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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number: 1-3390
SEABOARD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip Code)
(913) 676-8800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock $1.00 Par Value American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). Yes [ X ] No [ ]
The aggregate market value of 354,380 shares of Seaboard voting
stock held by nonaffiliates on January 31, 2004 was approximately
$74,242,610.00, based on the closing price of $209.50 per share
on June 27, 2003, the end of Seaboard's second fiscal quarter.
As of February 20, 2003, the number of shares of common stock
outstanding was 1,255,053.90.
DOCUMENTS INCORPORATED BY REFERENCE
Part I, item 1(b), a part of item 1(c)(1) and the financial
information required by item 1(d) and Part II, items 6, 7, 7A and
8 are incorporated herein by reference to Seaboard Corporation's
Annual Report to Stockholders furnished to the Commission
pursuant to Rule 14a-3(b).
Part II, a part of item 5, and Part III, a part of item 10 and
items 11, 12 and 13 are incorporated herein by reference to
Seaboard Corporation's definitive proxy statement filed pursuant
to Regulation 14A for the 2004 annual meeting of stockholders.
Forward-Looking Statements
This report, including information included or incorporated
by reference in this report, contains certain forward-looking
statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of
Seaboard Corporation and its subsidiaries (Seaboard). Forward-
looking statements generally may be identified as:
statements that are not historical in nature, and
statements preceded by, followed by or that include the
words "believes," "expects," "may," "will," "should,"
"could," "anticipates," "estimates," "intends" or
similar expressions
In more specific terms, forward-looking statements, include,
without limitation:
statements concerning projection of revenues, income or
loss, capital expenditures, capital structure or other
financial items,
statements regarding the plans and objectives of
management for future operations,
statements of future economic performance,
statements regarding the intent, belief or current
expectations of Seaboard and its management with
respect to:
(i) the cost and timing of the completion of new or
expanded facilities,
(ii) Seaboard's ability to obtain adequate
financing and liquidity,
(iii) the price of feed stocks and other materials
used by Seaboard,
(iv) the sale price for pork products from such
operations,
(v) the price for other products and services,
(vi) the charter hire rates and fuel prices for
vessels,
(vii) the demand for power, related spot market
prices and collectibility of receivables in the
Dominican Republic,
(viii) the effect of the devaluation of the
Argentine and Dominican Republic pesos,
(ix) the potential effect of the proposed meat
packer ban legislation on the Pork Division,
(x) the effect of the Venezuelan economy on the Marine
Division,
(xi) the potential effect of Seaboard's investment
in a wine business on the consolidated financial
statements,
(xii) the potential impact of various environmental
actions pending or threatened against Seaboard, or
(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.
Forward-looking statements are not guarantees of future
performance or results. They involve risks, uncertainties and
assumptions. Actual results may differ materially from those
contemplated by the forward-looking statements due to a variety
of factors. The information contained in this Form 10-K and in
other filings Seaboard makes with the Commission, including
without limitation, the information under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in this Form 10-K, identifies important
factors which could cause such differences.
2
PART I
Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, the successor
corporation to a company first incorporated in 1928, and
subsidiaries (Seaboard) is a diversified international
agribusiness and transportation company which is primarily
engaged domestically in pork production and processing, and cargo
shipping. Overseas, Seaboard is primarily engaged in commodity
merchandising, flour and feed milling, sugar production, and
electric power generation. See Item 1(c) (1) (ii) "Status of
Product or Segment" below for a discussion of developments in
specific segments.
Seaboard Flour LLC, a Delaware limited liability company,
owns approximately 70.7 percent of the outstanding common stock
of Seaboard. Mr. H. Harry Bresky, President and Chief Executive
Officer of Seaboard, and other members of the Bresky family,
including trusts created for their benefit; own approximately
99.5 percent of the common units of Seaboard Flour LLC. Such
Bresky family members also own additional shares, representing
approximately 3.0 percent of the outstanding common stock of
Seaboard.
(b) Financial Information about Industry Segments
The information required by Item 1(b) of Form 10-K relating
to Industry Segments is incorporated herein by reference to
Note 13 of the Consolidated Financial Statements appearing on
pages 48 through 52 of the Seaboard Corporation Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 to this Report.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done by the Registrant
(i) Principal Products and Services
Pork Division - Seaboard, through its subsidiary, Seaboard
Farms, Inc., engages in the businesses of hog production and pork
processing in the United States. Through these operations,
Seaboard produces and sells fresh and frozen pork to further
processors, foodservice outlets, grocery stores and other retail
outlets, and other distributors primarily in the western half of
the United States, and to Japan and other foreign markets.
Further processing companies purchase Seaboard's pork products in
bulk and produce products, such as lunchmeat, hams, bacon, and
sausages. Fresh pork, such as loins, tenderloins and ribs are
sold to distributors and grocery stores. Seaboard also sells a
small amount of packaged and marinated pork products. Seaboard
sells some of its products under the brand name Prairie Fresh.
Seaboard's hog processing plant is located in Guymon, Oklahoma,
and operates at double shift capacity. The plant processes
approximately 4.5 million hogs annually.
Seaboard's hog production operations consist of the breeding
and raising of approximately 3 million hogs annually at
facilities it either owns or leases or at facilities owned and
operated by third parties with whom it has grower contracts.
Seaboard has recently completed expansion of the facilities to
produce an additional 500,000 hogs annually. The hog production
operations are located in the States of Oklahoma, Kansas, Texas
and Colorado. As a part of the hog production operations,
Seaboard produces specially formulated feed for the hogs at six
owned feed mills. The remaining hogs processed are purchased
from third party hog producers, primarily pursuant to purchase
contracts.
Commodity Trading and Milling Division - Seaboard's
Commodity Trading and Milling Division, through its subsidiaries,
Seaboard Overseas Limited located in Bermuda, Seaboard Overseas
Trading and Shipping (PTY), Ltd. located in Durban, South Africa,
and other locations in Peru, Ecuador and Kenya, markets wheat,
corn, soybean meal and other commodities in bulk to third-party
customers internationally and affiliated companies. These
commodities are purchased worldwide, with primary destinations to
Africa, South America, the Caribbean, and the Eastern
Mediterranean. The division originates, transports and markets
approximately 4 million tons of grains and proteins on an annual
basis. Seaboard integrates the service of delivering commodities
to its customers through the use of its owned bulk carriers and
other chartered vessels, as required.
3
This division also operates milling businesses in 13
countries, which are primarily supplied by the trading locations
discussed above. The grain processing businesses are operated
through four owned and nine non-consolidated affiliates in
Africa, the Caribbean and South America, with flour, feed and
maize milling businesses which produce approximately 1.5 million
metric tons of finished products per year. Most of the products
produced by the milling operations are sold in the countries in
which the products are produced.
Marine Division - Seaboard, through its subsidiary, Seaboard
Marine Limited, and various foreign affiliated companies and
third party agents, provides containerized cargo shipping service
to over twenty countries between the United States, the Caribbean
Basin, and Central and South America. Seaboard uses a network of
offices and agents throughout the United States, Canada, Latin
America and the Caribbean Basin to book both northbound and
southbound cargo. Through intermodal arrangements, Seaboard can
transport cargo from numerous U.S. mainland locations by either
truck or rail to one of its U.S. port locations, where it is
staged for shipment via sea.
Seaboard's primary marine operations located in Miami
include a 135,000 square foot warehouse for cargo consolidation
and temporary storage, and a 70 acre private terminal at the Port
of Miami. At the Port of Houston, Seaboard operates a 62 acre
cargo terminal facility that includes over 690,000 square feet of
on-dock warehouse space for temporary storage of bagged grains,
resins and other cargoes. Seaboard also makes scheduled vessel
calls in New Orleans, Louisiana, Fernandina Beach, Florida and
Philadelphia, Pennsylvania. Seaboard's fleet consists of
approximately 28 owned or chartered vessels, thousands of dry,
refrigerated and specialized containers and related equipment.
Seaboard also provides cargo transportation service from its
domestic ports of call to and from multiple foreign destinations
where Seaboard does not make vessel calls through connecting
carrier agreements with third party regional and global carriers.
Sugar and Citrus Division - Seaboard, through its
subsidiary, Ingenio y Refineria San Martin del Tabacal and other
Argentine non-consolidated affiliates, is involved in the
production and refining of sugar cane and the production and
processing of citrus in Argentina. These products are primarily
sold in Argentina, primarily to retailers, soft drink
manufacturers, and food manufacturers, with some exports to the
United States, South America and Europe. Seaboard grows a large
portion of the sugar cane on approximately 40,000 acres of land
it owns in northern Argentina. The cane is processed at an owned
mill, with a processing capacity of approximately 180,000 metric
tons of sugar per year. The sugar mill is one of the largest in
Argentina. Seaboard also has an orange grove in Argentina
consisting of approximately 3,000 acres.
Power Division - Seaboard, through its subsidiary,
Transcontinental Capital Corp. (Bermuda) Ltd., operates as an
independent power producer in the Dominican Republic. This
operation is exempt from U.S. regulation by the Public Utility
Holding Company Act of 1938, as amended. The business operates
two floating barges with a series of diesel engines capable of
generating a combined rated capacity of approximately
112 megawatts of electricity. Seaboard generates electricity
into the local Dominican Republic power grid, but is not involved
in the transmission or distribution of the electricity. The
barges are secured on the Ozama River in Santo Domingo, Dominican
Republic. The electricity is sold at contracted pricing to
another local generation company and certain large commercial
users. The remaining electricity is sold in the "spot market" at
current market pricing, primarily to three wholly or partially
government-owned electric distribution companies.
Other Businesses - Seaboard purchases and processes jalapeno
peppers at its owned plant in Honduras. The processed peppers
are primarily sold to a customer in the United States, being
shipped by Seaboard's Marine division and distributed from
Seaboard's Port of Miami cold storage warehouse.
Seaboard has a truck transportation business which arranges
truck freight services for third parties as a broker and as a
carrier. This business also provides logistics and
transportation services to other Seaboard companies, using its
owner-operator program and extensive carrier network.
Seaboard also has an equity investment in a wine business
that produces wine in Bulgaria for distribution, primarily
throughout Europe.
The information required by Item 1 of Form 10-K with respect
to the amount or percentage of total revenue contributed by any
class of similar products or services which account for
10 percent or more of consolidated revenue in any of the last
three fiscal years is set forth in Note 13 of Seaboard's
Consolidated Financial Statements, appearing on pages 48 through
52 of the Seaboard's Annual Report to Stockholders, furnished to
the Commission pursuant to rule 14a-3(b) and attached as
Exhibit 13 to this report, which information is incorporated
herein by reference.
4
(ii) Status of Product or Segment
In early 2004, Seaboard entered into a marketing agreement
with Triumph Foods LLC (Triumph) to market all of the pork
products processed at Triumph's new pork processing plant to be
constructed in St. Joseph, Missouri. The plant is scheduled to
begin operations in mid to late 2005. This plant will have
capacity similar to Seaboard's Guymon, Oklahoma plant.
In early 2002, Seaboard announced plans to build a second
pork processing plant in northern Texas along with related plans
to expand its vertically integrated hog production facilities.
However, with the planned construction of the Triumph pork
processing plant discussed above, Seaboard does not intend to
make any final decisions regarding construction until late 2006
when the Triumph plant is expected to reach its operating
capacity. As a result, management does not intend to proceed
with the expansion project at this time beyond the expenditures
required to allow future land development possibilities should
market conditions change. If Seaboard ultimately decides to
pursue this project, it would also be contingent on a number of
other factors, including obtaining financing for the project,
obtaining the necessary permits, commitments for a sufficient
quantity of hogs to operate the plant, and no statutory
impediments being imposed.
During the first half of 2003, Seaboard fully stocked a new
Seaboard-owned hog production facility which increased the
breeding herd by approximately 12,500 sows. Seaboard's
processing plant began processing hogs produced from this
facility in January 2004.
During the third quarter of 2003, Seaboard purchased certain
hog production facilities previously leased under a master lease
arrangement. These facilities supply approximately 5% of the
Seaboard-owned hogs processed at Seaboard's processing plant.
In early 2003, individual legislative bills (the Bills) were
introduced in the United States Senate and House of
Representatives which include a provision to prohibit meat
packers, such as Seaboard, from owning or controlling livestock
intended for slaughter. The Bills also contain a transition rule
applicable to packers of pork providing for an effective date
which is 18 months after enactment. Similar language was passed
by the U.S. Senate in 2002 as part of the Senate's version of the
Farm Bill, but was eventually dropped in conference committee and
was not part of the final Farm Bill.
If any of the Bills containing the proposed language becomes
law, it could have a material adverse effect on Seaboard, its
operations and its strategy of vertical integration in the pork
business. Currently, Seaboard has the capacity to produce
approximately three and one-half million hogs per year at
facilities it either owns or leases or at facilities owned and
operated by third-parties with whom it has grower contracts. If
passed in their current form, the Bills would prohibit Seaboard
from owning or controlling hogs, and thus would require
divestiture of our operations, possibly at prices which are below
the carrying value of such assets as recorded on the balance
sheet, or otherwise restructure its ownership and operation.
The Bills could also be construed as prohibiting or
restricting Seaboard from engaging in various contractual
arrangements with third party hog producers, such as traditional
contract finishing arrangements. Accordingly, Seaboard's ability
to contract for the supply of hogs to its processing facility
could be significantly, negatively impacted. Seaboard, along
with industry groups and other similarly situated companies are
vigorously lobbying against enactment of any such legislation.
However, Management cannot presently predict the ultimate
outcome.
5
The economic environment in the Dominican Republic (DR),
where the Power segment generates electricity from two barges,
has deteriorated throughout 2003. As the local supply of U.S.
dollars has tightened throughout the year, the Dominican peso has
devalued significantly during 2003. Seaboard has contracts to
sell approximately 50% of its power to certain qualified
commercial large users and another local generation company, with
the remaining production sold on the spot market to a limited
number of commercial and government-owned distribution companies.
The liquidity problems of the local government have impaired its
ability to pay commercial creditors on a timely basis. During
the second half of 2003, trade receivables grew substantially
from the government-owned distribution companies and other
companies that must also collect from the government in order to
make payments on their accounts. While multilateral credit
agencies may eventually provide funding support to this country
to improve liquidity, management cannot predict if adequate
funding will occur to fully resolve this situation during the
next year. As a result, similar to other independent power
producers, Seaboard began to fluctuate its level of power
generation in mid-December 2003 between full capacity and
approximately 50% based on management's belief about
collectibility. With the exception of those government or
government-reliant customers, all other contract customers
continue to pay their accounts timely. Seaboard continues to
pursue other contract customers which would allow this segment to
increase generation of power in the future and reduce dependency
on the government-owned distribution companies.
During the third quarter of 2003, Seaboard sold its shrimp
farming and shrimp processing assets in exchange for long-term
notes receivable.
During 2002 and early 2003, Seaboard's equity investment in
a Bulgarian wine business (the Business) negotiated a series of
extensions when it was unable to make a scheduled principal
payment to a bank. During the third quarter of 2003, the
Business successfully negotiated a refinancing of certain of its
debt. As part of the refinancing, the bank forgave a portion of
the debt and the Business sold certain assets, the proceeds of
which were to repay a portion of the principal balance plus
accrued interest.
During the fourth quarter of 2003, Seaboard sold its equity
investment in Fjord Seafood ASA.
(iii) Sources and Availability of Raw Materials
None of Seaboard's businesses utilize material amounts of
raw materials that are dependent on purchases from one supplier
or a small group of dominant suppliers.
(iv) Patents, Trademarks, Licenses, Franchises and Concessions
Seaboard uses the registered trademark of Seaboard.
The Pork Division uses registered trademarks relating to its
products, including Seaboard Farms, Inc., Seaboard Farms,
PrairieFresh, and A Taste Like No Other. Seaboard considers
the use of these trademarks important to the marketing and
promotion of its' pork products.
The Marine Division uses the trade name Seaboard Marine
which is also a registered trademark. Seaboard believes there is
significant recognition of the Seaboard Marine trademark in the
industry and by many of its customers.
Part of the sales within the Sugar and Citrus segment are
made under the Chango brand in Argentina, where this segment
operates. Local sales prices benefit from sugar import duties
imposed by the Argentine government, which affects the volume of
sugar imported to that market.
Seaboard's Power division benefits from a tax exempt
concession granted by the Dominican Republic government through
2012.
Patents, trademarks, franchises, licenses and concessions
are not material to any of Seaboard's other segments.
(v) Seasonal Business
Profits from processed pork are generally higher in the fall
months. Sugar prices in Argentina are generally lower during the
typical sugarcane harvest period between June and November.
Seaboard's other segments are not seasonally dependent to any
material extent.
6
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of
Seaboard relating to working capital items.
(vii) Depending on a Single Customer or Few Customers
Seaboard does not have sales to any one customer equal to
10% or more of consolidated revenues. The power segment sells
power in the Dominican Republic to a limited number of contract
customers and on the spot market accessed primarily by three
wholly or partially government-owned distribution companies. Of
the rated capacity of approximately 112 megawatts, approximately
50 megawatts are sold under a contract expiring in July 2004 to
one independent power producer partially owned by a government-
owned electric company. Because the demand for power in this
country exceeds reliable supply, loss of this contract would
result in additional spot market sales.
Seaboard's Produce division sells nearly all of its
processed jalapeno peppers to one customer under a contract
expiring in 2006. We do not believe the loss of this customer
would have a material adverse effect on Seaboard's consolidated
financial position or results of operations. No other segments
have sales to a few customers which, if lost, would have a
material adverse effect on any such segment or on Seaboard taken
as a whole.
(viii) Backlog
Backlog is not material to Seaboard businesses.
(ix) Government Contracts
No material portion of Seaboard business involves government
contracts.
(x) Competitive Conditions
Competition in Seaboard's Pork segment comes from a variety
of national and regional producers and is based primarily on
product quality, customer service and price. According to a
recent issue of Successful Farming, a trade publication, and a
ranking prepared on behalf of the American Meat Institute,
Seaboard ranks as one of the nation's top five pork producers
(based on sows in production) and top ten pork processors (based
on daily processing capacity).
Seaboard's ocean liner service for containerized cargoes
faces competition based on price and customer service. Seaboard
believes it is among the top five ranking ocean liner services
for containerized cargoes in the Caribbean Basin based on cargo
volume.
Seaboard's sugar business owns one of the largest sugar
mills in Argentina and faces significant competition for sugar
sales in the local Argentine market. Sugar prices in Argentina
are higher than world markets due to current Argentine government
price protection policies.
Seaboard's power division is located in the Dominican
Republic. Power generated by this division is sold on the spot
market or to contract customers at prices primarily based on
market conditions rather than cost-based rates.
(xi) Research and Development Activities
Seaboard does not engage in material research and
development activities.
(xii) Environmental Compliance
Seaboard is subject to numerous Federal, state and local
provisions relating to the environment which require the
expenditure of funds in the ordinary course of business.
Seaboard does not anticipate making expenditures for these
purposes, including expenditures with respect to the items
disclosed in Item 3, Legal Proceedings, which, in the aggregate
would have a material or significant effect on the Seaboard's
financial condition or results of operations.
7
(xiii) Number of Persons Employed by Registrant
As of December 31, 2003, Seaboard, excluding non-
consolidated foreign affiliates, had 9,462 employees, of whom
5,329 were employed in the United States. Approximately 2,000
employees in Seaboard's Pork Division and approximately 10
employees in Seaboard's Produce Division are covered by
collective bargaining agreements. Seaboard considers its
employee relations to be satisfactory.
(d) Financial Information about Geographic Areas
The financial information required by Item 1(d) of Form 10-K
relating to export sales is incorporated herein by reference to
Note 13 of Seaboard's Consolidated Financial Statements appearing
on pages 48 through 52 of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 to this report.
Seaboard considers its relations with the governments of the
countries in which its foreign subsidiaries and affiliates are
located to be satisfactory, but these foreign operations are
subject to risks of doing business in lesser-developed countries
which are subject to potential civil unrests and government
instabilities, increasing the exposure to potential
expropriation, confiscation, war, insurrection, civil strife and
revolution, currency inconvertibility and devaluation, and
currency exchange controls. To minimize certain of these risks,
Seaboard has insured certain investments in its affiliate flour
mills in Angola, Democratic Republic of Congo, Haiti, Lesotho,
Mozambique and Zambia, to the extent available and deemed
appropriate against certain of these risks with the Overseas
Private Investment Corporation, an agency of the United States
Government. At the present time, Seaboard is experiencing some
difficulty in Nigeria in converting the Naira (the Nigerian
currency) to U.S. Dollars and other hard currencies. Also, Haiti
is presently experiencing insurrection and civil unrest in
certain parts of the country, but to date, this has not had any
effect on Seaboard's flour milling operations in that country.
These situations are not expected to have any material effect on
Seaboard's cash flow or results of operations. At the date of
this report, Seaboard is not aware of any other situations
referred to above which could have a material effect on
Seaboard's business.
(e) Available Information
Seaboard electronically files with the Commission annual
reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports pursuant to
Section 13(a) or 15(d) of the Exchange Act. The public may read
and copy any materials filed with the Commission at their public
reference room located at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain further
information concerning the public reference room and any
applicable copy charges, as well as the process of obtaining
copies of filed documents by calling the Commission at 1-800-SEC-
0330.
The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding electronic filers at www.sec.gov. Seaboard provides
access to its most recent Form 10-K, 10-Q and 8-K reports on its
Internet website, www.seaboardcorp.com, free of charge, as soon
as reasonably practicable after those reports are electronically
filed with the Commission.
Please note that any internet addresses provided in this
report are for information purposes only and are not intended to
be hyperlinks. Accordingly, no information provided at such
internet addresses is intended or deemed to be incorporated
herein by reference.
8
Item 2. Properties
(1) Pork
Seaboard's Pork Division owns a hog processing plant in
Guymon, Oklahoma, which opened in 1995, with a double shift
capacity of approximately four and one-half million hogs per
year. The plant is utilized at near capacity throughout the
year. Seaboard's hog production operations consist of the
breeding and raising of approximately 3 million hogs annually at
facilities it either owns or leases, or at facilities owned and
operated by third parties with whom it has grower contracts.
Seaboard has recently completed expansion of the facilities to
produce an additional 500,000 hogs annually. This business
currently operates six owned feed mills which have a combined
capacity to produce approximately 1,700,000 tons of formulated
feed annually used primarily to support Seaboard's existing hog
production, and has the capability of supporting additional hog
production in the future. These facilities are located in
Oklahoma, Texas, Kansas and Colorado.
(2) Commodity Trading and Milling
Seaboard's Commodity Trading and Milling Division owns, in
whole or in part, grain-processing operations in 13 countries
which have the capacity to mill approximately 5,500 metric tons
of wheat and maize per day. In addition, Seaboard has feed mill
capacity of approximately 100 metric tons per hour to produce
formula animal feed. The milling operations located in Angola,
Democratic Republic of Congo, Ecuador, Guyana, Haiti, Kenya,
Lesotho, Mozambique, Nigeria, Republic of Congo, Sierra Leone,
Uganda and Zambia own their facilities; in Kenya, Lesotho,
Mozambique, Nigeria, Republic of Congo and Sierra Leone the land
the mills are located on is leased under long-term agreements.
Certain foreign milling operations may operate at less than full
capacity due to low demand related to poor consumer purchasing
power and imported European-subsidized finished product.
Seaboard also owns seven 9,000 metric-ton deadweight dry bulk
carriers and "timecharters" (the charter of a vessel, whereby the
vessel owner is responsible to provide the captain and crew
necessary to operate the vessel), under short-term agreements,
between seven and sixteen bulk carrier ocean vessels with
deadweights ranging from 8,000 to 60,000 metric tons.
(3) Marine
Seaboard's Marine Division leases a 135,000 square foot
warehouse and 70 acres of port terminal land and facilities in
Miami, Florida which are used in its containerized cargo
operations. Seaboard owns seven ocean cargo vessels with
deadweights ranging from 2,813 to 14,545 metric tons and
timecharters, under short-term agreements, between fifteen and
nineteen containerized ocean cargo vessels with deadweights
ranging from 2,600 to 19,456 metric-tons. This business also
"bareboat charters" (the charter of a vessel, whereby the
charterer is responsible for providing the captain and crew
necessary to operate the vessel), under long-term lease
agreements, three containerized ocean cargo vessels with
deadweights ranging from 12,169 to 12,648 metric tons. Seaboard
owns or leases an aggregate of approximately 30,000 dry,
refrigerated and specialized containers and related equipment.
Seaboard also leases approximately 62 acre cargo handling and
terminal facility in Houston, Texas, which includes several on-
dock warehouses totaling over 690,000 square feet for cargo
storage.
(4) Sugar and Citrus
Seaboard's Argentine Sugar and Citrus Division owns
approximately 40,000 acres of planted sugarcane and approximately
3,000 acres of orange groves. In addition, this division owns a
sugar mill with a capacity to process approximately 180,000
metric tons of sugar per year, which is sufficient to process all
of the cane harvested by this company and certain additional
quantities harvested on behalf of the third party farmers in the
region. The sugarcane fields and processing mill are located in
northern Argentina in the Salta Province, which experiences
seasonal rainfalls that may limit the harvest season, which then
affects the duration of mill operations and quantities of sugar
produced.
This division also owns a juice processing plant and fresh
fruit packaging plant with capacity to produce approximately
3,500 tons of concentrated juice and package approximately
300,000 boxes of fresh fruit annually.
9
(5) Power
Seaboard's Power Division owns two floating electric power
generating facilities, consisting of a system of diesel engines
mounted onto barge-type vessels, with a combined rated capacity
of approximately 112 megawatts, both located on the Ozama River
in Santo Domingo, Dominican Republic. The barges historically
generated power at near capacity throughout the year as the
demand for power in the Dominican Republic exceeds reliable power
supply although Seaboard has curtailed production due to recent
non-payment by certain customers. Seaboard operates as an
independent power producer and is not involved in the
transmission and distribution facilities that deliver the power
to the end users.
(6) Other
Seaboard owns a jalapeno pepper processing plant in Honduras
and leases 40,000 square feet of refrigerated space and 70,000
square feet of dry space in the Port of Miami for warehousing
produce products.
Management believes that Seaboard's present facilities are
adequate and suitable for its current purposes.
Item 3. Legal Proceedings
Sierra Club Settlement
In order to settle threatened additional litigation with
Sierra Club, Seaboard agreed to conduct an investigation to
determine if corrective action is required at three farms
purchased from PIC located in Kingfisher and Major Counties in
Oklahoma according to an agreed upon process. Based on the
investigation, it has been determined that one farm does not
require any corrective action, although the process requires
additional limited testing of ground water monitoring wells. The
investigation is ongoing at the remaining two farms, and it is
unknown if any remediation will be required. The costs of
conducting the monitoring and the investigation are not material.
Environmental Protection Agency (EPA) and State of Oklahoma
Claims Concerning Farms in Major and Kingfisher County, Oklahoma
On June 29, 2001, the EPA filed a Unilateral Administrative
Order (the "RCRA Order") pursuant to Section 7003 of the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sec. 6973
("RCRA"), against Seaboard Farms, Inc. ("Seaboard Farms"),
Shawnee Funding, Limited Partnership and PIC International Group,
Inc. ("PIC") (collectively, "Respondents"). The RCRA Order
alleges that five swine farms located in Major County and
Kingfisher County, Oklahoma purchased from PIC are causing or
could cause contamination of the groundwater. The RCRA Order
alleges that, as a result, Respondents have contributed to an
"imminent and substantial endangerment" within the meaning of
RCRA from the leaking of solid waste in the lagoons or other
infrastructure at the farms. The RCRA Order requires Respondents
to develop and undertake a study to determine if there has been
any contamination from farm infrastructure, and if contamination
has occurred, to develop and undertake a remedial plan. In the
event the Respondents fail to comply with the RCRA Order, the EPA
may commence a civil action and can seek a civil penalty of up to
$5,500 per day, per violation.
On July 23, 2002, Seaboard Farms received a Notice of
Violation from the State of Oklahoma, alleging that Seaboard
Farms has violated various provisions of state law and the
operating permits related to these same farms based on the same
conditions which gave rise to the RCRA Order. In the event the
State brings an enforcement action, they have threatened to do so
as an administrative action in which they can seek administrative
penalties of not more than $10,000 per day of noncompliance and
can seek to assess violation points which could prohibit Seaboard
Farms from continuing to operate one or more of these farms.
On April 15, 2003, EPA sent a formal Notice of Violation
letter to the Respondents, alleging that the Respondents have
failed to comply with the RCRA Order because they have not
undertaken an investigation of land on which Seaboard Farms
spreads effluent originating from the five facilities. The
Respondents believe that the Notice of Violation letter has no
merit because the RCRA Order, by its terms, does not cover these
areas, and EPA does not have jurisdiction to impose the RCRA
Order with respect to land application activities.
10
Seaboard Farms disputes the RCRA Order and the State of
Oklahoma's contentions on legal and factual grounds, and has
advised EPA that it won't comply with the RCRA Order, as written.
Notwithstanding, Seaboard Farms is cooperating with EPA and the
State of Oklahoma, and has had significant ongoing dialogue with
EPA and the State of Oklahoma in order to attempt to settle the
RCRA Order and the Oklahoma Notice of Violation, and Seaboard
Farms has undertaken an extensive investigation under the RCRA
Order. EPA and the State of Oklahoma, they have advised Seaboard
Farms that one additional farm in Kingfisher County must be
included in any settlement, although neither agency has filed any
formal claims with respect to that farm.. No settlement has yet
been reached with EPA or the State of Oklahoma.
The farms that are the subject of the RCRA Order and the
allegations by the State of Oklahoma were previously owned by
PIC. PIC is indemnifying Seaboard Farms with respect to the RCRA
Order (reserving its right to contest the obligation to do so),
pursuant to an indemnification agreement which has a $5 million
limit. PIC has advised Seaboard Farms that if the settlement
being discussed with EPA and the State of Oklahoma is agreed to,
PIC's costs will exceed the $5 million limit, but not by a
material amount. Moreover, Seaboard Farms disputes PIC's
determination of the costs to be included in the calculation and
believes that the costs to be considered are less than
$5 million, such that PIC is responsible for all such costs.
Seaboard Farms also believes that a more general indemnity
agreement would require indemnification of liability in excess of
$5 million, although PIC disputes this. Seaboard Farms has also
demanded that PIC provide indemnity and defense with respect to
the Notice of Violation letter received from the State of
Oklahoma. PIC is disputing its obligation to provide indemnity
and defense with respect to this notice under both the $5 million
indemnification and the general indemnification, and this dispute
remains outstanding.
Potential Additional EPA Claims
EPA has been conducting a broad-reaching investigation of
Seaboard Farms, seeking information as to compliance with the
Clean Water Act (CWA), Comprehensive Environmental Response,
Compensation & Liability Act (CERCLA) and the Clean Air Act.
Through Information Requests and farm inspections, EPA obtained
information that may be related to whether Seaboard Farms'
operations are discharging pollutants to waters of the United
States in violation of the CWA, whether National Pollutant
Discharge Elimination System storm water construction permits
were obtained, where required, whether there has been unlawful
filling of or discharge to "wetlands" within the jurisdiction of
the CWA, whether Seaboard Farms has properly reported emissions
of hazardous substances into the air under CERCLA, and whether
some of its farms may be emitting air pollutants at levels
subject to Clean Air Act permitting requirements. As a result of
the investigation, EPA requested that Seaboard Farms engage in
settlement discussions to avoid further EPA investigative efforts
and potential formal claims being filed. EPA has presented
settlement demands, and Seaboard Farms has responded. Management
believes it has meritorious legal and factual defenses and
objections to EPA's demands, but will continue to engage in
settlement discussions. Such settlement discussions could lead
to an enforceable settlement agreement.
On April 2, 2002, the United States Environmental Protection
Agency ("EPA") sent to Seaboard Farms a letter pursuant to the
Clean Air Act ("CAA") demanding Seaboard Farms monitor emissions
at certain hog confinement facilities for purposes of determining
whether these operations are in compliance with the CAA. The EPA
also requested that Seaboard Farms agree that these facilities
are comparable to all other facilities operated, and that the
monitoring results can be reasonably extrapolated to estimate the
emissions for all other farms operated by Seaboard Farms. If any
of the specified farms are not comparable, the letter demanded
that Seaboard Farms conduct monitoring at those farms. The
letter also required that Seaboard Farms submit a plan and
protocol for testing for emissions of particulate matter,
volatile organic compounds and hydrogen sulfide.
Although management believes that EPA's demand is beyond the
Agency's authority pursuant to the CAA and that Seaboard Farms
cannot be required to undertake the air monitoring, Seaboard
Farms is engaging in discussions with EPA to attempt to reach an
agreement that will be satisfactory to EPA. Seaboard Farms
believes that the costs of conducting monitoring under a
negotiated plan will not be material. If no agreement is reached
with EPA, EPA could bring a suit to enforce the provisions of the
letter, and if a court were to determine that EPA is within its
authority, the court could impose a civil penalty of up to
$27,500 per day of non-compliance, and could order injunctive
relief requiring that Seaboard Farms conduct the monitoring.
Seaboard Farms believes the emissions from its hog operations do
not require CAA permits.
11
On February 20, 2003, Seaboard Farms received an additional
Information Request from EPA seeking information as to compliance
with the CWA by Seaboard Farms with respect to virtually all of
its confined animal feeding operations. Management has complied
with the Information Request. At present, no relief has been
sought by the EPA.
On March 24, 2003, Seaboard Farms received an additional
Information Request seeking information as to a hog farm and a
feed mill, each located in Colorado. The Company has complied
with the Information Request. At present, no relief has been
sought by the EPA.
The costs incurred to comply with the various Information
Requests from EPA are not material.
Other
On January 26, 2004, the U.S. Department of Justice sent
Seaboard Marine, Ltd. a letter stating that it was investigating
possible violations of 49 U.S.C. Secs. 5104-5124 and 49 C.F.R.
Secs. 171-173 relating to the transportation, storage and
discharge of hazardous materials. The letter does not specify
the relief sought, but threatens prosecution. Although the
matter has not been fully investigated, Seaboard has been advised
that the assertions relate to a single 40 foot container which a
customer loaded with drums containing chemicals to produce
detergent. After taking possession of the loaded container,
Seaboard Marine refused to transport it to the requested
destination and returned it to the customer.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during
the last quarter of the fiscal year covered by this report.
Executive Officers of Registrant
The following table lists the executive officers and certain
significant employees of Seaboard. Generally, each executive
officer is elected at the annual meeting of the Board of
Directors following the Annual Meeting of Stockholders and holds
his office until the next such annual meeting or until his
successor is duly chosen and qualified. There are no
arrangements or understandings pursuant to which any executive
officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
H. Harry Bresky (78) Chairman of the Board, President and
Chief Executive Officer of Seaboard;
Manager of Seaboard Flour LLC (SF)
Steven J. Bresky (50) Senior Vice President, International Operations
Robert L. Steer (44) Senior Vice President, Treasurer and
Chief Financial Officer
David M. Becker (42) Vice President, General Counsel and Secretary
Barry E. Gum (37) Vice President, Finance
James L. Gutsch (50) Vice President, Engineering
Ralph L. Moss (58) Vice President, Governmental Affairs
David S. Oswalt (36) Vice President, Taxation and Business Development
John A. Virgo (43) Vice President, Corporate Controller and
Chief Accounting Officer
Rodney K. Brenneman (39) President, Seaboard Farms, Inc.
John Lynch (70) President, Seaboard Marine Ltd.
Mr. H. Harry Bresky has served as President and Chief
Executive Officer of Seaboard since February 2001 and previously
as President of Seaboard from 1967 to 2001. He has served as
Manager of SF (previously Seaboard Flour Corporation) since 2002.
Previously he served as President of Seaboard Flour Corporation
from 1987 through 2002, and as Treasurer of Seaboard Flour
Corporation from 1973 through 2002. Mr. Bresky is the father of
Steven J. Bresky.
12
Mr. Steven J. Bresky has served as Senior Vice President,
International Operations of Seaboard since February 2001 and
previously as Vice President of Seaboard from 1989 to 2001.
Mr. Steer has served as Senior Vice President, Treasurer and
Chief Financial Officer of Seaboard since February 2001 and
previously as Vice President, Chief Financial Officer of Seaboard
from 1998 to 2001.
Mr. Becker has served as Vice President, General Counsel and
Secretary of Seaboard since December 2003, and previously as Vice
President, General Counsel and Assistant Secretary from 2001 to
2003. He served as General Counsel and Assistant Secretary of
Seaboard from 1998 to 2001.
Mr. Gum has served as Vice President, Finance of Seaboard
since December 2003, previously as Director of Finance from 2000
to 2003 and prior to that as Finance Manager from 1999 to 2000.
Mr. Gutsch has served as Vice President, Engineering of
Seaboard since December 1998.
Mr. Moss has served as Vice President, Governmental Affairs
of Seaboard since December 2003 and previously as Director,
Government Affairs from 1993 to 2003.
Mr. Oswalt has served as Vice President, Taxation and
Business Development of Seaboard since December 2003 and
previously as Director of Tax from 1995 to 2003.
Mr. Virgo has served as Vice President, Corporate Controller
and Chief Accounting Officer of Seaboard since December 2003 and
previously as Corporate Controller from 1996 to 2003.
Mr. Brenneman has served as President of Seaboard Farms,
Inc. since June 2001 and previously served as Senior Vice
President and Chief Financial Officer of Seaboard Farms, Inc.
from 1997 to 2001.
Mr. Lynch has served as President of Seaboard Marine, Ltd.
since 1998.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Seaboard's Board of Directors intends that Seaboard will
continue to pay quarterly dividends, with the actual amount of
any dividends being dependant upon such factors as Seaboard's
financial condition, results of operations and current and
anticipated cash needs, including capital requirements. As
discussed in Note 8 of the consolidated financial statements
appearing on pages 39 and 40 of the Seaboard Corporation Annual
Report to Stockholders furnished to the Commission pursuant to
Rule 14a-3(b) and attached as Exhibit 13 to this Report,
Seaboard's ability to declare and pay dividends is subject to
limitations imposed by the note agreements referred to there.
Seaboard has not established any equity compensation plans
for its employees under which options, rights or warrants with
respect to Seaboard common stock may be granted.
There were no purchases made by or on behalf of Seaboard or
any "affiliated purchaser" (as defined by applicable rules of the
Commission) of shares of Seaboard's common stock during the
fourth quarter of the fiscal year covered by this report.
In addition to the information provided above, the
information required by Item 5 of Form 10-K is incorporated
herein by reference to (a) the information under "Stock Listing"
and (b) the dividends per common share information and market
price range per common share information under "Quarterly
Financial Data" appearing on pages 53 and 8, respectively, of
Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this report.
Item 6. Selected Financial Data
The information required by Item 6 of Form 10-K is
incorporated herein by reference to the "Summary of Selected
Financial Data" appearing on page 7 of Seaboard's Annual Report
to Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 of this Report.
13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 of Form 10-K is
incorporated herein by reference to "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
appearing on pages 9 through 23 of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 to this Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A of Form 10-K is
incorporated herein by reference to (a) the material under the
captions "Derivative Instruments and Hedging Activities" within
Note 1 of Seaboard's Consolidated Financial Statements appearing
on page 31, and (b) to the material under the caption "Derivative
Information" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
21 through 23 of Seaboard's Annual Report to Stockholders
furnished to the Commission pursuant to Rule 14a-3(b) and
attached as Exhibit 13 to this Report.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 of Form 10-K is
incorporated herein by reference to Seaboard's "Quarterly
Financial Data," "Independent Auditors' Report," "Consolidated
Balance Sheets," "Consolidated Statements of Earnings,"
"Consolidated Statements of Changes in Equity," "Consolidated
Statements of Cash Flows" and "Notes to Consolidated Financial
Statements" appearing on page 8 and pages 24 through 52 of
Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Seaboard's management has evaluated, under the direction of
our chief executive and chief financial officers, the
effectiveness of Seaboard's disclosure controls and procedures as
of December 31, 2003. 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. Because of 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, regardless of how remote.
There has been no change in Seaboard's internal control over
financial reporting that occurred during the fiscal quarter ended
December 31, 2003 that has materially affected, or is reasonably
likely to materially affect, Seaboard's internal control over
financial reporting.
14
PART III
Item 10. Directors and Executive Officers of the Registrant
We refer you to the information under the caption "Executive
Officers of Registrant" appearing immediately following the
disclosure in Item 4 of Part I of this report.
Seaboard has adopted a code of business conduct and ethics
for directors, officers (including our chief executive officer,
chief financial officer, chief accounting officer, controller and
persons performing similar functions) and employees. A copy of
this code of business conduct and ethics is attached as Exhibit
14 to this Report.
In addition to the information provided above, the
information required by Item 10 of Form 10-K is incorporated
herein by reference to (a) the disclosure relating to directors
under "Item 1: Election of Directors" appearing on page 5 of the
2004 Proxy statement, (b) the disclosure relating to Seaboard's
audit committee and "audit committee financial expert" and its
director nomination procedures under "Meetings of the Board of
Directors and Committees -- Committees of the Board" appearing on
pages 6 and 7 of Seaboard's definitive proxy statement filed
pursuant to Regulation 14A for the 2004 annual meeting of
Stockholders ("2004 Proxy Statement"), and (c) the disclosure
relating to late filings of
reports required under Section 16(a) of the Securities Exchange
Act of 1934 under "Section 16(a) Beneficial Ownership Reporting
Compliance" appearing on page 19 of the 2004 Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 of Form 10-K is
incorporated herein by reference to (a) the disclosure relating
to compensation of directors under "Meetings of the Board of
Directors and Committees -- Committees of the Board" appearing on
pages 6 and 7 of the 2004 Proxy statement, and (b) the disclosure
relating to compensation of executive officers under "Executive
Compensation and Other Information," "Retirement Plans" and
"Compensation Committee Interlocks and Insider Participation"
appearing on pages 7 through 11 and page 14 of the 2004 Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Seaboard has not established any equity compensation plans
for its employees under which options, rights or warrants with
respect to Seaboard common stock may be granted.
In addition to the information provided above, the
information required by Item 12 of Form 10-K is incorporated
herein by reference to the disclosure under "Principal
Stockholders" and "Share Ownership of Management and Directors"
appearing on pages 3 and 4 of the 2004 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 of Form 10-K is
incorporated herein by reference to "Compensation Committee
Interlocks and Insider Participation" appearing on page 14 of the
2004 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by Item 14 of Form 10-K is
incorporated herein by reference to "Item 2 Selection of
Independent Auditors" appearing on pages 15 and 16 of the 2004
Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Consolidated financial statements.
15
See Index to Consolidated Financial Statements on
page F-1.
2. Consolidated financial statement schedules.
See Index to Consolidated Financial Statements on
page F-1.
3. Exhibits.
3.1 Seaboard's Certificate of Incorporation, as
amended. Incorporated herein by reference to
Exhibit 3.1 of Seaboard's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992.
3.2 Seaboard's By-laws, as amended. Incorporated
herein by reference to Exhibit 3.2 of
Seaboard's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
4.1 Note Purchase Agreement dated
December 1, 1993 between Seaboard and various
purchasers as listed in the exhibit.
Incorporated herein by reference to Exhibit
4.1 of Seaboard's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.
The Annexes and Exhibits to the Note Purchase
Agreement have been omitted from the filing,
but will be provided supplementally upon
request of the Commission.
4.2 Seaboard Corporation 6.49% Senior Note Due
December 1, 2005 issued pursuant to the Note
Purchase Agreement described above.
Incorporated herein by reference to Exhibit
4.2 of Seaboard's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.
4.3 Note Purchase Agreement dated June 1, 1995
between Seaboard and various purchasers as
listed in the exhibit. Incorporated herein
by reference to Exhibit 4.3 of Seaboard's
Form 10-Q for the quarter ended
September 9, 1995. The Annexes and Exhibits
to the Note Purchase Agreement have been
omitted from the filing, but will be provided
supplementally upon request of the
Commission.
4.4 Seaboard Corporation 7.88% Senior Note Due
June 1, 2007 issued pursuant to the Note
Purchase Agreement described above.
Incorporated herein by reference to Exhibit
4.4 of Seaboard's Form 10-Q for the quarter
ended September 9, 1995.
4.5 Seaboard Corporation Note Agreement dated as
of December 1, 1993 ($100,000,000 Senior
Notes due December 1, 2005). First Amendment
to Note Agreement. Incorporated herein by
reference to Exhibit 4.7 of Seaboard's Form
10-Q for the quarter ended March 23, 1996.
4.6 Seaboard Corporation Note Agreement dated as
of June 1, 1995 ($125,000,000 Senior Notes
due June 1, 2007). First Amendment to Note
Agreement. Incorporated herein by reference
to Exhibit 4.8 of Seaboard's Form 10-Q for
the quarter ended March 23, 1996.
4.7 Second Amendment to the Note Purchase
Agreements dated as of December 1, 1993
($100,000,000 Senior Notes due December 1,
2005). Incorporated herein by reference to
Exhibit 4.1 of Seaboard's Form 10-Q for the
quarter ended September 28, 2002.
4.8 Second Amendment to the Note Purchase
Agreements dated as of June 1, 1995
($125,000,000 Senior Notes due June 1, 2007).
Incorporated herein by reference to Exhibit
4.2 of Seaboard's Form 10-Q for the quarter
ended September 28, 2002.
16
4.9 Seaboard Corporation Note Purchase Agreement
dated as of September 30, 2002 between
Seaboard and various purchasers as listed in
the exhibit. Incorporated herein by
reference to Exhibit 4.3 of Seaboard's Form
10-Q for the quarter ended September 28,
2002. The Annexes and Exhibits to the Note
Purchase Agreement have been omitted from the
filing, but will be provided supplementally
upon request of the Commission.
4.10 Seaboard Corporation $32,500,000 5.8% Senior
Note, Series A, due September 30, 2009
issued pursuant to the Note Purchase
Agreement described above. Incorporated
herein by reference to Exhibit 4.4 of
Seaboard's Form 10-Q for the quarter ended
September 28, 2002.
4.11 Seaboard Corporation $38,000,000 6.21% Senior
Note, Series B, due September 30, 2009
issued pursuant to the Note Purchase
Agreement described above. Incorporated
herein by reference to Exhibit 4.5 of
Seaboard's Form 10-Q for the quarter ended
September 28, 2002.
4.12 Seaboard Corporation $7,500,000 6.21% Senior
Note, Series C, due September 30, 2012
issued pursuant to the Note Purchase
Agreement described above. Incorporated
herein by reference to Exhibit 4.6 of
Seaboard's Form 10-Q for the quarter ended
September 28, 2002.
4.13 Seaboard Corporation $31,000,000 6.92% Senior
Note, Series D, due September 30, 2012
issued pursuant to the Note Purchase
Agreement described above. Incorporated
herein by reference to Exhibit 4.7 of
Seaboard's Form 10-Q for the quarter ended
September 28, 2002.
*10.1 Seaboard's Executive Retirement Plan
dated January 1, 1997. The addenda have been
omitted from the filing, but will be provided
supplementary upon request of the Commission.
Incorporated herein by reference to Exhibit
10.1 of Seaboard's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.
*10.2 Seaboard's Supplemental Executive
Benefit Plan as Amended and Restated.
Incorporated herein by reference to Exhibit
10.2 of Seaboard's Form 10-K for fiscal year
ended December 31, 2000.
*10.3 Seaboard's Supplemental Executive
Retirement Plan for H. Harry Bresky dated
March 21, 1995. Incorporated herein by
reference to Exhibit 10.3 of Seaboard's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1995.
*10.4 Seaboard's Executive Deferred
Compensation Plan dated January 1, 1999.
Incorporated herein by reference to Exhibit
10.1 of Seaboard's Form 10-Q for the quarter
ended March 31, 1999.
*10.5 First Amendment to Seaboard's Executive
Retirement Plan as Amended and Restated
January 1, 1997, dated February 28, 2001,
amending Seaboard's Executive Retirement Plan
dated January 1, 1997 referenced as Exhibit
10.1. Incorporated herein by reference to
Exhibit 10.6 of Seaboard's Form 10-K for
fiscal year ended December 31, 2000.
*10.6 Seaboard's Investment Option Plan dated
December 18, 2000. Incorporated herein by
reference to Exhibit 10.7 of Seaboard's Form
10-K for fiscal year ended December 31, 2000.
10.7 Reorganization Agreement by and between
Seaboard Corporation and Seaboard Flour
Corporation as of October 18, 2002.
Incorporated herein by reference to
Exhibit 10.1 of the Form 8-K dated
October 18, 2002.
17
10.8 Purchase and Sale Agreement dated October 18,
2002 by and between Flour Holdings LLC and
Seaboard Flour Corporation with respect to
which the "Earnout Payments" thereunder have
been assigned to Seaboard Corporation.
Incorporated herein by reference to Exhibit
10.2 of Seaboard's Form 10-Q for the quarter
ended September 28, 2002.
10.9 Marketing Agreement dated February 2, 2004 by
and among Seaboard Corporation, Seaboard
Farms, Inc., Triumph Foods LLC, and for
certain limited purposes only, the members of
Triumph Foods LLC. Incorporated herein by
reference to Exhibit 10.2 of Seaboard's Form
8-K dated February 3, 2004.
13 Sections of Annual Report to security holders
specifically incorporated herein by reference
herein.
14 Code of Ethics.
21 List of subsidiaries.
31.1 Certification of the Chief Executive Officer
Pursuant to Exchange Act Rules 13a-14(a)/15d-
14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer
Pursuant to Exchange Act Rules 13a-14(a)/15d-
14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
(i) Form 8-K dated November 4, 2003, filed with the
Commission on November 4, 2003 with respect to
Items 7 and 12 to report Seaboard's issuance of a
press release dated November 4, 2003 announcing
earnings for the third quarter ended September 27,
2003.
(ii) Form 8-K dated December 3, 2003, filed with the
Commission on December 3, 2003 with respect to
Item 5 to report that Seaboard had completed the
sale of 100% of its equity interest in Fjord
Seafood ASA.
(iii) Form 8-K dated December 3, 2003, filed with
the Commission on December 5, 2003 with respect to
Items 2 and 7 to report that Seaboard had
completed the sale of 100% of its equity interest
in Fjord Seafood ASA through a private placement
by an investment banker to unknown third parties,
and to furnish pro forma financial information.
(c) Exhibits.
See exhibits identified above under Item 15(a)3.
(d) Financial Statement Schedules.
See financial statement schedules identified above
under Item 15(a)2.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Seaboard has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SEABOARD CORPORATION
By /s/H. H. Bresky By /s/Robert L. Steer
H. H. Bresky, President and Chief Robert L. Steer, Senior Vice President,
Executive Officer Treasurer and Chief Financial Officer
(principal executive officer) (principal financial officer)
Date: February 27, 2004 Date: February 27, 2004
By /s/John A. Virgo
John A. Virgo, Vice President, Corporate
Controller and Chief Accounting Officer
(principal accounting officer)
Date: February 27, 2004
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of Registrant and in the capacities and on the
dates indicated.
By /s/H. H. Bresky By /s/Kevin M. Kennedy
H. H. Bresky, Director and Kevin M. Kennedy, Director
Chairman of the Board
Date: February 27, 2004 Date: February 27, 2004
By /s/David A. Adamsen By /s/J.E. Rodrigues
David A. Adamsen, Director J.E. Rodrigues, Director
Date: February 27, 2004 Date: February 27, 2004
By /s/Douglas W. Baena
Douglas W. Baena, Director
Date: February 27, 2004
19
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
Stockholders'
Annual Report Page
Independent Auditors' Report 24
Consolidated Balance Sheets as of December 31, 2003
and December 31, 2002 25
Consolidated Statements of Earnings for the years
ended December 31, 2003, December 31, 2002 and
December 31, 2001 26
Consolidated Statements of Changes in Equity for the
years ended December 31, 2003, December 31, 2002 and
December 31, 2001 27
Consolidated Statements of Cash Flows for the years
ended December 31, 2003, December 31, 2002 and
December 31, 2001 28
Notes to Consolidated Financial Statements 29
The foregoing are incorporated herein by reference.
The individual financial statements of the nonconsolidated
foreign affiliates, which would be required if each such foreign
affiliate were a Registrant, are omitted because (a) Seaboard's
and its other subsidiaries' investments in and advances to such
foreign affiliates do not exceed 20% of the total assets as shown
by the most recent consolidated balance sheet and (b) Seaboard's
and its other subsidiaries' equity in the earnings before income
taxes and extraordinary items of the foreign affiliates does not
exceed 20% of such income of Seaboard and consolidated
subsidiaries compared to the average income for the last five
fiscal years.
Combined condensed financial information as to assets,
liabilities and results of operations have been presented for
nonconsolidated foreign affiliates in Note 5 of "Notes to the
Consolidated Financial Statements."
II - Valuation and Qualifying Accounts for the years ended
December 31, 2003, 2002 and 2001 F-3
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related consolidated notes.
F-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Seaboard Corporation:
Under date of February 23, 2004, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries (the
Company) as of December 31, 2003 and 2002, and the related
consolidated statements of earnings, changes in equity and cash
flows for each of the years in the three-year period ended
December 31, 2003, as contained in the December 31, 2003 annual
report to stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year ended December 31, 2003.
Our reported dated February 23, 2004 contains an explanatory
paragraph that states that the Company adopted Statement of
Financial Standards No. 143, "Accounting for Asset Retirement
Obligations," and FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities," and changed its method of accounting
for costs expected to be incurred during regularly scheduled
drydocking of vessels from the accrual method to the direct-
expense method in 2003. In connection with our audits of the
aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedule as listed
in the accompanying index. This financial statement schedule is
the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Kansas City, Missouri
February 23, 2004
F-2
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Provision Write-offs net Accounting Balance at
beginning of year (1) of recoveries Changes (2) end of year
Year ended December 31, 2003:
Allowance for doubtful accounts $16,178 8,473 (1,292) - $23,359
Drydock accrual $ 6,393 - - (6,393) $ -
Year ended December 31, 2002:
Allowance for doubtful accounts $20,571 62 (4,455) - $16,178
Drydock accrual $ 6,052 3,709 (3,368) - $ 6,393
Year ended December 31, 2001:
Allowance for doubtful accounts $29,801 206 (9,436) - $20,571
Drydock accrual $ 5,496 5,356 (4,800) - $ 6,052
(1) The allowance for doubtful accounts provision is charged to
selling, general and administrative expenses. Through December
31, 2002, the provision for drydock was charged to cost of sales.
(2) Effective January 1, 2003, Seaboard changed its method of
accounting for drydock maintenance costs from the accrue-in-
advance method to the direct-expense method. As a result,
Seaboard reversed its allowance for drydock accrual as a
cumulative effect of a change in accounting principle.
F-3