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, 2008
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)
(913) 676-8800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock $1.00 Par Value NYSE Alternext US
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ]
No [ X ]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No
[ X ]
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 statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "larger
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ X ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]
The aggregate market value of the 337,167 shares of Seaboard
common stock held by nonaffiliates was approximately
$505,750,500, based on the closing price of $1,500.00 per share
on June 27, 2008, the end of Seaboard's second fiscal quarter.
As of February 6, 2009, the number of shares of common stock
outstanding was 1,240,421.24.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated parts of this report: (1) Seaboard
Corporation's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) - Parts I and II; and (2)
Seaboard Corporation's definitive proxy statement filed pursuant
to Regulation 14A for the 2009 annual meeting of stockholders -
Part III.
Forward-Looking Statements
This report, including information included or incorporated by
reference in this report, contains certain forward-looking
statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of
Seaboard Corporation and its subsidiaries (Seaboard). Forward-
looking statements generally may be identified as:
-statements that are not historical in nature, and
-statements preceded by, followed by or that include the
words "believes," "expects," "may," "will," "should,"
"could," "anticipates," "estimates," "intends" or similar
expressions.
In more specific terms, forward-looking statements include,
without limitation:
-statements concerning the 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 regarding the intent, belief or current
expectations of Seaboard and its management with respect to:
(i) Seaboard's ability to obtain adequate financing and
liquidity,
(ii) the price of feed stocks and other materials used by
Seaboard,
(iii) the sale price or market conditions for pork, grains,
sugar and other products and services,
(iv) statements concerning management's expectations of
recorded tax effects under certain circumstances,
(v) the ability of the Commodity Trading and Milling
Division to successfully compete in the markets it
serves and the volume of business and working capital
requirements associated with the competitive trading
environment,
(vi) the charter hire rates and fuel prices for vessels,
(vii) the stability of the Dominican Republic's economy,
fuel cost and related spot market prices and
collections of receivables in the Dominican Republic,
(viii) the ability of Seaboard to sell certain grain
inventories in foreign countries at current cost basis
and the related contract performance by customers,
(ix) the effect of the fluctuation in foreign currency
exchange rates,
(x) statements concerning profitability or sales volume of
any of Seaboard's divisions,
(xi) the anticipated costs and completion timetable for
Seaboard's scheduled capital improvements,
acquisitions and dispositions, or
(xii) other trends affecting Seaboard's financial condition
or results of operations, and statements of the
assumptions underlying or relating to any of the
foregoing statements.
This list of forward-looking statements is not exclusive.
Seaboard undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events, changes in assumptions or otherwise.
Forward-looking statements are not guarantees of future
performance or results. They involve risks, uncertainties and
assumptions. Actual results may differ materially from those
contemplated by the forward-looking statements due to a variety
of factors. The information contained in this Form 10-K and in
other filings Seaboard makes with the Commission, including
without limitation, the information under the headings "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this Form 10-K,
identifies important factors which could cause such differences.
2
PART I
Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, and its subsidiaries
(Seaboard) is a diversified international agribusiness and
transportation company. In the United States, Seaboard is
primarily engaged in pork production and processing, and ocean
transportation. Overseas, Seaboard is primarily engaged in
commodity merchandising, grain processing, sugar production, and
electric power generation. See Item 1(c) (1) (ii) "Status of
Product or Segment" below for a discussion of acquisitions,
dispositions and other developments in specific divisions.
Seaboard Flour LLC, a Delaware limited liability company, owns
approximately 72.1 percent of the outstanding common stock of
Seaboard. Mr. Steven J. Bresky, President and Chief Executive
Officer of Seaboard, and other members of the Bresky family,
including trusts created for their benefit, own the common units of
Seaboard Flour LLC.
(b) Financial Information about Industry Segments
The financial information relating to Industry Segments required by
Item 1 of Form 10-K is incorporated herein by reference to Note 13
of the Consolidated Financial Statements appearing on pages 56
through 59 of the Seaboard Corporation 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
Pork Division - Seaboard, through its subsidiary Seaboard
Foods LLC, previously Seaboard Farms, Inc., engages in the
businesses of hog production and pork processing in the United
States. Through these operations, Seaboard produces and sells
fresh and frozen pork products to further processors,
foodservice operators, grocery stores, distributors and retail
outlets throughout the United States. Internationally,
Seaboard sells to distributors and further processors in
Japan, Mexico and other foreign markets. Other further
processing companies also purchase Seaboard's fresh and frozen
pork products in bulk and produce products, such as lunchmeat,
ham, bacon, and sausage. Fresh pork, such as loins,
tenderloins and ribs are sold to distributors and grocery
stores. Seaboard also sells further processed pork products
consisting primarily of raw and pre-cooked bacon from its two
bacon further processing plants. Seaboard sells some of its
fresh products under the brand name Prairie Fresh and its
bacon and other further processed products under the Daily's
brand name. Seaboard's hog processing plant is located in
Guymon, Oklahoma, and operates at double shift capacity.
Seaboard's bacon plants are located in Salt Lake City, Utah
and Missoula, Montana. Seaboard also earns fees, based
primarily on the number of head processed, to market all of
the products produced by Triumph Foods LLC at their pork
processing plant located in St. Joseph, Missouri.
Seaboard's hog production operations consist of the breeding
and raising of approximately 4.0 million hogs annually at
facilities primarily owned or at facilities owned and operated
by third parties with whom it has grower contracts. The hog
production operations are located in the States of Oklahoma,
Kansas, Texas and Colorado. As a part of the hog production
operations, Seaboard produces specially formulated feed for
the hogs at six owned feed mills. The remaining hogs
processed are purchased from third party hog producers,
primarily pursuant to purchase contracts.
In the second quarter of 2008, Seaboard commenced production
of biodiesel at a new facility constructed in Guymon,
Oklahoma. The biodiesel is produced from pork fat from
Seaboard's Guymon pork processing plant and from animal fat
supplied by non-Seaboard facilities. The biodiesel is sold to
a third party. The facility can also produce biodiesel from
vegetable oil. Seaboard is able to reduce or stop production
when it isn't economically feasible to produce based on input
costs or the price of biodiesel. Also during 2008, Seaboard
entered into an agreement to build and operate a majority-
owned ham-boning and processing plant in Mexico. The plant is
currently expected to be completed in the first half of 2009.
Commodity Trading and Milling Division - Seaboard's Commodity
Trading and Milling Division, primarily through its
subsidiaries, Seaboard Overseas Limited based in Bermuda,
Seaboard Overseas Trading and Shipping (PTY), Ltd. located in
South Africa, and SeaRice Limited located in Geneva,
Switzerland markets wheat, corn, soybean meal, rice and other
similar commodities in bulk to third party customers and
affiliated companies. These commodities are purchased from
most growing regions worldwide, with primary destinations
being Africa, South
3
America, and the Caribbean. The division sources, transports
and markets approximately 4.2 million tons of grains and
proteins on an annual basis. Seaboard integrates the
service of delivering commodities to its customers through
the use of chartered bulk vessels and its eight owned bulk
carriers.
This division also operates milling and related businesses
with 25 locations in 12 countries, which are primarily
supplied by the trading locations discussed above. The grain
processing businesses are operated through four consolidated
and nine non-consolidated affiliates in Africa, the Caribbean
and South America. These are flour, feed and maize milling
businesses which produce approximately two and a half million
metric tons of finished products per year. Most of the
products produced by the milling operations are sold in the
countries in which the products are produced or into adjacent
countries.
Marine Division - Seaboard, through its subsidiary, Seaboard
Marine Limited, and various foreign affiliated companies and
third party agents, provides containerized cargo shipping
service to 25 countries between the United States, the
Caribbean Basin, and Central and South America. Seaboard uses
a network of offices and agents throughout the United States,
Canada, Latin America and the Caribbean Basin to book both
northbound and southbound cargo to and from the United States
and between the countries it serves. Through agreements with
a network of connecting carriers, Seaboard can transport cargo
to and from numerous U.S. locations by either truck or rail to
and from one of its U.S. port locations, where it is staged
for export via vessel or received as import cargo from abroad.
Seaboard's primary marine operation is located in Miami and
includes a 81 acre terminal located at the Port of Miami and a
135,000 square foot off-dock warehouse for cargo consolidation
and temporary storage. Seaboard also operates a 62 acre cargo
terminal facility at the Port of Houston that includes
approximately 690,000 square feet of on-dock warehouse space
for temporary storage of bagged grains, resins and other
cargoes. Seaboard also makes scheduled vessel calls in
Brooklyn, New York, Fernandina Beach, Florida, New Orleans,
Louisiana and 40 foreign ports. At December 31, 2008,
Seaboard's fleet consists of 12 owned and approximately
27 chartered vessels, and approximately 55,000 dry,
refrigerated and specialized containers and units of related
equipment.
Sugar and Citrus Division - Seaboard, through its subsidiary,
Ingenio y Refineria San Martin del Tabacal and other Argentine
non-consolidated affiliates, is involved in the production and
refining of sugar cane and the production and processing of
citrus in Argentina. This division also purchases sugar and
citrus in bulk from third parties within Argentina for
subsequent resale. The sugar products are primarily sold in
Argentina, primarily to retailers, soft drink manufacturers,
and food manufacturers, with some exports to the United
States, South America and Europe while the citrus products are
primarily exported to the global market. Seaboard grows a
large portion of the sugar cane on more than 60,000 acres of
land it owns in northern Argentina. The cane is processed at
an owned mill, with a current processing capacity of
approximately 230,000 metric tons of sugar and approximately
13 million gallons of alcohol per year. The sugar mill is one
of the largest in Argentina. During the second quarter of
2008, construction on the alcohol distillery operation was
completed, which increased the alcohol production capacity
from approximately four million gallons to approximately 13
million gallons per year. In addition, approximately
3,000 acres of Seaboard's land in northern Argentina is
planted with orange trees. Also, during 2008 this division
began construction of a 40 megawatt cogeneration power plant,
which is expected to be completed in 2010.
All Other Businesses- All other businesses primarily
represents the business of Seaboard's subsidiary,
Transcontinental Capital Corp. (Bermuda) Ltd. (the Power
Division), which operates as an independent power producer in
the Dominican Republic. This operation is exempt from U.S.
regulation under the Public Utility Holding Company Act of
1938, as amended. The Power Division operates two floating
barges with a system of diesel engines capable of generating a
combined rated capacity of approximately 112 megawatts of
electricity. See "Status of Product or Segment" below for
discussion of the pending sale of the two barges. Seaboard
generates electricity into the local Dominican Republic power
grid. Seaboard is not directly involved in the transmission
or distribution of the electricity but does have contracts to
sell directly to third party users. The barges are secured on
the Ozama River in Santo Domingo, Dominican Republic. The
electricity is sold at contracted pricing to certain large
commercial users with contract terms extending from one to
four years. Seaboard also sells approximately 40% of its
power under a short-term contract to a government-owned
distribution company. The remaining electricity is sold in
the "spot market" at prevailing market prices, primarily to
three wholly or partially government-owned electric
distribution companies or other power producers who lack
sufficient power production to service their customers.
4
The information required by Item 1 of Form 10-K with respect
to the amount or percentage of total revenue contributed by
any class of similar products or services which account for
10 percent or more of consolidated revenue in any of the last
three fiscal years is set forth in Note 13 of Seaboard's
Consolidated Financial Statements, appearing on pages 56
through 59 of the Seaboard's Annual Report to Stockholders,
furnished to the Commission pursuant to rule 14a-3(b) and
attached as Exhibit 13 to this report, which information is
incorporated herein by reference.
(ii) Status of Product or Segment
In April 2008, the Pork Division entered into an agreement to
build and operate a majority-owned ham-boning and processing
plant in Mexico. This plant is expected to be completed in
early 2009.
In the second quarter of 2008, the Pork Division commenced
production of biodiesel at a new facility constructed in
Guymon, Oklahoma. The biodiesel is produced from pork fat from
Seaboard's Guymon pork processing plant and from animal fat
supplied by non-Seaboard facilities. The biodiesel is sold to
a third party. The facility can also produce biodiesel from
vegetable oil. In addition, the Pork Division previously
announced plans to expand its processed meats capabilities by
constructing a separate further processing plant, primarily
for bacon, or acquiring an existing facility. During the
second quarter of 2008, Seaboard decided to indefinitely delay
plans to expand its processed meats capabilities.
During 2007, the Pork Division constructed additional hog
finishing space to allow hogs more time to reach the desired
weight for processing at the Guymon plant. Additional hog
finishing space was completed in 2008. During 2008,
modifications were made to the Guymon plant that increased the
daily double shift processing capacity from approximately
16,800 to 18,500 hogs.
In the fourth quarter of 2008, Seaboard ceased flour milling
operations in Madagascar through the cancellation of the lease
of two milling facilities. In addition, during 2008 Seaboard
discontinued operations of its flour milling operations in
Mozambique as a result of its Mozambican subsidiary entering
into an agreement to exchange its flour milling facility for a
ten percent ownership interest in a food processing company in
that country. This exchange transaction is expected to be
complete in the first half of 2009.
On May 30, 2008, the Marine Division entered into an Amended
and Restated Terminal Agreement ("Amended Terminal Agreement")
with Miami-Dade County ("County") for marine terminal
operations pursuant to which Seaboard Marine renewed its
existing Terminal Agreement with the County at the Port of
Miami. The Amended Terminal Agreement will enable Seaboard
Marine to continue its existing operations at the Port of
Miami. The Amended Terminal Agreement has a term through
September 30, 2028, with two five-year renewal options, the
exercise of which are subject to certain conditions.
During 2007, Seaboard launched a plan to expand the sugar
business in the Sugar & Citrus Division. As part of this
plan, in 2007 Seaboard purchased land, planted an additional
15,000 acres of sugar cane and started expanding the alcohol
distillery operations. The alcohol distillery expansion was
completed in 2008. This expansion has raised sugar production
from approximately 200,000 metric tons per year to
approximately 230,000 metric tons per year and increased
alcohol production capacity from approximately four million
gallons per year to approximately 13 million gallons per year.
The Sugar and Citrus Division is in the process of developing
a 40 megawatt cogeneration power plant. This plant is
expected to be completed in 2010. In addition, management is
reviewing its strategic options for the citrus business.
On March 2, 2009, an agreement became effective under which
Seaboard will sell its two power barges in the Dominican
Republic for $70.0 million, which will use such barges for
private use. The agreement calls for the sale to occur on or
around January 1, 2011. Seaboard will be responsible for the
wind down and decommissioning costs of the barges. Completion
of the sale is dependent upon the satisfaction of several
conditions, including meeting certain baseline performance and
emission tests. Failure to satisfy or cure any deficiencies
could result in the agreement being terminated. Seaboard will
retain all other physical properties of its power generation
business, and is considering options to continue its power
business in the Dominican Republic after the sale of these
assets is completed.
5
(iii) Sources and Availability of Raw Materials
None of Seaboard'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
Seaboard uses the registered trademark of Seaboard.
The Pork Division uses registered trademarks relating to its
products, including Seaboard Farms, Prairie Fresh, A Taste
Like No Other, Daily's, Daily's Premium Meats Since 1893,
High Plains Bioenergy, Prairie Fresh Prime, Seaboard Foods,
Buffet Brand and Seaboard Farms, Inc. Seaboard considers
the use of these trademarks important to the marketing and
promotion of its pork products.
The Marine Division uses the trade name Seaboard Marine which
is also a registered trademark. Seaboard believes there is
significant recognition of the Seaboard Marine trademark in
the industry and by many of its customers.
Part of the sales within the Sugar and Citrus Division are
made under the Chango brand in Argentina, where this division
operates. Local sales prices are affected by sugar import
duties imposed by the Argentine government, which affects the
volume of sugar imported to and exported from that market.
Seaboard's Power Division benefits from a tax exempt
concession granted by the Dominican Republic government
through 2012.
Patents, trademarks, franchises, licenses and concessions are
not material to any of Seaboard's other divisions.
(v) Seasonal Business
Profits from processed pork are generally higher in the fall
months. However, for both 2008 and 2007, elevated grain prices
without a comparable increase in live hog prices, lowered
profits from hog production offsetting the generally higher
fall processing profits from previous years. Sugar prices in
Argentina are generally lower during the typical sugarcane
harvest period between June and November. Seaboard's other
divisions are not seasonally dependent to any material extent.
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of
Seaboard relating to working capital items.
(vii) Depending on a Single Customer or Few Customers
Seaboard does not have sales to any one customer equal to ten
percent or more of consolidated revenues. The Pork Division
derives approximately 12 percent of its revenues from a few
customers in Japan through one agent. The Power Division
sells power in the Dominican Republic to a limited number of
contract customers and on the spot market accessed primarily
by three wholly or partially government-owned distribution
companies. Approximately 40% of its power generation is
provided for one government-owned distribution company under a
short-term contract and for which Seaboard bears a
concentrated credit risk as this customer, from time to time,
has significant past due balances. No other division has
sales to a few customers which, if lost, would have a material
adverse effect on any such division or on Seaboard taken as a
whole.
(viii) Backlog
Backlog is not material to Seaboard's businesses.
(ix) Government Contracts
No material portion of Seaboard's business involves government
contracts.
(x) Competitive Conditions
Competition in Seaboard's Pork Division comes from a variety
of national, international and regional producers and
processors and is based primarily on product quality, customer
service and price. According to recent publications by
Successful Farming and Informa Economics, trade publications,
Seaboard ranks as one of the nation's top five pork producers
(based on sows in production) and top ten pork processors
(based on daily processing capacity).
6
Seaboard's ocean liner service for containerized cargoes faces
competition based on price, reliable sailing frequencies and
customer service. Seaboard believes it is among the top five
ranking ocean liner services for containerized cargoes in the
Caribbean Basin based on cargo volume.
Seaboard's sugar business owns one of the largest sugar mills
in Argentina and faces significant competition for sugar sales
in the local Argentine market. Sugar prices in Argentina can
fluctuate compared to world markets due to current Argentine
government price protection policies.
Seaboard's Power Division is located in the Dominican
Republic. Power generated by this division is sold on the
spot market or to contract customers at prices primarily based
on market conditions rather than cost-based rates.
(xi) Research and Development Activities
Seaboard conducts research and development activities focused
on various aspects of Seaboard's vertically integrated pork
processing system, including improving product quality,
production processes, animal genetics, nutrition
and health. Incremental costs incurred to perform these tests
are expensed as incurred and are not material to operating
results.
(xii) Environmental Compliance
Seaboard is subject to numerous Federal, state and local
provisions relating to the environment which require the
expenditure of funds in the ordinary course of business.
Seaboard does not anticipate making expenditures for these
purposes, which, in the aggregate would have a material or
significant effect on Seaboard's financial condition or
results of operations.
(xiii) Number of Persons Employed by Registrant
As of December 31, 2008, Seaboard, excluding non-consolidated
foreign affiliates, had 10,734 employees, of whom 5,714 were
employed in the United States. Approximately 2,000 employees
in Seaboard's Pork Division were covered by collective
bargaining agreements as of December 31, 2008. Seaboard
considers its employee relations to be satisfactory.
(d) Financial Information about Geographic Areas
In addition to the narrative disclosure provided below, the
financial information relating to export sales required by Item 1
of Form 10-K is incorporated herein by reference to Note 13 of
Seaboard's Consolidated Financial Statements appearing on pages 56
through 59 of Seaboard's Annual Report to Stockholders furnished to
the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this report.
Seaboard considers its relations with the governments of the
countries in which its foreign subsidiaries and affiliates are
located to be satisfactory, but these foreign operations are
subject to risks of doing business in lesser-developed countries
which are subject to potential civil unrests and government
instabilities, increasing the exposure to potential expropriation,
confiscation, war, insurrection, civil strife and revolution, sales
price controls, currency inconvertibility and devaluation, and
currency exchange controls. To minimize certain of these risks,
Seaboard has insured certain investments in its affiliate flour
mills in Democratic Republic of Congo, Haiti, Lesotho, Republic of
Congo and Zambia, to the extent available and deemed appropriate
against certain of these risks with the Overseas Private Investment
Corporation, an agency of the United States Government. At the
date of this report, Seaboard is not aware of any situations which
could have a material effect on Seaboard's business.
(e) Available Information
Seaboard electronically files with the Commission annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports pursuant to Section 13(a) or
15(d) of the Exchange Act. The public may read and copy any
materials filed with the Commission at their public reference room
located at 100 F Street N.E., Washington, D.C. 20549. The public
may obtain further information concerning the public reference room
and any applicable copy charges, as well as the process of
obtaining copies of filed documents by calling the Commission at 1-
800-SEC-0330.
The Commission maintains an internet website that contains reports,
proxy and information statements, and other information regarding
electronic filers at www.sec.gov. Seaboard provides access to its
most recent Form 10-K, 10-Q and 8-K reports, and any amendments to
these reports, on its internet website, www.seaboardcorp.com, free
of charge, as soon as reasonably practicable after those reports
are electronically filed with the Commission.
7
Please note that any internet addresses provided in this report are
for information purposes only and are not intended to be
hyperlinks. Accordingly, no information provided at such Internet
addresses is intended or deemed to be incorporated herein by
reference.
Item 1A. Risk Factors
Seaboard has identified important risks and uncertainties that
could affect the results of operations, financial condition or
business and that could cause them to differ materially from
Seaboard's historical results of operations, financial condition or
business, or those contemplated by forward-looking statements made
herein or elsewhere, by, or on behalf of, Seaboard. Factors that
could cause or contribute to such differences include, but are not
limited to, those factors described below.
(a) General
(1) Seaboard's Operations are Subject to the General Risks of the
Food Industry. The divisions of the business that are in the
food products manufacturing industry are subject to the risks
posed by:
- food spoilage or food contamination;
- evolving consumer preferences and nutritional and health-
related concerns;
- federal, state and local food processing controls;
- consumer product liability claims;
- product tampering;
- the possible unavailability and/or expense of liability
insurance.
If one or more of these risks were to materialize, Seaboard's
revenues could decrease, costs of doing business could
increase, and Seaboard's operating results could be adversely
affected.
(2) Foreign Political and Economic Conditions Have a Significant
Impact on Seaboard's Business. Seaboard is a diverse
agribusiness and transportation company with global operations
in several industries. Most of the sales and costs of
Seaboard's divisions are significantly influenced by worldwide
fluctuations in commodity prices or changes in foreign
political and economic conditions. Accordingly, sales,
operating income and cash flows can fluctuate significantly
from year to year. In addition, Seaboard's international
activities pose risks not faced by companies that limit
themselves to United States markets. These risks include:
- changes in foreign currency exchange rates;
- foreign currency exchange controls;
- changes in a specific country's or region's political or
economic conditions, particularly in emerging markets;
- hyperinflation;
- heightened customer credit risk;
- tariffs, other trade protection measures and import or
export licensing requirements;
- potentially negative consequences from changes in tax
laws;
- different legal and regulatory structures and unexpected
changes in legal and regulatory requirements; and
- negative perception within a foreign country of a United
States company doing business in that foreign country.
Seaboard cannot provide assurance that it will be successful
in competing effectively in international markets.
(3) Deterioration of Economic Conditions Could Negatively Impact
Seaboard's Business. Seaboard's business may be adversely
affected by changes in national or global economic conditions,
including inflation, interest rates, availability of capital
markets, consumer spending rates, energy availability and
costs and the effects of governmental initiatives to manage
economic conditions. Any such changes could adversely affect
the demand for our pork products, grains and shipping
services, or the cost and availability of our needed raw
materials and packaging materials, thereby negatively
affecting our financial results. The recent disruptions in
credit and other financial markets and deterioration of
national and global economic conditions, could, among other
things:
- impair the financial condition of some of our customers
and suppliers thereby increasing customer bad debts or
non-performance by customers and suppliers;
- negatively impact global demand for protein products,
which could result in a reduction of sales, operating
income and cash flows;
8
- decrease the value of our investments in equity and debt
securities, including pension plan assets; and
- impair the financial viability of our insurers.
(4) Ocean Transportation Has Inherent Risks. Seaboard's owned and
chartered vessels along with related cargoes are at risk of
being damaged or lost because of events such as:
- marine disasters;
- bad weather;
- mechanical failures;
- grounding, fire, explosions and collisions;
- human error; and
- war and terrorism.
All of these hazards can result in death or injury to persons,
loss of property, environmental damages, delays or rerouting.
If one of Seaboard's vessels were involved in an accident, the
resulting media coverage could have a material adverse effect
on Seaboard's business, financial condition and results of
operations.
(5) Seaboard's Common Stock is Thinly Traded and Subject to Daily
Price Fluctuations. The common stock of Seaboard is closely
held (72.1% is owned by Seaboard Flour, which is owned by S.
Bresky and other members of the Bresky family) and thinly
traded on a daily basis on the NYSE Alternext US (formerly,
American Stock Exchange). Accordingly, the price of a share
of common stock can fluctuate more significantly from day-to-
day than a widely held stock that is actively traded on a
daily basis.
(b) Pork Division
(1) Fluctuations in Commodity Pork Prices Could Adversely
Affect Seaboard's Results of Operations. Sale prices for
Seaboard's pork products are directly affected by both
domestic and world wide supply and demand for pork products
and other proteins, all of which are determined by constantly
changing market forces of supply and demand as well as other
factors over which Seaboard has little or no control.
Commodity pork prices demonstrate a cyclical nature over
periods of years, reflecting changes in the supply of fresh
pork and competing proteins on the market, especially beef and
chicken. Seaboard's results of operations could be adversely
affected by fluctuations in pork commodity prices.
(2) Increases in Costs of Seaboard's Feed Components and Hog
Purchases Could Adversely Affect Seaboard's Costs and
Operating Margins. Feed costs are the most significant single
component of the cost of raising hogs and can be materially
affected by commodity price fluctuations for corn and soybean
meal. The results of Seaboard's Pork Division can be
negatively affected by increased costs of Seaboard's feed
components. The recent increase in construction of ethanol
plants has elevated this risk as it has increased the
competing demand for feed ingredients, primarily corn.
Similarly, accounting for approximately 25% of Seaboard's
total hogs slaughtered, the cost of third party hogs purchased
fluctuates with market conditions and can have an impact on
Seaboard's total costs. The cost and supply of feed
components and the third party hogs that we purchase are
determined by constantly changing market forces of supply and
demand, which are driven by matters over which we have no
control, including weather, current and projected worldwide
grain stocks and prices, grain export prices and supports and
governmental agricultural policies. Seaboard attempts to
manage certain of these risks through the use of financial
instruments, however this may also limit its ability to
participate in gains from favorable commodity fluctuations.
Unless wholesale pork prices correspondingly increase,
increases in the prices of Seaboard's feed components or in
the cost of third party hogs purchased would adversely affect
Seaboard's operating margins.
(3) Seaboard's Ability to Obtain Appropriate Personnel at Remote
Locations is Important to Seaboard's Business. The remote
locations of the pork processing plant and live hog operations,
the lack of immigration reform could negatively affect the
availability and cost of labor. Seaboard is dependent on
having sufficient properly trained operations personnel.
Attracting and retaining qualified personnel is important to
Seaboard's success. The inability to acquire and retain the
services of such personnel could have a material adverse
effect on Seaboard's operations.
(4) The Loss of Seaboard's Sole Hog Processing Facility Could
Adversely Affect Seaboard's Business. Seaboard's Pork
Division is largely dependent on the continued operation of a
single hog processing facility. The loss of or damage to this
facility for any reason-including fire, tornado, governmental
action or other reason-could adversely affect Seaboard and
Seaboard's pork business.
9
(5) Environmental Regulation and Related Litigation Could Have a
Material Adverse Effect on Seaboard. Seaboard's operations
and properties are subject to extensive and increasingly
stringent laws and regulations pertaining to, among other
things, odors, the discharge of materials into the environment
and the handling and disposition of wastes (including solid
and hazardous wastes) or otherwise relating to protection of
the environment. Failure to comply with these laws and
regulations and any future changes to them may result in
significant consequences to Seaboard, including civil and
criminal penalties, liability for damages and negative
publicity. Some requirements applicable to Seaboard may also
be enforced by citizen groups. Seaboard has incurred, and
will continue to incur, operating expenditures to comply with
these laws and regulations.
(6) Health Risk to Livestock Could Adversely Affect Production,
the Supply of Raw Materials and Seaboard's Business. Seaboard
is subject to risks relating to its ability to maintain animal
health and control diseases. The general health of the hogs
and the reproductive performance of the sows can have an
adverse impact on production and production costs, the supply
of raw material to Seaboard's pork processing operations and
consumer confidence. If Seaboard's hogs are affected by
disease, Seaboard may be required to destroy infected
livestock, which could adversely affect Seaboard's production
or ability to sell or export its products. Moreover, the herd
health of third party suppliers could adversely affect the
supply and cost of hogs available for purchase by Seaboard.
Adverse publicity concerning any disease or health concern
could also cause customers to lose confidence in the safety
and quality of Seaboard's food products.
(7) If Seaboard's Pork Products Become Contaminated, We May be
Subject to Product Liability Claims and Product Recalls. Pork
products may be subject to contamination by disease producing
organisms. These organisms are generally found in the
environment and as a result, regardless of the manufacturing
practices employed, there is a risk that they as a result of
food processing could be present in Seaboard's processed pork
products. Once contaminated products have been shipped for
distribution, illness and death may result if the organisms
are not eliminated at the further processing, foodservice or
consumer level. Even an inadvertent shipment of contaminated
products is a violation of law and may lead to increased risk
of exposure to product liability claims, product recalls and
increased scrutiny by federal and state regulatory agencies
and may have a material adverse effect on Seaboard's business,
reputation, prospects, results of operations and financial
condition.
(8) Corporate Farming Legislation Could Result in the Divestiture
or Restructuring of Seaboard's Pork Operations. The
development of large corporate farming operations and
concentration of hog production in larger-scale facilities has
engendered opposition from residents of states in which
Seaboard conducts its pork processing and live hog operations.
From time-to-time, corporate farming legislation has been
introduced in the United States Senate and House of
Representatives, as well as in several state legislatures.
These proposed anti-corporate farming bills have included
provisions to prohibit or restrict meat packers, such as
Seaboard, from owning or controlling livestock intended for
slaughter, which would require divestiture or restructuring of
Seaboard's operations.
(9) International Trade Barriers Could Adversely Affect Seaboard's
Pork Operations. This division realizes a significant portion
of its revenues from international markets, particularly Japan
and Mexico. International sales are subject to risks related
to general economic conditions, imposition of tariffs, quotas,
trade barriers and other restrictions, enforcement of remedies
in foreign jurisdictions and compliance with applicable
foreign laws, and other economic and political uncertainties.
These and other risks could result in border closings or
other international trade barriers having an adverse effect on
Seaboard's earnings.
(10) Discontinuation of Tax Credits for Biodiesel Could
Adversely Affect Seaboard's Results of Operations. Seaboard
will obtain Federal and State tax credits for the biodiesel it
produces and sells. The Federal tax credit is currently
scheduled to expire on December 31, 2009, and if not renewed
could adversely affect Seaboard's results of operations and
could result in the potential impairment of the recorded value
of property, plant and equipment related to the biodiesel
processing facility.
(11) Operations of Biodiesel Production Facility. The
profitability of Seaboard's biodiesel plant could be adversely
affected by various factors, including the market price of
pork and other animal fat which is utilized to produce
biodiesel, and the market price for biodiesel. Unfavorable
changes in these prices over extended periods of time could
adversely affect Seaboard's results of operations and could
result in the potential impairment of the recorded value of
the property, plant and equipment related to this facility.
(c) Commodity Trading & Milling Division
(1) Seaboard's Commodity & Milling Division is Subject to Risks
Associated with Foreign Operations. This division principally
operates in Africa, Bermuda, South America and the Caribbean
and, in most cases, in what are generally
10
regarded to be lesser developed countries. Many of these
foreign operations are subject to risks of doing business in
lesser-developed countries which are subject to potential
civil unrests and government instabilities, increasing the
exposure to potential expropriation, confiscation, war,
insurrection, civil strife and revolution, currency
inconvertibility and devaluation, and currency exchange
controls, in addition to the risks of overseas operations
mentioned in clause (a)(2) above. In addition, foreign
government policies and regulations could restrict the
purchase of various grains, reducing or limiting Seaboard's
ability to access grains or to limit Seaboard's sales price
for grains sold in local markets.
(2) Fluctuations in Commodity Grain Prices Could Adversely Affect
the Business of Seaboard's Commodity & Milling Division. This
division's sales are significantly affected by fluctuating
worldwide prices for various commodities, such as wheat, corn,
soybeans and rice. These prices are determined by constantly
changing market forces of supply and demand as well as other
factors over which Seaboard has little or no control. North
American and European subsidized wheat and flour exports,
including donated food aid, and world-wide and local crop
production can contribute to these fluctuating market
conditions and can have a significant impact on the trading
and milling businesses' sales, value of commodities held in
inventory and operating income. The current unprecedented
volatility of grain prices increase certain business risks
including holding high priced inventory or the potential for
reduced sales volumes. These risks can increase if
governments impose sale price controls or seek to preserve
local food supply by banning exports, if grain prices fall
significantly and competitors hold lower priced positions, or
if customers default, which could result in write-downs of
inventory values and an increase in bad debts. Seaboard's
results of operations could be adversely affected by
fluctuations in commodity prices.
(3) Seaboard's Commodity & Milling Division Largely Depends on the
Availability of Chartered Ships. Most of Seaboard's third
party trading is transported with chartered ships. Charter
hire rates, influenced by available charter capacity and
demand for worldwide trade in bulk cargoes, and related fuel
costs can impact business volumes and margins.
(4) This Division Uses a Material Amount of Derivative Products to
Manage Certain Market Risks. The commodity trading portion of
the business enters into various commodity derivatives,
foreign exchange derivatives and freight derivatives to create
what management believes is an economic hedge for commodity
trades it executes or intends to execute with its customers.
From time to time, this portion of the business may enter into
speculative derivative transactions related to its market
risks. Failure to execute or improper execution of a
derivative position or a firmly committed sale or purchase
contract, a speculative transaction that closes without the
desired result or exposure to counter party risk could have an
adverse impact on the results of operations and liquidity.
(5) This Division is Subject to Higher than Normal Risks for
Attracting and Retaining Key Personnel. In the commodity
trading environment, a loss of a key employee such as a
commodity trader can have a negative impact resulting from the
loss of revenues as personal customer relationships can be
vital to obtaining and retaining business with various foreign
customers. In the milling portion of this division, employing
and retaining qualified expatriate personnel is a key element
of success given the difficult living conditions, the unique
operating environments and the reliance on a relatively small
number of executives to manage each individual location.
(d) Marine Division
(1) The Demand for Seaboard's Marine Division's Services Are
Affected by International Trade and Fluctuating Freight Rates.
This division provides containerized cargo shipping services
primarily from the United States to over twenty-five different
countries in the Caribbean Basin, and Central and South
America. In addition to the risks of overseas operations
mentioned in clause (a)(2) above, fluctuations in economic
conditions, unstable or hostile local political situations in
the countries in which Seaboard operates can affect import/
export trade volumes and the price of container freight rates
and adversely affect Seaboard's results of operations.
(2) Chartered Ships Are Subject to Fluctuating Rates. The largest
expense for this division is typically time charter cost.
Certain of the ships are under charters longer than one year
while others are less than one year. These costs can vary
greatly due to a number of factors including the worldwide
supply and demand for shipping. It is not possible to
determine in advance whether a charter contract for more or
less than one year will be favorable to Seaboard's business.
Accordingly, entering into long-term charter hire contracts
during periods of decreasing charter hire costs or short term
charter hire contracts during periods of increasing charter
hire costs could have an adverse effect on Seaboard's results
of operation.
11
(3) Fuel Prices Can Adversely Affect Seaboard's Business. Ship
fuel expenses are one of the division's largest expenses.
These costs can vary greatly from year-to-year depending on
world fuel prices. Also, but to a lesser extent, fuel price
increases can impact the cost of inland transportation costs.
(4) Hurricanes Can Disrupt Operations in the Caribbean Basin.
Seaboard's port operations throughout the Caribbean Basin can
be subject to disruption due to hurricanes, especially at
Seaboard's major ports in Miami, Florida and Houston, Texas,
which could have an adverse effect on our results of
operations
(5) Seaboard is Subject to Complex Laws and Regulations that Can
Adversely Affect the Revenues, Cost, Manner or Feasibility of
Doing Business. Federal, state and local laws and domestic
and international regulations governing worker health and
safety, environmental protection, port and terminal security,
and the operation of vessels significantly affect Seaboard's
operations, including rate discussions and other related
arrangements. Many aspects of the marine industry, including
rate agreements, are subject to extensive governmental
regulation by the Federal Maritime Commission, the U.S. Coast
Guard, and U.S. Customs and Border Protection, and to
regulation by private industry organizations. Compliance with
applicable laws, regulations and standards may require
installation of costly equipment or operational changes, while
the failure to comply may result in administrative and civil
penalties, criminal sanctions or the suspension or termination
of Seaboard's operations or detention of its vessels. In
addition, future changes in laws, regulations and standards,
including allowed freight rate discussions and other related
arrangements, may result in additional costs or a reduction
in revenues.
(e) Sugar and Citrus Division
(1) The Success of this Division Depends on the Condition of the
Argentinean Economy and Political Climate. This division
operates a sugar mill and alcohol production facility in
Argentina, locally growing a substantial portion of the sugar
cane processed at the mill. In addition, this division also
grows oranges in Argentina. The majority of the sales are
within Argentina. Fluctuations in economic conditions or
changes in the Argentine political climate can have an impact
on the costs of operations, the sale price of products and
export opportunities and the exchange rate of the Argentine
peso to the U.S. dollar. In this regard, local sale prices
are affected by sugar import duties imposed by the Argentine
government, which affects the volume of sugar imported to and
exported from that market. If import duties are changed, this
could have a negative impact on Seaboard's sale price of sugar.
In addition, the Argentine government attempts to control
inflation through price controls on commodities, including
sugar, which could adversely impact the local sales price of
sugar and the results of operations for this division. A
devaluation of the Argentine peso would have a negative impact
on Seaboard's financial position.
(2) This Division is Subject to the Risks that Are Inherent in any
Agricultural Business. Seaboard's results of operations for
this division may be adversely affected by numerous factors
over which we have little or no control and that are inherent
in any agricultural business, including reductions in the
market prices for Seaboard's products, adverse weather and
growing conditions, pest and disease problems, and new
government regulations regarding agriculture and the marketing
of agricultural products. Of these risks, weather particularly
can adversely affect the amount and quality of the sugar cane
produced by Seaboard and Seaboard's competitors located in
other regions of Argentina.
(3) The Loss of Seaboard's Sole Processing Facility Would
Adversely Affect the Business of This Division. Seaboard's
Sugar and Citrus Division is largely dependant on the
continued operation of a single processing facility. The loss
of or damage to this facility for any reason - including fire,
tornado, governmental action, labor unrest resulting in labor
strikes or other reasons - would adversely affect the business
of this division.
(f) Power Division
(1) This Division is Subject to Risks of Doing Business in the
Dominican Republic. This division operates in the Dominican
Republic (DR). In addition to significant currency
fluctuations and the other risks of overseas operations
mentioned in clause (a)(2) above, this division can experience
difficulty in obtaining timely collections of trade
receivables from the government partially-owned distribution
companies or other companies that must also collect from the
government in order to make payments on their accounts.
Currently, the DR does not allow a free market to enable
prices to rise with demand which would limit our profitability
in this business. The government has the ability to
arbitrarily decide which power units will be able to operate,
which could have adverse effects on results of operations.
12
(2) Increases in Fuel Costs Could Adversely Affect Seaboard's
Operating Margins. Fuel is the largest cost component of this
division's business and, therefore, margins may be adversely
affected by fluctuations in fuel if such increases can not be
fully passed to customers.
(3) Ability to Meet Obligations Under Asset Sale Agreement.
Seaboard's agreement to sell its Dominican Republic barges
requires that they meet certain performance standards at
closing, which if not met will result in Seaboard being in
breach of the agreement which could result in Seaboard
incurring significant damages.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
(1) Pork - Seaboard's Pork Division owns a hog processing plant in
Guymon, Oklahoma, which opened in 1995. It has a daily double
shift capacity to process approximately 18,500 hogs and generally
operates at capacity with additional weekend shifts depending on
market conditions. The plant is utilized at near capacity
throughout the year. In 2008, the Pork division made modifications
to this facility that increased daily double shift capacity from
approximately 16,800 hogs to 18,500 hogs. Seaboard's hog
production operations consist of the breeding and raising of
approximately 4.0 million hogs annually at facilities it primarily
owns or at facilities owned and operated by third parties with whom
it has grower contracts. This business owns and operates six
centrally located feed mills which have a combined capacity to
produce approximately 1,700,000 tons of formulated feed annually
used primarily to support Seaboard's existing hog production, and
has the capability of supporting additional hog production in the
future. These facilities are located in Oklahoma, Texas, Kansas
and Colorado.
Seaboard's Pork Division also owns two bacon further processing
plants located in Salt Lake City, Utah and Missoula, Montana.
These plants are utilized near capacity throughout the year, which
is a combined daily smoking capacity of approximately 300,000
pounds of raw pork bellies.
The Pork Division owns a processing plant in Guymon, Oklahoma with
the capacity to produce 30.0 million gallons of biodiesel annually,
which is currently produced from pork fat from Seaboard's Guymon
pork processing plant and from animal fat supplied by non-Seaboard
facilities. The facility can also produce biodiesel from vegetable
oil. Construction of this plant was completed in the second
quarter of 2008. Also during 2008, Seaboard entered into an
agreement to build and operate a majority-owned ham-boning and
processing plant in Mexico. The plant is currently expected to be
completed in the first half of 2009.
(2) Commodity Trading and Milling - Seaboard's Commodity Trading
and Milling Division owns, in whole or in part, grain-processing
and related agribusiness operations in 12 countries which have the
capacity to mill approximately 7,900 metric tons of wheat and maize
per day. In addition, Seaboard has feed mill capacity of in excess
of 129 metric tons per hour to produce formula animal feed. The
milling operations located in Colombia, Democratic Republic of
Congo, Ecuador, Guyana, Haiti, Kenya, Lesotho, Nigeria, Republic of
Congo, Sierra Leone, Uganda and Zambia own their facilities; and in
Kenya, Lesotho, Mozambique, Nigeria, Republic of Congo and Sierra
Leone the land on which the mills are located on is leased under
long-term agreements. Certain foreign milling operations may
operate at less than full capacity due to low demand related to
poor consumer purchasing power, excess milling capacity in their
competitive environment and European-subsidized wheat and flour
exports. Seaboard also owns seven 9,000 metric-ton deadweight dry
bulk carriers, one 23,400 metric ton deadweight dry bulk carrier,
and "time charters" (the charter of a vessel, whereby the vessel
owner is responsible to provide the captain and crew necessary to
operate the vessel) under short-term agreements, between 13 and 29
bulk carrier ocean vessels with deadweights ranging from 2,000 to
44,000 metric tons.
(3) Marine - Seaboard's Marine Division leases a 135,000 square
foot off-port warehouse and 81 acres of port terminal land and
facilities in Miami, Florida which are used in its containerized
cargo operations. Seaboard also leases an approximately 62 acre
cargo handling and terminal facility in Houston, Texas, which
includes several on-dock warehouses totaling approximately 690,000
square feet for cargo storage. At December 31, 2008, Seaboard
owned 12 ocean cargo vessels with deadweights ranging from 2,600 to
19,500 metric tons and time chartered 27 vessels under contracts
ranging from approximately one to two years with deadweights
ranging from 3,400 to 21,500 metric tons. In addition, Seaboard
has contracted to charter two vessels on a two-year time charter.
Delivery of these two time chartered ships, each with a deadweight
of 26,500 metric tons, is expected in the second half of 2009.
Seaboard also owns or leases an aggregate of approximately 55,000
dry, refrigerated and specialized containers and units of related
equipment.
13
(4) Sugar and Citrus - Seaboard's Argentine Sugar and Citrus
Division owns more than 60,000 acres of planted sugarcane and
approximately 3,000 acres of orange trees. Depending on local
harvest and market conditions, this business also purchases third
party sugar and citrus for resale. In addition, this division owns
a sugar mill with a current capacity to process approximately
230,000 metric tons of sugar and approximately 13 million gallons
of alcohol per year. This capacity is sufficient to process all of
the cane harvested by this division and certain additional
quantities harvested on behalf of the third party farmers in the
region. The sugarcane fields and processing mill are located in
northern Argentina in the Salta Province, which experiences
seasonal rainfalls that may limit the harvest season, which then
affects the duration of mill operations and quantities of sugar
produced. During 2008, construction was completed on the alcohol
distillery operation which increased the alcohol production
capacity from approximately four million gallons to approximately
13 million gallons per year. During 2010, it is anticipated that
construction will be completed on a 40 megawatt cogeneration power
plant. This division also owns a juice processing plant and fresh
fruit packaging plant with capacity to produce approximately 5,000
tons of concentrated juice and package approximately 400,000 boxes
of fresh fruit annually.
(5) Other - Seaboard's Power Division owns two floating electric
power generating facilities, consisting of a system of diesel
engines mounted onto barge-type vessels, with a combined rated
capacity of approximately 112 megawatts, both located on the Ozama
River in Santo Domingo, Dominican Republic. Seaboard operates as
an independent power producer. Seaboard is not directly involved
in the transmission and distribution facilities that deliver the
power to the end users but does have contracts to sell directly to
third party users. See "Status of Product or Segment" under Item 1
of this report for discussion of the pending sale of the two
barges.
In addition to the information provided above, the information
under "Principal Locations" of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this report is incorporated herein by
reference.
Management believes that Seaboard's present facilities are adequate
and suitable for its current purposes.
Item 3. Legal Proceedings
The information required by Item 3 of Form 10-K is incorporated
herein by reference to Note 11 of Seaboard's Consolidated Financial
Statements appearing on page 53 of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this Report.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
last quarter of the fiscal year covered by this report.
Executive Officers of the Registrant
The following table lists the executive officers and certain
significant employees of Seaboard. Generally, executive officers
are elected at the annual meeting of the Board of Directors
following the Annual Meeting of Stockholders and hold office until
the next such annual meeting or until their respective successors
are duly chosen and qualified. There are no arrangements or
understandings pursuant to which any executive officer was elected.
Name (Age) Positions and Offices with Registrantand Affiliates
Steven J. Bresky (55) President and Chief Executive Officer
Robert L. Steer (49) Senior Vice President, Chief Financial Officer
David M. Becker (47) Vice President, General Counsel and Secretary
Barry E. Gum (42) Vice President, Finance and Treasurer
James L. Gutsch (55) Vice President, Engineering
Ralph L. Moss (63) Vice President, Governmental Affairs
David S. Oswalt (41) Vice President, Taxation and Business Development
14
Ty A. Tywater (39) Vice President, Audit Services
John A. Virgo (48) Vice President, Corporate Controller and
Chief Accounting Officer
Rodney K. Brenneman (44) President, Seaboard Foods, LLC
David M. Dannov (47) President, Seaboard Overseas and Trading Group
Edward A. Gonzalez (43) President, Seaboard Marine Ltd.
Mr. Steven J. Bresky has served as President and Chief Executive
Officer since July 2006 and previously as Senior Vice President,
International Operations of Seaboard from February 2001 to July
2006.
Mr. Steer has served as Senior Vice President, Chief Financial
Officer of Seaboard since December 2006 and previously as Senior
Vice President, Treasurer and Chief Financial Officer from 2001-
2006.
Mr. Becker has served as Vice President, General Counsel and
Secretary of Seaboard since December 2003.
Mr. Gum has served as Vice President, Finance and Treasurer of
Seaboard since December 2006 and previously as Vice President,
Finance from 2003-2006.
Mr. Gutsch has served as Vice President, Engineering of Seaboard
since December 1998.
Mr. Moss has served as Vice President, Governmental Affairs of
Seaboard since December 2003.
Mr. Oswalt has served as Vice President, Taxation and Business
Development of Seaboard since December 2003.
Mr. Tywater has served as Vice President, Audit Services of
Seaboard since November 2008 and previously as Internal Audit
Director from 2002 to 2008.
Mr. Virgo has served as Vice President, Corporate Controller and
Chief Accounting Officer of Seaboard since December 2003.
Mr. Brenneman has served as President of Seaboard Foods, LLC
(previously Seaboard Farms Inc.) since June 2001.
Mr. Dannov has served as President of Seaboard Overseas and Trading
Group since August 2006 and previously as Vice President, Treasurer
of Seaboard Overseas and Trading Group from 1996 to 2006.
Mr. Gonzalez has served as President of Seaboard Marine, Ltd. since
January 2005 and previously as Vice President of Terminal
Operations of Seaboard Marine Ltd. from 2000 to 2005.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Seaboard's Board of Directors intends that Seaboard will continue
to pay quarterly dividends, with the actual amount of any dividends
being dependant upon such factors as Seaboard's financial
condition, results of operations and current and anticipated cash
needs, including capital requirements. As discussed in Note 8 of
the consolidated financial statements appearing on pages 46 and 47
of the Seaboard Corporation Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit
13 to this Report (which discussion is incorporated herein by
reference), Seaboard's ability to declare and pay dividends is
subject to limitations imposed by the note agreements referred to
there.
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock, may be granted.
The following table sets forth information concerning any purchases
made by or on behalf of Seaboard or any "affiliated purchaser" (as
defined by applicable rules of the Commission) of shares of
Seaboard's common stock during the fourth quarter of the fiscal
year covered by this report.
15
Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
Issuer Purchases of Equity Securities
Approximate
Total Dollar
Number Value
of Shares of Shares
Purchased that May
as Yet Be
Part of Purchased
Total Average Publicly Under the
Number Price Announced Plans or
of Shares Paid Plans or Programs
Period Purchased per Share Programs
September 28 to October 31, 2008 - $ n/a n/a $15,522,922
November 1 to November 30, 2008 241 $ 842.25 241 $15,319,940
December 1 to December 31, 2008 852 $ 961.86 852 $14,500,433
Total 1,093 $ 935.49 1,093 $14,500,433
All purchases during the quarter were made under the authorization
from our Board of Directors announced on August 8, 2007 to
purchase up to $50 million of shares of Seaboard common stock. An
expiration date of August 31, 2009 has been specified for this
authorization. All purchases were made through open-market
purchases and all the repurchased shares have been retired.
In addition to the information provided above, the information
required by Item 5 of Form 10-K is incorporated herein by reference
to (a) the information under "Stockholder Information - Stock
Listing," (b) the dividends per common share information and market
price range per common share information under "Quarterly Financial
Data" and (c) the information under "Company Performance Graph"
appearing on pages 60, 9 and 8, respectively, of Seaboard'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 of Form 10-K is incorporated
herein by reference to the "Summary of Selected Financial Data"
appearing on page 7 of Seaboard'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 of Form 10-K is incorporated
herein by reference to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
10 through 26 of Seaboard'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 of Form 10-K is incorporated
herein by reference to (a) the material under the captions
"Derivative Instruments and Hedging Activities" within Note 1 of
Seaboard's Consolidated Financial Statements appearing on page 37
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this Report, and (b) the material under the caption "Derivative
Information" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
24 through 26 of Seaboard'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 of Form 10-K is incorporated
herein by reference to Seaboard's "Quarterly Financial Data,"
"Report of Independent Registered Public Accounting Firm,"
"Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Changes in Equity" and "Notes to Consolidated
Financial Statements" appearing on page 9 and pages 28 through 59
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this Report.
16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures - As of December
31, 2008, Seaboard's management has evaluated, under the direction
of our chief executive and chief financial officers, the
effectiveness of Seaboard's disclosure controls and procedures, as
defined in Exchange Act rule 13a - 15(e). Based upon and as of the
date of that evaluation, Seaboard's chief executive and chief
financial officers concluded that Seaboard's disclosure controls
and procedures were effective to ensure that information required
to be disclosed in the reports it files and submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported as and when required. It should be noted that any
system of disclosure controls and procedures, however well designed
and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met. In addition,
the design of any system of disclosure controls and procedures is
based in part upon assumptions about the likelihood of future
events. Due to these and other inherent limitations of any such
system, there can be no assurance that any design will always
succeed in achieving its stated goals under all potential future
conditions.
Management's Report on Internal Control Over Financial Reporting -
Information required by Item 9A of Form 10-K concerning
management's report on Seaboard's internal control over financial
reporting, as defined in Exchange Act rule 13a-15(f) is
incorporated herein by reference to Seaboard's "Management's Report
on Internal Control over Financial Reporting" appearing on page 27
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this report.
Registered Public Accounting Firm's Attestation Report -
Information required by Item 9A of Form 10-K with respect to the
registered public accounting firm's attestation report on
Seaboard's internal controls over financial reporting is
incorporated herein by reference to "Report of Independent
Registered Public Accounting Firm" appearing on page 29 of
Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14-3(b) and attached as Exhibit 13 to
this report.
Change in Internal Controls - There has been no change in
Seaboard's internal control over financial reporting that occurred
during the fiscal quarter ended December 31, 2008 that has
materially affected, or is reasonably likely to materially affect,
Seaboard's internal control over financial reporting.
Item 9B. Other Information
Seaboard Corporation ("Seaboard") and its subsidiary,
Transcontinental Capital Corp. (Bermuda) Ltd. ("TCCB"), entered
into an Asset Purchase Agreement by and among TCCB, as Seller,
Seaboard, as Seller-Parent, and Pueblo Viejo Dominicana
Corporation, as Buyer ("Pueblo Viejo"), dated September 23, 2008,
which agreement was amended by that certain Amendment to Asset
Purchase Agreement among TCCB, Seaboard and Pueblo Viejo dated as
of March 2, 2009 (collectively, the "Agreement"). Pursuant to
the Agreement, TCCB has agreed to sell to Pueblo Viejo its two
power barges in the Dominican Republic for a purchase price of $70
million, which will use such barges for private use. The Agreement
calls for the sale to occur at or around January 1, 2011. Upon the
satisfaction of certain conditions, which are expected to be met
during March 2009, $15 million will be paid to TCCB
and the $55 million balance of the purchase price will be paid into
escrow and paid to TCCB at the closing of the sale. Seaboard will
be responsible for the wind down and decommissioning costs of the
barges. Completion of the sale is dependent upon several issues,
including meeting certain baseline performance and emission tests.
Failure to satisfy or cure any deficiencies could result in the
Agreement being terminated. Seaboard could be responsible to pay
liquidated damages of up to approximately $15 million should it
fail to perform its obligations under the Agreement, after
expiration of applicable cure and grace periods. Seaboard will
retain all other physical properties of this business and is
considering options to continue its power business in the Dominican
Republic after the sale of these assets is completed.
17
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We refer you to the information under the caption "Executive
Officers of Registrant" appearing immediately following the
disclosure in Item 4 of Part I of this report.
Seaboard has a Code of Ethics Policy (the Code) for directors,
officers (including our chief executive officer, chief financial
officer, chief accounting officer, controller and persons
performing similar functions) and employees. Seaboard has posted
the Code on its internet website, www.seaboardcorp.com, under the
"About Us" tab and intends to disclose any future changes and
waivers to the Code by posting such information on that website.
In addition to the information provided above, the information
required by Item 10 of Form 10-K is incorporated herein by
reference to (a) the disclosure relating to directors under "Item
1: Election of Directors" appearing on page 5 of Seaboard's
definitive proxy statement filed pursuant to Regulation 14A for the
2009 annual meeting of Stockholders ("2009 Proxy Statement"), (b)
the disclosure relating to Seaboard's audit committee and "audit
committee financial expert" and its director nomination procedures
under "Board of Directors Information -- Committees of the Board --
Audit Committee" and "Board of Directors Information -- Director
Nominations" appearing on pages 6 and 7 of the 2009 Proxy
Statement, and (c) the disclosure relating to late filings of
reports required under Section 16(a) of the Securities Exchange Act
of 1934 under "Section 16(a) Beneficial Ownership Reporting
Compliance" appearing on page 24 of the 2009 Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 of Form 10-K is incorporated
herein by reference to (a) the disclosure relating to compensation
of directors under "Board of Directors Information -- Compensation
of Directors" and "Employment Arrangements with Named Executive
Officers" appearing on page 7 and pages 10 and 11 of the 2009 Proxy
Statement, and (b) the disclosure relating to compensation of
executive officers under "Executive Compensation and Other
Information," "Benefit Plans" and "Compensation Committee
Interlocks and Insider Participation," "Compensation Committee
Report" and "Compensation Discussion and Analysis" appearing on
pages 8 and 9, and pages 11 through 21 of the 2009 Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock may be granted.
In addition to the information provided above, the information
required by Item 12 of Form 10-K is incorporated herein by
reference to the disclosure under "Principal Stockholders" and
"Share Ownership of Management and Directors" appearing on pages 3
and 4 of the 2009 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The information required by Item 13 of Form 10-K is incorporated
herein by reference to the disclosure under "Compensation Committee
Interlocks and Insider Participation" appearing on pages 20 and 21
of the 2009 Proxy Statement, and the disclosure under "Board of
Directors Information - Controlled Corporation" and "Board of
Directors Information - Committees of the Board" appearing on page
6 of the 2009 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by Item 14 of Form 10-K is incorporated
herein by reference to the disclosure under "Item 2 Selection of
Independent Auditors" appearing on pages 21 through 23 of the 2009
Proxy Statement.
18
PART IV
Item 15. Exhibits, Financial Statement Schedules
(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-1.
3.Exhibits.
3.1 Seaboard's Restated Certificate of Incorporation.
Incorporated herein by reference to Exhibit 3.1 of
Seaboard's Form 10-Q for the quarter ended April 1, 2006.
3.2 Seaboard's By-laws, as amended. Incorporated herein by
reference to Exhibit 3.2 of Seaboard's Form 10-K for
fiscal year ended December 31, 2006.
4.1 Seaboard Corporation Note Purchase Agreement dated as of
September 30, 2002 between Seaboard and various purchasers
as listed in the exhibit. Incorporated herein by
reference to Exhibit 4.3 of Seaboard's Form 10-Q for the
quarter ended September 28, 2002.
4.2 Seaboard Corporation $32,500,000 5.8% Senior Note, Series
A, due September 30, 2009 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.4 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.3 Seaboard Corporation $38,000,000 6.21% Senior Note, Series
B, due September 30, 2009 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.5 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.4 Seaboard Corporation $7,500,000 6.21% Senior Note, Series
C, due September 30, 2012 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.6 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.5 Seaboard Corporation $31,000,000 6.92% Senior Note, Series
D, due September 30, 2012 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.7 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.6 Amended and Restated Terminal Agreement between Miami-Dade
County and Seaboard Marine Ltd. for Marine Terminal
Operations, dated May 30, 2008. Incorporated herein by
reference to Exhibit 10.1 of Seaboard's Form 8-K dated May
30, 2008.
4.7 Amended and Restated Credit Agreement between Borrowers
and Bank of America, N.A., dated July 10, 2008
($300,000,000 revolving credit facility expiring July 9,
2013). Incorporated herein by reference to Exhibit 10.1
of Seaboard's Form 8-K dated July 10, 2008.
10.1* Seaboard Corporation 409A Executive Retirement Plan
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Executive Retirement Plan , 2005 Amendment and
Restatement dated March 6, 2006.
10.2* Seaboard Corporation Executive Deferred Compensation Plan
as Amended and Restated Effective January 1, 2009 and
dated December 22, 2008, amending and restating the
Seaboard Corporation Executive Deferred Compensation Plan
dated December 29, 2005.
10.3* Seaboard Corporation Executive Retirement Plan Trust dated
November 5, 2004 between Seaboard Corporation and
Robert L. Steer as trustee. Incorporated herein by
reference to Exhibit 10.2 of Seaboard's Form 10-Q for the
quarter ended October 2, 2004.
10.4* Seaboard Corporation Investment Option Plan dated
December 18, 2000. Incorporated herein by reference to
Exhibit 10.7 of Seaboard's Form 10-K for fiscal year ended
December 31, 2000.
10.5 Marketing Agreement dated February 2, 2004 by and among
Seaboard Corporation, Seaboard Farms, Inc., Triumph Foods
LLC, and for certain limited purposes only, the members of
Triumph Foods LLC. Incorporated herein by reference to
Exhibit 10.2 of Seaboard's Form 8-K dated February 3,
2004.
19
10.6* Seaboard Corporation Retiree Medical Benefit Plan as
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Retiree Medical Benefit Plan dated March 4,
2005.
10.7* Seaboard Corporation Executive Officers' Bonus
Policy. Incorporated herein by reference to Exhibit 10.10
of Seaboard's Form 10-K for fiscal year ended December 31,
2006.
10.8* Employment Agreement between Seaboard Corporation and
Steven J. Bresky dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.1 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.9* Employment Agreement between Seaboard Corporation and
Robert L. Steer dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.2 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.10* Employment Agreement between Seaboard Farms, Inc. and
Rodney K. Brenneman dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.3 of Seaboard's Form 10-
Q for the quarter ended July 2, 2005.
10.11* Employment Agreement between Seaboard Corporation and
Edward A. Gonzalez dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.14 of Seaboard's Form 10-
K for fiscal year ended December 31, 2006.
10.12* Seaboard Corporation Nonqualified Deferred Compensation
Plan Effective January 1, 2009 and dated December 22,
2008, amending and restating the Seaboard Corporation
Nonqualified Deferred Compensation Plan dated
December 29, 2005.
10.13* Amendment to Employment Agreement between Seaboard
Corporation and Edward A. Gonzalez dated August 8, 2006.
Incorporated herein by reference to Exhibit 10.1 of
Seaboard's Form 10-Q for the quarter ended July 1, 2006.
10.14* Employment Agreement between Seaboard Overseas
Trading Group and David M. Dannov dated July 1, 2006.
Incorporated herein by reference to Exhibit 10.17 of
Seaboard's Form 10-K for fiscal year ended December 31,
2006.
10.15* Second Amendment to Employment Agreement between
Seaboard Corporation and Edward A. Gonzalez dated January
17, 2007. Incorporated herein by reference to Exhibit
10.18 of Seaboard's Form 10-K for fiscal year ended
December 31, 2006.
10.16* First Amendment to Employment Agreement between
Seaboard Corporation and Steven J. Bresky dated December
15, 2008.
10.17* First Amendment to Employment Agreement between
Seaboard Corporation and Robert L. Steer dated December
15, 2008.
10.18* First Amendment to Employment Agreement between
Seaboard Foods LLC, formerly known as Seaboard Farms Inc.,
and Rodney K. Brenneman dated December 15, 2008.
10.19* Third Amendment to Employment Agreement between
Seaboard Marine Ltd. and Edward A. Gonzalez dated December
15, 2008.
10.20* First Amendment to Employment Agreement between
Seaboard Overseas Trading Group and David M. Dannov dated
December 15, 2008.
10.21 Asset Purchase Agreement by and among Transcontinental
Capital Corporation (Bermuda) Ltd. (as Seller), Seaboard
Corporation (as Seller-Parent) and Pueblo Viejo Dominicana
Corporation (as Buyer), dated as of September 23, 2008.
10.22 Amendment to Asset Purchase Agreement amount
Transcontinental Capital Corporation (Bermuda) Ltd.,
Seaboard Corporation and Pueblo Viejo dated as of March
2, 2009.
20
13 Sections of Annual Report to security holders specifically
incorporated herein by reference herein.
21 List of subsidiaries.
31.1 Certification of the Chief Executive Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
* Management contract or compensatory plan or arrangement.
(b) Exhibits.
See exhibits identified above under Item 15(a)3.
(c) Financial Statement Schedules.
See financial statement schedules identified above under Item
15(a)2.
21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SEABOARD CORPORATION
By /s/Steven J. Bresky By /s/Robert L. Steer
Steven J. Bresky, President and Chief Robert L. Steer,
Executive Officer Senior Vice President,
(principal executive officer) Chief Financial Officer
(principal financial officer)
Date: March 2, 2009 Date: March 2, 2009
By /s/John A. Virgo
John A. Virgo, Vice President,
Corporate Controller and Chief
Accounting Officer (principal
accounting officer)
Date: March 2, 2009
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/Steven J. Bresky By /s/Kevin M. Kennedy
Steven J. Bresky, Director and Kevin M. Kennedy, Director
Chairman of the Board
Date: March 2, 2009 Date: March 2, 2009
By /s/David A. Adamsen By /s/Joseph E. Rodrigues
David A. Adamsen, Director Joseph E. Rodrigues, Director
Date: March 2, 2009 Date: March 2, 2009
By /s/Douglas W. Baena
Douglas W. Baena, Director
Date: March 2, 2009
22
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
Stockholders'
Annual Report Page
Report of Independent Registered Public Accounting Firm 28
Consolidated Statement of Earnings for the years
ended December 31, 2008, December 31, 2007 and
December 31, 2006 30
Consolidated Balance Sheets as of December 31, 2008
and December 31, 2007 31
Consolidated Statement of Cash Flows for the years
ended December 31, 2008, December 31, 2007 and
December 31, 2006 32
Consolidated Statement of Changes in Equity for the
years ended December 31, 2008, December 31, 2007 and
December 31, 2006 33
Notes to Consolidated Financial Statements 34
The foregoing is incorporated herein 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) Seaboard'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 and (b) Seaboard'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 Seaboard 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."
II - Valuation and Qualifying Accounts for the years ended
December 31, 2008, 2007 and 2006 F-3
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-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Seaboard Corporation:
Under date of March 2, 2009, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries (the
Company) as of December 31, 2008 and 2007, 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, 2008, as contained in the December 31, 2008 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, 2008.
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.
Our report dated March 2, 2009 contains an explanatory
paragraph that states the Company adopted Statement of Financial
Accounting Standards No. 158, Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans, in 2006.
KPMG LLP
Kansas City, Missouri
March 2, 2009
F-2
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Provision Net deductions Balance at
beginning of year (1) (2) end of year
Year ended December 31, 2008:
Allowance for doubtful accounts $ 8,060 776 (1,533) $ 7,303
Year ended December 31, 2007:
Allowance for doubtful accounts $14,638 1,401 (7,979) $ 8,060
Year ended December 31, 2006:
Allowance for doubtful accounts $16,155 2,479 (3,996) $14,638
(1) The allowance for doubtful accounts provision is charged to
selling, general and administrative expenses.
(2) Includes write-offs net of recoveries and currency
translation adjustments.
F-3