UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April ~~2, 2016~~1, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________________ to __________________________

Seaboard Corporation

(Exact name of registrant as specified in its charter)


Delaware	1-3390	04-2260388
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation)	File Number)	Identification No.)


9000 West 67th Street, Merriam, Kansas		66202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (913) 676-8800

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 ☒ No ☐

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 “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒	Accelerated Filer ☐
Non-Accelerated Filer ☐ ~~(Do~~(Do not check if a smaller reporting company)	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 Exchange Act). Yes ☐ No ☒ .

There were 1,170,550 shares of common stock, $1.00 par value per share, outstanding on April ~~29, 2016.~~28, 2017.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars except share and per share amounts)	2016		2015		2017		2016
Net sales:
Products (includes sales to affiliates of $224 and $212)	$	1,066	$	1,177
Services revenues		236		249
Products (includes affiliate sales of $259 and $224)					$	1,125	$	1,066
Services (includes affiliate sales of $2 and $0)						249		236
Other		17		26		25		17
Total net sales		1,319		1,452		1,399		1,319
Cost of sales and operating expenses:
Products		990		1,119		1,022		990
Services		212		219		219		212
Other		17		21		20		17
Total cost of sales and operating expenses		1,219		1,359		1,261		1,219
Gross income		100		93		138		100
Selling, general and administrative expenses		64		65		72		64
Operating income		36		28		66		36
Other income (expense):
Interest expense		(8)		(5)		(3)		(8)
Interest income		4		3		2		4
Interest income from affiliates		6		7		6		6
Income from affiliates		22		11		1		22
Other investment income, net		5		7		37		5
Foreign currency gains, net		7		1		3		7
Miscellaneous, net		(3)		(4)		—		(3)
Total other income, net		33		20		46		33
Earnings before income taxes		69		48		112		69
Income tax expense		(14)		(15)		(28)		(14)
Net earnings	$	55	$	33	$	84	$	55
Less: Net income attributable to noncontrolling interests		(1)		—
Less: Net loss (income) attributable to noncontrolling interests						1		(1)
Net earnings attributable to Seaboard	$	54	$	33	$	85	$	54

Earnings per common share	$	45.91	$	28.11	$	71.84	$	45.91

Other comprehensive income (loss), net of income tax benefit of $10 and $0:
Other comprehensive income (loss), net of income tax benefit (expense) of $(1) and $10:
Foreign currency translation adjustment		(26)		(6)		(2)		(26)
Unrealized gain on investments		—		1		1		—
Unrecognized pension cost		1		1		1		1
Other comprehensive loss, net of tax	$	(25)	$	(4)
Other comprehensive income (loss), net of tax					$	—	$	(25)
Comprehensive income		30		29		84		30
Less: Comprehensive income attributable to noncontrolling interests		(1)		—
Less: Comprehensive loss (income) attributable to noncontrolling interests						1		(1)
Comprehensive income attributable to Seaboard	$	29	$	29	$	85	$	29

Average number of shares outstanding		1,170,550		1,170,550		1,170,550		1,170,550

Dividends declared per common share					$	1.50		—

See accompanying notes to ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	April 2,		December 31,		April 1,		December 31,
(Millions of dollars except share and per share amounts)	2016		2015		2017		2016
Assets
Current assets:
Cash and cash equivalents	$	53	$	50	$	43	$	77
Short-term investments		1,185		1,254		1,286		1,277
Receivables, net of allowance		451		510
Receivables, net						606		627
Inventories		694		739		842		762
Other current assets		99		111		109		105
Total current assets		2,482		2,664		2,886		2,848
Net property, plant and equipment		907		831		1,024		1,006
Investments in and advances to affiliates		722		671		786		773
Notes receivable from affiliates		213		200
Notes receivable from affiliates, net						19		26
Other non-current assets		72		65		93		102
Total assets	$	4,396	$	4,431	$	4,808	$	4,755
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable to banks	$	146	$	141	$	142	$	121
Current maturities of long-term debt		8		4		18		17
Accounts payable		193		239		163		216
Deferred revenue		100		93		150		114
Other current liabilities		272		289		281		317
Total current liabilities		719		766		754		785
Long-term debt, less current maturities		506		518		499		499
Deferred income taxes		30		41		89		77
Other liabilities and deferred credits		228		224		209		219
Total non-current liabilities		764		783		797		795
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,170,550 shares		1		1		1		1
Accumulated other comprehensive loss		(303)		(278)		(304)		(304)
Retained earnings		3,207		3,153		3,548		3,465
Total Seaboard stockholders’ equity		2,905		2,876		3,245		3,162
Noncontrolling interests		8		6		12		13
Total equity		2,913		2,882		3,257		3,175
Total liabilities and stockholders’ equity	$	4,396	$	4,431	$	4,808	$	4,755

See accompanying notes to ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Cash flows from operating activities:
Net earnings	$	55	$	33	$	84	$	55
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		23		24		27		23
Deferred income taxes		—		(8)		10		—
Pay-in-kind interest and accretion on notes receivable from affiliates		(1)		(4)
Income from affiliates		(22)		(11)		(1)		(22)
Dividends received from affiliates		1		10		12		1
Other investment income, net		(5)		(7)		(37)		(5)
Other, net		—		1		(2)		(1)
Changes in assets and liabilities, net of acquisition:
Changes in assets and liabilities, net of acquisitions:
Receivables, net of allowance		41		106		29		41
Inventories		48		18		(78)		48
Other current assets		9		(10)		(2)		9
Current liabilities, exclusive of debt		(38)		(31)		(53)		(38)
Other, net		6		2		5		6
Net cash from operating activities		117		123		(6)		117
Cash flows from investing activities:
Purchase of short-term investments		(171)		(225)		(191)		(171)
Proceeds from the sale of short-term investments		247		119		198		247
Proceeds from the maturity of short-term investments		5		4		25		5
Capital expenditures		(63)		(28)		(36)		(63)
Proceeds from the sale of fixed assets		44		—		1		44
Acquisition of business		(148)		—
Acquisition of businesses						(14)		(148)
Investments in and advances to affiliates, net		(24)		(18)		(25)		(24)
Long-term notes receivable issued to affiliates		(12)		—
Notes receivable issued to affiliates						(1)		(12)
Purchase of long-term investments		(9)		(3)		(2)		(9)
Other, net		—		(9)
Net cash from investing activities		(131)		(160)		(45)		(131)
Cash flows from financing activities:
Notes payable to banks, net		18		49		21		18
Proceeds from long-term debt						5		—
Principal payments of long-term debt						(5)		—
Dividends paid						(2)		—
Net cash from financing activities		18		49		19		18
Effect of exchange rate changes on cash and cash equivalents		(1)		—		(2)		(1)
Net change in cash and cash equivalents		3		12		(34)		3
Cash and cash equivalents at beginning of year		50		36		77		50
Cash and cash equivalents at end of period	$	53	$	48	$	43	$	53

See accompanying notes to ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Accounting Policies and Basis of Presentation

The ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries (“Seaboard”). All significant intercompany balances and transactions have been eliminated in consolidation. Seaboard’s investments in non-consolidated affiliates are accounted for by the equity method. The unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements should be read in conjunction with the ~~Consolidated Financial Statements~~consolidated financial statements of Seaboard for the year ended December 31, ~~2015~~2016 as filed in its annual report on Form 10-K. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Seaboard’s year-end is December 31.

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations for interim periods are not necessarily indicative of results to be expected for a full year. As Seaboard conducts its commodity trading business with third parties, consolidated subsidiaries and non-consolidated affiliates on an interrelated basis, gross margin on non-consolidated affiliates cannot be clearly distinguished without making numerous assumptions primarily with respect to mark-to-market accounting for commodity derivatives.

Use of Estimates

The preparation of the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting principles ("(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the ~~Condensed Consolidated Financial Statements,~~condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include those related to allowance for doubtful accounts, valuation of inventories, impairment of long-lived assets, potential write-down related to investments in and advances to affiliates and notes receivable from affiliates, income taxes and accrued pension liability. Actual results could differ from those estimates.

~~Supplemental Non-Cash Transactions~~Recently Issued Accounting Standards Adopted

~~Seaboard had notes receivable from affiliates that accrued pay-in-kind interest income, primarily from one affiliate.~~ On January ~~4, 2016,~~1, 2017, Seaboard adopted guidance to simplify the ~~interest on this note receivable was modified to eliminate future pay-in-kind interest. See Note 9 to~~subsequent measurement of inventory, excluding inventory measured using last-in, first-out (“LIFO”) or the ~~Condensed Consolidated Financial Statements for further discussion~~retail inventory method. Under the new standard, inventory is valued at the lower of cost and net realizable value. The adoption of this modification. Seaboard recognized $1 million and $4 million of non-cash, pay-in-kind interest income and accretion of discount for the first quarter ended April 2, 2016 and April 4, 2015, respectively, related to these notes receivable from affiliates.new guidance did not have a material impact on Seaboard’s financial position or net earnings.

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued guidance to develop a single, comprehensive revenue recognition model for all contracts with customers. This guidance requires an entity to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the ~~amount of revenue~~consideration to which itan entity expects to be entitled for ~~the transfer of promised~~those goods ~~or services to customers.~~and services. This guidance ~~will replace most~~supersedes nearly all existing revenue recognition guidance ~~in GAAP when it becomes effective.~~under GAAP. Seaboard ~~is currently evaluating the impact this new guidance~~ will ~~have on its consolidated financial statements and related disclosures. Seaboard will be required to~~ adopt this guidance on January 1, 2018, ~~and it is currently anticipated that Seaboard will apply this guidance~~ using the cumulative effect transition ~~method.~~

~~In July 2015,~~method, where any cumulative effect of initially adopting the ~~FASB issued~~ guidance ~~to simplify the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under the new standard, inventory should be~~is recognized at the ~~lower~~date of ~~cost and net realizable value. The new guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted.~~adoption. Based on management’s initial assessment, Seaboard believes the adoption of this guidance will not have a material impact on ~~Seaboard’s~~its financial position or net earnings.

In January 2016, the FASB issued guidance that requires entities to measure equity investments, other than those accounted for using the equity method of accounting, at fair value and recognize any changes in fair value in net income if a readily determinable fair value exists. For ~~equity~~ investments without readily determinable fair values, the cost method of accounting is ~~also~~ eliminated. An entity may elect to record these equity investments at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. ~~The new~~Seaboard will adopt this guidance ~~is effective for interim~~on January 1, 2018, and

~~annual periods beginning after December 15, 2017. Seaboard is analyzing~~believes the ~~impact~~adoption of this ~~new standard~~guidance will not have a material impact on ~~certain of~~ its ~~equity investments and, at this time, cannot estimate the impact of adoption on~~financial position or net earnings.

In February 2016, the FASB issued guidance that a lessee should ~~recognize in~~record a right-of-use (“ROU”) asset and a lease liability on the balance sheet ~~a liability to make lease payments and a right-of-use asset representing its right to use~~for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the ~~underlying asset for~~pattern of expense recognition in the ~~lease term.~~income statement. The recognition, measurement, and presentation of expenses and cash flows arising from a financing lease ~~by a lessee~~ have not significantly changed from the

previous guidance. For operating leases, a lessee is required to: (1) recognize a ~~right-of-use~~ROU asset and a lease liability, initially measured at the present value of the lease payments, in the balance sheet, (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and (3) classify all cash payments within operating activities in the statement of cash flows. ~~It is effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.~~Seaboard will adopt this guidance on January 1, 2019. In transition, lessees ~~and lessors~~ are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. Seaboard is ~~currently assessing~~in the ~~potential impact~~preliminary stages of its assessment of the effect the guidance will have on its existing accounting policies and the consolidated financial statements, but expects there will be an increase in assets and liabilities on the consolidated balance sheets at adoption due to the recording of ROU assets and corresponding lease liabilities, which may be material. See Note 10 to the consolidated financial statements included in Seaboard’s annual report for the year ended December 31, 2016, for information about Seaboard’s lease obligations.

In March 2017, the FASB issued guidance that will require the service cost component of net periodic benefit cost to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in inventory. The other components of net periodic benefit cost will be presented outside of operating income and will not be capitalizable. Seaboard will adopt this guidance on January 1, 2018, and believes the adoption of this ~~new standard.~~guidance will not have a material impact on its financial position or net earnings.

Note 2 – Investments

The following is a summary of the amortized cost and estimated fair value of short-term investments ~~for both available-for-sale and~~classified as trading securities held at April ~~2, 2016~~1, 2017 and December 31, ~~2015.~~

2016.



	April 2, 2016				December 31, 2015				April 1, 2017				December 31, 2016
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
(Millions of dollars)	Cost		Value		Cost		Value		Cost		Value		Cost		Value
Money market funds	$	133	$	133	$	81	$	81
Total available-for-sale short-term investments		133		133		81		81
Domestic equity securities		466		469		475		466	$	529	$	589	$	444	$	482
Domestic debt securities		351		351		452		450
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries										300		301		437		437
Foreign equity securities		119		114		120		120		236		252		198		199
High yield debt securities		94		93		108		104
High yield securities										96		96		114		115
Money market funds held in trading accounts		17		17		22		22		26		26		13		13
Collateralized loan obligation		10		8		10		10
Collateralized loan obligations										18		19		25		26
Other trading securities		—		—		1		1		3		3		5		5
Total trading short-term investments		1,057		1,052		1,188		1,173	$	1,208	$	1,286	$	1,236	$	1,277
Total short-term investments	$	1,190	$	1,185	$	1,269	$	1,254

Seaboard had ~~$76~~$97 million of equity securities denominated in foreign currencies at April ~~2, 2016,~~1, 2017, with ~~$25~~$39 million in euros, ~~$17~~$22 million in Japanese yen, ~~$14~~$17 million in British pounds, $6 million in Swiss francs and the remaining $13 million in various other currencies. At December 31, 2016, Seaboard had $91 million of equity securities denominated in foreign currencies, with $35 million in euros, $20 million in Japanese yen, $16 million in British pounds, $6 million in Swiss francs and the remaining $14 million in various other currencies. At December 31, 2015, Seaboard had $80 million of equity securities denominated in foreign currencies, with $25 million in euros, $20 million in Japanese yen, $15 million in British pounds, $7 million in Swiss francs and the remaining $13 million in various other currencies. Also, money market funds included $2$4 million and $3$1 million denominated in various foreign currencies at April ~~2, 2016,~~1, 2017 and December 31, ~~2015,~~2016, respectively.

Unrealized gains related to trading securities still held at the end of the respective reporting period were $38 million and $5 million for the three months ended April 1, 2017 and April 2, 2016, respectively.

In addition to its short-term investments, Seaboard also has trading securities related to Seaboard’s deferred compensation plans classified in other current assets in the ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. See Note 5 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for information on the types of trading securities held related to the deferred compensation plans.

Note 3 – Inventories

The following is a summary of inventories at April ~~2, 2016~~1, 2017 and December 31, ~~2015:~~2016:



	April 2,		December 31,		April 1,		December 31,
(Millions of dollars)	2016		2015		2017		2016
At lower of LIFO cost or market:
Live hogs and materials	$	231	$	210	$	284	$	273
Fresh pork and materials		32		26		38		34
		263		236		322		307
LIFO adjustment		(27)		(28)		(21)		(21)
Total inventories at lower of LIFO cost or market		236		208		301		286
At lower of FIFO cost or market:
Grains, oilseeds and other commodities		281		330		340		279
Sugar produced and in process		34		52		32		30
Other		53		61		70		62
Total inventories at lower of FIFO cost or market		368		443		442		371
Grain, flour and feed at lower of weighted average cost or market		90		88		99		105
Total inventories	$	694	$	739	$	842	$	762

Note 4 – Income Taxes

Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material adjustments. Seaboard’s ~~U.S. federal income tax years are closed through 2011. Seaboard has been notified of the IRS’ intent to examine its~~ 2013 U.S. income tax ~~return.~~return is currently under Internal Revenue Service examination. There have not been any material changes in unrecognized income tax benefits since December 31, ~~2015.~~2016. Interest and penalties related to unrecognized tax benefits were not material for the three months ended April ~~2, 2016.~~1, 2017.

Note 5 – Derivatives and Fair Value of Financial Instruments

GAAP discusses valuation techniques, such as the market approach (prices and other relevant information generated by market conditions involving identical or comparable assets or liabilities), the income approach (techniques to convert future amounts to single present amounts based on market expectations including present value techniques and option-pricing), and the cost approach (amount that would be required to replace the service capacity of an asset, which is often referred to as replacement cost). Seaboard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad levels:

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities that Seaboard has the ability to access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following table shows assets and liabilities measured at fair value on a recurring basis as of April ~~2, 2016~~1, 2017 and also the level within the fair value hierarchy used to measure each category of assets and liabilities. Seaboard ~~uses~~determines if there are any transfers between levels at the end of ~~the~~a reporting ~~period to determine if there were any transfers between levels.~~period. There were no transfers between levels that occurred in the first three months of ~~2016.~~2017. The trading securities classified as other current assets below are assets held for Seaboard’s deferred compensation plans.



	Balance								Balance
	April 2,								April 1,
(Millions of dollars)	2016		Level 1		Level 2		Level 3		2017		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities – short-term investments:
Money market funds	$	133	$	133	$	—	$	—
Trading securities – short term investments:
Trading securities – short-term investments:
Domestic equity securities		469		469		—		—	$	589	$	589	$	—	$	—
Domestic debt securities		351		351		—		—
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries										301		300		1		—
Foreign equity securities		114		114		—		—		252		252		—		—
High yield debt securities		93		—		93		—
High yield securities										96		19		77		—
Money market funds held in trading accounts		17		17		—		—		26		26		—		—
Collateralized loan obligation		8		—		8		—
Collateralized loan obligations										19		—		19		—
Other trading securities										3		3		—		—
Trading securities – other current assets:
Domestic equity securities		29		29		—		—		35		35		—		—
Foreign equity securities		4		4		—		—		4		4		—		—
Fixed income mutual funds		3		3		—		—		3		3		—		—
Other		2		2		—		—		3		2		1		—
Derivatives
Derivatives:
Commodities (1)		5		5		—		—		5		5		—		—
Foreign currencies		2		—		2		—
Total Assets	$	1,230	$	1,127	$	103	$	—	$	1,336	$	1,238	$	98	$	—
Liabilities:
Derivatives:
Commodities (1)	$	8	$	8	$	—	$	—	$	4	$	4	$	—	$	—
Interest rate swaps		7		—		7		—		3		—		3		—
Foreign currencies		14		—		14		—		2		—		2		—
Total Liabilities	$	29	$	8	$	21	$	—	$	9	$	4	$	5	$	—

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets on a net basis, including netting the derivatives with the related margin accounts. As of April ~~2, 2016,~~1, 2017, the commodity derivatives had a margin account balance of ~~$23~~$15 million resulting in a net other current asset in the ~~Condensed Consolidated Balance Sheet~~condensed consolidated balance sheet of ~~$19~~$16 million.

The following table shows assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2015~~2016 and also the level within the fair value hierarchy used to measure each category of ~~assets.~~assets and liabilities.



	Balance								Balance
	December 31,								December 31,
(Millions of dollars)	2015		Level 1		Level 2		Level 3		2016		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities – short-term investments:
Money market funds	$	81	$	81	$	—	$	—
Trading securities – short term investments:
Trading securities – short-term investments:
Domestic equity securities		466		466		—		—	$	482	$	482	$	—	$	—
Domestic debt securities		450		450		—		—
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries										437		437		—		—
Foreign equity securities		120		120		—		—		199		199		—		—
High yield debt securities		104		—		104		—
High yield securities										115		15		100		—
Collateralized loan obligations										26		—		26		—
Money market funds held in trading accounts		22		22		—		—		13		13		—		—
Collateralized loan obligation		10		—		10		—
Other trading securities		1		—		1		—		5		5		—		—
Trading securities – other current assets:
Domestic equity securities		31		31		—		—		30		30		—		—
Foreign equity securities		5		5		—		—		3		3		—		—
Fixed income mutual funds		4		4		—		—		3		3		—		—
Other		3		2		1		—		4		4		—		—
Derivatives
Derivatives:
Commodities (1)		4		4		—		—		3		3		—		—
Foreign currencies		8		—		8		—		1		—		1		—
Total Assets	$	1,309	$	1,185	$	124	$	—	$	1,321	$	1,194	$	127	$	—
Liabilities:
Derivatives:
Commodities (1)	$	18	$	18	$	—	$	—	$	1	$	1	$	—	$	—
Interest rate swaps		6		—		6		—		4		—		4		—
Foreign currencies										4		—		4		—
Total Liabilities	$	24	$	18	$	6	$	—	$	9	$	1	$	8	$	—

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets on a net basis, including netting the derivatives with the related margin accounts. As of December 31, ~~2015,~~2016, the commodity derivatives had a margin account balance of ~~$29~~$10 million resulting in a net other current asset in the ~~Condensed Consolidated Balance Sheet~~condensed consolidated balance sheet of ~~$15~~$12 million.

Financial instruments consisting of cash and cash equivalents, net receivables, notes payable, and accounts payable are carried at cost, which approximates fair value as a result of the short-term nature of the instruments. The amortized cost and estimated fair values of short-term investments at April ~~2, 2016~~1, 2017 and December 31, ~~2015~~2016 are presented in Note 2 to the ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements. The fair value of long-term debt is estimated by comparing interest rates for debt with similar terms and maturities. As Seaboard’s long-term debt ~~was issued during late 2015 and~~ is variable-rate, its carrying amount approximates fair value. If Seaboard’s long-term debt was measured at fair value onin its ~~Condensed Consolidated Balance Sheets,~~condensed consolidated balance sheets, it would have been classified as level 2 in the fair value hierarchy.

While management believes its derivatives are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these types of transactions as hedges for accounting purposes. ~~Since~~As the derivatives discussed below are not accounted for as hedges, fluctuations in the related commodity prices, foreign currency exchange rates and interest rates could have a material impact on earnings in any given period. Seaboard also enters into speculative derivative transactions not directly related to its raw material requirements. The nature of Seaboard’s market risk exposure has not changed materially since December 31, ~~2015.~~2016.

Commodity Instruments

Seaboard uses various derivative futures and options to manage its risk toof price fluctuations for raw materials and other inventories, finished product sales and firm sales commitments. At April 2, 2016, Seaboard had open net derivative contracts to purchase 18 million bushels of grain and open net derivative contracts to sell 105 million pounds of hogs and 2 million gallons of heating oil. At December 31, 2015,1, 2017, Seaboard had open net derivative contracts to purchase 25 million ~~pounds of hogs, 22 million~~ bushels of grain and 313 million pounds of ~~sugar~~hogs, and open net derivative contracts to sell 816 million pounds of soybean oil and 3 million gallons of heating oil. At December 31, 2016, Seaboard had open net derivative contracts to purchase 22 million bushels of grain, 14 million pounds of hogs, and open net derivative contracts to sell 35 million pounds of soybean oil and 4 million gallons of heating oil. Commodity derivatives are recorded at fair value with any changes in fair value being marked-to-market as a component of cost of sales in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Comprehensive Income.~~comprehensive income.

Foreign Currency Exchange Agreements

Seaboard enters into foreign currency exchange agreements to manage the foreign currency exchange rate risk with respect to certain transactions denominated in foreign currencies. Foreign currency exchange agreements that are primarily related to an underlying commodity transaction are recorded at fair value with changes in value marked-to-market as a component of cost of sales in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Comprehensive Income.~~comprehensive income. Foreign currency exchange agreements that are not related to an underlying commodity transaction are recorded at fair value with changes in value marked-to-market as a component of foreign currency gains, ~~(losses),~~ net in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Comprehensive Income.~~comprehensive income. At April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, Seaboard had trading foreign currency exchange agreements to cover a portion of its firm sales and purchase commitments and related trade receivables and payables with net notional amounts of ~~$162~~$93 million and ~~$94~~$81 million, respectively, primarily related to the South African ~~rand.~~rand and Canadian dollar.

Interest Rate Exchange Agreements

During 2014 and 2015, Seaboard entered into four, approximately eight-year interest rate exchange agreements with mandatory early termination dates, which coincided with the anticipated delivery dates in 2015 and 2016 of dry bulk vessels to be leased. These agreements involved the exchange of fixed-rate and variable-rate interest payments without the exchange of the underlying notional amounts to mitigate the potential effects of fluctuations in interest rates on the anticipated dry bulk vessel leases. As of December 31, 2015, two agreements remained, each with a $22 million notional amount outstanding. In the first quarter of 2016, these agreements were terminated and not renewed with the delivery of the final two bulk vessels. Payments to unwind these agreements were $2 million.

During 2010, Seaboard entered into three ten-year interest rate exchange agreements to mitigate the effects of fluctuations in interest rates on variable-rate debt. These agreements involve the exchange of fixed-rate and variable-rate interest payments over the life of the agreements without the exchange of the underlying notional amounts. Seaboard pays a fixed rate and receives a variable rate of interest on the notional ~~amounts of $25 million each.~~

amounts. At April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, Seaboard had three ~~and five~~ interest rate exchange agreements outstanding ~~respectively,~~ with a total notional value of $75 ~~million and $119 million, respectively.~~million. None of Seaboard’s outstanding interest rate exchange agreements qualify as hedges for accounting purposes. Accordingly, the changes in fair value of these agreements are recorded in miscellaneous, net in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Comprehensive Income.~~comprehensive income.

Counterparty Credit Risk

From time to time Seaboard is subject to counterparty credit risk related to its foreign currency exchange agreements and interest rate swaps should the counterparties fail to perform according to the terms of the contracts. As of April ~~2, 2016,~~1, 2017, Seaboard had a maximum amount of loss due to credit risk ~~in the amount~~ of $2less than $1 million with three counterparties related to foreign currency exchange agreements, and no counterparty credit risk related to the interest rate swaps. Seaboard does not hold any collateral related to these agreements.

The following table provides the amount of gain or (loss) recognized in income for each type of derivative and where it was recognized in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Comprehensive Income~~comprehensive income for the three months ended April ~~2, 2016~~1, 2017 and April ~~4, 2015.~~2, 2016.



		Three Months Ended					Three Months Ended
		April 2,		April 4,			April 1,		April 2,
(Millions of dollars)		2016		2015			2017		2016
Commodities	Cost of sales	$	—	$	(6)	Cost of sales	$	2	$	—
Foreign currencies	Cost of sales		(12)		(1)	Cost of sales		(5)		(12)
Foreign currencies	Foreign currency		—		2
Interest rate	Miscellaneous, net		(3)		(5)
Interest rate swaps						Miscellaneous, net		—		(3)

The following table provides the fair value of each type of derivative held as of April ~~2, 2016~~1, 2017 and December 31, ~~2015~~2016 and where each derivative is included in the ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets.



		Asset Derivatives					Liability Derivatives					Asset Derivatives					Liability Derivatives
		April 2,		December 31,			April 2,		December 31,			April 1,		December 31,			April 1,		December 31,
(Millions of dollars)		2016		2015			2016		2015			2017		2016			2017		2016
Commodities(1)	Other current assets	$	5	$	4	Other current liabilities	$	8	$	18	Other current assets	$	5	$	3	Other current liabilities	$	4	$	1
Foreign currencies	Other current assets		2		8	Other current liabilities		14		—	Other current assets		—		1	Other current liabilities		2		4
Interest rate	Other current assets		—		—	Other current liabilities		7		6
Interest rate swaps											Other current assets		—		—	Other current liabilities		3		4

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets on a net basis, including netting the derivatives with the related margin accounts. As of April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, the commodity derivatives had a margin account balance of ~~$23~~$15 million and ~~$29~~$10 million, respectively, resulting in a net other current asset in the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets of ~~$19~~$16 million and ~~$15~~$12 million, respectively.

Note 6 – Employee Benefits

Effective January 1, 2017, Seaboard ~~maintains~~merged the assets and liabilities of its two defined benefit pension plans for its domestic salaried and clerical employees. At this time, no contributions are expected to be made to ~~these plans~~the combined plan in ~~2016.~~2017. Seaboard also sponsors non-qualified, unfunded supplemental executive plans, and has certain individual, non-qualified, unfunded supplemental retirement agreements for certain retired employees. Management has no plans to provide funding for these supplemental plans in advance of when the benefits are paid.

The net periodic benefit cost for all of these plans was as follows:



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Components of net periodic benefit cost:
Service cost	$	2	$	2	$	2	$	2
Interest cost		3		3		3		3
Expected return on plan assets		(2)		(2)		(2)		(2)
Amortization and other		1		1		1		1
Net periodic benefit cost	$	4	$	4	$	4	$	4

Note 7 – Notes Payable, Long-term Debt, Commitments and Contingencies

Notes Payable

All of the $142 million of notes payable outstanding at April ~~2, 2016~~1, 2017 related to foreign subsidiaries, with ~~$66~~$60 million denominated in South African rand, ~~$32~~$35 million denominated in Argentine pesos and ~~$20~~$4 million denominated in Zambian kwacha. The weighted average interest rate for outstanding notes payable was ~~13.17%~~11.21% and ~~11.74%~~14.88% at April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, respectively. As of April ~~2, 2016,~~1, 2017, Seaboard had uncommitted ~~bank~~credit lines totaling ~~$371~~$370 million, of which ~~$321~~$320 million ~~of the uncommitted lines~~ related to foreign subsidiaries. ~~Seaboard’s borrowing capacity was reduced by $146 million outstanding under the uncommitted lines and letters of credit totaling $3 million.~~ The notes payable under the credit lines are unsecured and do not require compensating balances. Also, Seaboard has a $100 million committed credit line secured by certain short-term investments, but there was no outstanding balance as of April 1, 2017.

Seaboard’s borrowing capacity under its uncommitted and committed lines was reduced by $142 million drawn under the uncommitted lines and letters of credit totaling $3 million as of April 1, 2017.

Long-term Debt

The following is a summary of long-term debt:



		April 2,		December 31,		April 1,		December 31,
(Millions of dollars)		2016		2015		2017		2016
Term Loan due 2022	$	500	$	500	$	494	$	497
Foreign subsidiary obligations due 2020 through 2023		15		23
Foreign subsidiary obligations due 2018 through 2023						24		20
Total long-term debt at face value		515		523		518		517
Current maturities of long-term debt and unamortized discount		(9)		(5)		(19)		(18)
Long-term debt, less current maturities and unamortized discount	$	506	$	518	$	499	$	499

~~Foreign currency exchange rate fluctuations accounted for $8 million of the decrease in the total long-term debt from December 31, 2015 to April 2, 2016.~~ The interest rate on the Term Loan due 2022 was ~~2.06%~~2.61% and ~~1.90%~~2.40% at April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, respectively. The weighted average interest rate on Seaboard’s ~~Argentine subsidiary’s loans~~foreign subsidiary obligations was ~~30.25%~~19.21% and ~~30.23%~~22.39% at April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, respectively. Seaboard was in compliance with all restrictive debt covenants relating to these agreements as of April ~~2, 2016.~~

~~Commitments~~

In 2015, Seaboard’s Pork segment and Triumph Foods, LLC (“Triumph”) entered into a new joint venture, Seaboard Triumph Foods, LLC (“STF LLC”), with equal ownership of 50%. This joint venture is constructing a new pork processing facility in Sioux City, Iowa, which is expected to be completed by mid-2017. Seaboard originally agreed to contribute up to $207 million in connection with the development and operation of the facility; however, in the first quarter of 2016, third-party financing was obtained and the subscription agreement was amended to require $150 million in contributions. As of April 2, 2016, $36 million is expected to be contributed during the remainder of 2016, with $73 million due in1, 2017. ~~As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility.~~

Contingencies

On ~~April 29,~~September 18, 2014, and subsequently in 2015 and 2016, Seaboard received a number of grand jury subpoenas and informal requests for information from the Department of Justice, Asset Forfeiture and Money Laundering Section (“AFMLS”), ~~a Grand Jury subpoena issued by the U.S. District Court for the District of Columbia (the “DC District Court”) requesting~~seeking records related to 37 specified foreign companies and ~~five~~ individuals. Seaboard has previously produced documents responsive to Grand Jury subpoenas dated September 18, 2014 and October 17, 2014. The subpoena issued September 18, 2014 requested records related to nine entities and one individual, and the subpoena issued October 17, 2014 requested records with respect to eight additional entities and one additional individual. Two additional subpoenas, each dated July 2, 2015, were received by Seaboard requesting records related to a certain customer. The companies and individuals as to which the requested records relate ~~to are~~were not affiliated with Seaboard, although Seaboard has also received subpoenas and requests for additional information relating to an affiliate of Seaboard. ~~The AFMLS attorney conducting~~During 2017, Seaboard received grand jury subpoenas requesting documents and information related to money transfers and bank accounts in the ~~investigation has advised~~Democratic Republic of Congo (“DRC”) and other African countries and requests to interview certain Seaboard ~~that it is not~~employees and to obtain testimony before a ~~target of the investigation.~~grand jury. Seaboard has retained outside counsel and is cooperating with the government’s investigation. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome or to estimate the amount of potential loss, if any, resulting from the government’s inquiry.

On September 19, 2012, the U.S. Immigration and Customs Enforcement (“ICE”) executed three search warrants authorizing the seizure of certain records from Seaboard’s offices in Merriam, Kansas and at the Seaboard Foods LLC ("(“Seaboard ~~Foods"~~Foods”) employment office and the human resources department in Guymon, Oklahoma. The warrants generally called for the seizure of employment-related files, certain e-mails and other electronic records relating to Medicaid and Medicaid recipients, certain health care providers in the Guymon area, and Seaboard’s health plan and certain personnel issues. The U.S. Attorney’s Office for the Western District of Oklahoma (“USAO”), which has been leading the investigation, previously advised Seaboard that it intended to close its investigation and that no charges would be brought against Seaboard. However, discussions continue with the USAO, ICE and the Oklahoma Attorney General's office regarding the matter, including the possibility of a settlement. No proceedings have been filed or brought as of the date of this report. It is not possible at this time to determine whether a settlement will be reached or whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter.

On February 16, 2016, Seaboard Foods received an information request ~~(“Request”)~~ from the U.S. Environmental Protection Agency (“EPA”) seeking information under the Clean Air Act with regard to various ammonia releases at Seaboard Foods’ pork processing plant in Guymon, Oklahoma. Seaboard has been cooperating with the EPA with regard

to the investigation and has responded to the ~~Request.~~request. It is not possible at this time to determine whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter.

Seaboard is subject to various administrative and judicial proceedings and other legal matters related to the normal conduct of its business. In the opinion of management, the ultimate resolution of these items is not expected to have a material adverse effect on the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements of Seaboard.

Contingent Obligations

Certain of the non-consolidated affiliates and third-party contractors who perform services for Seaboard have bank debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in order to further Seaboard’s business objectives. Seaboard does not issue guarantees of third parties for compensation. As of April ~~2, 2016,~~1, 2017, guarantees outstanding to third parties were not material. Seaboard has not accrued a liability for any of the third-party or affiliate guarantees as management considers the likelihood of loss to be remote. See Notes Payable section above for discussion of letters of credit.

Note 8 – Stockholders’ Equity and Accumulated Other Comprehensive Loss

Seaboard has a share repurchase program in place that was approved by its Board of Directors and is in effect through October 31, 2017. As of April ~~2, 2016,~~1, 2017, the authorized amount of repurchase under the share repurchase program remained at $100 million. Seaboard did not repurchase any shares of common stock ~~during~~for the ~~first quarter of 2016.~~three months ended April 1, 2017. Under this share repurchase program, Seaboard is authorized to repurchase its common stock from time to time in open market or privately negotiated purchases, which may be above or below the traded market price. During the period that the share repurchase program remains in effect, from time to time, Seaboard may enter into a 10b5-1 plan authorizing a third party to make such purchases on behalf of Seaboard. All stock repurchased will be made in compliance with applicable legal requirements and funded by cash on hand. The timing of the repurchases and the number of shares repurchased at any given time will depend upon market conditions, compliance with Securities and Exchange Commission regulations, and other factors. The Board of Directors’ stock repurchase authorization does not obligate Seaboard to acquire a specific amount of common stock, and the stock repurchase program may be suspended at any time at Seaboard’s discretion.

In December 2012, Seaboard declared and paid a dividend of $12.00 per share on common stock. The increased 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 prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per share per year). Seaboard did not declare or pay a dividend in 2013, 2014, or 2015, and does not currently intend to declare any dividends for 2016.

The changes in the components of other comprehensive loss, ~~("OCL”),~~ net of related taxes, are as follows:



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Foreign currency translation adjustment	$	(26)	$	(6)	$	(2)	$	(26)
Unrealized gain on investments		—		1		1		—
Unrecognized pension cost (1)		1		1		1		1
Other comprehensive loss, net of tax	$	(25)	$	(4)	$	—	$	(25)

⁽¹⁾

This primarily represents the amortization of actuarial losses that were included in net periodic pension cost and was recorded in operating income. See Note 6 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for further discussion.

The components of accumulated other comprehensive loss, net of related taxes, are as follows:



	April 2,		December 31,		April 1,		December 31,
(Millions of dollars)	2016		2015		2017		2016
Cumulative foreign currency translation adjustment	$	(254)	$	(228)	$	(256)	$	(254)
Unrealized gain on investments		1		1		3		2
Unrecognized pension cost		(50)		(51)		(51)		(52)
Total accumulated other comprehensive loss	$	(303)	$	(278)	$	(304)	$	(304)

The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange fluctuation on the net assets of the Sugar segment. ~~During the first quarter of 2016, Seaboard recognized $23 million of other comprehensive loss, net of related taxes, related to the devaluation of the Argentine peso.~~ At April ~~2, 2016,~~1, 2017, the Sugar segment had ~~$58~~$84 million in net assets denominated in Argentine pesos and ~~$2 million in~~ net liabilities denominated in U.S. ~~dollars.~~dollars were $1 million. Management ~~anticipates that~~cannot predict the ~~Argentine peso could continue to weaken against~~volatility in the ~~U.S. dollar~~currency exchange rate.

At April 1, 2017 and ~~that Seaboard could incur additional~~April 2, 2016, income taxes for the cumulative foreign currency translation adjustment ~~losses in other comprehensive loss during the remainder of 2016.~~

~~At April 2, 2016 and April 4, 2015, income taxes for cumulative foreign currency translation adjustments were~~was recorded using a 35% effective tax rate except for ~~$88~~$90 million and ~~$60~~$88 million, respectively, related to certain subsidiaries for which no tax benefit was recorded. At April ~~2, 2016~~1, 2017 and April ~~4, 2015,~~2, 2016, income taxes for all other components of accumulated other comprehensive loss were recorded using a 39% effective tax rate except for unrecognized pension cost of ~~$18~~$19 million and ~~$20~~$18 million, respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.

Note 9 – Segment Information

Seaboard has six reportable segments: Pork, Commodity Trading and Milling (“CT&M”), Marine, Sugar, Power and Turkey, each offering a specific product or service. Below are segment updates from ~~year-end or that impact prior period financial statements.~~year-end.

~~On February 7, 2016,~~During the first quarter of 2017, Seaboard’s ~~Pork~~CT&M segment acquired ~~hog inventory,~~ a ~~feed mill, truck washes~~pulse and ~~certain hog farms~~grain elevator in ~~the Central U.S. from Christensen Farms & Feedlots, Inc. and Christensen Farms Midwest, LLC~~Canada for total cash consideration of ~~$148~~$14 million. ~~Seaboard had previously agreed~~This business, which complements an existing CT&M business in Canada, is expected to provide a portion of the hogs to be processed at the new pork processing facility being developed through STF LLC, as discussed in Note 7 to the Condensed Consolidated Financial Statements. With this purchase, Seaboard will increase its sow herd to meet the majority of such supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.

pulse trade volumes. The purchase was recorded at fair value ~~in Seaboard’s Pork segment~~with $11 million allocated to property, plant and ~~the allocation of the preliminary purchase price was as follows:~~



~~(Millions of dollars)~~
~~Inventories~~	$	33
~~Property, plant and equipment~~		~~111~~
~~Intangible assets~~		1
~~Goodwill~~		3
~~Total consideration transferred~~	$	~~148~~

~~Intangible assets include customer relationships that have a weighted-average useful life of 1.6 years.~~equipment and $3 million allocated to goodwill. Goodwill represents the ~~farms’ established processes,~~assembled workforce, cost savings of buying rather than developing a greenfield operation and the close proximity of this elevator to the ~~Sioux City, Iowa, processing plant.~~

producers in the region. The goodwill is deductible for income tax purposes. Operating results ~~of $20 million in net sales and an immaterial amount of net income~~ have been included in Seaboard’s ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements from the date of ~~acquisition for~~acquisition. Pro forma results of operations are not presented as the ~~three months ended April 2, 2016. Acquisition costs were less than $1 million.~~

~~The following unaudited pro forma information presents the combined consolidated financial~~effects are not material to Seaboard’s results ~~for Seaboard as if the acquisition had been completed at the beginning~~ of ~~January 1, 2015.~~operations.

Three months ended

April 2,

April 4,

(Millions of dollars except per share amounts)

2016

2015

Net sales

$
1,335

$
1,489

Net earnings

$
55

$
32

Earnings per common share

$
45.91

$
27.25

The CT&M segment has a 50% noncontrolling interest in a bakery located in the Democratic Republic of Congo (“DRC”), which began operations in 2012. As a result of continuing equipment problems, other production challenges and unfavorable local market conditions causing operating losses and challenges in gaining market share,DRC. Seaboard’s management determined achieving improved operating results would take significantly longer than initially anticipated, and determined there was a decline in value considered other than temporary as of December 31, 2014. Seaboard recorded a write-down of $11 million in loss from affiliate in the fourth quarter of 2014, which represented the remaining equity investment ~~in this business. There was no tax benefit from this transaction.~~balance is zero. As part of its original investment, Seaboard has an interest bearing long-term note receivable from this affiliate ~~with the first payment due June 2015~~that had a principal and a maturity date of December 2020. No payments have been received, and Seaboard agreed to temporarily waive this default to allow time to work with the business management and its other owners on revisions to the payment schedule to better align with the bakery’s forecasted cash flows. As of April 2, 2016, the recordedinterest balance of ~~this note receivable and previous accrued interest was $35~~approximately $19 million at April 1, 2017, all classified as long-term given uncertainty of the timing of payments in the future. ~~On April 11,~~In the second and fourth quarters of 2016, Seaboard ~~reached~~reserved an ~~agreement with~~aggregate of $16 million of the original note balance in bad debt expense within selling, general and administrative expenses in the consolidated statements of comprehensive income. The note receivable is 50% guaranteed by the other shareholder in the entity. During the fourth quarter of 2016, the business owners began discussions regarding various strategic alternatives, such as restructuring the note to ~~restructure this note receivable by extending~~further extend the ~~maturity 18 months to June 1, 2022~~term and ~~changing the bi-annual~~match payments to ~~monthly payments of varying amounts beginning December 1, 2016. Based on~~revised cash flow ~~projections~~estimates, enforce the guarantees from the other owner which may require legal action, sale of the bakery, or Seaboard obtaining control of the bakery at which time the entity would become consolidated. As of the date of this report, no alternative strategic solution was agreed upon, and ~~a discounted cash flow analysis based on the terms~~there was no amendment of the note receivable ~~Seaboard recognized no impairment as of April 2, 2016.~~agreement. If the future long-term cash flows of this bakery do not improve, ~~and forecasted cash flow projections are not met, some~~more of the recorded value of the note receivable from affiliate could be deemed uncollectible in the future, which ~~may~~could result in a ~~material~~further charge to earnings. ~~Including this business, as of April 2, 2016, Seaboard~~

The CT&M segment had a total of $61 million of investments in, advances to and notes receivable from all of its affiliates in the DRC, which represent the single largest foreign country risk exposure of Seaboard’s equity method investments. One of the other affiliates in the DRC, to which Seaboard sells wheat, is the only supplier of flour to this bakery.

~~Seaboard has~~ a 50% noncontrolling ~~equity~~ interest in Belarina Alimentos S.A. (“Belarina”), a flour production business in ~~Brazil. Since September 2013,~~Brazil, which it accounted for using the equity method of accounting prior to October 28, 2016, the date Seaboard ~~has contributed a total of $50 million in investments and advances, and provided a $13 million long-term loan to this business. Half~~obtained 98% of the ~~interest on this long-term note receivable from affiliate is payable currently in~~equity ownership and control of Belarina. No cash ~~and~~or other consideration was transferred to the other ~~half accrues~~shareholder whose ownership was diluted through revision of the shareholders agreement to restructure the affiliate debt and equity of Belarina. Seaboard accounted for the transaction as ~~pay-in-kind interest. This note receivable matures~~a business combination achieved in ~~September 2020 but can be repaid with Seaboard having~~stages and included the ~~option to convert~~financial results of Belarina in its consolidated financial statements since the ~~note receivable to equity and the other equity holders having the option to match such conversion with a purchase~~date of new shares to avoid dilution. At the time of Seaboard's initial investment in this business, plans included potential future equal additional investments by the owners to improve existing operations and expand operations to improve long-term operating results.acquisition. During the three months ended April 2, 2016, Seaboard’s advances totaled $1 million, and Seaboard recorded losses from affiliate of $1 million related to the advances. Based on discussions with the business’ other 50% shareholder and the executive management of the business, the extent of the losses and revised financial forecast of the business economy, the halting of the construction plans for a new plant and the amount of existing third-party debt, Seaboard previously reserved a total of $22 million related to its advances and long-term note receivable. Third-party debt was $19 million and $16 million as of April 2, 2016 and December 31, 2015, respectively. In total,

Seaboard’s investment in the business, advances and long-term note receivable are zero as of April 2, 2016. Seaboard has begun the legal process, as allowed per the Shareholders Agreement, to convert its debt to equity and, if successful, Seaboard would obtain control of the business and the entity would become consolidated. However, there is no certainty that Seaboard will successfully be able to obtain control. Seaboard alsoMarine segment has a gross receivable due from affiliate related to this business resulting from sales of grain and supplies of $23 million and $17 million as of April 2, 2016 and December 31, 2015, respectively, which Seaboard recorded a reserve of $9 million during 2015 based on an analysis of collectability and working capital.

During the first quarter of 2016, Seaboard’s CT&M segment provided a $12 million loan to a Peruvian affiliate. Interest is payable monthly, and the principal is due on August 31, 2017, with no prepayment penalty.

~~Also during the first quarter of 2016, Seaboard invested $7 million of cash and converted its $8 million note receivable to equity for a~~ 36% ~~noncontrolling interest~~investment in a holding company that owns a ~~controlling~~majority interest in ~~two Haitian~~a Caribbean start-up ~~projects consisting of a marine~~ terminal ~~operation and a free trade zone development, which includes a planned power plant. The~~operation. Seaboard accounts for its investment ~~is accounted for in the Marine segment~~ using the equity method, and ~~reported~~as of December 31, 2016 had a book investment balance of $14 million, a convertible note receivable of $2 million and an affiliate receivable of $1 million. During the first quarter of 2017, the terminal operations encountered the loss of a customer and defaulted on certain third-party debt obligations. In addition, third-party engineering studies identified significant unexpected construction modifications needed for the terminal operation. The holding company is investigating various strategic alternatives, such as additional capital calls, restructuring of the third-party debt, and restructuring of the affiliate equity and receivables, which includes the deferral of all affiliated receivable payments until such future time as cash flow is sufficient to pay all third-party debt. As a ~~three-month lag. Seaboard’s first proportionate share of income (loss) from affiliates will be recognized~~result, Seaboard evaluated its investment in affiliate and receivables for impairment and recorded a $5 million charge on its investment, a $1 million charge on its convertible note receivable and a $3 million allowance on its affiliate receivables in the ~~second quarter of 2016.~~three month period ended April 1, 2017. If future long-term cash flows do not improve, there is a possibility that there could be additional charges.

During the second quarter of 2015, Seaboard’s Power segment invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic and changed its method of accounting from a cost method investment to an equity method investment. This change in accounting required Seaboard to present its prior

1514

~~period financial results~~

In March of 2017, Seaboard’s Power segment was notified by the Ministry of Environment and Natural Resources (the “Ministry”), a division within the Dominican Republic government, that it will not renew the environmental license for Seaboard’s power plant on a barge located in the Ozama River. If the license is not renewed, Seaboard would be required to ~~reflect~~find a new location by the ~~equity method~~third quarter of ~~accounting~~2018. Seaboard’s management is in discussions with the Ministry and will vigorously defend its rights to continue to operate the barge, which is under a special dispensation from the ~~date~~President of the ~~initial investment. Seaboard's portion of~~Dominican Republic, in its current location. It is not possible at this time to determine whether a favorable outcome will be reached or to estimate the ~~investee’s loss for~~charge to earnings if Seaboard has to relocate the ~~three months ended April 4, 2015 was not material.~~barge.

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC (“Butterball”). Butterball had total net sales for the three months ended April 2, 2016 and April 4, 2015 of $385 million and $398 million, respectively. For the three months ended April 2, 2016 and April 4, 2015, Butterball had operating income of $45 million and $43 million, respectively, and net income of $38 million and $32 million respectively. As of April ~~2, 2016~~1, 2017 and December 31, ~~2015,~~2016, Butterball had total assets of ~~$1,101~~$1,111 million and ~~$1,087~~$1,154 million, respectively.

In connection with its initial investment in Butterball in December 2010, Seaboard provided Butterball with a $100 million unsecured subordinated loan (the “subordinated loan”) with a seven-year maturity and interest of 15% per annum, comprised of 5% payable in cash semi-annually, plus 10% pay-in-kind interest, compounded semi-annually, which accumulates and Butterball’s summarized income statement information is paid at maturity. Also in connection with providing the subordinated loan, Seaboard received detachable warrants, which upon exercise for a nominal price, would enable Seaboard to acquire an additional 5% equity interest in Butterball. In January 2016, the interest on the subordinated loan was modified to 10% per annum, payable only in cash semi-annually and the warrants were also modified, whereby Seaboard can exercise these warrants at any time after December 31, 2018 or prior to December 31, 2025 after which time the warrants expire.as follows:



	Three Months Ended
		April 1,		April 2,
(Millions of dollars)		2017		2016
Net sales	$	350	$	385
Operating income	$	10	$	45
Net income	$	5	$	38

The following tables set forth specific financial information about each segment as reviewed by Seaboard’s management. Operating income for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income, along with income or ~~losses~~loss from affiliates for the CT&M and Turkey segments, is used as the measure of evaluating segment performance because management does not consider interest, other investment income and income tax expense on a segment basis.



Sales to External Customers:	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Pork	$	328	$	321	$	370	$	328
Commodity Trading and Milling		709		820		727		709
Marine		227		237		234		227
Sugar		33		45		40		33
Power		17		25		24		17
All Other		5		4		4		5
Segment/Consolidated Totals	$	1,319	$	1,452	$	1,399	$	1,319



Operating Income (Loss):	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Pork	$	29	$	16	$	49	$	29
Commodity Trading and Milling		9		4		17		9
Marine		3		7		3		3
Sugar		—		4		3		—
Power		—		3		2		—
All Other						—		—
Segment Totals		41		34		74		41
Corporate		(5)		(6)		(8)		(5)
Consolidated Totals	$	36	$	28	$	66	$	36

1615



Income (Loss) from Affiliates:	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Pork	$	3	$	2	$	—	$	3
Commodity Trading and Milling		(4)		(9)		4		(4)
Marine		1		1		(6)		1
Sugar		1		—		—		1
Power		1		—		—		1
Turkey		20		17		3		20
Segment/Consolidated Totals	$	22	$	11	$	1	$	22



Total Assets:	April 2,		December 31,		April 1,		December 31,
(Millions of dollars)	2016		2015		2017		2016
Pork	$	1,035	$	858	$	1,191	$	1,157
Commodity Trading and Milling		955		988		1,050		989
Marine		311		296		315		314
Sugar		132		202		168		166
Power		198		271		192		196
Turkey		469		448		486		493
All Other		5		6		8		6
Segment Totals		3,105		3,069		3,410		3,321
Corporate		1,291		1,362		1,398		1,434
Consolidated Totals	$	4,396	$	4,431	$	4,808	$	4,755



Investments in and Advances to Affiliates:	April 2,		December 31,		April 1,		December 31,
(Millions of dollars)	2016		2015		2017		2016
Pork	$	134	$	115	$	201	$	175
Commodity Trading and Milling		214		218		207		207
Marine		34		19		28		33
Sugar		3		3		4		4
Power		35		34		30		30
Turkey		302		282		316		324
Segment/Consolidated Totals	$	722	$	671	$	786	$	773

Administrative services provided by the corporate office are allocated to the individual segments and represent corporate services rendered to and costs incurred for each specific segment, with no allocation to individual segments ~~for~~of general corporate management oversight costs. Corporate assets include short-term investments, other current assets related to deferred compensation plans, fixed assets, ~~deferred tax amounts~~ and other miscellaneous items. Corporate operating losses represent certain operating costs not specifically allocated to individual segments and include costs related to Seaboard’s deferred compensation plans, which are offset by the effect of the mark-to-market adjustments on these investments recorded in other investment income, ~~(loss),~~ net.

1716

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

Summary of Sources and Uses of Cash

Cash and short-term investments as of April ~~2, 2016~~1, 2017 decreased ~~$66~~$25 million to ~~$1,238~~$1,329 million from December 31, ~~2015.~~2016. The decrease was primarily the result of the sale of short-term investments used for the $148 million acquisition of hog inventory and related assets discussed in Note 9 to the Condensed Consolidated Financial Statements and cash used for capital expenditures of $63 million, partially offset bylower net cash from operating ~~activities of $117 million.~~activities. Cash from operating activities decreased $6$123 million for the three months ended April ~~2, 2016~~1, 2017 compared to the same period in ~~2015,~~2016, primarily as a result of changes in working capital, partially offset by higher net earnings.

Capital Expenditures, Acquisitions and Other Investing Activities

During the three months ended April ~~2, 2016,~~1, 2017, Seaboard Corporation and its subsidiaries (“Seaboard”) invested ~~$63~~$36 million in property, plant and equipment, of which ~~$15~~$18 million was in the Pork segment, ~~$31~~$6 million in the Commodity Trading and Milling (“CT&M”) segment, $6$8 million in the Marine segment and ~~$10~~$4 million in the Sugar segment. The Pork segment expenditures were primarily for improvements to existing facilities and related equipment and additional hog finishing barns. Of the Commodity Trading and Milling segment expenditures, $29 million was for the construction of two dry bulk vessels, of which both were delivered and then sold and leased back by Seaboard, at book value of $44 million each during the first quarter of 2016. The Marine segment expenditures were primarily for purchases of cargo carrying and handling equipment. The Sugar segment expenditures were primarily for milling capacity increase and fermentation and distillery equipment upgrades. All other capital expenditures were primarily of a normal recurring nature and primarily included replacements of machinery and equipment and general facility modernizations and upgrades.

For the remainder of ~~2016,~~2017, management has budgeted capital expenditures totaling ~~$147~~$198 million. The Pork segment plans to spend ~~$52~~$89 million primarily for further expansion of existing live operations and other improvements to its existing facilities and related ~~equipment and additional hog finishing barns.~~equipment. The ~~Commodity Trading and Milling~~CT&M segment plans to spend ~~$29~~$46 million primarily for ~~a new wheat mill in Zambia~~milling assets and other improvements to existing facilities and related equipment. The Marine segment has budgeted ~~$42~~$52 million primarily for additional cargo carrying and handling ~~equipment.~~equipment and port improvements. The Sugar segment plans to spend ~~$23~~$9 million primarily for ~~increasing distillery and milling capacity.~~alcohol production capacity improvements. The balance of $1$2 million is planned to be spent in all other businesses primarily for normal upgrades to existing operations. Management anticipates paying for these capital expenditures from a combination of available cash, the use of available short-term investments and Seaboard’s available borrowing capacity.

During the first quarter of ~~2016,~~2017, Seaboard’s CT&M segment acquired a pulse and grain elevator in Canada for total cash consideration of $14 million. With this business, the CT&M segment expects to increase pulse trade volumes, which complements its existing Canadian operations. See Note 9 to the condensed consolidated financial statements for further information on this purchase.

During the first quarter of 2017, Seaboard contributed ~~$16~~$25 million to its 50% joint venture, Seaboard Triumph Foods, LLC (“~~STF LLC”~~STF”), constructing a pork processing facility in Sioux City, Iowa. AsPursuant to the ~~joint venture obtained third-party financing in March 2016, the original~~amended subscription agreement, was amended to modify the total contribution amount and timing of payments. See the Contractual Obligations section below for more information. In addition to capital contributions, Seaboard also agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Segment acquired hog inventory and related assets in the Central United States (“U.S.”) for a purchase price of $148 million. These assets are expected to increase Seaboard’s ~~hog production capacity to meet the majority of such hog supply~~remaining commitment for ~~single shift processing at the new plant. See Note 9 to the Condensed Consolidated Financial Statements for further discussion~~2017 was $48 million as of ~~this acquisition.~~April 1, 2017. Seaboard anticipates buying additional hog inventory and related assets during ~~2016~~2017 to ~~fulfill the remaining amount of such~~further increase its hog supply ~~commitment.~~

Also during the first quarter of 2016, Seaboard invested $7 million of cash and converted its $8 million note receivable to equity for a 36% noncontrolling interest in a holding company that owns a controlling interest in two Haitian start-up projects consisting of a marine terminal operation and a free trade zone development, which includes a planned power plant. The investment is accounted for in the Marine segment using the equity method and reported on a three-month lag. Seaboard’s first proportionate share of income (loss) from affiliates will be recognized in the second quarter of 2016.capacity.

Financing Activities and Debt

As of April ~~2, 2016,~~1, 2017, Seaboard had short-term uncommitted lines of credit totaling ~~$371~~$370 million and a committed line of credit totaling $100 million. Borrowings under the uncommitted lines of credit totaled ~~$146~~$142 million, with ~~all such borrowings~~the full balance related to foreign subsidiaries. Seaboard’s borrowing capacity under its uncommitted lines was further reduced by letters of credit totaling $3 million. There was no outstanding balance as of April 1, 2017, under the committed line of credit.

~~On December 4, 2015, Seaboard’s wholly-owned subsidiary,~~As of April 1, 2017, Seaboard ~~Foods LLC, obtained a $500 million~~had an unsecured term loan, which matures in 2022, with a ~~maturity date~~balance of ~~December 4, 2022. Also in 2015, Seaboard’s Argentine~~$494 million and $24 million of foreign subsidiary ~~obtained long-term~~ debt, ~~financing of $23 million, comprised of five loans~~primarily denominated in Argentine pesos. ~~All~~Seaboard was in compliance with all restrictive covenants related to these loans and facilities as of ~~the debt is guaranteed by Seaboard, except for $3 million secured by property, plant and equipment.~~April 1, 2017. See Note 7 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for current debt balances and for a summary of Seaboard’s contingent obligations, including guarantees issued to support certain activities of non-consolidated affiliates or third parties who provide services for Seaboard.

As of April ~~2, 2016,~~1, 2017, Seaboard had cash and short-term investments of ~~$1,238~~$1,329 million and additional total net working capital of ~~$525~~$803 million. Accordingly, management believes Seaboard’s combination of internally generated cash, liquidity, capital resources and borrowing capabilities will be adequate for its existing operations and any currently known potential plans for expansion of existing operations or business segments for ~~2016.~~2017. Management intends to continue seeking opportunities for expansion in the industries in which Seaboard operates, utilizing existing liquidity, available borrowing capacity and other financing alternatives.

As of April ~~2, 2016, $341~~1, 2017, $404 million of the ~~$1,238~~$1,329 million of cash and short-term investments were held by Seaboard’s foreign subsidiaries, and Seaboard could be required to accrue and pay taxes to repatriate these funds if needed for Seaboard’s operations in the United States (“U.S.”). However, Seaboard’s intent is to permanently reinvest these funds outside the U.S., and current plans do not demonstrate a need to repatriate them to fund Seaboard’s U.S. operations.

~~Contractual Obligations~~

In the first quarter of ~~2016, STF LLC obtained third-party financing,~~2017, Seaboard declared and paid a quarterly dividend of $1.50 per share of common stock. On May 3, 2017, Seaboard declared another quarterly dividend of $1.50 per share of common stock payable on May 25, 2017. Seaboard’s Board of Directors intends that Seaboard will continue to pay quarterly dividends for the reasonably foreseeable future, with the amount of any dividends being dependent upon such factors as ~~a result the original subscription agreement was amended to modify~~ Seaboard’s ~~total contribution amount~~financial condition, results of operations and ~~timing of payments. Seaboard’s total contribution was reduced from $207 million to $150 million, with $36 million due during the remainder of 2016~~current and ~~$73 million due in 2017. Construction of the pork processing facility is expected to be completed by mid-2017.~~anticipated cash needs, including capital requirements.

RESULTS OF OPERATIONS

Net sales ~~decreased $133 million~~ for the three month period of ~~2016 compared to~~2017 increased $80 million over the same period in ~~2015.~~2016. The ~~decrease~~increase was primarily the result of ~~lower sales~~higher prices and the mix of products sold in the Commodity Trading and Milling segment, lower cargo rates in the Marine segment, lower prices of sugar and alcohol sold in the Sugar segment, and lower spot market rates in the Power segment.

~~Operating income increased $8 million for the three month period of 2016 compared to the same period in 2015. The increase primarily reflected higher sales volumes~~ for pork products sold and higher sales of market hogs in the Pork segment and higher ~~margins on commodity trades~~third-party sales prices and higher volume of sales to ~~third parties~~affiliates in the ~~Commodity Trading and Milling~~CT&M segment.

Operating income increased $30 million for the three month period of 2017 compared to the same period in 2016. The increase ~~was partially offset by~~primarily reflected improved overall margins from higher meat prices and lower ~~cargo rates~~feed costs for hogs internally grown in the ~~Marine segment and higher production costs in the Sugar~~Pork segment.

Pork Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Net sales	$	328	$	321	$	370	$	328
Operating income	$	29	$	16	$	49	$	29
Income from affiliates	$	3	$	2	$	—	$	3

Net sales for the Pork segment increased $7$42 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The increase was primarily the result of higher prices for pork products sold and higher sales of market hogs, ~~related to the recent acquisition as discussed in Note 9 to the Condensed Consolidated Financial Statements,~~ partially offset by a lower ~~prices for~~volume of pork products ~~sold.~~sold domestically.

Operating income for the Pork segment increased ~~$13~~$20 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The increase was primarily the result of improved overall margins from higher meat prices and lower feed costs for hogs internally ~~grown,~~grown. The increase was partially offset by lower ~~prices~~margins on biodiesel since the Federal blender’s credits have not been renewed for 2017 and lower volumes of pork products sold.

Management is unable to predict future market prices for pork products, the cost of feed or cost of third-party hogs. However, management anticipates positive operating income for this segment for the remainder of ~~2016.~~2017.

Commodity Trading and Milling Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Net sales	$	709	$	820	$	727	$	709
Operating income as reported	$	9	$	4	$	17	$	9
Mark-to-market adjustments		5		(4)
Mark-to-market losses (gains)						(4)		5
Operating income excluding mark-to-market adjustments	$	14	$	—	$	13	$	14
Loss from affiliates	$	(4)	$	(9)
Income (loss) from affiliates					$	4	$	(4)

Net sales for the ~~Commodity Trading and Milling~~CT&M segment ~~decreased $111~~increased $18 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase primarily reflected ~~lower~~higher sales prices for sales to third parties and ~~the mix~~higher volume of ~~products sold,~~sales to affiliates, partially offset by ~~higher~~lower third-party sales volumes in corn ~~soybean meal~~ and wheat.

Operating income for this segment increased $5$8 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The increase for the three month period primarily ~~reflected higher margins on commodity trades to third parties. The increase also~~ reflected fluctuations of $9 million of mark-to-market derivative contracts as discussed below. Excluding the effects of mark-to-market adjustments for ~~derivatives~~derivative contracts, operating income ~~increased $14 million.~~decreased $1 million for the three month period of 2017 compared to the same period for 2016.

Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which ~~Seaboard~~this segment operates, and the current volatility in the commodity markets, management is unable to predict future sales and operating results for this segment. However, management anticipates positive operating income for this segment for the remainder of ~~2016,~~2017, excluding the effects of marking to market derivative contracts.

Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have been lower by $4 million and higher by $5 ~~million and lower by $4~~ million for the three month periods of ~~2016~~2017 and ~~2015,~~2016, respectively. While management believes its commodity futures, options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked-to-market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time, and these mark-to-market adjustments could reverse in ~~fiscal 2016.~~2017. Management believes eliminating these mark-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.

Income from affiliates for the three month period of 2017 increased by $8 million compared to the same period in 2016. Based on the uncertainty of local political and economic environments in the countries in which ~~Seaboard’s~~the CT&M segment’s affiliates operate, management cannot predict future ~~results.~~results for the affiliates.

Marine Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Net sales	$	227	$	237	$	234	$	227
Operating income	$	3	$	7	$	3	$	3
Income from affiliates	$	1	$	1
Income (loss) from affiliates					$	(6)	$	1

Net sales for the Marine segment ~~decreased $10~~increased $7 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase was primarily the result of higher volumes in certain markets during 2017 compared to 2016, partially offset by lower cargo rates.

Operating income did not change for the three month period of 2017 compared to the same period in 2016. The increase in cargo volumes was primarily offset as the result of lower cargo rates ~~in certain markets during 2016 compared to 2015.~~

~~Operating income decreased $4 million for the three month period of 2016 compared to the same period in 2015. The decrease was primarily the result of lower cargo rates, partially offset by lower~~and higher voyage ~~costs, principally fuel costs on a per unit shipped basis.~~costs. Management cannot predict changes in future cargo volumes, cargo rates and fuel costs, or to what extent changes in economic conditions in markets served will affect net sales or operating income during the remainder of ~~2016.~~2017. However, management anticipates this segment will have positive operating income for the remainder of ~~2016.~~2017.

Income from affiliates for the three month period of 2017 decreased $7 million compared to the same period in 2016 primarily due to an other-than-temporary impairment charge of $6 million related to Seaboard’s investment in a holding company that owns a majority interest in a start-up terminal operation. See Note 9 to the condensed consolidated financial statements for further information on this affiliate.

Sugar Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Net sales	$	33	$	45	$	40	$	33
Operating income	$	—	$	4	$	3	$	—
Income from affiliates	$	1	$	—	$	—	$	1

Net sales for the Sugar segment ~~decreased $12~~increased $7 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase primarily reflected ~~lower~~higher volumes and selling prices of alcohol and higher selling prices for sugar ~~and alcohol~~offset by lower volumes of sugar sold. Sugar and alcohol sales are denominated in Argentine pesos. The foreign currency exchange rate from pesos ~~and an~~to U.S. dollars did not significantly change in the first quarter of 2017, but in 2016, the increase in local sale prices in terms of U.S. dollars ~~were~~was principally offset by exchange rate changes as the Argentine peso continued

to weaken against the U.S. dollar. Management cannot predict local sugar and alcohol prices ~~for~~or the remainder of 2016, but management anticipates that the Argentine peso will continue to weaken against the U.S. dollar. See Note 8 to the Condensed Consolidated Financial Statements for discussion of this devaluation’s impact on stockholders’ equityvolatility in the ~~first quarter of 2016.~~currency exchange rate.

Operating income ~~decreased $4~~for the Sugar segment increased $3 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase for the three month period primarily reflected higher ~~production costs for sugar,~~ alcohol ~~and cogeneration. To a lesser extent, the decrease in operating income was~~margins, partially offset by ~~a reduction in selling, general and administrative expenses principally from decreased personnel related~~higher sugar production costs. Based on ~~recent~~ market conditions, management currently cannot predict if this segment will be profitable for the remainder of ~~2016.~~2017.

Power Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Net sales	$	17	$	25	$	24	$	17
Operating income	$	—	$	3	$	2	$	—
Income from affiliates	$	1	$	—	$	—	$	1

Net sales for the Power segment ~~decreased $8~~increased $7 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase primarily ~~reflects lower~~reflected higher spot market rates. ~~The lower spot market rates were attributable primarily to lower fuel costs, a component of pricing.~~

Operating income ~~decreased $3~~for the Power segment increased $2 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015.~~2016. The ~~decrease~~increase primarily reflected ~~lower~~higher spot market rates, partially offset by ~~lower~~higher fuel ~~costs per kilowatt hour generated and other lower production~~ costs. Management cannot predict future fuel costs or the extent that spot market rates will fluctuate compared to fuel costs. However, management anticipates positive operating income for this segment for the remainder of ~~2016.~~2017.

Turkey Segment



	Three Months Ended				Three Months Ended
	April 2,		April 4,		April 1,		April 2,
(Millions of dollars)	2016		2015		2017		2016
Income from affiliates	$	20	$	17	$	3	$	20

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC. The ~~increase~~decrease in income from affiliates for the three month period of ~~2016~~2017 compared to the same period in ~~2015~~2016 was primarily the result of ~~higher~~lower prices for turkey products ~~sold, partially offset by higher costs from the increased production of further processed turkey products and lower volumes.~~sold. Management is unable to predict future market prices for turkey products or the cost of ~~feed or the impact to the Turkey segment from avian influenza.~~feed. However, management anticipates positive income for this segment for the remainder of ~~2016.~~2017.

~~Interest Expense~~Selling, General and Administrative Expenses

~~Interest expense~~Selling, general and administrative (“SG&A”) expenses increased ~~by $3~~$8 million for the three month period of ~~2016~~2017 compared to the same period in ~~2015. The increase is~~2016 primarily due to increased personnel-related costs, including costs related to ~~long-term debt issued in December 2015, partially~~Seaboard’s deferred compensation program, which are offset by ~~capitalized interest. See Note 7 to~~ the ~~Condensed Consolidated Financial Statements for further information~~effect of the mark-to-market on ~~this debt.~~

~~Other Investment Income, Net~~

~~The fluctuation~~investments recorded in other investment ~~income,~~income. As a percentage of total net sales, SG&A was 5% for the three month period of ~~2016~~2017 and 2016.

Interest Expense

Interest expense decreased $5 million for the three month period of 2017 compared to the same period in ~~2015~~2016 primarily ~~reflects higher losses associated with investments~~due to a patronage dividend received in ~~refined coal processing plants, partially offset by~~the first quarter of 2017 related to the Term Loan due 2022. Seaboard receives patronage dividends since the lenders are cooperative banks that are required to distribute their profits to their members.

Other Investment Income, Net

Other investment income, net increased $32 million for the three month period of 2017 compared to the same period in 2016 primarily due to higher income on short-term investments related to mark-to-market ~~fluctuations and dividends. A portion of Seaboard’s investment losses in refined coal processing plants are offset by tax credits in income tax expense.~~fluctuations.

Foreign Currency Gains, Net

Foreign currency gains, net ~~totaled $7 million and $1~~decreased $4 million for the three month ~~periods~~period of ~~2016 and 2015, respectively.~~2017 compared to the same period in 2016. The ~~fluctuation~~decrease primarily reflects ~~gains~~losses in the ~~euro, Japanese yen,~~ South African rand, ~~and various~~among fluctuations of other currency exchange ~~rates~~rate changes in several foreign countries. The political and economic conditions of the countries in which Seaboard operates and does business, along with fluctuations in the value of the U.S. dollar, cause volatility in currency exchange rates, which exposes Seaboard to fluctuating foreign currency gains and losses that cannot be predicted by Seaboard. Although Seaboard does not utilize hedge accounting, Seaboard does utilize foreign currency exchange contracts to manage its risks and exposure to foreign currency fluctuations primarily related to the South African rand. Management believes gains and

losses on commodity transactions, including the mark-to-market effects, of such foreign currency exchange contracts relate to the underlying commodity transactions and classifies such gains and losses in cost of sales. All other gains ~~(losses)~~and losses on foreign currency exchange agreements are included in foreign currency gains, ~~(losses),~~ net.

Income Tax Expense

On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Tax Act”) was signed into law. The 2015 Tax Act reinstated and made permanent certain expired corporate income tax provisions that impact current and deferred taxes for financial reporting purposes. Certain reinstated provisions were extended for 2015 and 2016, while certain other provisions were extended beyond 2016.

The effective tax rate for the three month period of ~~2016~~2017 was ~~lower~~higher than that for the three month period of ~~2015~~2016 primarily due to the ~~2015 Tax Act’s extension~~expiration of ~~certain~~the U.S. biodiesel tax provisions ~~that had expired during the three month period of 2015~~on December 31, 2016 and ~~additional~~lower projected tax credits ~~earned.~~in 2017, partially offset by a change in the mix of domestic and foreign earnings from the prior year.

Other Financial Information

See Note 1 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for a discussion of recently issued accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Seaboard is exposed to various types of market risks in its day-to-day operations. Seaboard utilizes derivative instruments to mitigate some of these risks, including both purchases and sales of futures and options to hedge inventories, forward purchases and sale contracts. Primary market risk exposures result from changing commodity prices, foreign currency exchange rates and interest rates. Seaboard also enters into speculative derivative transactions not directly related to its raw material requirements. The nature of Seaboard’s market risk exposure related to these items has not changed materially since December 31, ~~2015.~~2016. See Note 5 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for further discussion.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures — Seaboard’s management evaluated, under the direction of ~~our~~the Chief Executive and Chief Financial Officers, the effectiveness of Seaboard’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) as of April ~~2, 2016.~~1, 2017. 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.

Change in Internal Controls — There has been no change in Seaboard’s internal control over financial reporting required by Exchange Act Rule 13a-15(f) that occurred during the fiscal quarter ended April ~~2, 2016~~1, 2017 that has materially affected, or is reasonably likely to materially affect, Seaboard’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For information related to Seaboard’s legal proceedings, see Note 7 to the ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes in the risk factors as previously disclosed in Seaboard’s annual report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

As of the date of this report, Seaboard 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 8 to the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements for further discussion. There were no purchases made pursuant to Seaboard’s share repurchase program during the first quarter of ~~2016.~~2017.


Item 6.		Exhibits

Exhibit No.		Description

10.1		~~First~~ Amendment to Employment Agreement between Seaboard ~~Triumph~~Corporation and Steven J. Bresky dated March 22, 2017.

10.2		Amendment to Employment Agreement between Seaboard Foods LLC ~~Subscription~~and Terry J. Holton dated March 22, 2017.

10.3		Amendment to Employment Agreement between Seaboard Overseas and Trading Group and David M. Dannov dated ~~February 29, 2016~~March 22, 2017.

10.4		Seaboard Corporation Pension Plan as restated and amended effective as of January 1, 2017. Incorporated herein by reference to Exhibit 10.10 of Seaboard’s Form 10-K for the fiscal year ended December 31, 2016.

10.5		Seaboard Corporation Executive Officers’ Bonus Policy (effective for 2017). Incorporated herein by reference to Exhibit 10.14 of Seaboard’s Form 10-K for the fiscal year ended December 31, 2016.

10.6		Seaboard Corporation Executive Incentive Plan effective January 1, 2017. Incorporated herein by reference to Exhibit 10.15 of Seaboard’s Form 10-K for the fiscal year ended December 31, 2016.

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

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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Forward-looking Statements

This Form 10-Q contains 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 projection of revenues, income or loss, capital expenditures, capital structure or other financial items, including the impact of mark-to-market accounting on operating income; 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 sales 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~~CT&M segment; (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 segments; (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; (xii) the increase in Seaboard's hog and other production capacity attributable to acquisitions; ~~(xiii) the amount of Seaboard's funding commitment for refined coal processing plants;~~ or ~~(xiv)~~(xiii) 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 report, including without limitation the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” identifies important factors that could cause such differences.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SEABOARD CORPORATION


	by:	/s/ Robert L. Steer
		Robert L. Steer, Executive Vice President,
		Chief Financial Officer
		(principal financial officer)

	Date: May ~~6, 2016~~3, 2017


	by:	/s/ Michael D. Trollinger
		Michael D. Trollinger, Vice President, Corporate Controller
		and Chief Accounting Officer
		(principal accounting officer)

	Date: May ~~6, 2016~~3, 2017

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