Attached files
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, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number: 1-3390
SEABOARD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2260388
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip Code)
(913) 676-8800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock $1.00 Par Value NYSE Amex Equities
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ]
No [ X ]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No
[ X ]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark 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 (section 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 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 a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "larger
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ X ]
Non-accelerated filer [ ](Do not check if a smaller reporting company)
Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [ ] No [X ]
The aggregate market value of the 330,026 shares of Seaboard
common stock held by nonaffiliates was approximately
$360,388,392, based on the closing price of $1,092.00 per share
on July 2, 2009, the end of Seaboard's second fiscal quarter. As
of February 5, 2010, the number of shares of common stock
outstanding was 1,235,582.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated parts of this report: (1) Seaboard
Corporation's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) - Parts I and II; and (2)
Seaboard Corporation's definitive proxy statement filed pursuant
to Regulation 14A for the 2010 annual meeting of stockholders -
Part III.
Forward-Looking Statements
This report, including information included or incorporated by
reference in this report, contains certain forward-looking
statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of
Seaboard Corporation and its subsidiaries (Seaboard). Forward-
looking statements generally may be identified as:
- statements that are not historical in nature, and
- statements preceded by, followed by or that include the
words "believes," "expects," "may," "will," "should,"
"could," "anticipates," "estimates," "intends" or similar
expressions.
In more specific terms, forward-looking statements include,
without limitation:
- statements concerning the projection of revenues, income or
loss, capital expenditures, capital structure or other
financial items,
- statements regarding the plans and objectives of management
for future operations,
- statements of future economic performance,
- statements regarding the intent, belief or current
expectations of Seaboard and its management with respect to:
(i) Seaboard's ability to obtain adequate financing and
liquidity,
(ii) the price of feed stocks and other materials used by
Seaboard,
(iii) the sale price or market conditions for pork, grains,
sugar and other products and services,
(iv) statements concerning management's expectations of
recorded tax effects under certain circumstances,
(v) the volume of business and working capital requirements
associated with the competitive trading environment for
the Commodity Trading and Milling division ,
(vi) the charter hire rates and fuel prices for vessels,
(vii) the stability of the Dominican Republic's economy, fuel
cost and related spot market prices and collections of
receivables in the Dominican Republic,
(viii) the ability of Seaboard to sell certain grain
inventories in foreign countries at current cost basis
and the related contract performance by customers,
(ix) the effect of the fluctuation in foreign currency
exchange rates,
(x) statements concerning profitability or sales volume of
any of Seaboard's divisions,
(xi) the anticipated costs and completion timetable for
Seaboard's scheduled capital improvements, acquisitions
and dispositions,
(xii) the impact from the H1N1 flu incident on the demand and
overall market prices for pork products, 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.
This list of forward-looking statements is not exclusive.
Seaboard undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events, changes in assumptions or otherwise.
Forward-looking statements are not guarantees of future
performance or results. They involve risks, uncertainties and
assumptions. Actual results may differ materially from those
contemplated by the forward-looking statements due to a variety
of factors. The information contained in this Form 10-K and in
other filings Seaboard makes with the Commission, including
without limitation, the information under the headings "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this Form 10-K,
identifies important factors which could cause such differences.
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PART I
Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, and its subsidiaries
(Seaboard) is a diversified international agribusiness and
transportation company. In the United States, Seaboard is
primarily engaged in pork production and processing, and ocean
transportation. Overseas, Seaboard is primarily engaged in
commodity merchandising, grain processing, sugar production, and
electric power generation. See Item 1(c) (1) (ii) "Status of
Product or Segment" below for a discussion of acquisitions,
dispositions and other developments in specific divisions.
Seaboard Flour LLC and SFC Preferred LLC, Delaware limited
liability companies, own approximately 72.3 percent of the
outstanding common stock of Seaboard. Mr. Steven J. Bresky,
President and Chief Executive Officer of Seaboard, and other
members of the Bresky family, including trusts created for their
benefit, own the common units of Seaboard Flour LLC and SFC
Preferred LLC.
(b) Financial Information about Industry Segments
The financial information relating to Industry Segments required by
Item 1 of Form 10-K is incorporated herein by reference to Note 13
of the Consolidated Financial Statements appearing on pages 55
through 59 of the Seaboard Corporation Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this Report.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done by the Registrant
(i) Principal Products and Services
Pork Division - Seaboard, through its subsidiary Seaboard
Foods LLC engages in the businesses of hog production and pork
processing in the United States. Through these operations,
Seaboard produces and sells fresh and frozen pork products to
further processors, foodservice operators, grocery stores,
distributors and retail outlets throughout the United States.
Internationally, Seaboard sells to these same types of
customers in Japan, Mexico and other foreign markets. Other
further processing companies also purchase Seaboard's fresh
and frozen pork products in bulk and produce products, such as
lunchmeat, ham, bacon, and sausage. Fresh pork, such as
loins, tenderloins and ribs are sold to distributors and
grocery stores. Seaboard also sells further processed pork
products consisting primarily of raw and pre-cooked bacon from
its two bacon further processing plants. Seaboard sells some
of its fresh products under the brand name Prairie Freshr and
its bacon and other further processed products under the
Daily'sr brand name. Seaboard's hog processing plant is
located in Guymon, Oklahoma, and operates at double shift
capacity. Seaboard's bacon plants are located in Salt Lake
City, Utah and Missoula, Montana. Seaboard also earns fees,
based primarily on the number of head processed, to market all
of the products produced by Triumph Foods LLC at their pork
processing plant located in St. Joseph, Missouri.
Seaboard's hog production operations consist of the breeding
and raising of approximately 4.0 million hogs annually at
facilities primarily owned or at facilities owned and operated
by third parties with whom it has grower contracts. The hog
production operations are located in the States of Oklahoma,
Kansas, Texas and Colorado. As a part of the hog production
operations, Seaboard produces specially formulated feed for
the hogs at six owned feed mills. The remaining hogs
processed are purchased from third party hog producers,
primarily pursuant to purchase contracts.
Seaboard produces biodiesel at a facility in Guymon, Oklahoma.
The biodiesel is produced from pork fat from Seaboard's Guymon
pork processing plant and from animal fat supplied by non-
Seaboard facilities. The biodiesel is sold to third parties.
The facility can also produce biodiesel from vegetable oil.
Seaboard is able to reduce or stop production when it isn't
economically feasible to produce based on input costs or the
price of biodiesel. During 2009, Seaboard completed
construction of and began operations at a ham-boning and
processing plant in Mexico.
Commodity Trading and Milling Division - Seaboard's Commodity
Trading and Milling Division, primarily through its
subsidiaries, Seaboard Overseas Limited based in Bermuda,
Seaboard Overseas Trading and Shipping (PTY), Ltd. located in
South Africa, SeaRice Limited located in Geneva, Switzerland
and SeaRice Carribean located in Miami, Florida markets wheat,
corn, soybean meal, rice and other similar commodities in bulk
to third party customers and affiliated companies. These
commodities are purchased from most growing regions worldwide,
with primary destinations being Africa, South America, and the
Caribbean. The division sources, transports and markets
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up to approximately 4.0 to 4.5 million tons of grains and
proteins on an annual basis. Seaboard integrates the service
of delivering commodities to its customers through the use of
chartered bulk vessels and its eight owned bulk carriers.
This division also operates milling and related businesses
with 24 locations in 12 countries, which are primarily
supplied by the trading locations discussed above. The grain
processing businesses are operated through four consolidated
and nine non-consolidated affiliates in Africa, the Caribbean
and South America. These are flour, feed and maize milling
businesses which produce approximately two and a half million
metric tons of finished products per year. Most of the
products produced by the milling operations are sold in the
countries in which the products are produced or into adjacent
countries.
Marine Division - Seaboard, through its subsidiary, Seaboard
Marine Ltd., and various foreign affiliated companies and
third party agents, provides containerized cargo shipping
service to 25 countries between the United States, the
Caribbean Basin, and Central and South America. Seaboard uses
a network of offices and agents throughout the United States,
Canada, Latin America and the Caribbean Basin to book both
northbound and southbound cargo to and from the United States
and between the countries it serves. Through agreements with
a network of connecting carriers, Seaboard can transport cargo
to and from numerous U.S. locations by either truck or rail to
and from one of its U.S. port locations, where it is staged
for export via vessel or received as import cargo from abroad.
Seaboard's primary marine operation is located in Miami and
includes a 81 acre terminal located at the Port of Miami and a
135,000 square foot off-dock warehouse for cargo consolidation
and temporary storage. Seaboard also operates a 62 acre cargo
terminal facility at the Port of Houston that includes
approximately 690,000 square feet of on-dock warehouse space
for temporary storage of bagged grains, resins and other
cargoes. Seaboard also makes scheduled vessel calls in
Brooklyn, New York, Fernandina Beach, Florida, New Orleans,
Louisiana and 40 foreign ports. At December 31, 2009,
Seaboard's fleet consists of 12 owned and approximately 22
chartered vessels, and dry, refrigerated and specialized
containers and other related equipment.
Sugar 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 in Argentina. This division also
purchases sugar in bulk from third parties within Argentina
for subsequent resale. The sugar products are mostly sold in
Argentina, primarily to retailers, soft drink manufacturers,
and food manufacturers, with some exports to the United
States, South America and Europe. Seaboard grows a large
portion of the sugar cane on more than 60,000 acres of land it
owns in northern Argentina. The cane is processed at an owned
mill, with a current processing capacity of approximately
250,000 metric tons of sugar and approximately 14 million
gallons of alcohol per year (hydrated and dehydrated). The
sugar mill is one of the largest in Argentina. Also, during
2008 this division began construction of a 40 megawatt
cogeneration power plant, which is expected to be completed
during the third quarter of 2010.
Power Division - All other businesses primarily represents the
business of Seaboard's subsidiary, Transcontinental Capital
Corp. (Bermuda) Ltd. (the Power Division), which operates as
an independent power producer in the Dominican Republic. This
operation is exempt from U.S. regulation under the Public
Utility Holding Company Act of 1938, as amended. The Power
Division operates two floating barges with a system of diesel
engines capable of generating a combined rated capacity of
approximately 112 megawatts of electricity. See "Status of
Product or Segment" below for discussion of the pending sale
of the two barges. Seaboard generates electricity into the
local Dominican Republic power grid. Seaboard is not directly
involved in the transmission or distribution of the
electricity but does have contracts to sell directly to third
party users. The barges are secured on the Ozama River in
Santo Domingo, Dominican Republic. The electricity is sold to
certain large commercial users with contract terms extending
from one to four years. Seaboard also sells approximately 34%
of its power under a short-term contract that expires at the
end of March 2010 to a government-owned distribution company.
The remaining electricity is sold in the "spot market" at
prevailing market prices, primarily to three wholly
government-owned electric distribution companies or other
power producers who lack sufficient power production to
service their customers.
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, and are
shipped to the United States by Seaboard's Marine Division and
distributed from Seaboard's port facilities.
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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 55
through 59 of the Seaboard's Annual Report to Stockholders,
furnished to the Commission pursuant to rule 14a-3(b) and
attached as Exhibit 13 to this report, which information is
incorporated herein by reference.
(ii) Status of Product or Segment
During 2009, Seaboard completed construction of and began
operations at a majority-owned ham-boning and processing plant
in Mexico.
During 2008 Seaboard discontinued operations of its flour
milling operations in Mozambique as a result of its Mozambican
subsidiary entering into an agreement to exchange its flour
milling facility for a ten percent ownership interest in a
food processing company in that country. This exchange
transaction is expected to be completed in the first half of
2010.
Seaboard has a minority ownership in a feed mill operation in
Nigeria. During 2009, this entity contributed all
manufacturing equipment and certain other assets along with
its trade name to a newly formed feed mill operation in
Nigeria in exchange for a minority interest in the new mill
operation and will no longer continue its original feed mill
operations. In a separate transaction, this same entity sold
certain land and building of one of its closed feed mill
operations to a third party for cash.
On January 12, 2010, Haiti was struck by an earthquake.
Seaboard has a non-controlling interest in a foreign affiliate
with a flour mill operation in Lafiteau, Haiti. Part of this
facility was severely damaged as a result of the earthquake.
This affiliate business intends to rebuild the damaged part of
the facility and will continue to operate the portion of the
facility that was not damaged. This facility was fully
insured, including business interruption and inventory
coverage. Seaboard also sells wheat and flour to this
business through Seaboard's commodity trading operations. In
addition, the primary port in Haiti, located in Port-au-Prince
from which Seaboard Marine's vessels normally dock, was
severely damaged. Seaboard is not the owner operator of this
port location but does operate a small terminal facility
nearby that sustained minor damage from the earthquake, which
is covered by insurance. Currently, Seaboard has no
indication how long it will take before regular service can be
resumed to Haiti's primary port but is currently routing
cargoes through secondary ports in Haiti and the Dominican
Republic.
The Sugar Division is in the process of developing a 40
megawatt cogeneration power plant. This plant is expected
to be completed during the third quarter of 2010. In
addition, during the first quarter of 2009, management
reviewed its strategic options for the citrus business in
light of a continually difficult operating environment. In
the first quarter of 2009, management decided not to process,
package or market the 2009 harvest for the citrus and related
juice operations. In the second quarter of 2009, management
decided to integrate and transform some of the land previously
used for citrus production into sugar cane production
resulting in an exit from the citrus business. Lastly, in the
first quarter of 2010, the Company began sales of dehydrated
alcohol to certain local oil companies under the national bio-
ethanol program which requires alcohol to be blended with
gasoline.
The Power Division's short-term contract with a government-
owned distribution company, which represents approximately 34%
of its sales, expires at the end of March 2010.
On March 2, 2009, an agreement became effective under which
Seaboard will sell its two power barges in the Dominican
Republic for $70.0 million, which will use such barges for
private use. The agreement calls for the sale to occur on or
around January 1, 2011. Seaboard will be responsible for the
wind down and decommissioning costs of the barges. Completion
of the sale is dependent upon the satisfaction of several
conditions, including meeting certain baseline performance and
emission tests. Failure to satisfy or cure any deficiencies
could result in the agreement being terminated. Seaboard will
retain all other physical properties of its power generation
business, and is considering options to continue its power
business in the Dominican Republic after the sale of these
assets is completed.
5
(iii) Sources and Availability of Raw Materials
None of Seaboard's businesses utilize material amounts of raw
materials that are dependent on purchases from one supplier or
a small group of dominant suppliers.
(iv) Patents, Trademarks, Licenses, Franchises and Concessions
Seaboard uses the registered trademark of Seaboard.
The Pork Division uses registered trademarks relating to its
products, including Seaboard Farms, Prairie Fresh, A Taste
Like No Other, Daily's, Daily's Premium Meats Since 1893,
High Plains Bioenergy, Prairie Fresh Prime, Seaboard Foods,
Buffet Brand, Seaboard Farms, Inc. and Del Pueblo.
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 and
Seaboard Solutions which are all registered trademarks.
Seaboard believes there is significant recognition of these
trademarks in the industry and by many of its customers.
Part of the sales within the Sugar Division are made under the
Chango brand in Argentina, where this division operates.
Local sales prices are affected by government price control
and sugar import duties imposed by the Argentine government,
impacting local volume sold, as well as imported and exported
volumes to and from international markets.
Seaboard's Power Division benefits from a tax exempt
concession granted by the Dominican Republic government
through 2012.
Patents, trademarks, franchises, licenses and concessions are
not material to any of Seaboard's other divisions.
(v) Seasonal Business
Sugar prices in Argentina are generally lower during the
typical sugarcane harvest period between May and November.
Seaboard's other divisions are not seasonally dependent to any
material extent.
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of
Seaboard relating to working capital items.
(vii) Depending on a Single Customer or Few Customers
Seaboard does not have sales to any one customer equal to ten
percent or more of consolidated revenues. The Pork Division
derives approximately 12 percent of its revenues from a few
customers in Japan through one agent. The Power Division
sells power in the Dominican Republic to a limited number of
contract customers and on the spot market accessed primarily
by three wholly government-owned distribution companies.
Approximately 34% of its power generation is provided for one
government-owned distribution company under a short-term
contract that expires at the end of March 2010 and for which
Seaboard bears a concentrated credit risk as this customer,
from time to time, has significant past due balances. No
other division has sales to a few customers which, if lost,
would have a material adverse effect on any such division or
on Seaboard taken as a whole.
(viii) Backlog
Backlog is not material to Seaboard's businesses.
(ix) Government Contracts
No material portion of Seaboard's business involves government
contracts.
(x) Competitive Conditions
Competition in Seaboard's Pork Division comes from a variety
of national, international and regional producers and
processors and is based primarily on product quality, customer
service and price. According to recent publications by
Successful Farming and Informa Economics, trade publications,
Seaboard ranks as one of the nation's top five pork producers
(based on sows in production) and top ten pork processors
(based on daily processing capacity).
Seaboard's ocean liner service for containerized cargoes faces
competition based on price, reliable sailing frequencies and
customer service. Seaboard believes it is among the top five
ranking ocean liner services for containerized cargoes in the
Caribbean Basin based on cargo volume.
6
Seaboard's sugar business owns one of the largest sugar mills
in Argentina and faces significant competition for sugar sales
in the local Argentine market. Sugar prices in Argentina can
fluctuate compared to world markets due to current Argentine
government price control and protection policies.
Seaboard's Power Division is located in the Dominican
Republic. Power generated by this division is sold on the
spot market or to contract customers at prices primarily based
on market conditions rather than cost-based rates.
(xi) Research and Development Activities
Seaboard conducts research and development activities focused
on various aspects of Seaboard's vertically integrated pork
processing system, including improving product quality,
production processes, animal genetics, nutrition
and health. Incremental costs incurred to perform these tests
are expensed as incurred and are not material to operating
results.
(xii) Environmental Compliance
Seaboard is subject to numerous Federal, state and local
provisions relating to the environment which require the
expenditure of funds in the ordinary course of business.
Seaboard does not anticipate making expenditures for these
purposes, which, in the aggregate would have a material or
significant effect on Seaboard's financial condition or
results of operations.
(xiii) Number of Persons Employed by Registrant
As of December 31, 2009, Seaboard, excluding non-consolidated
foreign affiliates, had 10,957 employees, of whom 5,737 were
employed in the United States. Approximately 2,100 employees
in Seaboard's Pork Division were covered by collective
bargaining agreements as of December 31, 2009. Seaboard
considers its employee relations to be satisfactory.
(d) Financial Information about Geographic Areas
In addition to the narrative disclosure provided below, the
financial information relating to export sales required by Item 1
of Form 10-K is incorporated herein by reference to Note 13 of
Seaboard's Consolidated Financial Statements appearing on pages 55
through 59 of Seaboard's Annual Report to Stockholders furnished to
the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this report.
Seaboard considers its relations with the governments of the
countries in which its foreign subsidiaries and affiliates are
located to be satisfactory, but these foreign operations are
subject to risks of doing business in lesser-developed countries
which are subject to potential civil unrests and government
instabilities, increasing the exposure to potential expropriation,
confiscation, war, insurrection, civil strife and revolution, sales
price controls, currency inconvertibility and devaluation, and
currency exchange controls. To minimize certain of these risks,
Seaboard has insured certain investments in its affiliate flour
mills in Democratic Republic of Congo, Haiti, Lesotho, Republic of
Congo and Zambia, to the extent available and deemed appropriate
against certain of these risks with the Overseas Private Investment
Corporation, an agency of the United States Government. At the
date of this report, Seaboard is not aware of any situations which
could have a material effect on Seaboard's business, although the
January 12, 2010 earthquake in Haiti could result in civil unrest
over a period of time if local conditions do not improve from
current conditions.
(e) Available Information
Seaboard electronically files with the Commission annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports pursuant to Section 13(a) or
15(d) of the Exchange Act. The public may read and copy any
materials filed with the Commission at their public reference room
located at 100 F Street N.E., Washington, D.C. 20549. The public
may obtain further information concerning the public reference room
and any applicable copy charges, as well as the process of
obtaining copies of filed documents by calling the Commission at 1-
800-SEC-0330.
The Commission maintains an internet website that contains reports,
proxy and information statements, and other information regarding
electronic filers at www.sec.gov. Seaboard provides access to its
most recent Form 10-K, 10-Q and 8-K reports, and any amendments to
these reports, on its internet website, www.seaboardcorp.com, free
of charge, as soon as reasonably practicable after those reports
are electronically filed with the Commission.
7
Please note that any internet addresses provided in this report are
for information purposes only and are not intended to be
hyperlinks. Accordingly, no information provided at such Internet
addresses is intended or deemed to be incorporated herein by
reference.
Item 1A. Risk Factors
Seaboard has identified important risks and uncertainties that
could affect the results of operations, financial condition or
business and that could cause them to differ materially from
Seaboard's historical results of operations, financial condition or
business, or those contemplated by forward-looking statements made
herein or elsewhere, by, or on behalf of, Seaboard. Factors that
could cause or contribute to such differences include, but are not
limited to, those factors described below.
(a) General
(1) Seaboard's Operations are Subject to the General Risks of the
Food Industry. The divisions of the business that are in the
food products manufacturing industry are subject to the risks
posed by:
- food spoilage or food contamination;
- evolving consumer preferences and nutritional and health-
related concerns;
- federal, state, national, provincial and local food
processing controls;
- consumer product liability claims;
- product tampering;
- the possible unavailability and/or expense of liability
insurance.
If one or more of these risks were to materialize, Seaboard's
revenues could decrease, costs of doing business could
increase, and Seaboard's operating results could be adversely
affected.
(2) Foreign Political and Economic Conditions Have a Significant
Impact on Seaboard's Business. Seaboard is a diverse
agribusiness and transportation company with global
operations in several industries. Most of the sales and costs
of Seaboard's divisions are significantly influenced by
worldwide fluctuations in commodity prices or changes in
foreign political and economic conditions. Accordingly, sales,
operating income and cash flows can fluctuate significantly
from year to year. In addition, Seaboard's international
activities pose risks not faced by companies that limit
themselves to United States markets. These risks include:
- changes in foreign currency exchange rates;
- foreign currency exchange controls;
- changes in a specific country's or region's political or
economic conditions, particularly in emerging markets;
- hyperinflation;
- heightened customer credit and execution risk;
- tariffs, other trade protection measures and import or
export licensing requirements;
- potentially negative consequences from changes in tax
laws;
- different legal and regulatory structures and unexpected
changes in legal and regulatory requirements; and
- negative perception within a foreign country of a United
States company doing business in that foreign country.
Seaboard cannot provide assurance that it will be successful
in competing effectively in international markets.
(3) Deterioration of Economic Conditions Could Negatively Impact
Seaboard's Business. Seaboard's business may be adversely
affected by changes in national or global economic conditions,
including inflation, interest rates, availability of capital
markets, consumer spending rates, energy availability and
costs and the effects of governmental initiatives to manage
economic conditions. Any such changes could adversely affect
the demand for our pork products, grains and shipping
services, or the cost and availability of our needed raw
materials and packaging materials, thereby negatively
affecting our financial results. The current national and
global economic conditions, could, among other things:
- impair the financial condition of some of our customers
and suppliers thereby increasing customer bad debts or
non-performance by customers and suppliers;
- negatively impact global demand for protein and
grain-based products, which could result in a reduction
of sales, operating income and cash flows;
- decrease the value of our investments in equity and debt
securities, including pension plan assets; and
8
- impair the financial viability of our insurers.
(4) Ocean Transportation Has Inherent Risks. Seaboard's owned and
chartered vessels along with related cargoes are at risk of
being damaged or lost because of events such as:
- marine disasters;
- bad weather;
- mechanical failures;
- grounding, fire, explosions and collisions;
- human error; and
- war and terrorism.
All of these hazards can result in death or injury to persons,
loss of property, environmental damages, delays or rerouting.
If one of Seaboard's vessels were involved in an accident, the
resulting media coverage could have a material adverse effect
on Seaboard's business, financial condition and results of
operations.
(5) Seaboard's Common Stock is Thinly Traded and Subject to Daily
Price Fluctuations. The common stock of Seaboard is closely
held (72.3% is owned by Seaboard Flour and SFC Preferred LLC,
which is owned by S. Bresky and other members of the Bresky
family) and thinly traded on a daily basis on the NYSE Amex
Equities (formerly, NYSE Alternext US). Accordingly, the
price of a share of common stock can fluctuate more
significantly from day-to-day than a widely held stock that is
actively traded on a daily basis.
(b) Pork Division
(1) Fluctuations in Commodity Pork Prices Could Adversely
Affect Seaboard's Results of Operations. Sales prices for
Seaboard's pork products are directly affected by both
domestic and world wide supply and demand for pork products
and other proteins, all of which are determined by constantly
changing market forces of supply and demand as well as other
factors over which Seaboard has little or no control.
Commodity pork prices demonstrate a cyclical nature over
periods of years, reflecting changes in the supply of fresh
pork and competing proteins on the market, especially beef and
chicken. Seaboard's results of operations could be adversely
affected by fluctuations in pork commodity prices.
(2) Increases in Costs of Seaboard's Feed Components and Hog
Purchases Could Adversely Affect Seaboard's Costs and
Operating Margins. Feed costs are the most significant single
component of the cost of raising hogs and can be materially
affected by commodity price fluctuations for corn and soybean
meal. The results of Seaboard's Pork Division can be
negatively affected by increased costs of Seaboard's feed
components. The recent increase in construction and operation
of ethanol plants has elevated this risk as it has increased
the competing demand for feed ingredients, primarily corn.
Similarly, accounting for approximately 25% of Seaboard's
total hogs slaughtered, the cost of third party hogs purchased
fluctuates with market conditions and can have an impact on
Seaboard's total costs. The cost and supply of feed components
and the third party hogs that we purchase are determined by
constantly changing market forces of supply and demand, which
are driven by matters over which we have no control, including
weather, current and projected worldwide grain stocks and
prices, grain export prices and supports and governmental
agricultural policies. Seaboard attempts to manage certain of
these risks through the use of financial instruments, however
this may also limit its ability to participate in gains from
favorable commodity fluctuations. Unless wholesale pork prices
correspondingly increase, increases in the prices of
Seaboard's feed components or in the cost of third party hogs
purchased would adversely affect Seaboard's operating margins.
(3) Seaboard's Ability to Obtain Appropriate Personnel at Remote
Locations is Important to Seaboard's Business. The remote
locations of the pork processing plant and live hog operations,
the lack of immigration reform could negatively affect the
availability and cost of labor. Seaboard is dependent on
having sufficient properly trained operations personnel.
Attracting and retaining qualified personnel is important to
Seaboard's success. The inability to acquire and retain the
services of such personnel could have a material adverse
effect on Seaboard's operations.
(4) The Loss of Seaboard's Sole Hog Processing Facility Could
Adversely Affect Seaboard's Business. Seaboard's Pork
Division is largely dependent on the continued operation of a
single hog processing facility. The loss of or damage to this
facility for any reason - including fire, tornado,
governmental action or other reason - could adversely affect
Seaboard and Seaboard's pork business.
(5) Environmental Regulation and Related Litigation Could Have a
Material Adverse Effect on Seaboard. Seaboard's operations and
properties are subject to extensive and increasingly stringent
laws and regulations pertaining to, among other things, odors,
the discharge of materials into the environment and the
handling and disposition of wastes
9
(including solid and hazardous wastes) or otherwise relating
to protection of the environment. Failure to comply with these
laws and regulations and any future changes to them may result
in significant consequences to Seaboard, including civil and
criminal penalties, liability for damages and negative
publicity. Some requirements applicable to Seaboard may also
be enforced by citizen groups. Seaboard has incurred, and
will continue to incur, operating expenditures to comply with
these laws and regulations.
(6) Health Risk to Livestock Could Adversely Affect Production,
the Supply of Raw Materials and Seaboard's Business. Seaboard
is subject to risks relating to its ability to maintain animal
health and control diseases. The general health of the hogs
and the reproductive performance of the sows can have an
adverse impact on production and production costs, the supply
of raw material to Seaboard's pork processing operations and
consumer confidence. If Seaboard's hogs are affected by
disease, Seaboard may be required to destroy infected
livestock, which could adversely affect Seaboard's production
or ability to sell or export its products. Moreover, the herd
health of third party suppliers could adversely affect the
supply and cost of hogs available for purchase by Seaboard.
Adverse publicity concerning any disease or health concern
could also cause customers to lose confidence in the safety
and quality of Seaboard's food products.
(7) If Seaboard's Pork Products Become Contaminated, We May be
Subject to Product Liability Claims and Product Recalls. Pork
products may be subject to contamination by disease producing
organisms. These organisms are generally found in the
environment and as a result, regardless of the manufacturing
practices employed, there is a risk that they as a result of
food processing could be present in Seaboard's processed pork
products. Once contaminated products have been shipped for
distribution, illness and death may result if the organisms
are not eliminated at the further processing, foodservice or
consumer level. Even an inadvertent shipment of contaminated
products is a violation of law and may lead to increased risk
of exposure to product liability claims, product recalls and
increased scrutiny by federal and state regulatory agencies
and may have a material adverse effect on Seaboard's business,
reputation, prospects, results of operations and financial
condition.
(8) Corporate Farming Legislation Could Result in the Divestiture
or Restructuring of Seaboard's Pork Operations. The
development of large corporate farming operations and
concentration of hog production in larger-scale facilities has
engendered opposition from residents of states in which
Seaboard conducts its pork processing and live hog operations.
From time-to-time, corporate farming legislation has been
introduced in the United States Senate and House of
Representatives, as well as in several state legislatures.
These proposed anti-corporate farming bills have included
provisions to prohibit or restrict meat packers, such as
Seaboard, from owning or controlling livestock intended for
slaughter, which would require divestiture or restructuring of
Seaboard's operations.
(9) International Trade Barriers Could Adversely Affect Seaboard's
Pork Operations. This division realizes a significant portion
of its revenues from international markets, particularly Japan
and Mexico. International sales are subject to risks related
to general economic conditions, imposition of tariffs, quotas,
trade barriers and other restrictions, enforcement of remedies
in foreign jurisdictions and compliance with applicable
foreign laws, and other economic and political uncertainties.
These and other risks could result in border closings or other
international trade barriers having an adverse effect on
Seaboard's earnings.
(10) Discontinuation of Tax Credits for Biodiesel Could
Adversely Affect Seaboard's Results of Operations. Seaboard
obtains Federal and State tax credits for the biodiesel it
produces and sells. The Federal tax credit expired on
December 31, 2009, and if not renewed by Congress during 2010
could adversely affect Seaboard's results of operations and
could result in the potential impairment of the recorded value
of property, plant and equipment related to the biodiesel
processing facility.
(11) Operations of Biodiesel Production Facility. The
profitability of Seaboard's biodiesel plant could be adversely
affected by various factors, including the market price of
pork and other animal fat which is utilized to produce
biodiesel, and the market price for biodiesel. Unfavorable
changes in these prices over extended periods of time could
adversely affect Seaboard's results of operations and could
result in the potential impairment of the recorded value of
the property, plant and equipment related to this facility.
(c) Commodity Trading & Milling Division
(1) Seaboard's Commodity & Milling Division is Subject to Risks
Associated with Foreign Operations. This division principally
operates in Africa, Bermuda, South America and the Caribbean
and, in most cases, in what are generally regarded to be
lesser developed countries. Many of these foreign operations
are subject to risks of doing business in lesser-developed
countries which are subject to potential civil unrests and
government instabilities, increasing the exposure to potential
expropriation, confiscation, war, insurrection, civil strife
and revolution, currency
10
inconvertibility and devaluation, and currency exchange
controls, in addition to the risks of overseas operations
mentioned in clause (a)(2) above. In addition, foreign
government policies and regulations could restrict the
purchase of various grains, reducing or limiting Seaboard's
ability to access grains or to limit Seaboard's sales price
for grains sold in local markets.
(2) Fluctuations in Commodity Grain Prices Could Adversely Affect
the Business of Seaboard's Commodity & Milling Division. This
division's sales are significantly affected by fluctuating
worldwide prices for various commodities, such as wheat, corn,
soybeans and rice. These prices are determined by constantly
changing market forces of supply and demand as well as other
factors over which Seaboard has little or no control. North
American and European subsidized wheat and flour exports,
including donated food aid, and world-wide and local crop
production can contribute to these fluctuating market
conditions and can have a significant impact on the trading
and milling businesses' sales, value of commodities held in
inventory and operating income. Seaboard's results of
operations could be adversely affected by fluctuations in
commodity prices.
(3) Seaboard's Commodity & Milling Division Largely Depends on the
Availability of Chartered Ships. Most of Seaboard's third
party trading is transported with chartered ships. Charter
hire rates, influenced by available charter capacity and
demand for worldwide trade in bulk cargoes, port access and
throughput time, and related fuel costs can impact business
volumes and margins.
(4) This Division Uses a Material Amount of Derivative Products to
Manage Certain Market Risks. The commodity trading portion of
the business enters into various commodity derivatives,
foreign exchange derivatives and freight derivatives to create
what management believes is an economic hedge for commodity
trades it executes or intends to execute with its customers.
From time to time, this portion of the business may enter into
speculative derivative transactions related to its market
risks. Failure to execute or improper execution of a
derivative position or a firmly committed sale or purchase
contract, a speculative transaction that closes without the
desired result or exposure to counter party risk could have an
adverse impact on the results of operations and liquidity.
(5) This Division is Subject to Higher than Normal Risks for
Attracting and Retaining Key Personnel. In the commodity
trading environment, a loss of a key employee such as a
commodity trader can have a negative impact resulting from the
loss of revenues as personal customer relationships can be
vital to obtaining and retaining business with various foreign
customers. In the milling portion of this division, employing
and retaining qualified expatriate personnel is a key element
of success given the difficult living conditions, the unique
operating environments and the reliance on a relatively small
number of executives to manage each individual location.
(d) Marine Division
(1) The Demand for Seaboard's Marine Division's Services Are
Affected by International Trade and Fluctuating Freight Rates.
This division provides containerized cargo shipping services
primarily from the United States to twenty-five different
countries in the Caribbean Basin, Central and South America.
In addition to the risks of overseas operations mentioned in
clause (a)(2) above, fluctuations in economic conditions,
unstable or hostile local political situations in the
countries in which Seaboard operates can affect import/export
trade volumes and the price of container freight rates and
adversely affect Seaboard's results of operations.
(2) Chartered Ships Are Subject to Fluctuating Rates. The largest
expense for this division is typically time charter cost.
Certain of the ships are under charters longer than one year
while others are less than one year. These costs can vary
greatly due to a number of factors including the worldwide
supply and demand for shipping. It is not possible to
determine in advance whether a charter contract for more or
less than one year will be favorable to Seaboard's business.
Accordingly, entering into long-term charter hire contracts
during periods of decreasing charter hire costs or short term
charter hire contracts during periods of increasing charter
hire costs could have an adverse effect on Seaboard's results
of operation.
(3) Fuel Prices Can Adversely Affect Seaboard's Business. Ship
fuel expenses are one of the division's largest expenses.
These costs can vary greatly from year-to-year depending on
world fuel prices. Also, but to a lesser extent, fuel price
increases can impact the cost of inland transportation costs.
(4) Hurricanes Can Disrupt Operations in the Caribbean Basin.
Seaboard's port operations throughout the Caribbean Basin can
be subject to disruption due to hurricanes, especially at
Seaboard's major ports in Miami, Florida and Houston, Texas,
which could have an adverse effect on our results of
operations.
11
(5) Seaboard is Subject to Complex Laws and Regulations that Can
Adversely Affect the Revenues, Cost, Manner or Feasibility of
Doing Business. Federal, state and local laws and domestic
and international regulations governing worker health and
safety, environmental protection, port and terminal security,
and the operation of vessels significantly affect Seaboard's
operations, including rate discussions and other related
arrangements. Many aspects of the marine industry, including
rate agreements, are subject to extensive governmental
regulation by the Federal Maritime Commission, the U.S. Coast
Guard, and U.S. Customs and Border Protection, and to
regulation by private industry organizations. Compliance
with applicable laws, regulations and standards may require
installation of costly equipment or operational changes, while
the failure to comply may result in administrative and civil
penalties, criminal sanctions or the suspension or termination
of Seaboard's operations or detention of its vessels. In
addition, future changes in laws, regulations and standards,
including allowed freight rate discussions and other related
arrangements, may result in additional costs or a reduction
in revenues.
(e) Sugar Division
(1) The Success of this Division Depends on the Condition of the
Argentinean Economy and Political Climate. This division
operates a sugar mill and alcohol production facility in
Argentina, locally growing a substantial portion of the sugar
cane processed at the mill. The majority of the sales are
within Argentina. Fluctuations in economic conditions or
changes in the Argentine political climate can have an impact
on the costs of operations, the sales prices of products and
export opportunities and the exchange rate of the Argentine
peso to the U.S. dollar. In this regard, local sales prices
are affected by government price control and sugar import
duties imposed by the Argentine government, impacting local
volume sold, as well as imported and exported volumes to and
from international markets. If import duties are changed,
this could have a negative impact on Seaboard's sale price of
its products. In addition, the Argentine government attempts
to control inflation through price controls on commodities,
including sugar, which could adversely impact the local sales
price of its products and the results of operations for this
division. A devaluation of the Argentine peso would have a
negative impact on Seaboard's financial position.
(2) This Division is Subject to the Risks that Are Inherent in any
Agricultural Business. Seaboard's results of operations for
this division may be adversely affected by numerous factors
over which we have little or no control and that are inherent
in any agricultural business, including reductions in the
market prices for Seaboard's products, adverse weather and
growing conditions, pest and disease problems, and new
government regulations regarding agriculture and the marketing
of agricultural products. Of these risks, weather particularly
can adversely affect the amount and quality of the sugar cane
produced by Seaboard and Seaboard's competitors located in
other regions of Argentina.
(3) The Loss of Seaboard's Sole Processing Facility Would
Adversely Affect the Business of This Division. Seaboard's
Sugar Division is largely dependant on the continued operation
of a single processing facility. The loss of or damage to
this facility for any reason - including fire, tornado,
governmental action, labor unrest resulting in labor strikes
or other reasons - would adversely affect the business of this
division.
(4) Labor Relations. This division is dependent on unionized
labor at its single sugar mill in Argentina. The current
nature of the political environment in Argentina makes normal
labor relations very challenging. Contributing to the
situation are the policies of the National Government, the
failure of the Argentine courts to enforce contractual
obligations with unions and basic property rights.
Interruptions in production as a result of labor unrest can
impact the quantity of sugar cane harvested and the amount of
sugar and alcohol produced as well as interrupting the
distribution of products stored at the facility in the Salta
Province.
(f) Power Division
(1) This Division is Subject to Risks of Doing Business in the
Dominican Republic. This division operates in the Dominican
Republic (DR). In addition to significant currency
fluctuations and the other risks of overseas operations
mentioned in clause (a)(2) above, this division can experience
difficulty in obtaining timely collections of trade
receivables from the government partially-owned distribution
companies or other companies that must also collect from the
government in order to make payments on their accounts.
Currently, the DR does not allow a free market to enable
prices to rise with demand which would limit our profitability
in this business. The government has the ability to
arbitrarily decide which power units will be able to operate,
which could have adverse effects on results of operations.
12
(2) Increases in Fuel Costs Could Adversely Affect Seaboard's
Operating Margins. Fuel is the largest cost component of this
division's business and, therefore, margins may be adversely
affected by fluctuations in fuel if such increases can not be
fully passed to customers.
(3) Ability to Meet Obligations Under Asset Sale Agreement.
Seaboard's agreement to sell its Dominican Republic barges
requires that they meet certain performance standards at
closing, which if not met will result in Seaboard being in
breach of the agreement which could result in Seaboard
incurring significant damages.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
(1) Pork - Seaboard's Pork Division owns a hog processing plant in
Guymon, Oklahoma, which opened in 1995. It has a daily double
shift capacity to process approximately 18,500 hogs and generally
operates at capacity with additional weekend shifts depending on
market conditions. Seaboard's hog production operations consist of
the breeding and raising of approximately 4.0 million hogs annually
at facilities it primarily owns or at facilities owned and operated
by third parties with whom it has grower contracts. This business
owns and operates six centrally located feed mills which have a
combined capacity to produce approximately 1,700,000 tons of
formulated feed annually used primarily to support Seaboard's
existing hog production, and have the capability of supporting
additional hog production in the future. These facilities are
located in Oklahoma, Texas, Kansas and Colorado.
Seaboard's Pork Division also owns two bacon further processing
plants located in Salt Lake City, Utah and Missoula, Montana.
These plants are utilized near capacity throughout the year, which
is a combined daily smoking capacity of approximately 300,000
pounds of raw pork bellies. The Pork Division also operates a
majority-owned ham-boning and processing plant in Mexico that has
the capacity to process 58.0 million pounds of ham annually. This
plant was completed in the second quarter of 2009.
The Pork Division owns a processing plant in Guymon, Oklahoma with
the capacity to produce 30.0 million gallons of biodiesel annually,
which is currently produced from pork fat from Seaboard's Guymon
pork processing plant and from animal fat supplied by non-Seaboard
facilities. The facility can also produce biodiesel from vegetable
oil.
(2) Commodity Trading and Milling - Seaboard's Commodity Trading
and Milling Division owns, in whole or in part, grain-processing
and related agribusiness operations in 12 countries which have the
capacity to mill approximately 6,700 metric tons of wheat and maize
per day. In addition, Seaboard has feed mill capacity of in excess
of 129 metric tons per hour to produce formula animal feed. The
milling operations located in Colombia, Democratic Republic of
Congo, Ecuador, Guyana, Haiti, Kenya, Lesotho, Nigeria, Republic of
Congo, Sierra Leone, Uganda and Zambia own their facilities; and in
Kenya, Lesotho, Nigeria, Republic of Congo and Sierra Leone the
land on which the mills are located on is leased under long-term
agreements. Certain foreign milling operations may operate at less
than full capacity due to low demand related to poor consumer
purchasing power, excess milling capacity in their competitive
environment and European-subsidized wheat and flour exports.
Seaboard also owns seven 9,000 metric-ton deadweight dry bulk
carriers, one 23,400 metric ton deadweight dry bulk carrier, and
"time charters" (the charter of a vessel, whereby the vessel owner
is responsible to provide the captain and crew necessary to operate
the vessel) under short-term agreements, between 13 and 44 bulk
carrier ocean vessels with deadweights ranging from 500 to 44,000
metric tons.
(3) Marine - Seaboard's Marine Division leases a 135,000 square
foot off-port warehouse and 81 acres of port terminal land and
facilities in Miami, Florida which are used in its containerized
cargo operations. Seaboard also leases an approximately 62 acre
cargo handling and terminal facility in Houston, Texas, which
includes several on-dock warehouses totaling approximately 690,000
square feet for cargo storage. At December 31, 2009, Seaboard
owned 12 ocean cargo vessels with deadweights ranging from 2,600 to
19,500 metric tons and time chartered 22 vessels under contracts
ranging from approximately five months to two years with
deadweights ranging from 3,400 to 21,500 metric tons. In addition,
Seaboard has contracted to charter two vessels on a four-year time
charter. Delivery of these two time chartered ships, each with a
deadweight of 26,500 metric tons, is expected in the first half of
2010. Seaboard also owns or leases dry, refrigerated and
specialized containers and other related equipment.
13
(4) Sugar - Seaboard's Argentine Sugar Division owns more than
60,000 acres of planted sugarcane. Depending on local market
conditions, this business also purchases third party sugar for
resale. In addition, this division owns a sugar mill with a
current capacity to process approximately 250,000 metric tons of
sugar and an alcohol distillery with a current capacity of
approximately 14 million gallons of alcohol per year. This
capacity is sufficient to process all of the cane harvested by this
division and certain additional quantities purchased from third
party farmers in the region. The sugarcane fields and processing
mill are located in northern Argentina in the Salta Province, which
experiences seasonal rainfalls that may limit the harvest season,
which then affects the duration of mill operations and quantities
of sugar produced. During the third quarter of 2010, it is
anticipated that construction will be completed on a 40 megawatt
cogeneration power plant.
(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. Seaboard operates as
an independent power producer. Seaboard is not directly involved
in the transmission and distribution facilities that deliver the
power to the end users but does have contracts to sell directly to
third party users. See "Status of Product or Segment" under Item 1
of this report for discussion of the pending sale of the two
barges.
(6) Other - Seaboard owns a jalapeno pepper processing plant and
warehouse in Honduras.
In addition to the information provided above, the information
under "Principal Locations" of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this report is incorporated herein by
reference.
Management believes that Seaboard's present facilities are adequate
and suitable for its current purposes.
Item 3. Legal Proceedings
The information required by Item 3 of Form 10-K is incorporated
herein by reference to Note 11 of Seaboard's Consolidated Financial
Statements appearing on pages 53 and 54 of Seaboard's Annual Report
to Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 to this Report.
Item 4. Reserved
Executive Officers of the Registrant
The following table lists the executive officers and certain
significant employees of Seaboard. Generally, executive officers
are elected at the annual meeting of the Board of Directors
following the Annual Meeting of Stockholders and hold office until
the next such annual meeting or until their respective successors
are duly chosen and qualified. There are no arrangements or
understandings pursuant to which any executive officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
Steven J. Bresky (56) President and Chief Executive Officer
Robert L. Steer (50) Senior Vice President, Chief Financial Officer
David M. Becker (48) Vice President, General Counsel and Secretary
Barry E. Gum (43) Vice President, Finance and Treasurer
James L. Gutsch (56) Vice President, Engineering
Ralph L. Moss (64) Vice President, Governmental Affairs
David S. Oswalt (42) Vice President, Taxation and Business Development
14
Ty A. Tywater (40) Vice President, Audit Services
John A. Virgo (49) Vice President, Corporate Controller and
Chief Accounting Officer
Rodney K. Brenneman (45) President, Seaboard Foods, LLC
David M. Dannov (48) President, Seaboard Overseas and Trading Group
Edward A. Gonzalez (44) President, Seaboard Marine Ltd.
Mr. Steven J. Bresky has served as President and Chief Executive
Officer since July 2006 and previously as Senior Vice President,
International Operations of Seaboard from February 2001 to July
2006.
Mr. Steer has served as Senior Vice President, Chief Financial
Officer of Seaboard since December 2006 and previously as Senior
Vice President, Treasurer and Chief Financial Officer from 2001-
2006.
Mr. Becker has served as Vice President, General Counsel and
Secretary of Seaboard since December 2003.
Mr. Gum has served as Vice President, Finance and Treasurer of
Seaboard since December 2006 and previously as Vice President,
Finance from 2003-2006.
Mr. Gutsch has served as Vice President, Engineering of Seaboard
since December 1998.
Mr. Moss has served as Vice President, Governmental Affairs of
Seaboard since December 2003.
Mr. Oswalt has served as Vice President, Taxation and Business
Development of Seaboard since December 2003.
Mr. Tywater has served as Vice President, Audit Services of
Seaboard since November 2008 and previously as Internal Audit
Director from 2002 to 2008.
Mr. Virgo has served as Vice President, Corporate Controller and
Chief Accounting Officer of Seaboard since December 2003.
Mr. Brenneman has served as President of Seaboard Foods, LLC
(previously Seaboard Farms Inc.) since June 2001.
Mr. Dannov has served as President of Seaboard Overseas and Trading
Group since August 2006 and previously as Vice President, Treasurer
of Seaboard Overseas and Trading Group from 1996 to 2006.
Mr. Gonzalez has served as President of Seaboard Marine, Ltd. since
January 2005.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Seaboard's Board of Directors intends that Seaboard will continue
to pay quarterly dividends, with the actual amount of any dividends
being dependant upon such factors as Seaboard's financial
condition, results of operations and current and anticipated cash
needs, including capital requirements. As discussed in Note 8 of
the consolidated financial statements appearing on pages 44 and 45
of the Seaboard Corporation Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit
13 to this Report (which discussion is incorporated herein by
reference), Seaboard's ability to declare and pay dividends is
subject to limitations imposed by the note agreements referred to
there.
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock, may be granted.
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 "Stockholder Information - Stock
Listing," (b) the dividends per common share information and closing
market price range per common share information under "Quarterly
Financial Data" and (c) the information under "Company Performance
Graph" appearing on pages 60, 9 and 8, respectively, of Seaboard's
Annual Report to Stockholders furnished to the Commission pursuant
to Rule 14a-3(b) and attached as Exhibit 13 to this report.
15
Item 6. Selected Financial Data
The information required by Item 6 of Form 10-K is incorporated
herein by reference to the "Summary of Selected Financial Data"
appearing on page 7 of Seaboard's Annual Report to Stockholders
furnished to the Commission pursuant to Rule 14a-3(b) and attached
as Exhibit 13 of this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 of Form 10-K is incorporated
herein by reference to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
10 through 24 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 pages 35
and 36 of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this Report, and (b) the material under the caption "Derivative
Information" within "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
23 and 24 of Seaboard's Annual Report to Stockholders furnished to
the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this Report.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 of Form 10-K is incorporated
herein by reference to Seaboard's "Quarterly Financial Data,"
"Report of Independent Registered Public Accounting Firm,"
"Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Changes in Equity" and "Notes to Consolidated
Financial Statements" appearing on page 9 and pages 26 through 59
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures - As of December
31, 2009, Seaboard's management has evaluated, under the direction
of our chief executive and chief financial officers, the
effectiveness of Seaboard's disclosure controls and procedures, as
defined in Exchange Act rule 13a - 15(e). Based upon and as of the
date of that evaluation, Seaboard's chief executive and chief
financial officers concluded that Seaboard's disclosure controls
and procedures were effective to ensure that information required
to be disclosed in the reports it files and submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported as and when required. It should be noted that any
system of disclosure controls and procedures, however well designed
and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met. In addition,
the design of any system of disclosure controls and procedures is
based in part upon assumptions about the likelihood of future
events. Due to these and other inherent limitations of any such
system, there can be no assurance that any design will always
succeed in achieving its stated goals under all potential future
conditions.
Management's Report on Internal Control Over Financial Reporting -
Information required by Item 9A of Form 10-K concerning
management's report on Seaboard's internal control over financial
reporting, as defined in Exchange Act rule 13a-15(f) is
incorporated herein by reference to Seaboard's "Management's Report
on Internal Control over Financial Reporting" appearing on page 25
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this report.
Registered Public Accounting Firm's Attestation Report -
Information required by Item 9A of Form 10-K with respect to the
registered public accounting firm's attestation report on
Seaboard's internal controls over financial reporting is
incorporated herein by reference to "Report of Independent
Registered Public Accounting Firm" appearing on page 27 of
Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14-3(b) and attached as Exhibit 13 to
this report.
16
Change in Internal Controls - There has been no change in
Seaboard's internal control over financial reporting that occurred
during the fiscal quarter ended December 31, 2009 that has
materially affected, or is reasonably likely to materially affect,
Seaboard's internal control over financial reporting.
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We refer you to the information under the caption "Executive
Officers of Registrant" appearing immediately following the
disclosure in Item 4 of Part I of this report.
Seaboard has a Code of Ethics Policy (the Code) for directors,
officers (including our chief executive officer, chief financial
officer, chief accounting officer, controller and persons
performing similar functions) and employees. Seaboard has posted
the Code on its internet website, www.seaboardcorp.com, under the
"About Us" tab and intends to disclose any future changes and
waivers to the Code by posting such information on that website.
In addition to the information provided above, the information
required by Item 10 of Form 10-K is incorporated herein by
reference to (a) the disclosure relating to directors under "Item
1: Election of Directors" appearing on page 5 of Seaboard's
definitive proxy statement filed pursuant to Regulation 14A for the
2010 annual meeting of Stockholders ("2010 Proxy Statement"), (b)
the disclosure relating to Seaboard's audit committee and "audit
committee financial expert" and its director nomination procedures
under "Board of Directors Information -- Committees of the Board --
Audit Committee" and "Board of Directors Information -- Director
Nominations" appearing on pages 7 and 8 of the 2010 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 25 of the 2010 Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 of Form 10-K is incorporated
herein by reference to (a) the disclosure relating to compensation
of directors under "Board of Directors Information -- Compensation
of Directors" and "Employment Arrangements with Named Executive
Officers" appearing on page 8 and pages 11 and 12 of the 2010 Proxy
Statement, and (b) the disclosure relating to compensation of
executive officers under "Executive Compensation and Other
Information," "Benefit Plans" and "Compensation Committee
Interlocks and Insider Participation," "Compensation Committee
Report" and "Compensation Discussion and Analysis" appearing on
pages 9 and 10 and pages 12 through 23 of the 2010 Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock may be granted.
In addition to the information provided above, the information
required by Item 12 of Form 10-K is incorporated herein by
reference to the disclosure under "Principal Stockholders" and
"Share Ownership of Management and Directors" appearing on pages 3
and 4 of the 2010 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The information required by Item 13 of Form 10-K is incorporated
herein by reference to the disclosure under "Compensation Committee
Interlocks and Insider Participation" appearing on page 22 of the
2010 Proxy Statement, and the disclosure under "Board of Directors
Information - Controlled Corporation" and "Board of Directors
Information - Committees of the Board" appearing on page 7 of the
2010 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by Item 14 of Form 10-K is incorporated
herein by reference to the disclosure under "Item 2 Selection of
Independent Auditors" appearing on pages 23 through 25 of the 2010
Proxy Statement.
17
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
1. Consolidated financial statements.
See Index to Consolidated Financial Statements on page F-1.
2. Consolidated financial statement schedules.
See Index to Consolidated Financial Statements on page F-1.
3. Exhibits.
3.1 Seaboard's Restated Certificate of Incorporation.
Incorporated herein by reference to Exhibit 3.1 of
Seaboard's Form 10-Q for the quarter ended April 4, 2009.
3.2 Seaboard's By-laws, as amended. Incorporated herein by
reference to Exhibit 3.2 of Seaboard's Form 10-K for
fiscal year ended December 31, 2005.
4.1 Seaboard Corporation Note Purchase Agreement dated as of
September 30, 2002 between Seaboard and various purchasers
as listed in the exhibit. Incorporated herein by
reference to Exhibit 4.3 of Seaboard's Form 10-Q for the
quarter ended September 28, 2002.
4.2 Seaboard Corporation $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.
4.3 Seaboard Corporation $31,000,000 6.92% Senior Note, Series
D, due September 30, 2012 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.7 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.4 Amended and Restated Terminal Agreement between Miami-Dade
County and Seaboard Marine Ltd. for Marine Terminal
Operations, dated May 30, 2008. Incorporated herein by
reference to Exhibit 10.1 of Seaboard's Form 8-K dated May
30, 2008.
4.5 Amended and Restated Credit Agreement between Borrowers
and Bank of America, N.A., dated July 10, 2008
($300,000,000 revolving credit facility expiring July 10,
2013). Incorporated herein by reference to Exhibit 10.1
of Seaboard's Form 8-K dated July 10, 2008.
10.1* Seaboard Corporation 409A Executive Retirement Plan
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Executive Retirement Plan , 2005 Amendment and
Restatement dated March 6, 2006. Incorporated herein by
reference to Exhibit 10.1 of Seaboard's Form 10-K for
fiscal year ended December 31, 2008.
10.2* Seaboard Corporation Executive Deferred Compensation Plan
as Amended and Restated Effective January 1, 2009 and
dated December 22, 2008, amending and restating the
Seaboard Corporation Executive Deferred Compensation Plan
dated December 29, 2005. Incorporated herein by reference
to Exhibit 10.2 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.3* Seaboard Corporation Executive Retirement Plan Trust dated
November 5, 2004 between Seaboard Corporation and
Robert L. Steer as trustee. Incorporated herein by
reference to Exhibit 10.2 of Seaboard's Form 10-Q for the
quarter ended October 2, 2004.
10.4* Seaboard Corporation Investment Option Plan dated
December 18, 2000. Incorporated herein by reference to
Exhibit 10.7 of Seaboard's Form 10-K for fiscal year ended
December 31, 2000.
10.5 Marketing Agreement dated February 2, 2004 by and among
Seaboard Corporation, Seaboard Farms, Inc., Triumph Foods
LLC, and for certain limited purposes only, the members of
Triumph Foods LLC. Incorporated herein by reference to
Exhibit 10.2 of Seaboard's Form 8-K dated February 3,
2004.
18
10.6* Seaboard Corporation Retiree Medical Benefit Plan as
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Retiree Medical Benefit Plan dated March 4,
2005. Incorporated herein by reference to Exhibit 10.6 of
Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.7* Seaboard Corporation Executive Officers' Bonus
Policy. Incorporated herein by reference to Exhibit 10.10
of Seaboard's Form 10-K for fiscal year ended December 31,
2005.
10.8* Employment Agreement between Seaboard Corporation and
Steven J. Bresky dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.1 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.9* Employment Agreement between Seaboard Corporation and
Robert L. Steer dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.2 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.10* Employment Agreement between Seaboard Farms, Inc. and
Rodney K. Brenneman dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.3 of Seaboard's Form 10-
Q for the quarter ended July 2, 2005.
10.11* Employment Agreement between Seaboard Corporation and
Edward A. Gonzalez dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.14 of Seaboard's Form 10-
K for fiscal year ended December 31, 2006.
10.12* Seaboard Corporation Nonqualified Deferred Compensation
Plan Effective January 1, 2009 and dated December 22, 2008,
amending and restating the Seaboard Corporation
Nonqualified Deferred Compensation Plan dated
December 29, 2005. Incorporated herein by reference to
Exhibit 10.12 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.13* Amendment to Employment Agreement between Seaboard
Corporation and Edward A. Gonzalez dated August 8, 2006.
Incorporated herein by reference to Exhibit 10.1 of
Seaboard's Form 10-Q for the quarter ended July 1, 2006.
10.14* Employment Agreement between Seaboard Overseas
Trading Group and David M. Dannov dated July 1, 2006.
Incorporated herein by reference to Exhibit 10.17 of
Seaboard's Form 10-K for fiscal year ended December 31,
2006.
10.15* Second Amendment to Employment Agreement between
Seaboard Corporation and Edward A. Gonzalez dated January
17, 2007. Incorporated herein by reference to Exhibit
10.18 of Seaboard's Form 10-K for fiscal year ended
December 31, 2006.
10.16* First Amendment to Employment Agreement between
Seaboard Corporation and Steven J. Bresky dated December
15, 2008. Incorporated herein by reference to Exhibit
10.16 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.17* First Amendment to Employment Agreement between
Seaboard Corporation and Robert L. Steer dated December
15, 2008. Incorporated herein by reference to Exhibit
10.17 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.18* First Amendment to Employment Agreement between
Seaboard Foods LLC, formerly known as Seaboard Farms Inc.,
and Rodney K. Brenneman dated December 15, 2008.
Incorporated herein by reference to Exhibit 10.18 of
Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.19* Third Amendment to Employment Agreement between
Seaboard Marine Ltd. and Edward A. Gonzalez dated December
15, 2008. Incorporated herein by reference to Exhibit
10.19 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.20* First Amendment to Employment Agreement between
Seaboard Overseas Trading Group and David M. Dannov dated
December 15, 2008. Incorporated herein by reference to
Exhibit 10.20 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
19
10.21 Asset Purchase Agreement by and among Transcontinental
Capital Corporation (Bermuda) Ltd. (as Seller), Seaboard
Corporation (as Seller-Parent) and Pueblo Viejo Dominicana
Corporation (as Buyer), dated as of September 23, 2008.
Incorporated herein by reference to Exhibit 10.21 of
Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.22 Amendment to Asset Purchase Agreement amount
Transcontinental Capital Corporation (Bermuda) Ltd.,
Seaboard Corporation and Pueblo Viejo dated as of March 2,
2009. Incorporated herein by reference to Exhibit 10.22
of Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.23* Seaboard Corporation Cash Balance Executive
Retirement Plan effective January 1, 2009 and dated
December 18, 2009.
10.24* Seaboard Marine Ltd. 401(k) Excess Plan effective
January 1, 2009 and dated December 18, 2009.
10.25* Amendment No. 1 to the Seaboard Corporation Non-
Qualified Deferred Compensation Plan effective January 1,
2009 and dated December 17, 2009.
13 Sections of Annual Report to security holders specifically
incorporated herein by reference herein.
21 List of subsidiaries.
31.1 Certification of the Chief Executive Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
* Management contract or compensatory plan or arrangement.
(b) Exhibits.
See exhibits identified above under Item 15(a)3.
(c) Financial Statement Schedules.
See financial statement schedules identified above under Item
15(a)2.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SEABOARD CORPORATION
By /s/Steven J. Bresky By /s/Robert L. Steer
Steven J. Bresky, President and Robert L. Steer, Senior Vice President,
Chief Executive Officer Chief Financial Officer
Executive Officer (principal financial officer)
(principal executive officer)
Date: March 5, 2010 Date: March 5, 2010
By /s/John A. Virgo
John A. Virgo, Vice President,
Corporate Controller and Chief
Accounting Officer
(principal accounting officer)
Date: March 5, 2010
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of registrant and in the capacities and on the dates
indicated.
By /s/Steven J. Bresky By /s/Edward I. Shifman, Jr.
Steven J. Bresky, Director and Edward I. Shifman, Jr., Director
Chairman of the Board
Date: March 5, 2010 Date: March 5, 2010
By /s/David A. Adamsen By /s/Joseph E. Rodrigues
David A. Adamsen, Director Joseph E. Rodrigues, Director
Date: March 5, 2010 Date: March 5, 2010
By /s/Douglas W. Baena
Douglas W. Baena, Director
Date: March 5, 2010
21
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
Stockholders'
Annual Report Page
Report of Independent Registered Public Accounting Firm 26
Consolidated Statement of Earnings for the years
ended December 31, 2009, December 31, 2008 and
December 31, 2007 28
Consolidated Balance Sheets as of December 31, 2009
and December 31, 2008 29
Consolidated Statement of Cash Flows for the years
ended December 31, 2009, December 31, 2008 and
December 31, 2007 30
Consolidated Statement of Changes in Equity for the
years ended December 31, 2009, December 31, 2008 and
December 31, 2007 31
Notes to Consolidated Financial Statements 32
The foregoing is incorporated herein by reference.
The individual financial statements of the nonconsolidated
foreign affiliates, which would be required if each such foreign
affiliate were a Registrant, are omitted because (a) Seaboard's
and its other subsidiaries' investments in and advances to such
foreign affiliates do not exceed 20% of the total assets as shown
by the most recent consolidated balance sheet and (b) Seaboard's
and its other subsidiaries' equity in the earnings before income
taxes and extraordinary items of the foreign affiliates does not
exceed 20% of such income of Seaboard and consolidated
subsidiaries compared to the average income for the last five
fiscal years.
Combined condensed financial information as to assets,
liabilities and results of operations have been presented for
nonconsolidated foreign affiliates in Note 5 of "Notes to the
Consolidated Financial Statements."
II - Valuation and Qualifying Accounts for the years ended
December 31, 2009, 2008 and 2007 F-3
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related consolidated notes.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Seaboard Corporation:
Under date of March 5, 2010, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries (the
Company) as of December 31, 2009 and 2008, 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, 2009, as contained in the December 31, 2009 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, 2009.
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
March 5, 2010
F-2
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Provision Net deductions Balance at
beginning of year (1) (2) end of year
Year ended December 31, 2009:
Allowance for doubtful accounts $ 7,303 2,088 (2,061) $ 7,330
Year ended December 31, 2008:
Allowance for doubtful accounts $ 8,060 776 (1,533) $ 7,303
Year ended December 31, 2007:
Allowance for doubtful accounts $ 14,638 1,401 (7,979) $ 8,060
(1) The allowance for doubtful accounts provision is charged to
selling, general and administrative expenses.
(2) Includes write-offs net of recoveries and currency
translation adjustments.
F-
