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, 20152017
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[ ]☐ 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 nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)
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| (I.R.S. Employer Identification No.) |
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9000 West 67th Street, Merriam, Kansas 66202
(Address of principal executive offices)Principal Executive Offices) (Zip Code)
(913) 676-8800
(Registrant’s telephone number, including area code)code (913) 676-8800
SECURITIES REGISTERED PURSUANT TO SECTIONSecurities registered pursuant to Section 12(b) OF THE ACT:of the Act:
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| Title of each class Common Stock $1.00 Par Value | Name of each exchange on which registered NYSE |
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SECURITIES REGISTERED PURSUANT TO SECTIONSecurities registered pursuant to Section 12(g) OF THE ACT:
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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ]☒ No [ ]☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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-K10‑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, or an emerging growth company. See the definitions of “larger“large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | Accelerated filer |
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Non-accelerated filer | Smaller reporting company |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 262,616260,841 shares of Seaboard common stock held by nonaffiliates was approximately $925,986,642,$1,042,059,795, based on the closing price of $3,526.01$3,995.00 per share on July 2, 2015,1, 2017, the end of Seaboard’s most recently completed second fiscal quarter. As of January 29, 2016,31, 2018, the number of shares of common stock outstanding was 1,170,550.
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 CommissionSEC pursuant to Rule 14a-3(b) – Parts I and II; and (2) Seaboard Corporation’s definitive proxy statement, which will be filed no later than 120 days after December 31, 2015,2017, pursuant to Regulation 14A for the 20162018 annual meeting of stockholders – Part III.
FORM 10-K
SEABOARD CORPORATION
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:
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| 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, turkey and other products and services; |
(iv) | the recorded tax effects under certain circumstances and changes in tax laws; |
(v) | the volume of business and working capital requirements associated with the competitive trading environment for the Commodity Trading and Milling division; |
(vi) | the charter hire rates and fuel prices for vessels; |
(vii) | the fuel costs and related spot market prices in the Dominican Republic; |
(viii) | the effect of the fluctuation in foreign currency exchange rates; |
(ix) | the profitability or sales volume of any of Seaboard’s divisions; |
(x) | the anticipated costs and completion timetables for Seaboard’s scheduled capital improvements, acquisitions and dispositions; |
(xi) | the productive capacity of facilities that are planned or under construction, and the timing of the commencement of operations at such facilities; or |
(xii) |
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| 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 Securities and Exchange Commission (the “Commission”“SEC”), including without limitation, the information under the items “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.
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PART I
Item 1. Business
(a) | General Development of Business |
Originally founded in 1918, today Seaboard Corporation, a Delaware corporation organized in 1946, and its subsidiaries (“Seaboard”), is are a diverse global agribusiness and transportation company. In the United States (“U.S.”), 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. Seaboard also has an interest inequity method investment that has turkey operations in the U.S. 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 and SFC Preferred, LLC, Delaware limited liability companies, collectively own approximately 76% 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 equity interests of Seaboard Flour LLC and SFC Preferred, LLC.
(b) | Financial Information about Segments |
The financial information relating to reportable segments required by this item is incorporated herein by reference to Note 1213 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s annual report to stockholders furnished to the CommissionSEC pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this annual report on Form 10-K (“Annual Report to Stockholders”).
(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, engages in the business of hog production and pork processing in the U.S. Through these operations, SeaboardSeaboard’s Pork division produces and sells fresh and frozen pork products to further processors, foodservice operators, grocery stores, distributors and retail outlets throughout the U.S. Internationally, Seaboard sells, and, to these same types of customers in Japan, Mexico and numerous other foreign markets.a lesser extent, internationally. 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 sells some of its fresh products under the brand name Prairie Fresh®. Seaboard’sThe Pork division’s hog processing plant is located in Guymon, Oklahoma and generally operates at capacity. SeaboardThe Pork division also has a ham-boning and processing plant in Mexico. Seaboard earns fees, based primarily on the number of head processed, to market substantially all of the products produced by Triumph Foods, LLC (“Triumph”) at its pork processing plant located in St. Joseph, Missouri.
Seaboard’sThe Pork division’s hog production operations consist of the breeding and raising of over fourfive million hogs annually primarily at facilities owned by Seaboard or at facilities owned and operated by third parties with whom Seaboard has grower contracts. The hog production operations are located in the Central U.S. As a part of the hog production operations, Seaboardthe Pork division produces specially formulated feed for the hogs at fiveseven owned feed mills. The remaining hogs processed are purchased from third-party hog producers, primarily pursuant to purchase contracts.
SeaboardThe Pork division produces biodiesel at a facilityfacilities in Guymon, Oklahoma.Oklahoma and Missouri. The biodiesel is produced from pork fat from Seaboard’s Guymonsupplied by the division’s Oklahoma pork processing plant and from other animal fat or vegetable oil supplied by non-Seaboard facilities. The biodiesel is sold to third parties. fuel blenders for distribution and in the retail markets.
The facility can also produce biodiesel from vegetable oil.Pork division earns fees to market substantially all of the products produced by Triumph Foods, LLC (“Triumph”) at its pork processing plant located in Missouri, and by Seaboard is ableTriumph Foods, LLC (“STF”) at its pork processing plant located in Iowa. As part of the operations, Seaboard and Triumph sell a portion of their hogs to reduce or stop production when it is not economically feasible to produce based on input costs orbe processed at the price of biodiesel.STF plant. Seaboard has a 50% noncontrolling interest in STF.
Seaboard’sThe Pork Divisiondivision has a 50% noncontrolling interest in Daily’s Premium Meats, LLC (“Daily’s”). Daily’s produces and markets raw and pre-cooked bacon ham and sausageham under the Daily’s® brand name primarily for the food service industry and, to a lesser extent, retail markets. Daily’s has three further processing plants located in Utah, Montana and Missouri. Seaboard, STF and Triumph each supply raw product to Daily’s.
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the food service industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located in Salt Lake City, Utah and Missoula, Montana that generally operate at capacity. In the second quarter of 2015, Daily’s began construction on a third further processing plant located in St. Joseph, Missouri. Operations are expected to begin in mid-2016. Seaboard and Triumph each supply raw product to Daily’s.
On May 13, 2015, the Pork Division and Triumph agreed to jointly develop and operate a pork processing facility in Sioux City, Iowa. The facility is anticipated to begin operations in mid-2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Division and a newly formed limited liability partnership that will be consolidated with Seaboard acquired hog inventory and related assets that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant.
Commodity Trading and Milling Division – Seaboard’s Commodity Trading and Milling Division(“CT&M”) division is an integrated agricultural commodity trading, processing and logistics company. This division markets wheat, corn, soybean meal and other commodities in bulk to third parties and affiliated companies. ThisThe CT&M division is principally managed under the name of Seaboard Overseas and Trading Group and conducts business primarily through its subsidiaries, Seaboard Overseas Limited with offices in Colombia, Ecuador, Isle of Man, Kenya, Singapore, Korea and South Africa, Seaboard Overseas Trading and Shipping (PTY) Ltd. located in South Africa, PS International, LLC located in Chapel Hill, North Carolina and Canada, and its non-consolidated affiliates, ContiLatin del Peru S.A. located in Lima, Peru, Interra International, LLC located in Atlanta, Georgia, Cereoil Uruguay S.A. located in Montevideo, Uruguay, and Plum Grove Pty Ltd located in Fremantle, Australia.Australia, and Zalar Holding S.A. located in Morocco. This division also operates a grain and specialty crop storage and throughput facility through Fill-More Seeds, Inc. located in Fillmore, Canada, and an ocean transportation brokerage operation through Seaboard Bulk Services, Ltd. located in Athens, Greece. Seaboard integrates the service of delivering commodities to its customers through the use of chartered and owned bulk vessels.
On January 5, 2018, the CT&M division acquired five entities operating as Groupe Mimran (“Mimran”). Mimran operates three flour mills and an associated trading business located in Senegal, Ivory Coast and Monaco. Excluding the acquisition of Mimran, the CT&M division sources, transports and markets approximately ten million tons of agricultural commodities on an annual basis. All of the commodities marketed by this division are purchased from growing regions worldwide, with primary destinations being Africa, South America, the Caribbean and the Caribbean. This division sources, transports and markets approximately nine million tons of agricultural commodities on an annual basis. Seaboard integrates the service of delivering commodities to its customers through the use of short-term chartered bulk vessels and its three owned bulk carriers.Asia.
ThisThe CT&M division also operates grain and feed milling and related businesses with 3538 locations in 2120 countries, including wheat flour mills in 16 countries, which are primarily supplied by the trading locations discussed above. The grain processing businesses are operated through 56 consolidated and 1918 non-consolidated affiliates in Africa, South America, the Caribbean and Asia.Europe. These are primarily flour, feed and maize milling and oiloilseed crush businesses, which produce approximately fourfive million metric tons of finished products per year. In addition, this division has a noncontrolling interest in a poultry businessbusinesses in Africa and a bakery business in the Democratic Republic of Congo. Most of the products produced by these operations are sold in the countries in which the products are produced or into adjacent countries.
Marine Division – Seaboard, through its subsidiary, Seaboard Marine Ltd., and various foreign affiliated companies and third partythird-party agents, provides cargo shipping services to 2628 countries between the U.S., the Caribbean Basin, and Central and South America. SeaboardSeaboard’s Marine division uses a network of offices and agents throughout the U.S., Canada, LatinCentral and South America and the Caribbean Basin to book cargo to and from the U.S. and between the countries it serves. Through agreements with a network of connecting carriers, Seaboardthis division 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’sThe Marine division’s primary marine operation isoperations are located in Miami, Florida and includes a terminal located at PortMiami and off-dock warehouses for cargo consolidation and temporary storage. SeaboardThis division also operates a cargo terminal facility at the Port of Houston that includes an on-dock warehouse space for temporary storage of bagged grains, resins and other cargoes. SeaboardThis division also makes scheduled vessel calls in Brooklyn, New York, New Orleans, Louisiana, Philadelphia, Pennsylvania, and 4549 foreign ports. At December 31, 2015, Seaboard’sThe Marine division’s fleet consistedconsists of approximately 2220 chartered and 3 owned vessels and dry, refrigerated and specialized containers and other related equipment.
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Sugar Division – Seaboard, through its subsidiaries, Ingenio y Refineria San Martin del Tabacal S.R.L. and Alconoa S.R.L., as well as other Argentine non-consolidated affiliates, grows sugarcane, which it uses to produce refined sugar and alcohol in Argentina. This division also purchases sugar and alcohol in bulk from third parties mostly within Argentina for subsequent resale. The sugar products are mostly sold in Argentina, primarily to retailers, soft drink manufacturers and food manufacturers, with some exports to the U.S. and other South American countries. SeaboardSeaboard’s Sugar division grows a large portion of the sugarcane on the nearly 70,000 acres of land it owns in northern Argentina. The cane is processed at an owned mill, one of the largest in Argentina, with a current processing capacity of approximately 250,000 metric tons of sugar and approximately 1527 million gallons of alcohol per year. Also, this division owns a 51 megawatt cogeneration power plant that is fueled by using sugarcane by-products, natural gas and other biomass when available.
Power Division – Seaboard, through its subsidiary, Transcontinental Capital Corp. (Bermuda) Ltd., is an unregulated independent power producer generating electricity for the local power grid in the Dominican
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Republic. SeaboardSeaboard’s Power division operates one owned floating power generating facilitybarge with capacity to generate approximately 108 megawatts of electricity. The facilityelectricity that is secured on the Ozama River in Santo Domingo, Dominican Republic. The facility consists of a system of diesel engines mounted onto barge-type vessels and is capable of using natural gas or heavy fuel oil. This operation is exempt from U.S. regulations under the Public Utility Holding Company Act of 1938, as amended. SeaboardSeaboard’s Power division is not directly involved in the transmission or distribution of electricity. Seaboardelectricity and primarily sells on the spot market accessed primarily byto wholly government-owned distribution companies or partially government-owned generation companies. This division also has a 29.9% noncontrolling interest in a 300 megawatt electricity generating facility among a few other equity method investments in energy-related businesses in the Dominican Republic.
Turkey Segment – Seaboard has a 50% noncontrolling voting interest in Butterball, LLC (“Butterball”). Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other products. Butterball has four processing plants, threetwo further processing plants and numerous live production and feed milling operations located in North Carolina, Arkansas, Missouri Illinois and Kansas. Butterball produces over one billion pounds of turkey each year. Butterball is a national supplier to retail and foodservice outlets, and also exports products to Mexico and numerous other foreign markets.
Other Businesses – Seaboard processes jalapeño peppers at its plant in Honduras, which are primarily shipped to and sold in the U.S.
The information required by this item 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 set forth in Note 1213 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s Annual Report to Stockholders, which information is incorporated herein by reference.
(ii) Status of Product or Segment
On May 13, 2015,In August 2017, the Pork Division agreed to contribute up to $207 million through 2019 to jointly develop and operate a pork processing facility in Sioux City, Iowa with Triumph. The facility is anticipated to begin operations in mid-2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Division and a newly formed limited liability partnership that will be consolidated with Seaboard paid $148 million to acquiredivision acquired hog inventory and related assets in Iowa and Colorado that is expectedfrom an existing farm operation for an investment of $40 million. This acquisition provided additional sows to further increase Seaboard’s hog production capacity to meet the majority of suchfulfill its hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventorySTF plant, which began operations in September 2017.
During 2017, the CT&M division acquired a pulse and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.
In the second quarter of 2015, Daily’s began construction on a third further processing plant locatedgrain elevator in St. Joseph, Missouri. Operations are expected to begin in mid-2016. To date, construction funding has been provided by current operations.
The Commodity Trading and Milling Division took delivery of two dry bulk vessels builtCanada for a total cost of approximately $45$14 million during 2015. An additional vessel was delivered in January 2016 and the final vessel is expected to be delivered during the first half of 2016 for a total cost of approximately $45 million. Seaboard entered into sales-leaseback transactions for the vessels delivered and anticipates selling and leasing back the
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remaining vessel when completed, which would result in Seaboard receiving back the amounts spent to build the vessels.
Also the Commodity Trading and Milling Division made various investments in affiliates. During the second quarter of 2015, the Commodity Trading and Milling Division invested $10 million inthat complements an oilseed crushingexisting CT&M business in the Republic of Turkey for a 25% noncontrolling interest, $8 million in a flour millingCanada, and pasta business in Botswana for a 49% noncontrolling interest and $10 million in a commodity trading and flour milling business in Uruguay for a 45% noncontrolling interest, all accounted for using the equity method. In addition, this division invested $18an additional $7 million in a grain trading and poultry business in Morocco for a 12% noncontrolling interest, which is accounted for using the cost method. During the fourth quarter of 2015, Seaboard contributed $13 million in cash, a small amount of other assets, certain employees and rights to sell certain agricultural commodities that Seaboard had previously sold through its subsidiary, PS International, LLC, for a 40% noncontrolling interest in a commodity trading business in Atlanta, Georgia.
In April 2015, the Power Division invested $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic, increasingMorocco. The additional investment increased Seaboard’s ownership interest in this Moroccan business to 29.9%19.4% and, as a result, Seaboard changed its accounting method from the cost method to equity method effective on the date of the additional investment. On January 5, 2018, the CT&M division completed the acquisition of Mimran, including three flour mills in Senegal and Ivory Coast having a combined capacity of approximately 2,750 metric tons a day, and a trading business located in Monaco that is expected to increase Seaboard’s annual grain trading volume by approximately 900,000 tons. The purchase price was $375 million, plus an earn-out between zero and $48 million, using the exchange rate in effect at closing.
Butterball closed its Montgomery, Illinois, further processing plant in 2017, resulting in charges primarily related to impaired fixed assets and accrued severance. Seaboard’s proportionate share of these charges, recognized in income (loss) from affiliates, was $18 million for the year ended December 31, 2017.
(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. However,suppliers except the following: the Power segment has one primary supplier of natural gas, but the barge can run on other types of fuel; and the Turkey Segmentsegment purchases a significant portion of its feed and grain used in the manufacturing of feed for its turkeys in North Carolina from Seaboard’s 50% partner in Butterball.
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(iv) Patents, Trademarks, Licenses, Franchises and Concessions
Seaboard uses the registered trademark of Seaboard®Seaboard™.
The Pork Divisiondivision uses registered trademarks relating to its products, including Seaboard Farms®, Prairie Fresh®, A Taste Like No Other®, St. Joe Pork®, High Plains Bioenergy®, Prairie Fresh Prime®, Seaboard Foods®, Cook inCook-in Bag®, 67th Street™Street® and The Thrill Without The Grill®. The Pork Division’sDaily’s, a non-consolidated affiliate Daily’s Premium Meats, LLC,of the Pork division, uses the trademarks Daily’s®, Daily’s Premium Meats Since 1893®, Buffet Brand® and Del Pueblo®. Seaboard considers the use of these trademarks important to the marketing and promotion of its pork products.
The Marine Divisiondivision uses the trade nameregistered trademarks of Seaboard Marine® and Seaboard Solutions® which are both registered trademarks.. Seaboard believes there is significant recognition of these trademarks in the industry and by many of its customers.
Part of theThe Sugar division markets certain sugar sales within the Sugar Division are made under the Chango® brand in Argentina, where this division operates. Certain local sales prices are affected by government price control, primarily for one kilogram size bags, and sugar import duties imposed by the Argentine government, impacting local volume sold, as well as imported and exported volumes to and from international markets.
brand.
The Turkey Segmentsegment uses registered trademarks, relatingincluding Butterball®, Carolina Turkey® and Farm to its products, includingFamily Butterball® and Carolina Turkeys®. Seaboard considers the use of these trademarks important to marketing and promotion of its turkey products.
Patents, trademarks, franchises, licenses and concessions are not material to any of Seaboard’s other divisions.
(v) Seasonal Business
The Turkey business is seasonal only on the whole bird side with the Thanksgiving and Christmas holidays driving the majority of those sales. 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.
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(vii) Depending on a Single Customer or Few Customers
Seaboard does not have sales to any one customer equal to 10% or more of consolidated revenues. Historically, the Commodity Trading and Milling Division derives a significant portionThe CT&M division derived 12% of its operating incomesales from sales to a non-consolidated affiliate.affiliate for the year ended December 31, 2017. The Sugar Division derives approximatelydivision derived 39%, 26% and 20% of its revenuessales from one customer.customer for the years ended December 31, 2017, 2016 and 2015, respectively, and another customer represented 10% of its sales for the year ended December 31, 2017. The Power Divisiondivision sells power in the Dominican Republic on the spot market accessed primarily by three wholly government-owned distribution companies. The Turkey Segment had one customer that represented 13% and 11% of its sales for the years ended December 31, 2017 and 2016, respectively, and another customer that represented 11% of its sales for the year ended December 31, 2017. No other division has sales to a few customers which,that, 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 Divisiondivision comes from a variety of regional, national international and regionalinternational producers and processors and is based primarily on product quality, customer service and price. According to Successful Farming and Informa Economics, trade publications, Seaboard was ranked number three in pork production (based on sows in production) and number four in processing (based on daily processing capacity, including Triumph’s and STF’s capacity) in the U.S. (including Triumph volume) in 2015.2017.
Seaboard’s commodity trading business to third parties faces competition from numerous traders around the world in a very competitive environment with low margin percentages on most trades. Most of the grain processing and related businesses face competition from either imported products or other local producers in the same industries.
Seaboard’s ocean liner service for cargoesMarine division faces competition based on price, reliable sailing frequencies and customer service. Seaboard believes it is among the top five ranking ocean liner services for cargoes in the Caribbean Basin and Central America based on cargo volume.
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Seaboard’s sugar businessSugar division 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 Argentine government price control and protection policies. High sugarcane production volumes in Argentina, in conjunction with low international sugar and alcohol prices, have increased competition in the domestic market.
Seaboard’s Power Divisiondivision is located in the Dominican Republic. Power generated by this division is sold on the spot market or to contract customers at prices based on market conditions and cost-based rates.
Competition for the Turkey Segmentsegment comes from a variety of national and regional producers and processors and is based primarily on product quality, customer service and price. Butterball ranks as one of the nation’s top three turkey producers (based on live production).
(xi) Research and Development Activities
SeaboardSeaboard’s Pork division and its Turkey Segmentsegment each conduct research and development activities focused on various aspects of their respective vertically integrated pork and turkey processing systems, 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
SeaboardSeaboard’s Pork division and its Turkey Segmentsegment are subject to numerous Federal, Statefederal, state and local provisions relating to the environment whichthat require the expenditure of funds in the ordinary course of business. SeaboardSeaboard’s Pork division and its Turkey
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Segmentsegment do not anticipate making expenditures for these purposes that, 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
AsAt the time of December 31, 2015,this report, Seaboard, excluding the recent Mimran acquisition and non-consolidated affiliates, had 10,772approximately 11,800 employees, of whom 5,541approximately 6,400 were employed in the U.S. Approximately 2,050 employees in Seaboard’s Pork Division were covered by collective bargaining agreements as of December 31, 2015. 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 this item is incorporated herein by reference to Note 1213 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s Annual Report to Stockholders.
Seaboard considers its relations with the governments of the countries in which its foreign subsidiaries and affiliates are located to be satisfactory, but foreign operations in lesser-developed countries are subject to risks of doing business such as potential civil unrestsunrest and government instabilities,instability, 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 its investment in an affiliated flour mill in the Democratic Republic of Congo to the extent available and deemed appropriate against certain of these risks with the Overseas Private Investment Corporation, an agency of the U.S. Government. At the date of this report, Seaboard is not aware of any situations whichthat could have a material effect on Seaboard’s business.
(e) | Available Information |
Seaboard electronically files with the CommissionSEC 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 CommissionSEC 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 CommissionSEC 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.SEC.
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.
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FORM 10-K
SEABOARD CORPORATION
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
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SEABOARD CORPORATION
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 Registrant and Affiliates |
Steven J. Bresky |
| President and Chief Executive Officer |
Robert L. Steer |
| Executive Vice President, Chief Financial Officer |
David M. Becker |
| Senior Vice President, General Counsel and Secretary |
|
| |
James L. Gutsch |
| Senior Vice President, Engineering |
Ralph L. Moss |
| Senior Vice President, Governmental Affairs |
David S. Oswalt (50) | Senior Vice President, Finance and Treasurer | |
David H. Rankin |
| Senior Vice President, Taxation and Business Development |
Michael D. Trollinger |
| Vice President, Corporate Controller and Chief Accounting Officer |
Ty A. Tywater |
| Vice President, Audit Services |
|
| |
David M. Dannov |
| President, Seaboard Overseas and Trading Group |
Edward A. Gonzalez |
| President, Seaboard Marine Ltd. |
Terry J. Holton (58)
President, Seaboard Foods LLC
Mr. Bresky has served as President and Chief Executive Officer of Seaboard since July 2006.
Mr. Steer has served as Executive Vice President, Chief Financial Officer of Seaboard since April 2011, and previously as Senior Vice President, Chief Financial Officer since December 2006.
2011.
Mr. Becker has served as Senior Vice President, General Counsel and Secretary of Seaboard since April 2011, and previously as Vice President, General Counsel and Secretary since December 2003.
2011.
Mr. Gutsch has served as Senior Vice President, Engineering of Seaboard since April 2011, and previously as Vice President, Engineering since December 1998.
2011.
Mr. Moss has served as Senior Vice President, Governmental Affairs of Seaboard since April 2011, and previously as Vice President, Governmental Affairs since December 2003.
2011.
Mr. Oswalt has served as Senior Vice President, Finance and Treasurer since April 2013, and previously as Senior Vice President, Taxation and Business Development of Seaboard from 2011 to 2013 and as Vice President, Taxation and Business Development from 2003 to 2011.
2013.
Mr. Rankin has served as Senior Vice President, Taxation and Business Development since April 2015 and previously as Vice President, Taxation and Business Development since April 2013 and Vice President of Seaboard from 2010 to 2013.
Mr. Trollinger has served as Vice President, Corporate Controller and Chief Accounting Office of Seaboard since March 2015. Prior to that, he served as Vice President, Finance & Operational Reporting for Jack Cooper Enterprises, Inc. from 2011 to 2015.
Mr. Tywater has served as Vice President, Audit Services of Seaboard since November 2008.
Mr. Holton has served as President of Seaboard Foods LLC since December 2011 and previously as Senior Vice President, Sales and Marketing since September 1997.
Mr. Dannov has served as President of Seaboard Overseas and Trading Group since August 2006.
Mr. Gonzalez has served as President of Seaboard Marine Ltd. since January 2005.
Mr. Holton has served as President of Seaboard Foods LLC since December 2011.
7
FORM 10-K
SEABOARD CORPORATION
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 those factors described below.
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(a) | General |
(1) | Seaboard’s Operations |
· | food spoilage or |
· | evolving consumer preferences and nutritional and health-related concerns; |
· | international, foreign, federal, state |
· | consumer product liability claims; |
· | product tampering; and |
· | public perception of food production practices, including handling of production and live animals. |
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) | International Operations Subject Seaboard to Risks That Could 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, |
· | 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 and execution risk; |
· | tariffs, other trade protection measures and import or export licensing requirements; |
· | potentially negative consequences from changes in tax laws; |
· |
|
· | negative perception within a foreign country of a U.S. company doing business in that foreign country; |
· | compliance with U.S. laws and regulations for conducting international business such as Foreign Account Tax Compliance Act, Foreign Corrupt Practices Act and Office of Foreign Assets Control regulations; |
· | expropriation, civil unrest and government |
· | inconsistent application or enforcement of local laws, including tax laws. |
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 |
· | impair the financial condition of some of |
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SEABOARD CORPORATION
· | negatively impact global demand for protein and grain-based products, which could result in a reduction of |
· | decrease the value of |
· | impair the financial viability of |
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SEABOARD CORPORATION
(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: |
· | bad weather; |
· | mechanical failures; |
· | grounding, fire, explosions and collisions; |
· | human error; and |
· | war, piracy and terrorism. |
All of these hazards cancould 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,incident, the resulting media coveragenegative public perception could have a material adverse effect on Seaboard’s business, financial condition and results of operations. Also, many aspects of the marine industry are subject to extensive governmental regulations. 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, the suspension or termination of Seaboard’s operations or detention of its vessels.
(5) | Seaboard’s Common Stock |
(6) | Seaboard |
(7) | Seaboard Is Increasingly Dependent on Information Technology Systems to Manage and Support a Variety of Business Processes and Activities. Any significant breakdown, invasion, destruction, or interruption of these systems could negatively impact operations. In addition, there is a risk of business interruption and reputational damage from leakage of confidential information. Also, the disclosure of sensitive non-public company information through external media channels could lead to information loss. Any business interruptions or damage to Seaboard’s reputation could negatively impact its financial condition, results of operations, and the market price of its common stock. |
(b) | Pork Division |
(1) | Fluctuations in Commodity Pork Prices Could Adversely Affect |
(2) | Increases in Costs of |
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SEABOARD CORPORATION
Similarly, accounting for approximately |
(3) | Seaboard May |
(4) | The Loss of |
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SEABOARD CORPORATION
damage to this |
(5) | Environmental Regulation and Related Litigation Could Have a Material Adverse Effect on |
(6) | Health Risk to Livestock Could Adversely Affect Production, the Supply of Raw Materials and |
(7) | If |
(8) | International Trade Barriers Could Adversely Affect |
(9) | The Operating Profit of the Biodiesel Production |
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SEABOARD CORPORATION
mandates to use biofuels could adversely affect |
(10) | Difficulties Could Be Experienced in the |
(c) | Commodity Trading |
(1) | This Division |
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SEABOARD CORPORATION
expropriation, confiscation, war, insurrection, civil strife and revolution, corruption, 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 |
(2) | Fluctuations in Commodity |
(3) | This Division Uses a Material Amount of Derivative Products to Manage Certain Market Risks. The commodity trading portion of |
(4) | This Division |
(5) | This Division Faces Increasing Competition. This division is experiencing increasing competition in certain foreign markets by |
(d) | Marine Division |
(1) | The Demand for |
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SEABOARD CORPORATION
(2) | Chartered Ships Are Subject to Fluctuating Rates. Time-charter expenses are one of |
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(3) | Increased Fuel Prices May Adversely Affect |
(4) | Hurricanes May Disrupt Operations |
(5) | This Division |
(6) |
|
(e) | Sugar Division |
(1) | The Success of |
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SEABOARD CORPORATION
(2) | This Division |
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SEABOARD CORPORATION
(3) | The Loss of |
(4) | Labor |
(5) | The Operating Profit of the Alcohol Production Facility Could Be Adversely Impacted by Government Regulations. The profitability of |
(6) | The Operating Profit of the Cogeneration Power Plant Could Be Adversely Impacted by Contract for the Sale of Energy. |
(f) | Power Division |
(1) | This Division is Subject to Risks of Doing Business in the Dominican Republic. In addition to significant currency fluctuations and the other risks of overseas operations mentioned in clause (a)(2) above, this division |
(2) | Fluctuations in Fuel Costs Could Adversely Affect |
(3) | Supply of Natural Gas is Limited in the Dominican Republic. Supply of natural gas in the Dominican Republic is limited to one primary supplier. Although the barge can run on other types of fuel, supply disruptions of natural gas could have a negative impact on this division’s operating income. |
(4) | The Loss of |
(g) | Turkey Segment |
(1) | Fluctuations in Commodity Turkey Prices Could Adversely Affect the Results of Operations. Sales prices for turkey products are directly affected by both domestic and worldwide supply and demand for turkey products and |
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FORM 10-K
SEABOARD CORPORATION
other proteins, which are determined by constantly changing market forces of supply and demand as well as other factors over which Butterball has little or no control. Butterball’s results of operations and the value of Seaboard’s investment in Butterball could be adversely affected by fluctuations in the turkey commodity prices. |
(2) | Increases in Costs of |
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SEABOARD CORPORATION
materially affected by commodity price fluctuations for corn, soybean meal and other commodity grain inputs. Butterball’s results may be negatively affected by increased costs of the feed components. |
(3) | Adverse Operating Results Could Result in Need for Additional Investment. Butterball has third-party bank loan facilities separate from Seaboard |
(4) | Decreased Perception of Value in the |
(5) | The Loss of Butterball’s Primary Further Processing Facility Could Adversely Affect Butterball’s |
(6) | If Butterball’s Turkey Products Become Contaminated, the Company |
(7) | Health Risk to Poultry Could Adversely Affect Production, the Supply of Raw Materials and Butterball’s Business. Butterball is subject to risks relating to its ability to maintain animal health and control diseases, such as avian influenza. The general health of the turkeys and reproductive performance |
(8) | Butterball May |
14
FORM 10-K
SEABOARD CORPORATION
Item 1B. Unresolved Staff Comments
None.
None
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FORM 10-K
SEABOARD CORPORATION
Item 2. Properties
As of December 31, 2015, Seaboard’s principal properties by Divisiondivision are described below:
(1) Pork - Seaboard’s Pork Divisiondivision owns a hog processing plant in Guymon, Oklahoma, which opened in 1995.Oklahoma. It has a daily double shiftdouble-shift capacity to process approximately 20,500 hogs and generally operates at capacity with additional weekend shifts depending on market conditions. Seaboard’s hog production operations consist of the breeding and raising of approximately fourover five million hogs annually at facilities it primarily owns or at facilities owned and operated by third parties with whom it has grower contracts. This businessdivision owns and operates fiveseven centrally located feed mills, which have a combined capacity to produce approximately twothree million tons of formulated feed annually. These feed mills are used primarily to support Seaboard’s existing hog production, and have the capability of supporting additional hog production in the future. These facilities are located in Iowa, Oklahoma, Texas, Kansas and Colorado. The Pork Divisiondivision also operates a ham-boning and processing plant in Mexico that has the capacity to process 96 million pounds of ham annually.
The Pork Divisiondivision owns a biodiesel plantplants in Guymon, Oklahoma, and St. Joseph, Missouri, with the capacity to produce 3646 million gallons and 28 million gallons, respectively, 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.annually.
Seaboard’s Pork Division’sDaily’s, a non-consolidated affiliate, Daily’s, owns twothree bacon further processing plants located in Salt Lake City, Utah, Missoula, Montana, and St. Joseph, Missouri. The Salt Lake City and Missoula Montana. These plants are utilized near capacity throughout the year, whichwhile the St. Joseph plant is a fairly new production facility. The three plants have a combined daily smoking capacity of approximately 350,000600,000 pounds of raw pork bellies. In the second quarter of 2015, Daily’s began construction on
STF, a third further processing plant located in St. Joseph, Missouri, which is expected to have daily capacity of 230,000 pounds of raw pork bellies. Operations are anticipated to begin in mid-2016.
Also, the Pork Division and Triumph formed another joint venture during 2015 to develop and operatenon-consolidated affiliate, owns a pork processing facilityplant in Sioux City, Iowa, which is anticipated to beginthat began operations in mid-2017.September 2017. The plant is expected to process about three million market hogs annually when operating a single shift.
(2) Commodity Trading and Milling - Seaboard’s Commodity Trading and Milling DivisionCT&M division owns, in whole or in part, grain-processing and related agribusiness operations in 1920 countries whichthat have the capacity to mill approximately 10,30010,400 metric tons of wheat and maize per day. In addition, Seaboard has feed mill capacity of approximately 175day, produce 7,800 metric tons of animal feed per hour to produce formula animal feed.day, and crush 2,500 metric tons of oilseeds per day. The grain-processing and related agribusiness operations located in Botswana, Brazil, Colombia, Democratic Republic of Congo, Ecuador, Gambia, Ghana, Guyana, Haiti, Jamaica, Kenya, Lesotho, Madagascar,Morocco, Mozambique, Nigeria, Peru, Republic of Congo, South Africa, Turkey, Uganda, Uruguay, and Zambia own their facilities; and in Kenya, Lesotho, Morocco, Mozambique, Nigeria, and Republic of Congo and Zambia, the land on which thecertain facilities are located is leased under long-term agreements. Certain foreign milling operations may operate at less than full capacity due to low demand, poor consumer purchasing power, excess milling capacity in their competitive environment or imported flour. In addition, thisThe CT&M division has an investmentinvestments through non-consolidated affiliates in poultry businesses operating in parts of EasternMorocco, Kenya, Tanzania and Southern Africa. This division also has an investment through a non-consolidated affiliate inZambia and a bakery business in the Democratic Republic of Congo. SeaboardSeaboard’s CT&M division owns three 18,900 metric ton deadweight dry bulk carriersvessels and charters between 2920 and 5250 bulk carriersvessels with deadweights ranging from 5,0007,000 to 76,00083,000 metric tons under short-term agreements. The Commodity Trading and Milling Division took delivery of twoAlso, the CT&M division charters four dry bulk vessels, built foreach with a total costdeadweight of 28,000 metric tons, which were originally purchased and then subsequently sold and leased-back. On January 5, 2018, the CT&M division completed the acquisition of Mimran, including three flour mills in Senegal and Ivory Coast having a combined capacity of approximately $45 million during 2015. An additional vessel was delivered in January 2016,2,750 metric tons a day, and the final vessela trading business located in Monaco that is expected to be delivered during the first half of 2016 for a total cost ofincrease Seaboard’s annual grain trading volume by approximately $45 million. Seaboard entered into sales-leaseback transactions for the vessels delivered and anticipates selling and leasing back the remaining vessel when completed, which would result in Seaboard receiving back the amounts spent to build the vessels.900,000 tons.
(3) Marine - Seaboard’s Marine Divisiondivision leases approximately 267,000 square feet of off-port warehouse space and 9592 acres of port terminal land and facilities in Miami, Florida, which are used in its containerized cargo operations. SeaboardSeaboard’s Marine division 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, 2015, Seaboard2017, the Marine division owned three ocean cargo vessels with deadweights ranging from 7,700 to 11,000 metric tons. In addition, Seaboardthis division chartered approximately 2220 vessels under contracts that typically range from approximately sixtwo months to three years with deadweights ranging from approximately 11,000 to 34,500 metric tons but has also entered into some longer-term charters up to eleven years. Seaboard’s Marine division owns or leases dry, refrigerated and specialized containers and other related equipment.
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SEABOARD CORPORATION
deadweights ranging from approximately 8,000 to 33,900 metric tons but has also entered into some longer-term charters up to ten years. Seaboard owns or leases dry, refrigerated and specialized containers and other related equipment.
(4) Sugar - Seaboard’s Argentine Sugar Divisiondivision owns nearly 70,000 acres of planted sugarcane and a sugar mill with a current capacity to process approximately 250,000 metric tons of sugar and an alcohol distillery with a current capacity of approximately 1527 million gallons of alcohol per year. This capacity is sufficient to process all of the cane harvested by this division and additional quantities purchased from third partythird-party farmers in the region. Depending on local market conditions, this business also purchases third-party sugar for resale. 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 and alcohol produced. The Sugar Divisiondivision also owns a 51 megawatt cogeneration power plant that supplies electricity to the Argentine power grid under a renewable energy contractscontract with an Argentine state owned company. The plant is powered by the burning of sugarcane by-products, natural gas and other biomass when available.
(5) Power - Seaboard’s Power Divisiondivision owns one floating electric power generating facility (108 megawatts). The facility consistsbarge with capacity to generate approximately 108 megawatts of a system of diesel engines mounted onto barge-type vessels locatedelectricity that is secured on the Ozama River in Santo Domingo, Dominican Republic. The owned facility is capable of using natural gas or heavy fuel oil. Seaboard operates as an independent power producer generating electricity for the local power grid. Seaboard is not directly involved in the transmission and distribution facilities that deliver the power to the end user.
(6) Turkey – Seaboard’s Turkey Segment has a total of four processing plants, threetwo further processing plants and numerous company and third-party live production facilities and feed milling operations, all of which are located in North Carolina, Arkansas, Missouri Illinois and Kansas. These plants produce over one billion pounds of turkey each year.
(7) Other - Seaboard owns a jalapeño pepper processing plant and warehouse in Honduras.
In addition to the information provided above, the information under the caption “Principal Locations” of Seaboard’s Annual Report to Stockholders is incorporated herein by reference.
Management believes that Seaboard’s present facilities are adequate and suitable for its current purposes.
Item 3. 3. Legal Proceedings
The information required by this item is incorporated herein by reference to Note 10 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s Annual Report to Stockholders.Stockholders and attached as Exhibit 13.
Item 4. 4. Mine Safety Disclosures
Not Applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
In December 2012,each of the four quarters of 2017, Seaboard declared and paid a dividendquarterly dividends of $12.00$1.50 per share on theof common stock. TheSeaboard’s Board of Directors intends that Seaboard will continue to pay quarterly dividends for the reasonably foreseeable future, with the amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an annual basis) represented a prepaymentany dividends being dependent upon such factors as Seaboard’s financial condition, results of the annual 2013, 2014, 2015operations and 2016 dividends ($3.00 per share per year). Therefore, Seaboard did not declare a dividend during the three years ended December 31, 2015,current and does not currently intend to declare a dividend for 2016.anticipated cash needs, including capital requirements. As discussed in Note 7 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s Annual Report to Stockholders and attached as Exhibit 13 (which discussion is incorporated herein by reference), Seaboard’s ability to declare and pay dividends is subject to limitations imposed by debt agreements referred to there.described therein. Seaboard did not declare a dividend during 2016 and 2015. In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock. The amount of the dividend represented a prepayment of the 2013, 2014, 2015 and 2016 dividends.
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SEABOARD CORPORATION
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.
Seaboard presently may repurchase up to $100 million market value of its common stock from time to time in open market or privately negotiated purchases under its share repurchase program. See Note 11 to the Consolidated Financial Statementsconsolidated financial statements included in Seaboard’s Annual Report to Stockholders for further discussion. There were no purchases made by or on behalf of Seaboard or any “affiliated purchaser” (as defined by applicable rules of the Commission)SEC) of shares of Seaboard’s common stock during the fourth quarter of the fiscal year covered by this report.
In addition to the information provided above, the information required by this item is incorporated herein by reference to the information under the captions of “Stockholder
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SEABOARD CORPORATION
“Stockholder Information -– Stock Listing,” “Quarterly Financial Data” and “Company Performance Graph” of Seaboard’s Annual Report to Stockholders.
Item 6. Selected Financial Data
The information required by this item is incorporated herein by reference to the “Summary of Selected Financial Data” of Seaboard’s Annual Report to Stockholders.Stockholders and attached as Exhibit 13 to this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information required by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Seaboard’s Annual Report to Stockholders.Stockholders and attached as Exhibit 13 to this report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is incorporated herein by reference to the information under the caption “Derivative Information” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Derivative Instruments and Hedging Activities” within Note 1 and Note 8 of Seaboard’s Consolidated Financial Statementsconsolidated financial statements of Seaboard’s Annual Report to Stockholders.Stockholders and attached as Exhibit 13 to this report.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to the information under the captions “Quarterly Financial Data,” “Report of Independent Registered Public Accounting Firm,” “Consolidated Statements of Comprehensive Income,” “Consolidated Balance Sheets,” “Consolidated Statements of Cash Flows,” “Consolidated Statements of Changes in Equity” and “Notes to Consolidated Financial Statements” included in Seaboard’s Annual Report to Stockholders and attached as Exhibit 13 to this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures – As of December 31, 2015,2017, Seaboard’s management has evaluated, under the direction of ourits chief executive and chief financial officers, the effectiveness of Seaboard’s disclosure controls and procedures, as defined under the Securities Exchange Act of 1934 (the “Exchange Act”) ruleRule 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
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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.
Reports on Internal Control Over Financial Reporting – Management’s report on internal control over financial reporting and the attestation report of KPMG LLP, Seaboard’s independent registered public accounting firm, on Seaboard’s internal control over financial reporting, as defined in Exchange Act ruleRule 13a-15(f), is incorporated herein by reference to all information under the captions “Management’s Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm,” respectively, of Seaboard’s Annual Report to Stockholders and attached as Exhibit 13 to this report.
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SEABOARD CORPORATION
Change in Internal Control Over Financial Reporting –There have been no changechanges in Seaboard’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 20152017 that has materially affected, or is reasonably likely to materially affect, Seaboard’s internal control over financial reporting.
Item 9B.9B. Other Information
None.
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FORM 10-K
SEABOARD CORPORATION
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information about the executive officers of the Company is included under the caption “Executive Officers of the Registrant” in Item 1 of this annual report on Form 10-K.
Seaboard has a Code of Ethics Policy (the “Code”) for directors, officers (including ourthe chief executive officer, chief financial officer, chief accounting officer, and persons performing similar functions) and employees. Seaboard has posted the Code on its internet website, www.seaboardcorp.com, and intends to disclosesatisfy the disclosure requirement under Item 10 of Form 10-K regarding 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 this item is incorporated herein by reference to the information under the captions “Item 1: Election of Directors,” “Board of Directors Information – Committees of the Board – Audit Committee,” “Board of Directors Information – Director Nominations” and “Section 16(a) Beneficial Ownership Reporting Compliance” of Seaboard’s definitive proxy statement for the 20162018 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 20152017 (“Proxy Statement”).
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to the information under the captions “Board of Directors Information – Compensation of Directors,” “Executive Compensation and Other Information,” “Employment Arrangements with Named Executive Officers,” “Benefit Plans,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report,” and “Compensation Discussion and Analysis” included in ourthe 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 this item is incorporated herein by reference to the information under the captions “Principal Stockholders” and “Share Ownership of Management and Directors” included in ourthe Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference to the information under the captions “Compensation Committee Interlocks and Insider Participation,” “Board of Directors Information – Controlled Corporation” and “Board of Directors Information – Committees of the Board” included in ourthe Proxy Statement.
Item 14.14. Principal Accounting Fees and Services
The information required by this item is incorporated herein by reference to the information under the captions “Item 2: Selection of Independent Auditors” included in ourthe Proxy Statement.
2018
FORM 10-K
SEABOARD CORPORATION
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) List the following documents filed as a part of the report:
1. Financial statements.
The consolidated financial statements and accompanying notes are incorporated herein by reference to the Annual Report to Stockholders filed as Exhibit 13 hereto.
2. Financial statement schedules.
Schedule II - Valuation and Qualifying Accounts |
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All other schedules are omitted as the required information is inapplicablenot applicable or the information is presented in the consolidated financial statements or related consolidated notes.
3. Exhibits.
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Exhibit No. |
| Description | |
2.1+ | |||
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| 3.1 |
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| 3.2 |
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| 10.1* |
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| 10.2* |
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| 10.3* |
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| 10.4* |
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| 10.5* |
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| 10.6* |
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19
FORM 10-K
SEABOARD CORPORATION
21
FORM 10-K
SEABOARD CORPORATION
| 10.8* |
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10.19* | |||||
10.20* | |||||
10.21* | |||||
10.22* |
20
FORM 10-K
SEABOARD CORPORATION
10.23* | |||||
10.24 | |||||
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22
FORM 10-K
SEABOARD CORPORATION
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| 10.29 |
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| 13+ |
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| 21+ |
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| 31.1+ |
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| 31.2+ |
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| 32.1+ |
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| 32.2+ |
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| 99.1+ |
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| 101.INS+ |
| XBRL Instance Document. |
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| 101.SCH+ |
| XBRL Taxonomy Extension Schema Document. |
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| 101.CAL+ |
| XBRL Taxonomy Extension Calculation Linkbase Document. |
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| 101.DEF+ |
| XBRL Taxonomy Extension Definition Linkbase Document. |
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| 101.LAB+ |
| XBRL Taxonomy Extension Label Linkbase Document. |
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| 101.PRE+ |
| XBRL Taxonomy Extension Presentation Linkbase Document. |
* Management contract or compensatory plan or arrangement.
+ Filed electronically herewith.
21
FORM 10-K
SEABOARD CORPORATION
(b) Exhibits.
See exhibits identified above under Item 15(a)(3)
.
(c) Financial Statement Schedules.
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Schedule II - Valuation and Qualifying Accounts |
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Schedule II – Report of Independent Registered Public Accounting Firm |
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2322
SIGNATURES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SEABOARD CORPORATION | ||
| (Registrant) | ||
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| /s/ Steven J. Bresky |
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| Steven J. Bresky, Chairman of the Board, |
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| President and Chief Executive Officer |
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| Date: | February |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantRegistrant and in the capacities and on the dates indicated.
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| Name |
| Date |
| Title |
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| /s/ Steven J. Bresky |
| February |
| Chairman of the Board, President, |
| Steven J. Bresky |
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| Chief Executive Officer and |
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| Director (principal executive |
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| officer) |
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| /s/ Robert L. Steer |
| February |
| Executive Vice President, |
| Robert L. Steer |
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| Chief Financial Officer |
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| /s/ Michael D. Trollinger |
| February |
| Vice President, Corporate |
| Michael D. Trollinger |
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| Controller and Chief Accounting |
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| Officer (principal accounting |
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| officer) |
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| /s/ David A. Adamsen |
| February |
| Director |
| David A. Adamsen |
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| /s/ Douglas W. Baena |
| February |
| Director |
| Douglas W. Baena |
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| /s/ Edward I. Shifman, Jr. |
| February |
| Director |
| Edward I. Shifman, Jr. |
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/s/ Paul M. Squires | February 21, 2018 | Director | |||
Paul M. Squires | |||||
2423
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Millions)
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| Balance at |
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| Balance at |
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| beginning of year |
| Provision(1) |
| Net deductions(2) |
| end of year |
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| beginning of year |
| Provision(1) |
| Net deductions(2) |
| end of year |
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Allowance for Doubtful Accounts: |
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Year Ended December 31, 2017 |
| $ | 14 |
| 16 |
| (1) |
| $ | 29 |
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Year Ended December 31, 2016 |
| $ | 21 |
| (1) |
| (6) |
| $ | 14 |
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Year Ended December 31, 2015 |
| $ | 12 |
| 13 |
| (4) |
| $ | 21 |
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| $ | 12 |
| 13 |
| (4) |
| $ | 21 |
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Year Ended December 31, 2014 |
| $ | 13 |
| — |
| (1) |
| $ | 12 |
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Year Ended December 31, 2013 |
| $ | 12 |
| 3 |
| (2) |
| $ | 13 |
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(1)The allowance for doubtful accountsDuring 2017, $12 million of the provision iswas charged to selling, general and administrative expenses.expenses, $2 million to income from affiliates related to reserves on convertible notes and $2 million to cost of sales related to a rebate reserve.
(2)Includes write-offs net of recoveries and currency translation adjustments.
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| Balance at |
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| beginning of year |
| Provision (1) |
| Net deductions |
| end of year |
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Allowance for Notes Receivable: |
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Year Ended December 31, 2017 |
| $ | 16 |
| — |
| — |
| $ | 16 |
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Year Ended December 31, 2016 |
| $ | — |
| 16 |
| — |
| $ | 16 |
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| Balance at |
| Charged (credit) |
| Balance at |
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| Balance at |
| Charge (credit) |
| Balance at |
| ||||
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| beginning of year |
| to expense |
| end of year |
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| beginning of year |
| to expense |
| end of year |
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Allowance for Deferred Tax Assets: |
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Year Ended December 31, 2017 |
| $ | 58 |
| 1 |
| $ | 59 |
| |||||||||
Year Ended December 31, 2016 |
| $ | 19 |
| 39 |
| $ | 58 |
| |||||||||
Year Ended December 31, 2015 |
| $ | 21 |
| (2) |
| $ | 19 |
|
| $ | 21 |
| (2) |
| $ | 19 |
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Year Ended December 31, 2014 |
| $ | 18 |
| 3 |
| $ | 21 |
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Year Ended December 31, 2013 |
| $ | 12 |
| 6 |
| $ | 18 |
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| Balance at |
| Credit |
| Balance at |
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| Balance at |
| Credit |
| Balance at |
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| beginning of year |
| to expense |
| end of year |
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| beginning of year |
| to expense |
| end of year |
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Reserve for LIFO Valuation: |
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Year Ended December 31, 2017 |
| $ | 21 |
| 10 |
| $ | 31 |
| |||||||||
Year Ended December 31, 2016 |
| $ | 28 |
| (7) |
| $ | 21 |
| |||||||||
Year Ended December 31, 2015 |
| $ | 37 |
| (9) |
| $ | 28 |
|
| $ | 37 |
| (9) |
| $ | 28 |
|
Year Ended December 31, 2014 |
| $ | 62 |
| (25) |
| $ | 37 |
| |||||||||
Year Ended December 31, 2013 |
| $ | 91 |
| (29) |
| $ | 62 |
| |||||||||
See accompanying report of independent registered public accounting firm.
2524
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TheTo the Stockholders and Board of Directors and Stockholders
Seaboard Corporation:
Under dateOur audits of February 25, 2016, we reported on the consolidated balance sheetsfinancial statements referred to in our report dated February 21, 2018 appearing in the 2017 Annual Report of Seaboard Corporation and subsidiaries (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2015, as contained in the annual(which report on Form 10-K for the year 2015. In connection with our audits of the aforementionedand consolidated financial statements weare incorporated by reference in this Annual Report on Form 10-K) also audited the related consolidatedincluded an audit of financial statement schedule noted as Schedule II under Item 15(a)(2). This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express anII. In our 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.therein when read in conjunction with the related consolidated financial statements.
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| /s/ KPMG LLP |
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Kansas City, Missouri |
|
February |
|
2625