to the operations of Tabacal. As discussed in Note 5 to the
consolidated financial statements, Tabacal is included in 1999
consolidated operations. During 1998, losses increased from Tabacal
as a result of lower sugar prices and planned operating efficiencies
and harvest production levels not being realized.
Gain on Disposition of Businesses
On December 30, 1998, the Company completed the sale of its baking and
flour milling businesses in Puerto Rico resulting in a pre-tax gain of
$54.5 million ($33.3 million after taxes). See Note 2 to the
consolidated financial statements for further discussion.
Miscellaneous Income
Miscellaneous income totaled $3.1 million, $3.9 million and $1.2
million for the years ended December 31, 1999, 1998 and 1997,
respectively. The increases in 1999 and 1998 over 1997 are primarily
the result of gains on the sale of fixed assets in the Marine segment
as older, fully depreciated equipment was replaced in the normal
course of business.
Income Tax Expense
The effective tax rates increased significantly during 1999 and 1998
primarily as a result of significant increases in overall losses from
foreign entities for which tax benefits are not available within their
respective countries or to offset domestic income.
Discontinued Operations
Earnings from discontinued poultry operations, net of income taxes,
decreased in 1999 compared to 1998 due primarily to lower overall
sales prices for poultry products, partially offset by lower finished
feed costs. An increase in poultry production within the industry has
resulted in lower prices for most poultry products while the Russian
economic situation continued to have a negative effect on domestic
prices for dark meat sales.
Earnings from discontinued operations, net of income taxes, increased
in 1998 compared to 1997 primarily as a result of significantly lower
finished feed costs, improved sales prices and, to a lesser extent,
uninterrupted operations of a plant that was shut down for one week in
1997 for a process conversion.
Other Financial Information
The Company is subject to various federal and state regulations
regarding environmental protection and land and water 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 material regulations. Laws and regulations
in the states where the Company currently conducts its pork operations
are becoming more restrictive. These and future changes could delay
the Company's expansion plans or 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.
During the second quarter of 1998 the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments and all hedging
activities. It requires that an entity recognize all derivatives as
either assets or liabilities at their fair values. Accounting for
changes in the fair value of a derivative depends on its designation
and effectiveness. For derivatives that qualify as effective hedges,
the change in fair value will have no net impact on earnings until the
hedged transaction affects earnings. For derivatives that are not
designated as hedging instruments, or for the ineffective portion of a
hedging instrument, the change in fair value will affect current
period net earnings. During the second quarter of 1999 the Financial
Accounting Standards Board amended SFAS No. 133 delaying the effective
date. The Company will adopt SFAS No. 133 during the first quarter of
fiscal 2001. Depending on market interest rates and the types of
financial hedging derivatives in place at the time of adoption, if
any, adoption of this statement could result in significant
adjustments to the Company's balance sheet as financial derivatives
are recorded as assets or liabilities at fair value with corresponding
adjustments to Other Comprehensive Income. The Company does not
believe adoption will have a material impact on the Company's net
earnings or cash flows.
The Company has not experienced nor does it expect to experience any
significant Year 2000 issues or disruptions in operations. The
Company believes that the total costs, including equipment
replacements and internal costs consisting primarily of payroll
related costs, to resolve Year 2000 issues were not material to the
Company's consolidated financial statements.
The Company does not believe its businesses have been materially
adversely affected by general inflation.
Derivative Information
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, soybeans 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 decreasing prices of pork products. 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 table below provides information about the Company's non-trading
financial instruments sensitive to changes in interest rates at
December 31, 1999. For debt obligations, the table presents principal
cash flows and related weighted average interest rates by expected
maturity dates. At December 31, 1999, long-term debt includes foreign
subsidiary obligations of $5.1 million denominated in U.S. dollars and
$12.8 million payable in Argentine pesos. At December 31, 1998, long-
term debt includes foreign subsidiary obligations of $21.5 million
denominated in U.S. dollars and $14.6 million payable in Argentine
pesos. The Argentine peso is currently pegged to the U.S. dollar and
accordingly, management believes there is minimal exchange rate risk.
Weighted average variable rates are based on rates in place at the
reporting date. Short-term instruments including short-term
investments, non-trade receivables and current notes payable have
carrying values that approximate market and are not included in this
table due to their short-term nature.
(Dollars in thousands) 2000 2001 2002 2003 2004 Thereafter Total
Long-term debt:
Fixed rate $8,964 23,388 22,842 47,126 47,149 102,145 $251,614
Average interest rate 5.84% 7.02% 6.78% 7.48% 7.48% 8.01% 7.53%
Variable rate $2,523 - 26,667 - 6,000 42,700 $77,890
Average interest rate 5.00% - 6.57% - 5.85% 6.17% 6.25%
Non-trading financial instruments sensitive to changes in interest
rates at December 31, 1998 consisted of fixed rate long-term debt
totaling $263,749 million with an average interest rate of 7.71%, and
variable rate long-term debt totaling $68,183 million with an average
interest rate of 5.60%. At December 31, 1998, 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%. During 1999 the Company terminated
these agreements for proceeds totaling $6.0 million.
Inventories that are sensitive to changes in commodity prices,
including carrying amounts and fair values at December 31, 1999 and
1998 are presented in Note 4 to the consolidated financial statements.
Projected raw material requirements, finished product sales, and firm
sales commitments may also be sensitive to changes in commodity
prices. The tables below provide information about the Company's
derivative contracts that are sensitive to changes in commodity
prices. Although used to manage overall market risks, certain
contracts do not qualify as hedges for financial reporting purposes.
As a result, they are classified as trading instruments and carried at
fair market value. Contracts that qualify as hedges for financial
reporting purposes are classified as non-trading instruments. Gains
and losses on non-trading instruments are deferred and recognized as
adjustments of the carrying amounts of the commodities when the hedged
transaction occurs. The following tables present the notional
quantity amounts, the weighted average contract prices, the contract
maturities, and the fair value of the position of the Company's open
trading and non-trading derivatives at December 31, 1999.
<TABLE>
<CAPTION>
Trading:
Contract Volumes Wtd.-avg. Fair
Futures Contracts Quantity (000's)Units Price/Unit Maturity Value (000's)
<S> <C> <C> <C> <C>
Corn purchases - long 1,010 bushels $ 1.99 2000 $ 54
Corn sales - short 1,045 bushels 2.13 2000 (50)
Hog sales - short 1,440 pounds 0.59 2000 16
<CAPTION>
Contract Volumes Wtd.-avg.Exercise Fair
Option Contracts Quantity (000's)Units Price/Unit Maturity Value (000's)
<S> <C> <C> <C> <C>
Corn puts written - long 2,300 bushels $ 2.11 2000 $(273)
Corn puts purchased - short 2,000 bushels 1.90 2000 40
Corn calls written - short 2,060 bushels 2.39 2000 (137)
Corn calls purchased - long 2,725 bushels 2.57 2000 110
Wheat puts written - long 1,885 bushels 2.70 2000 (402)
Wheat puts purchased - short 1,345 bushels 2.71 2000 362
Wheat calls written - short 1,750 bushels 3.40 2000 (5)
Wheat calls purchased - long 2,585 bushels 3.12 2000 55
Soybean meal calls purchased - long 5.6 tons 145.98 2000 32
Soybean meal puts written - long 5.6 tons 135.98 2000 (8)
Non-trading:
<CAPTION>
Contract Volumes Wtd.-avg. Fair
Futures Contracts Quantity (000's)Units Price/Unit Maturity Value (000's)
<S> <C> <C> <C> <C>
Corn purchases - long 2,130 bushels $ 2.06 2000 $ (32)
Corn sales - short 2,950 bushels 2.01 2000 (118)
Wheat purchases - long 405 bushels 3.24 2000 (60)
Wheat sales - short 870 bushels 2.77 2000 91
Soybean meal purchases - long 28.2 tons 144.20 2000 72
Soybean meal sales - short 31.4 tons 145.07 2000 (53)
</TABLE>
At December 31, 1998, the Company had net trading contracts to
purchase 10.8 million bushels of grain (fair value of $(628,000)) and
115,000 tons of meal (fair value of $68,000), and net contracts to
sell 1.4 million pounds of hogs (fair value of $(11,000)). At
December 31, 1998, the Company had net non-trading contracts to
purchase 1.1 million bushels of grain (fair value of $(101,000)) and
4,000 tons of meal (fair value of $44,000).
The table below provides information about the Company's financial
instruments and related derivative financial instruments sensitive to
foreign currency exchange rates, consisting of a Japanese Yen (Yen)
denominated note obligation and a foreign currency forward exchange
agreement. Information is presented in U.S. dollar equivalents. The
table presents the notional amounts and weighted average exchange rate
by contractual maturity date. The notional amount is generally used
to calculate the contractual payments to be exchanged under the
contract. Due to the short-term nature of these instruments, their
carrying and contract values approximate market.
(Dollars in thousands) 1999 1998
Short-term notes payable:
Variable rate (Yen) $20,000 $16,560
Average interest rate 7.19% 5.85%
Related derivative:
Forward exchange agreement, including projected
interest due at maturity (receive Yen/pay $US) $20,363 $16,616
Exchange rate 104.13 116.63
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 LLP, whose responsibility
is to examine records and transactions and to gain an
understanding of the system of internal accounting controls to
the extent required by generally accepted auditing standards and
render an opinion as to the fair presentation of the consolidated
financial statements.
The board of directors pursues its review of auditing,
internal controls and financial statements through its audit
committee, consisting of a majority of directors who are not
employed by the Company. In the exercise of its responsibilities,
the audit committee meets periodically with management, with the
internal auditors and with the independent accountants to review
the scope and results of examinations. Both the internal auditors
and independent accountants have free access to the committee
with or without the presence of management.
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets
of Seaboard Corporation and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of earnings,
changes in equity and cash flows for each of the years in the
three-year period ended December 31, 1999. 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, 1999 and 1998, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally
accepted accounting principles.
As discussed in Note 4 to the consolidated financial
statements, the Company changed its method of accounting for
certain inventories from the first-in, first-out method to the
last-in, first-out method in 1999.
KPMG LLP
Kansas City, Missouri
February 28, 2000
Seaboard Corporation and Subsidiaries
Consolidated Statements of Earnings
(Thousands of dollars except per share amounts)
Years ended December 31,
1999 1998 1997
Net sales $1,255,304 $1,265,366 $1,303,753
Cost of sales and operating expenses 1,134,879 1,114,073 1,106,224
Gross income 120,425 151,293 197,529
Selling, general and administrative expenses 107,760 119,343 116,378
Operating income 12,665 31,950 81,151
Other income (expense):
Interest income 7,446 7,072 6,127
Interest expense (31,418) (26,371) (25,577)
Loss from foreign affiliates (1,413) (17,105) (8,733)
Gain on disposition of business -- 54,544 --
Minority interest 1,283 -- --
Miscellaneous 3,128 3,908 1,221
Total other income (expense), net (20,974) 22,048 (26,962)
Earnings (loss) from continuing operations
before income taxes (8,309) 53,998 54,189
Income tax expense (5,085) (21,154) (17,624)
Earnings (loss) from continuing operations (13,394) 32,844 36,565
Earnings (loss) from discontinued operations,
net of income taxes of $8,278, $11,753 and
$(3,616), for 1999, 1998 and 1997
respectively 13,634 19,511 (5,991)
Net earnings $ 240 $ 52,355 $ 30,574
Earnings per common share:
Earnings (loss) from continuing
operations $ (9.00) $ 22.08 $ 24.58
Earnings (loss) from discontinued
operations 9.16 13.12 (4.03)
Earnings per common share $ 0.16 $ 35.20 $ 20.55
See accompanying notes to consolidated financial statements.
Seaboard Corporation and Subsidiaries
Consolidated Balance Sheets
(Thousands of dollars)
December 31,
Assets 1999 1998
Current assets:
Cash and cash equivalents $ 11,039 $ 20,716
Short-term investments 91,609 155,763
Receivables:
Trade 141,838 133,282
Due from foreign affiliates 31,383 25,319
Other 27,785 21,418
201,006 180,019
Allowance for doubtful receivables (29,075) (26,117)
Net receivables 171,931 153,902
Inventories 200,382 151,957
Deferred income taxes 15,031 14,604
Prepaid expenses and deposits 20,395 12,268
Current assets of discontinued operations 103,464 92,059
Total current assets 613,851 601,269
Investments in and advances to foreign
affiliates 28,449 28,416
Net property, plant and equipment 480,415 462,856
Other assets 30,204 33,506
Non-current assets of discontinued operations 132,407 97,087
Total Assets $1,285,326 $1,223,134
See accompanying notes to consolidated financial statements.
Seaboard Corporation and Subsidiaries
Consolidated Balance Sheets
(Thousands of dollars)
December 31,
Liabilities and Stockholders' Equity 1999 1998
Current liabilities:
Notes payable to banks $ 221,353 $ 158,980
Current maturities of long-term debt 11,487 18,608
Accounts payable 61,529 58,662
Accrued liabilities 57,045 73,827
Deferred revenues 31,929 15,384
Accrued payroll 17,360 16,353
Current liabilities of discontinued operations 24,013 23,650
Total current liabilities 424,716 365,464
Long-term debt, less current maturities 318,017 313,324
Deferred income taxes 41,589 44,147
Other liabilities 34,924 27,609
Non-current liabilities of discontinued
operations 16,824 17,116
Total non-current and deferred liabilities 411,354 402,196
Minority interest 831 5,682
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
Accumulated other comprehensive income (201) (81)
Retained earnings 433,924 435,171
Total stockholders' equity 448,425 449,792
Total Liabilities and Stockholders' Equity $1,285,326 $1,223,134
See accompanying notes to consolidated financial statements.
<TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Statements of Changes in Equity
(Thousands of dollars except per share amounts)
Years ended December 31, 1999, 1998 and 1997
<CAPTION>
Accumulated
Other
Common Treasury Additional Comprehensive Retained Comprehensive
Stock Stock Capital Income Earnings Inome
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1997 $ 1,790 $ (302) $ 13,214 $ 16 $ 355,216
Net earnings -- -- -- -- 30,574 $ 30,574
Other comprehensive income,
net of income tax benefit
of $3 -- -- -- (6) -- (6)
Comprehensive income -- -- -- -- -- 30,568
Dividends on common stock
($1.00 per share) -- -- -- -- (1,487)
Balances, December 31, 1997 1,790 (302) 13,214 10 384,303
Net earnings -- -- -- -- 52,355 52,355
Other comprehensive income,
net of income tax benefit -- -- -- (91) -- (91)
of $56
Comprehensive income -- -- -- -- -- 52,264
Dividends on common stock
($1.00 per share) -- -- -- -- (1,487)
Balances, December 31, 1998 1,790 (302) 13,214 (81) 435,171
Net earnings -- -- -- -- 240 240
Other comprehensive income,
net of income tax benefit
of $77 -- -- -- (120) -- (120)
Comprehensive income -- -- -- -- -- $ 120
Dividends on common stock
($1.00 per share) -- -- -- -- (1,487)
Balances, December 31, 1999 $ 1,790 $ (302) $ 13,214 $(201) $ 433,924
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
Seaboard Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Thousands of dollars)
Years ended December 31,
1999 1998 1997
Cash flows from operating activities:
Net earnings $ 240 $ 52,355 30,574
Adjustments to reconcile net earnings to
cash from operating activities:
Net (earnings) loss from discontinued
operations (13,634) (19,511) 5,991
Depreciation and amortization 45,582 40,479 41,746
Loss from foreign affiliates 1,413 17,105 8,733
Deferred income taxes (2,985) 10,884 2,719
Gain from sale of fixed assets (1,984) (2,737) (1,798)
Gain from disposition of businesses -- (54,544) --
Changes in current assets and liabilities
(net of businesses acquired and disposed):
Receivables, net of allowance (18,029) 7,471 (17,196)
Inventories (48,425) 33,162 (21,320)
Prepaid expenses and deposits (8,127) (1,040) (1,398)
Current liabilities exclusive of debt 3,637 (23,814) 62,856
Other, net 1,837 (346) 5,266
Net cash from operating activities (40,475) 59,464 116,173
Cash flows from investing activities:
Purchase of investments (443,978) (446,868) (277,437)
Proceeds from the sale of investments 456,903 311,433 193,303
Proceeds from the maturity of investments 51,073 85,053 65,754
Capital expenditures (67,713) (26,913) (48,324)
Investments in and advances to foreign
affiliates, net (1,446) (48,586) (41,834)
Proceeds from the sale of fixed assets 5,042 9,795 7,117
Investment in domestic affiliate -- (2,500) --
Additional investment in a controlled
subsidiary (2,791) -- --
Acquisition of business (net of cash acquired) -- (1,388) --
Proceeds from disposition of businesses -- 72,359 --
Net cash from investing activities (2,910) (47,615) (101,421)
Cash flows from financing activities:
Notes payable to banks, net 62,373 (15,025) 7,288
Proceeds from issuance of long-term debt 26,667 -- 10,213
Principal payments of long-term debt (26,807) (7,400) (1,278)
Dividends paid (1,487) (1,487) (1,487)
Proceeds from termination of interest rate
swap agreements 5,982 -- --
Bond construction fund -- -- (1,055)
Net cash from financing activities 66,728 (23,912) 13,681
Net cash flows from discontinued operations (33,020) 24,227 (31,348)
Net change in cash and cash equivalents (9,677) 12,164 (2,915)
Cash and cash equivalents at beginning of year 20,716 8,552 11,467
Cash and cash equivalents at end of year $ 11,039 $ 20,716 $ 8,552
See accompanying notes to consolidated financial statements.
Seaboard Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
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 primarily
engaged in domestic pork production and processing, and cargo shipping.
Overseas, the Company is primarily engaged in commodity merchandising,
flour and feed milling, produce farming, sugar production, and electric
power generation. Seaboard Flour Corporation is the owner of 75.3% of the
Company's outstanding common stock.
Principles of Consolidation and Investments in Affiliates
The consolidated financial statements include the accounts of Seaboard
Corporation and its domestic and foreign subsidiaries. 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. Financial information from certain
foreign subsidiaries and affiliates is reported on a one- to three-month
lag depending on the specific entity. As more fully described in Note 13,
in December 1999 the Company agreed to sell its Poultry Division.
Accordingly, the Company's financial statements and notes have been
restated to reflect the Poultry Division as a discontinued operation for
all periods presented.
Short-term Investments
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 component
of accumulated other comprehensive income. The cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in interest income.
Inventories
Effective January 1, 1999, the Company changed its method of
accounting from the lower of first-in, first-out (FIFO) cost or market to
the lower of last-in, first-out (LIFO) cost or market for determining
inventory cost of live hogs, dressed pork product and related materials.
All other inventories are valued at the lower of FIFO cost or market.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and are being
depreciated generally on the straight-line method over useful lives ranging
from 3 to 30 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, 1999 and 1998 is
$10,704,000 and $11,127,000, 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.
Comprehensive Income
For the years ended December 31, 1999, 1998 and 1997, other
comprehensive income adjustments were not material and consisted of
unrealized gains on available-for-sale securities and foreign currency
cumulative translation adjustments, net of tax.
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
containerized cargo 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. See Note 12
for discussion of recoverability of Sugar and Citrus segment's long-lived
assets.
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, 1999, 1998 and 1997,
respectively. 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 $23,483,000 and $19,997,000 at December 31, 1999 and
1998, respectively. The amounts paid (received) for income taxes and
interest are as follows:
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Interest (net of amounts capitalized) $ 33,090 26,444 24,753
Income taxes $ 15,432 (3,608) 7,987
Supplemental Noncash Transactions
As more fully described in Notes 2 and 5, during 1998 the Company
purchased two businesses, consolidated a previously non-controlled foreign
affiliate and disposed of its Puerto Rican baking and flour milling
operations. The following table summarizes the noncash transactions
resulting from the acquisitions and consolidation of the foreign affiliate:
Year ended December 31,
(Thousands of dollars) 1998
Increase in other working capital $ 38,539
Decrease in investments in and advances to
foreign affiliates (96,733)
Increase in fixed assets 114,867
Increase in other net assets 9,198
Increase in notes payable and long-term debt (58,801)
Minority interest (5,682)
Cash paid, net of cash acquired and consolidated $ 1,388
The following table summarizes the noncash transactions resulting from the
disposition of businesses:
Year ended December 31,
(Thousands of dollars) 1998
Decrease in short-term investments $ 3,429
Decrease in other working capital 1,303
Decrease in fixed assets 19,736
Decrease in other net assets 1,347
Long-term note receivable from sale (8,000)
Gain on disposal 54,544
Proceeds from disposition of businesses $ 72,359
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 certain of the Company's foreign subsidiaries and
affiliates primarily conduct business. These fluctuations result in
exchange gains and losses. The activities of these foreign subsidiaries
and affiliates are primarily conducted with U.S. subsidiaries or operate in
hyper-inflationary environments. As a result, the Company translates the
financial statements of certain foreign subsidiaries and affiliates using
the U.S. dollar as the functional currency. The exchange gains and losses
reported in earnings were not material for the years ended December 31,
1999, 1998 and 1997. Foreign currency exchange restrictions imposed upon
the Company's foreign subsidiaries and foreign affiliates do not have a
significant effect on the consolidated financial position of the Company.
Certain foreign subsidiaries use local currency as their functional
currency. Assets and liabilities of these subsidiaries are translated to
U.S. dollars at year-end exchange rates, and income and expense items are
translated at average rates for the year. Resulting translation gains and
losses were not material for the years ended December 31, 1999, 1998 and
1997. Translation gains and losses are recorded as components of
accumulated other comprehensive income.
Financial Instruments
The Company, from time-to-time, 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. These agreements effectively convert specifically
identified, variable-rate debt into fixed-rate debt. The Company also has
a foreign currency exchange agreement to manage a foreign currency exchange
risk on a short-term note which is payable in foreign currency.
Differences to be paid or received are accrued as interest or exchange
rates change and are recognized as an adjustment to interest expense. See
Note 8 for a description of outstanding exchange rate agreements.
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, 1999 and 1998, net
deferred gains on terminated interest rate exchange agreements totaled
$6,435,000 and $784,000, respectively. In cases where there is no
remaining underlying debt instrument, gains and losses on termination are
recognized currently in miscellaneous income (expense).
Commodity Instruments
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, 1999, the
Company had net contracts to purchase 1.0 million bushels of grain and 8.0
tons of meal, and net contracts to sell 1.4 million pounds of 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 in the consolidated statements of
operations. For the years ended December 31, 1999, 1998 and 1997, losses
on commodity contracts reported in operating income were $592,000,
$3,139,000 and $2,962,000, respectively. At December 31, 1999, the net
deferred loss on commodity instruments was $426,000, compared to a net
deferred gain at December 31, 1998 of $92,000. These amounts are 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.
Note 2
Acquisitions and Dispositions of Businesses
In December 1999, the Company agreed to sell its Poultry Division.
The sale of this division is presented as a discontinued operation and is
more fully described in Note 13.
In October 1998, the Company purchased a controlling interest in an
existing Bulgarian winery by acquiring newly issued shares for $15,000,000.
During 1999, the Company further increased its interest in the winery by
purchasing previously issued shares for $2,791,000. In November 1998, the
Company purchased a flour and feed milling operation in Zambia by assuming
liabilities of approximately $10,232,000. These acquisitions were
accounted for using the purchase method and would not have significantly
affected sales, net earnings or earnings per share on a pro forma basis.
On December 30, 1998, the Company completed the sale of its Puerto
Rican baking and flour milling businesses, to a management group led by the
President of the baking businesses. These assets were sold for $81,359,000
and the assumption of $11,770,000 in liabilities. The proceeds consisted
of $72,359,000 in cash, an $8,000,000 interest bearing subordinated note
receivable due in 2004, and a $1,000,000 interest bearing note receivable
subsequently collected in the first quarter of 1999. The Company
recognized a pre-tax gain of $54,544,000 ($33,272,000 after tax) in
connection with this transaction.
The following pro forma unaudited financial data reflects the pro
forma impact on the Company's results of operations as if the sale was
consummated at the beginning of each year presented, excluding the gain on
the sale, with pro forma adjustments to give effect to reducing short-term
borrowings, interest income earned on short-term investments and certain
other adjustments, together with related income tax effects:
Years ended December 31,
(Thousands of dollars, except per share amounts) 1998 1997
Net sales $1,174,190 1,209,776
Earnings (loss) from continuing operations $ (1,966) 34,465
Net earnings $ 17,545 28,474
Earnings (loss) per share from continuing
operations $ (1.32) 23.17
Earnings per share $ 11.79 19.14
The pro forma financial information is not necessarily indicative of
the results of operations that would have occurred had the sale been
consummated on the dates assumed, nor are they necessarily indicative of
future operating results.
Note 3
Short-term Investments
Substantially all available-for-sale securities have contractual
maturities within two years and are available to meet current operating
needs. The amortized cost of these investments approximates fair value at
December 31, 1999 and 1998. The gross realized gains and losses on sales
of available-for-sale securities were not material for the years ended
December 31, 1999, 1998 and 1997. The following is a summary of the
estimated fair value of available-for-sale securities at December 31, 1999
and 1998:
December 31,
(Thousands of dollars) 1999 1998
U.S. Treasury securities and obligations of U.S.
government agencies $ 33,960 $ 39,265
Obligations of states and political subdivisions 35,526 60,877
Other securities 22,123 55,621
Total securities $ 91,609 $ 155,763
Note 4
Inventories
During the fourth quarter of 1999, the Company changed its method of
accounting for certain inventories of the Pork Division from FIFO to LIFO,
retroactively effective as of January 1, 1999. The Company believes the
new method is preferable because the LIFO method of valuing inventories
more closely matches current costs and revenues in periods of price level
changes. The net effect of this change was to increase net earnings from
continuing operations by $2,456,000 or $1.65 per common share.
A summary of inventories at the end of each year is as follows:
December 31,
(Thousands of dollars) 1999 1998
At lower of LIFO (FIFO for 1998) cost or market:
Live hogs and related materials $ 75,662 $ 73,804
Dressed pork and related materials 8,360 8,766
84,022 82,570
LIFO allowance 4,026 --
Total inventories at lower of LIFO cost or market 88,048 82,570
At lower of FIFO cost or market:
Grain, flour and feed 41,772 6,478
Sugar produced and in process 22,398 26,025
Crops in production and related materials 14,121 11,233
Wine and other spirits 8,391 4,288
Other 25,652 21,363
Total inventories at lower of FIFO cost or market 112,334 69,387
Total inventories $ 200,382 $ 151,957
Note 5
Investments in and Advances to Foreign Affiliates
The Company has made investments in and advances to non-controlled
foreign affiliates primarily conducting business in flour and feed milling.
The foreign affiliates are located in Angola, the Democratic Republic of
Congo, Lesotho, Mozambique, Nigeria and Sierra Leone in Africa; Ecuador in
South America; and Haiti in the Caribbean. These investments 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 1997.
During the second quarter of 1999, the Company invested $1.7 million
for a minority interest in a flour mill in Angola. In July 1998, the
Company acquired for $5,000,000 a non-controlling interest in a flour mill
in Lesotho. In June 1998, the Company, in a joint venture with two other
partners, acquired an interest in a flour mill in Haiti. The Company made
an investment of $3,000,000 for a minority interest in the joint venture,
which in turn owns 70% of a Haitian company which owns the flour mill.
These investments are being accounted for using the equity method.
Ingenio y Refineria San Martin del Tabacal S.A. (Tabacal) is an
Argentine company primarily engaged in growing and refining sugarcane and,
to a lesser extent, citrus production. The Company accounted for this
investment using the equity method from July 1996 (date of acquisition)
through December 1998. Losses from foreign affiliates during 1998 and 1997
are primarily attributable to the operations of Tabacal. Effective
December 31, 1998, the Company obtained voting control over a majority of
the capital stock of Tabacal. Accordingly, as of December 31, 1998,
Tabacal is accounted for as a consolidated subsidiary. See Note 1 for
further discussion of the effects of the consolidation on the 1998 balance
sheet.
Sales of grain and supplies to non-consolidated foreign affiliates are
included in consolidated net sales for the years ended December 31, 1999,
1998 and 1997, and amounted to $69,739,000, $107,424,000 and $79,946,000,
respectively.
Combined condensed financial information of the non-controlled, non-
consolidated foreign affiliates for their fiscal periods ended within each
of the Company's years ended, excluding Tabacal's 1999 operating results
and 1999 and 1998 balance sheets, are as follows:
December 31,
(Thousands of dollars) 1999 1998 1997
Net sales $ 166,592 217,362 208,340
Net loss $ (8,966) (20,497) (13,831)
Total assets $ 122,008 137,381 240,511
Total liabilities $ 61,557 72,995 193,094
Total equity $ 60,451 64,386 47,417
Note 6
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) 1999 1998
Land and improvements $ 81,317 $ 76,750
Buildings and improvements 154,647 153,092
Machinery and equipment 388,887 353,917
Transportation equipment 82,174 71,506
Office furniture and fixtures 13,697 12,048
Construction in progress 14,023 6,926
734,745 674,239
Accumulated depreciation and amortization (254,330) (211,383)
Net property, plant and equipment $ 480,415 $ 462,856
Note 7
Income Taxes
Income taxes attributable to continuing operations for the years ended
December 31, 1999, 1998 and 1997 differ from the amounts computed by
applying the statutory U.S. Federal income tax rate to earnings (loss) from
continuing operations before income taxes for the following reasons:
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Computed "expected" tax expense (benefit) $(2,908) $18,899 $18,966
Adjustments to tax expense (benefit) attributable to:
Foreign tax differences 8,988 7,680 705
Tax-exempt investment income (358) (730) (621)
State income taxes, net of Federal benefit 12 199 944
Other (649) (4,894) (2,370)
Income tax expense - continuing operations 5,085 21,154 17,624
Income tax expense (benefit) - discontinued operations 8,278 11,753 (3,616)
Total income tax expense $13,363 $32,907 $14,008
The components of total income taxes are as follows:
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Current:
Federal $ 3,080 $(10,807) $ 8,031
Foreign (including Puerto Rico) 5,332 17,126 6,469
State and local (419) (118) 909
Deferred:
Federal (3,445) 14,300 2,587
Foreign (including Puerto Rico) (6) 110 (730)
State and local 543 543 358
Income tax expense - continuing operations 5,085 21,154 17,624
Unrealized changes in other comprehensive
income (77) (56) (3)
Income tax expense (benefit) - discontinued
operations 8,278 11,753 (3,616)
Total income taxes $ 13,286 $ 32,851 $ 14,005
Components of the net deferred income tax liability at the end of each year
are as follows:
December 31,
(Thousands of dollars) 1999 1998
Deferred income tax liabilities:
Cash basis farming adjustment $ 17,162 $ 18,084
Deferred earnings of foreign subsidiaries 1,749 4,819
Depreciation 64,116 52,853
Other 4,123 775
87,150 76,531
Deferred income tax assets:
Reserves/accruals 48,591 40,001
Foreign losses 2,420 3,165
Other 11,731 5,972
62,742 49,138
Valuation allowance 2,150 2,150
Net deferred income tax liability $ 26,558 $ 29,543
The Company believes that its future taxable income will be sufficient
for full realization of the deferred tax assets. The valuation allowance
represents the effect of accumulated losses on certain foreign subsidiaries
that will not be recognized without future liquidation or sale of these
subsidiaries.
At December 31, 1999 and 1998 current income taxes payable totaled
$9,792,000 and $17,231,000, respectively.
At December 31, 1999 and 1998, 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 $30,000,000.
Note 8
Notes Payable and Long-term Debt
Notes payable amounting to $221,353,000 and $158,980,000 at December
31, 1999 and 1998, respectively, consisted of obligations due banks within
one year. At December 31, 1999, these funds were outstanding under the
Company's one-year revolving credit facilities totaling $153.3 million and
short-term uncommitted credit lines from banks totaling $145.0 million,
less outstanding letters of credit commitments totaling $6.0 million.
Subsequent to year-end, 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 short-term
uncommitted credit lines totaling $145.0 were reduced to $132.5 million.
Weighted average interest rates on the notes payable were 7.24% and 6.18%
at December 31, 1999 and 1998, respectively.
Included in notes payable at December 31, 1999 and 1998, are
$20,000,000 and $16,560,000, respectively, payable in Japanese Yen (Yen)
and outstanding under a $20 million uncommitted line of credit. At
December 31, 1999 and 1998, the Company had foreign exchange contracts in
place effectively fixing the exchange rate on this $20,000,000 note payable
at 104.13 Yen to one U.S. dollar, and on the $16,560,000 note payable at
116.63 Yen to one U.S. dollar, respectively.
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:
December 31,
(Thousands of dollars) 1999 1998
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
(IDRBs), floating rates (5.75% - 6.78% at
December 31, 1999) due through 2027 48,700 48,700
Revolving credit facility, floating rate
(6.57% at December 31, 1999) due 2002 26,667 10,000
Foreign subsidiary obligations
(9.00% - 14.50%) due 2001 through 2007 15,353 26,665
Foreign subsidiary obligations, floating
rate (5.00% at December 31, 1999) due 2000 2,522 9,484
Term loan, 3.00%, due 2000 5,415 5,415
Capital lease obligations and other 5,847 6,668
329,504 331,932
Current maturities of long-term debt (11,487) (18,608)
Long-term debt, less current maturities $ 318,017 $ 313,324
Of the 1999 foreign subsidiary obligations, $5,085,000 is denominated
in U.S. dollars and the remaining $12,790,000 is payable in Argentine
pesos. Of the 1998 foreign subsidiary obligations, $21,532,000 was
denominated in U.S. dollars and the remaining $14,617,000 was payable in
Argentine pesos.
At December 31, 1999, Argentine land and sugar production facilities
and equipment with a depreciated cost of $17,621,000, secure certain bond
issues and foreign subsidiary debt. Included in other assets at
December 31, 1999 and 1998 are $1,532,000 and $1,477,000, respectively, of
unexpended bond proceeds held in trust that are invested in accordance with
the bond issuance agreements.
The terms of the note agreements pursuant to which the senior notes,
IDRBs, 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;
requires the maintenance of consolidated tangible net worth, as defined, of
not less than $250,000,000; and limits the Company's ability to sell assets
under certain circumstances. The Company is in compliance with all
restrictive debt covenants relating to these agreements as of December 31,
1999.
At December 31, 1998, 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 were scheduled to expire in 2007. However, during 1999 the
Company terminated these agreements for proceeds totaling $5,982,000.
These proceeds will be amortized as a reduction of interest expense through
the original expiration dates in 2007, or recognized as other income to the
extent of any early repayment of the related debt. Unamortized proceeds of
$582,000 at December 31, 1999 relate to agreements associated with debt of
the Company's discontinued poultry operations (see Note 13) and will be
recognized as a component of the gain on the disposal in the first quarter
of 2000. Ownership of these agreements, including any amortization of
termination proceeds, increased interest expense in 1999 by $799,000 and in
1998 by $808,000.
Annual maturities of long-term debt at December 31, 1999 are as
follows: $11,487,000 in 2000, $23,388,000 in 2001, $49,509,000 in 2002,
$47,126,000 in 2003, $53,149,000 in 2004 and $144,845,000 thereafter.
Note 9
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, 1999 and 1998 the fair value of the Company's
short-term investments was $91,609,000 and $155,763,000, respectively, with
an amortized cost of $91,684,000 and $155,682,000 at December 31, 1999 and
1998, respectively.
The fair value of long-term debt is determined by comparing interest
rates for debt with similar terms and maturities. At December 31, 1999 and
1998 the fair value of the Company's long-term debt was $325,275,000 and
$347,269,000, respectively, with a carrying value of $329,504,000 and
$331,932,000 at December 31, 1999 and 1998, respectively.
Other financial instruments consisting of cash and cash equivalents,
net receivables, notes payable, and accounts payable are carried at cost,
which approximates fair value, as a result of the short-term nature of the
instruments.
Note 10
Employee Benefits
The Company maintains defined benefit pension plans for its domestic
salaried and clerical 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 changes in the plans' benefit obligations and fair value
of assets for the years ended December 31, 1999 and 1998, and a statement
of the funded status as of December 31, 1999 and 1998 are as follows:
December 31,
(Thousands of dollars) 1999 1998
Reconciliation of benefit obligation:
Benefit obligation at beginning of year $ 30,072 $ 35,786
Service cost 2,419 2,640
Interest cost 2,231 2,558
Actuarial losses (gains) (1,685) 1,514
Benefits paid (1,273) (2,075)
Divestitures (see Note 2) -- (10,351)
Benefit obligation at end of year 31,764 30,072
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of
year 26,213 30,763
Actual return on plan assets 2,734 3,492
Employer contributions 48 1,028
Benefits paid (1,273) (2,075)
Divestitures (see Note 2) -- (6,995)
Fair value of plan assets at end of year 27,722 26,213
Funded status (4,042) (3,859)
Unrecognized transition obligation 1,052 1,213
Unamortized prior service cost (1,966) (2,188)
Unrecognized net actuarial gains (5,315) (3,167)
Accrued benefit cost $ (10,271) $ (8,001)
Assumptions used in determining pension information were:
Years ended December 31,
1999 1998 1997
Weighted-average assumptions:
Discount rate 8.00% 7.25% 7.50%
Expected return on plan assets 8.75% 8.75% 8.75%
Long-term rate of increase in
compensation levels 4.50% 4.50% 4.25-4.50%
The net periodic benefit cost of these plans was as follows:
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Components of net periodic benefit cost:
Service cost $ 2,419 $ 2,640 $ 2,506
Interest cost 2,231 2,558 2,282
Expected return on plan assets (2,268) (2,692) (2,407)
Amortization and other (65) (68) (94)
Net periodic benefit cost $ 2,317 $ 2,438 $ 2,287
As of December 31, 1999, the projected benefit obligation and
accumulated benefit obligation for unfunded pension plans were $3,583,000
and $2,685,000, respectively. As of December 31, 1998, the projected
benefit obligation and accumulated benefit obligation for unfunded pension
plans were $2,561,000 and $2,143,000, respectively. As more fully
described in Note 13, the Poultry Division was sold in January 2000 and is
presented as a discontinued operation. Poultry employees retain benefits
in the primary pension plan summarized above and are treated as terminated
and fully vested at the date of the sale. This results in a $1.6 million
curtailment gain and will be recognized as a component of the gain on the
sale in January 2000. A plan for certain production employees of the
Poultry Division was assumed by the buyer and the above information for
1998 and 1997 has been excluded from the presentation above.
The Company has certain individual, non-qualified, unfunded
supplemental retirement agreements for certain executive employees.
Pension expense for these plans was $658,000, $514,000 and $574,000 for the
years ended December 31, 1999, 1998 and 1997, respectively. Included in
other liabilities at December 31, 1999 and 1998 is $8,492,000 and
$8,207,000, 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 $1,157,000, $1,102,000 and $916,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
Note 11
Commitments and Contingencies
The Company leases various ships, facilities and equipment under
noncancelable operating lease agreements.
In addition, the Company is a party to master lease programs with
limited partnerships which own certain of the facilities used by the
Company in connection with its hog production. These arrangements are
accounted for as operating leases. Under these arrangements, 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 lessors 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 $58,253,000,
$57,515,000 and $48,628,000 in 1999, 1998 and 1997, respectively. Minimum
lease commitments under noncancelable leases with initial terms greater
than one year at December 31, 1999, were $23,020,000 for 2000, $15,283,000
for 2001, $11,223,000 for 2002, $9,039,000 for 2003, $6,666,000 for 2004
and $35,560,000 thereafter. It is expected that, in the ordinary course of
business, leases will be renewed or replaced.
In January 2000, the Company signed a construction contract to build a
71.2 megawatt barge-mounted power plant for approximately $50 million to be
located in the Dominican Republic. The Company is currently evaluating
financing options including potential leasing alternatives and expects to
begin supplying power during the fourth quarter of 2000.
In February 2000, the Company signed an agreement to purchase assets
of an existing hog production operation for approximately $75 million,
consisting of $36 million in cash, the assumption of $33 million in debt
and $6 million payable over the next four years. The transaction is
expected to close in late March or early second quarter of 2000 and will be
accounted for using the purchase method.
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 recently received a ruling in its
favor which dismisses the principal theory of recovery although the appeal
period has not expired. Accordingly, the Company believes that it has no
responsibility for the loss.
The Company is a defendant in a lawsuit brought in federal court by a
third-party hog supplier claiming breach of agreement, common law fraud and
violation of the federal RICO statute. Damages of approximately $25
million are alleged. Any amount awarded under the RICO count would be
trebled. The Company has counterclaimed asserting breach of agreement and
claiming damages of approximately $16 million. The Company believes it has
meritorious defenses to all counts and that the RICO count is without
merit.
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 12
Segment Information
Seaboard Corporation has six reportable segments: Pork, Marine,
Commodity Trading and Milling, Sugar and Citrus, Power, and Wine, each
offering a specific product or service. The Pork segment sells fresh and
value-added pork products mainly to further processors and foodservice
companies both domestically and overseas. The Marine segment, primarily
based out of the Port of Miami, offers containerized cargo shipping
services throughout Latin America and the Caribbean. The Commodity Trading
and Milling segment sources bulk and bag commodities primarily overseas and
operates foreign flour and feed mills. The Sugar and Citrus segment
produces and processes sugar and citrus in Argentina to be marketed locally
and for export to the United States and Europe. The Power segment
generates electric power from a floating generating facility located in the
Dominican Republic. The Wine segment, located in Bulgaria, produces wines,
brandies and other beverages to be marketed throughout Europe and for
export to the United Kingdom, Canada, Russia and the United States.
Revenues from all other segments are primarily derived from operations
including produce farming and baking (sold in December 1998, see Note 2).
Each of the six main segments is separately managed and each was started or
acquired independent of the other segments.
In December 1999, the Company agreed to sell its Poultry Division (see
Note 13). As a result, the Poultry Division is no longer reported as a
separate segment and two other operations, Power and Wine, now qualify as
reportable segments of the Company. As discussed in Note 13, certain
amounts have been restated to exclude general corporate overhead previously
allocated to the discontinued operation.
The Company accounted for its investment in Tabacal using the equity
method through December 1998. Effective December 31, 1998, the Company
obtained voting control over a majority of the capital stock of Tabacal.
Accordingly, during 1999 the operating results of Tabacal are accounted for
as a consolidated subsidiary. Due to the significance of Tabacal's
operating results, it is reported as an additional segment (Sugar and
Citrus) in 1999. Results in 1999 include severance charges of $3.0 million
related to certain employee layoffs enacted to reduce future operating
costs. The December 31, 1998, total assets by segment information has been
restated to reflect Tabacal as a separate segment. No comparative 1998
segment operating results information is provided as Tabacal's results were
reported under the equity method in 1998.
The entire Argentine sugar industry is experiencing financial
difficulties, with Tabacal and certain large competitors incurring
operating losses in part because Argentine sugar prices are below
historical levels. As a result of these recent operating losses for
Tabacal, the Company has 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.
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.
Sales to External Companies: Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Pork $ 571,159 $ 500,357 $ 531,587
Marine 307,663 310,903 309,306
Commodity Trading and Milling 259,489 306,406 313,900
Sugar and Citrus 46,855 -- --
Power 22,975 26,183 30,336
Wine 12,859 -- --
All other 34,304 121,517 118,624
Segment/Consolidated Totals $1,255,304 $1,265,366 $1,303,753
Operating Income: Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Pork $ 37,661 $ (1,122) $ 38,378
Marine (1,893) 17,379 27,297
Commodity Trading and Milling 2,615 10,505 9,542
Sugar and Citrus (15,909) -- --
Power 7,942 8,839 7,879
Wine (5,946) -- --
All other (4,376) 1,785 1,909
Segment Totals 20,094 37,386 85,005
Corporate Items (7,429) (5,436) (3,854)
Consolidated Totals $ 12,665 $ 31,950 $ 81,151
Depreciation and Amortization: Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Pork $ 20,759 $ 20,676 $ 20,225
Marine 9,651 8,451 9,476
Commodity Trading and Milling 3,230 2,985 3,037
Sugar and Citrus 7,102 -- --
Power 1,547 1,638 1,623
Wine 362 -- --
All other 2,160 6,125 6,212
Segment Totals 44,811 39,875 40,573
Corporate Items 771 604 1,173
Consolidated Totals $ 45,582 $ 40,479 $ 41,746
Capital Expenditures: Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Pork $ 22,072 $ 16,304 $ 31,850
Marine 20,001 5,151 9,020
Commodity Trading and Milling 4,816 1,162 1,464
Sugar and Citrus 14,998 -- --
Power 389 79 1,381
Wine 3,746 -- --
All other 715 3,200 4,381
Segment Totals 66,737 25,896 48,096
Corporate Items 976 1,017 228
Consolidated Totals $ 67,713 $ 26,913 $ 48,324
Total Assets: December 31,
(Thousands of dollars) 1999 1998
Pork $ 401,316 $ 387,699
Marine 97,561 99,609
Commodity Trading and Milling 161,477 108,822
Sugar and Citrus 167,972 162,094
Power 21,068 32,736
Wine 29,156 31,066
All other 46,466 43,227
Segment Totals 925,016 865,253
Corporate Items 124,439 168,735
Discontinued Poultry Operations 235,871 189,146
Consolidated Totals $1,285,326 $1,223,134
Administrative services provided by the corporate office are primarily
allocated to the individual segments based on the size and nature of their
operations. Prior to the third quarter of 1999, these costs were primarily
allocated based on revenues. This change is deemed to provide a more
accurate allocation and does not have a material impact on prior period
comparative information. Corporate assets include short-term investments,
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 general Corporate overhead previously allocated to the
discontinued Poultry operations.
Geographic Information
No individual foreign country accounts for 10% or more of sales to
external customers. The following table provides a geographic summary of
the Company's net sales based on the location of product delivery:
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
United States $ 639,167 $ 651,581 $ 683,851
Caribbean, Central and South America 355,337 336,868 315,409
Africa 102,022 126,150 160,524
Pacific Basin and Far East 84,148 72,033 82,975
Canada/Mexico 40,294 35,972 20,676
Eastern Mediterranean 13,124 39,436 37,123
Europe 21,212 3,326 3,195
Totals $1,255,304 $1,265,366 $1,303,753
The following table provides a geographic summary of the Company's
long-lived assets according to their physical location and primary port for
Company owned vessels:
December 31,
(Thousands of dollars) 1999 1998
United States $ 331,765 $ 323,458
Argentina 111,486 103,968
All other 37,164 35,430
Totals $ 480,415 $ 462,856
At December 31, 1999 and 1998, the Company had approximately
$93,624,000 and $80,096,000, respectively, of foreign receivables,
excluding receivables due from foreign affiliates, which represent more of
a collection risk than the Company's domestic receivables. The Company
believes that its allowance for doubtful receivables is adequate.
Note 13
Discontinued Operations / Subsequent Event
In December 1999, the Company agreed to sell 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 was completed on January 3, 2000
resulting in a pre-tax gain on the sale of approximately $148 million ($90
million after estimated 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 financial statements have been restated to reflect the
Poultry Division as a discontinued operation for all periods presented.
Operating results of the discontinued poultry operations are summarized
below. 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. The results for 1999 reflect activity through
November 1999 (the measurement date); results for 1998 and 1997 reflect
activity for each entire year. Net losses incurred after the measurement
date (for the month of December 1999) totaled $4,180,000 and have been
deferred as a component of current assets of discontinued operations at
December 31, 1999. These losses will be recognized in January 2000 as a
reduction of the gain realized on the sale.
Years ended December 31,
(Thousands of dollars) 1999 1998 1997
Net sales $437,695 514,503 476,580
Operating income (loss) $ 27,023 36,414 (4,076)
Earnings (loss) from discontinued
operations $ 13,634 19,511 (5,991)
Assets and liabilities of the discontinued poultry operations are
summarized below:
December 31,
(Thousands of dollars) 1999 1998
Receivables $ 27,367 $ 27,681
Inventories 70,532 62,889
Prepaid expenses and deposits 1,385 1,489
Deferred net loss after measurement date 4,180 --
Current assets of discontinued operations $ 103,464 $ 92,059
Net property, plant and equipment $ 132,224 $ 96,893
Other assets 183 194
Non-current assets of discontinued operations $ 132,407 $ 97,087
Accounts payable $ 14,189 $ 14,819
Accrued liabilities 9,824 8,831
Current liabilities of discontinued operations $ 24,013 $ 23,650
Long-term debt $ 16,145 $ 16,145
Other liabilities 679 971
Non-current liabilities of discontinued
operations $ 16,824 $ 17,116
EXHIBIT 18
February 28, 2000
The Board of Directors
Seaboard Corporation
We have audited the consolidated balance sheets of Seaboard
Corporation and subsidiaries as of December 31, 1999 and 1998 and
the related consolidated statements of earnings, changes in
equity and cash flows for each of the years in the three-year
period ended December 31, 1999 and have reported thereon under
date of February 28, 2000, as contained in the December 31, 1999
annual report to shareholders. The aforementioned consolidated
financial statements and our audit report thereon are
incorporated by reference in the Company's annual report on Form
10-K for the year ended December 31, 1999. As stated in Note 4,
the Company changed its method of accounting for certain
inventories from the first-in, first-out method to the last-in,
first-out (LIFO) method and states that the newly adopted
accounting principle is preferable in the circumstances because
the LIFO method of valuing inventories more closely matches
current costs and revenues in periods of price level changes. In
accordance with your request, we have reviewed and discussed with
Company officials the circumstances and business judgment and
planning upon which the decision to make this change in the
method of accounting was based.
With regard to the aforementioned accounting change,
authoritative criteria have not been established for evaluating
the preferability of one acceptable method of accounting over
another acceptable method. However, for purposes of Seaboard
Corporation's compliance with the requirements of the Securities
and Exchange Commission, we are furnishing this letter.
Based on our review and discussion, with reliance on management's
business judgment and planning, we concur that the newly adopted
method of accounting is preferable in the Company's
circumstances.
Very truly yours,
KPMG LLP
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
Agencia Maritima
del Istmo, S.A. Same Costa Rica
Agencias Generales
Conaven, C.A. Conaven Venezuela
Almacenadora
Conaven, S.A. Same Venezuela
Atlantic Salmon
(Maine) Limited
Liability Company* Same Maine
Cape Fear Railways, Inc. Same North Carolina
Cayman Freight Shipping
Services, Ltd.* Same Cayman Islands
Chestnut Hill Farms, Inc. Same Florida
Chestnut Hill Farms
Honduras, S.A. de C.V. Same Honduras
Consorcio Naviero de
Occidente, C.A. Conaven Venezuela
ContiSea LLC* Same Maine
Cultivos Marinos,
S.A. de C.V. CUMAR Honduras
Delta Packaging
Company Ltd.* Same Nigeria
Desarrollo Industrial
Bioacuatico, S.A.* DIBSA Ecuador
Ducktrap River Fish
Farm, L.L.C.* Same Maine
Empacadora Litoral,
S.A. de C.V. Same Honduras
Globe International
Holdings, S.A.* Same Nigeria
H&O Shipping Limited Same Liberia
Haiti Agro Processors
Holdings, Ltd* Same Cayman Islands
Ingenio y Refineria
San Martin delTabacal Tabacal Argentina
KWABA - Sociedade
Industrial e Comercial,
SARL* KWABA Angola
Les Moulins d'Haiti
S.E.M. (LHM)* Same Haiti
EXHIBIT 21
(continued)
Lesotho Flour Mills
Limited* Same Lesotho
Life Flour Mill Ltd.* Same Nigeria
Minoterie de Matadi,
S.A.R.L.* Midema DemocraticRepublic
of Congo
Mobeira, SARL* Same Mozambique
Molinos Champion, S.A.* Mochasa Ecuador
Molinos del Ecuador, C.A.* Molidor Ecuador
National Milling Company
of Guyana, Ltd. Same Guyana
National Milling Company
Limited Same Zambia
Port of Miami Cold
Storage, Inc. Same Florida
Representaciones Maritimas
y Aereas, S.A. Remarsa Guatemala
S.B.D., LLC Same Delaware
Samovar International
Finance, Inc. Same Puerto Rico
SASCO Engineering Co./
Seaboard Sales
Corporation Ltd. Same Bermuda
Sea Cargo, S.A. Same Panama
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, Inc. Same Oklahoma
Seaboard Freight &
Shipping Jamaica Limited Same Jamaica
Seaboard Guyana, Ltd. Same Bermuda
Seaboard Holdings Ltd. Same British Virgin Islands
Seaboard Marine Bahamas, Ltd. Same Bahamas
Seaboard Marine Ltd. Same Liberia
Seaboard Marine of
Florida, Inc. Same Florida
Seaboard Overseas Limited Same Bahamas
EXHIBIT 21
(continued)
Seaboard Ship Management
Inc. Same Florida
Seaboard Shipping Services
(PTY) Ltd. Same South Africa
Seaboard Trading and
Shipping Ltd. Same Minnesota
Seaboard Transport Inc. Same Oklahoma
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. (Bermuda) Ltd. Same Bermuda
Vinprom Rousse AD Same Bulgaria
Zenith Investments, Ltd.* Same Nigeria
*Represents a non-controlled, non-consolidated affiliate.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FISCAL
1999 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-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 11039
<SECURITIES> 91609
<RECEIVABLES> 201006
<ALLOWANCES> 29075
<INVENTORY> 200382
<CURRENT-ASSETS> 613851
<PP&E> 734745
<DEPRECIATION> 254330
<TOTAL-ASSETS> 1285326
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<BONDS> 318017
0
0
<COMMON> 1488
<OTHER-SE> 446937
<TOTAL-LIABILITY-AND-EQUITY> 1285326
<SALES> 1255304
<TOTAL-REVENUES> 1255304
<CGS> 1134879
<TOTAL-COSTS> 1134879
<OTHER-EXPENSES> 107760
<LOSS-PROVISION> 7105
<INTEREST-EXPENSE> 31418
<INCOME-PRETAX> (8309)
<INCOME-TAX> (5085)
<INCOME-CONTINUING> (13394)
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<NET-INCOME> 240
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<EPS-DILUTED> .16
</TABLE>
