UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
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)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ X ]
Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes . No X .
There were 1,261,367.24 shares of common stock, $1.00 par value
per share, outstanding on July 23, 2007.
Total pages in filing - 19 pages
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
2007 2006 2007 2006
Net sales:
Products $ 507,645 $ 482,493 $1,020,596 $ 925,100
Services 211,957 183,017 409,771 353,634
Other 22,617 23,427 41,000 45,776
Total net sales 742,219 688,937 1,471,367 1,324,510
Cost of sales and operating
expenses:
Products 479,264 410,563 940,432 793,054
Services 167,626 143,786 317,896 279,612
Other 19,919 19,491 36,559 38,782
Total cost of sales and operating
expenses 666,809 573,840 1,294,887 1,111,448
Gross income 75,410 115,097 176,480 213,062
Selling, general and administrative
expenses 40,948 37,029 85,200 74,137
Operating income 34,462 78,068 91,280 138,925
Other income (expense):
Interest expense (3,381) (4,765) (6,923) (10,334)
Interest income 5,402 5,537 10,043 11,531
Income (loss) from foreign
affiliates (142) 2,120 1,274 2,029
Minority and other noncontrolling
interests 196 (1,668) 119 (3,122)
Foreign currency gain (loss),
net 1,873 (855) (1,431) 2,413
Miscellaneous, net 5,582 1,387 6,168 6,171
Total other income, net 9,530 1,756 9,250 8,688
Earnings before income taxes 43,992 79,824 100,530 147,613
Income tax expense (1,335) (10,634) (8,518) (26,883)
Net earnings $ 42,657 $ 69,190 $ 92,012 $ 120,730
Earnings per common share $ 33.82 $ 54.85 $ 72.95 $ 95.71
Dividends declared per common
share $ 0.75 $ 0.75 $ 1.50 $ 1.50
Average number of shares
outstanding 1,261,367 1,261,367 1,261,367 1,261,367
See accompanying notes to condensed consolidated financial statements.
2
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Thousands of dollars)
(Unaudited)
June 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $ 34,558 $ 31,369
Short-term investments 461,257 478,859
Receivables, net 248,535 277,048
Inventories 352,221 341,366
Deferred income taxes 12,134 12,894
Other current assets 71,740 55,033
Total current assets 1,180,445 1,196,569
Investments in and advances to foreign affiliates 43,872 42,457
Net property, plant and equipment 686,119 637,813
Goodwill 40,000 28,372
Intangible assets, net 31,700 28,760
Other assets 36,369 27,462
Total assets $2,018,505 $1,961,433
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks $ 63,709 $ 62,975
Current maturities of long-term debt 37,906 63,415
Accounts payable 100,869 103,429
Other current liabilities 189,680 159,423
Total current liabilities 392,164 389,242
Long-term debt, less current maturities 134,192 137,817
Deferred income taxes 120,587 119,861
Other liabilities 74,743 72,103
Total non-current and deferred liabilities 329,522 329,781
Minority and other noncontrolling interests 969 39,103
Stockholders' equity:
Common stock of $1 par value,
Authorized 4,000,000 shares;
issued and outstanding 1,261,367 shares 1,261 1,261
Additional paid-in capital 21,574 21,574
Accumulated other comprehensive loss (80,070) (82,493)
Retained earnings 1,353,085 1,262,965
Total stockholders' equity 1,295,850 1,203,307
Total liabilities and stockholders' equity $2,018,505 $1,961,433
See accompanying notes to condensed consolidated financial statements.
3
SEABOARD CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Thousands of dollars)
(Unaudited)
Six Months Ended
June 30, July 1,
2007 2006
Cash flows from operating activities:
Net earnings $ 92,012 $ 120,730
Adjustments to reconcile net earnings to cash
from operating activities:
Depreciation and amortization 38,747 34,887
Other investment income, net (1,772) (827)
Income from foreign affiliates (1,274) (2,029)
Minority and noncontrolling interest (119) 3,122
Deferred income taxes 1,382 (579)
Gain from sale of fixed assets (730) (585)
Changes in current assets and liabilities:
Receivables, net of allowance 28,866 (3,273)
Inventories (10,963) 22,374
Other current assets (15,198) 14,350
Current liabilities, exclusive of debt (3,474) (37,639)
Other, net (398) (8,573)
Net cash from operating activities 127,079 141,958
Cash flows from investing activities:
Purchase of short-term investments (1,351,064) (1,962,579)
Proceeds from the sale or maturity of short-term
investments 1,367,468 1,972,731
Investments in and advances to foreign affiliates, net 46 2,015
Capital expenditures (80,174) (32,974)
Repurchase of minority interest in a controlled
subsidiary (30,053) -
Proceeds from the sale of fixed assets 1,213 1,596
Other, net (1,450) (978)
Net cash from investing activities (94,014) (20,189)
Cash flows from financing activities:
Notes payable to banks, net 734 (84,839)
Principal payments of long-term debt (28,789) (29,422)
Dividends paid (1,892) (1,892)
Other, net (82) (3,552)
Net cash from financing activities (30,029) (119,705)
Effect of exchange rate change on cash 153 (63)
Net change in cash and cash equivalents 3,189 2,001
Cash and cash equivalents at beginning of year 31,369 34,622
Cash and cash equivalents at end of period $ 34,558 $ 36,623
See accompanying notes to condensed consolidated financial statements.
4
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - Accounting Policies and Basis of Presentation
The condensed consolidated financial statements include the accounts
of Seaboard Corporation and its domestic and foreign subsidiaries
("Seaboard"). All significant intercompany balances and transactions
have been eliminated in consolidation. Seaboard's investments in non-
controlled affiliates are accounted for by the equity method. The
unaudited condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements of Seaboard
for the year ended December 31, 2006 as filed in its Annual Report on
Form 10-K. Seaboard's first three quarterly periods include
approximately 13 weekly periods ending on the Saturday closest to the
end of March, June and September. Seaboard's year-end is December 31.
The accompanying unaudited condensed consolidated financial statements
include all adjustments (consisting only of normal recurring accruals)
which, in the opinion of management, are necessary for a fair
presentation of financial position, results of operations and cash
flows. Results of operations for interim periods are not necessarily
indicative of results to be expected for a full year.
Use of Estimates
The preparation of the consolidated financial statements in conformity
with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements, and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
New Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 157 (SFAS 157),
"Fair Value Measurements". This statement establishes a single
authoritative definition of fair value when accounting rules require
the use of fair value, sets out a framework for measuring fair value,
and requires additional disclosures about fair-value measurements. For
Seaboard, SFAS 157 is effective for the fiscal year beginning January
1, 2008. Management believes the adoption of SFAS 157 will not have
a material impact on Seaboard's financial position or net earnings.
In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159 (SFAS 159), "The Fair Value Option for Financial
Assets and Financial Liabilities." This statement provides companies
with an option to report selected financial assets and liabilities at
fair value. Seaboard will be required to adopt this statement as of
January 1, 2008. Management believes the adoption of SFAS 159 will
not have a material impact on Seaboard's financial position or net
earnings.
Supplemental Noncash Transactions
As more fully described in Note 2, Seaboard repurchased the 4.74%
equity interest in Seaboard Foods LP from the former owners of Daily's
effective January 1, 2007. The following table summarizes the non-
cash transactions resulting from this repurchase:
June 30,
(Thousands of dollars) 2007
Increase in fixed assets $ 7,976
Increase in goodwill 11,628
Increase in intangible assets 3,745
Increase in other accrued liabilities (31,228)
Decrease in minority interest 37,932
Cash paid to date $ 30,053
5
Note 2 - Repurchase of Minority Interest
On December 27, 2006, Seaboard entered into a Purchase Agreement to
repurchase the 4.74% equity interest in Seaboard Foods LP from the
former owners of Daily's effective January 1, 2007. As part of the
Purchase Agreement, on January 2, 2007 Seaboard paid $30,000,000 of
the purchase price for the 4.74% equity interest to the former owners
of Daily's. The total purchase price was equal to the greater of
$40,000,000 or the same formula-determined value of the original put
option, determined as of June 30, 2007; less the amount of interest
which accrues on the initial $30,000,000 portion of the purchase price
from January 2, 2007 through the date on which the balance of the
purchase price is paid.
Based on the formula of operating results and certain net cash flows
through June 30, 2007, the final purchase price was determined to be
approximately $61,281,000 subject to final agreement, including
transaction costs of $53,000. Seaboard expects to pay the balance of
the purchase price owed to the former owners of Daily's of $31,228,000
in August 2007. The total purchase price of $61,281,000 for the 4.74%
equity interest represents $23,349,000 in excess of book value.
Seaboard applied the purchase method of accounting for this step
acquisition by allocating the purchase price to the fair value of the
net assets acquired to the extent of the 4.74% change in ownership.
The allocation of the purchase price resulted in the recording of an
increase in fixed assets of $7,976,000, an intangible asset for
customer relationships of $3,745,000 and goodwill of $11,628,000 as of
June 30, 2007. The goodwill has been allocated to Seaboard's Pork
segment and is expected to be deductible for tax purposes. The
intangible asset for customer relationships will be amortized over
fifteen years. Depreciation and amortization of $593,000 was recorded
in the second quarter representing the amount of depreciation on the
write-up of fixed assets and amortization of intangible asset from
January 1, 2007 through June 30, 2007. Pro forma results of
operations are not presented, as the effects of this acquisition are
not considered material to Seaboard's results of operations. The
factors that contributed to a purchase price that resulted in the
recognition of goodwill are a formula based re-purchase price
resulting in a value in excess of historical book values.
Note 3 - Inventories
The following is a summary of inventories at June 30, 2007 and
December 31, 2006:
June 30, December 31,
(Thousands of dollars) 2007 2006
At lower of LIFO cost or market:
Live hogs and materials $167,682 $149,521
Fresh pork and materials 19,434 19,443
187,116 168,964
LIFO adjustment (7,290) 1,458
Total inventories at lower of LIFO cost or market 179,826 170,422
At lower of FIFO cost or market:
Grain, primarily wheat, corn and soybeans 81,045 80,068
Sugar produced and in process 21,150 25,124
Other 35,323 29,016
Total inventories at lower of FIFO cost or market 137,518 134,208
Grain, flour and feed at lower of weighted average cost or
market 34,877 36,736
Total inventories $352,221 $341,366
6
Note 4 - Income Taxes
Seaboard adopted the provisions of FASB Interpretation No. 48 (FIN
48), Accounting for Uncertainty in Income Taxes, on January 1, 2007.
As of January 1, 2007, Seaboard had $320,000 in total unrecognized tax
benefits all of which, if recognized, would affect the effective tax
rate. Beginning January 1, 2007, Seaboard now recognizes interest
accrued related to unrecognized tax benefits and penalties in income
tax expense as Seaboard believes it is more closely related to income
tax expense instead of financing related items. Prior to the adoption
of FIN 48 on January 1, 2007, Seaboard recognized interest accrued
related to unrecognized tax benefits in interest expense and penalties
in selling, general and administrative expenses. As of January 1,
2007, Seaboard did not have any amounts recorded for accrued interest
and penalties on uncertain tax positions. Seaboard's tax returns are
regularly audited by federal, state and foreign tax authorities, which
may result in adjustments. Seaboard's U.S. federal income tax returns
have been reviewed through the 2004 tax year. Seaboard does not have
any uncertain tax positions in which it is reasonably possible that
the total amounts of the unrecognized tax benefits will significantly
increase or decrease within 12 months of the reporting date. The tax
amounts provided above have not changed materially since January 1,
2007.
In the second quarter of 2006, Seaboard reached a settlement with the
Internal Revenue Service on its audit of Seaboard's 2004 and 2003 U.S.
federal income tax returns. The favorable resolution of these tax
issues resulted in a tax benefit of $2,786,000 for items previously
reserved which was recorded in the second quarter of 2006.
Note 5 - Employee Benefits
Seaboard maintains a defined benefit pension plan ("the Plan") for its
domestic salaried and clerical employees. As a result of its current
liquidity and tax positions, in April 2007 Seaboard made a deductible
contribution in the amount of $10,000,000 for the 2006 Plan year. At
this time management does not plan on making any additional
contributions in 2007 for the 2006 plan year, and currently does not
anticipate making any contributions during 2007 for the 2007 plan
year. Additionally, Seaboard also sponsors non-qualified, unfunded
supplemental executive plans, and unfunded supplemental retirement
agreements with certain executive employees. Management is
considering funding alternatives, but currently has no plans to
provide funding for these supplemental plans in advance of when the
benefits are paid.
Mr. H. H. Bresky retired as President and CEO of Seaboard effective
July 6, 2006. As a result of Mr. Bresky's retirement, he was entitled
to a lump sum payment of $8,709,000 from Seaboard's Executive
Retirement Plan. Under IRS regulations, there is a six month delay of
benefit payments for key employees and thus Mr. Bresky was not paid
his lump sum until February 2007. This lump sum payment exceeded the
Company's service and interest cost components under this plan and
thus required Seaboard to recognize a portion of its actuarial losses.
However, Seaboard was not relieved of its obligation until the
settlement was paid in 2007. Accordingly, the settlement loss of
$3,671,000 was not recognized until February 2007 in accordance with
Statement of Financial Accounting Standards No. 88, "Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension
for Termination Benefits."
The net periodic benefit cost of these plans was as follows:
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Thousands of dollars) 2007 2006 2007 2006
Components of net periodic benefit cost:
Service cost $ 1,236 $ 1,208 $ 2,455 $ 2,128
Interest cost 1,447 1,405 2,854 2,589
Expected return on plan assets (1,527) (1,084) (2,774) (2,231)
Amortization and other 493 807 1,003 1,292
Settlement loss - - 3,671 -
Net periodic benefit cost $ 1,649 $ 2,336 $ 7,209 $ 3,778
7
Note 6 - Commitments and Contingencies
During the fourth quarter of 2005, Seaboard's subsidiary, Seaboard
Marine, received a notice of violation letter from U.S. Customs and
Border Protection demanding payment of a significant penalty for an
alleged failure to manifest narcotics in connection with Seaboard
Marine's shipping operations, in violation of a federal statute and
regulation. Seaboard has responded to the allegations and is engaged
in discussions with U.S. Customs and Border Protection regarding the
matter. Management believes that the resolution of the matter will
not have a material adverse effect on the consolidated financial
statements of Seaboard.
Seaboard Marine has been sued by an individual who suffered serious
injuries as a result of an accident occurring during vessel loading
operations in late 2004. The suit does not make any specific demand
for damages. Seaboard's Protection and Indemnity Insurer has been
providing indemnity and defense for the case, but during the second
quarter of 2007, advised Seaboard that if Seaboard has any liability,
it believes that the liability will not be covered. Seaboard believes
that the Insurer is wrong with respect to this position, and has
received a legal opinion opining that there is coverage. If the
Insurer continues to maintain the position, then the coverage issue
will be resolved by arbitration in London. In the event of an adverse
arbitration decision, then Seaboard will pursue other insurance. If
it is determined that other insurance is not applicable, this could
result in a materially adverse effect on Seaboard's results of
operations.
Seaboard is subject to various other legal proceedings related to the
normal conduct of its business, including various environmental
related actions. In the opinion of management, none of these actions
is expected to result in a judgment having a materially adverse effect
on the consolidated financial statements of Seaboard.
In June 2007, Seaboard received a $4,171,000 settlement related to a
land expropriation in Argentina. This land settlement was recorded as
miscellaneous income since the land was expropriated prior to
Seaboard's purchase of the sugar and citrus business, thus never a
part of the sugar and citrus operations recorded by Seaboard.
Contingent Obligations
Certain of the non-consolidated affiliates and third party contractors
who perform services for Seaboard have bank debt supporting their
underlying operations. From time to time, Seaboard will provide
guarantees of that debt allowing a lower borrowing rate or
facilitating third party financing in order to further Seaboard's
business objectives. Seaboard does not issue guarantees of third
parties for compensation. As of June 30, 2007, Seaboard had
guarantees outstanding to three third parties with a total maximum
exposure of $2,403,000. Seaboard has not accrued a liability for any
of the third party or affiliate guarantees as management considered
the likelihood of loss to be remote.
As of June 30, 2007, Seaboard had outstanding letters of credit
("LCs") with various banks which reduced its borrowing capacity under
its committed and uncommitted credit facilities by $57,021,000 and
$1,733,000, respectively. Included in these amounts are LCs totaling
$42,688,000, which support the Industrial Development Revenue Bonds
included as long-term debt and $14,008,000 of LCs related to insurance
coverages.
Note 7 - Stockholders' Equity and Accumulated Other Comprehensive Loss
In conjunction with a 2002 transaction ("the Transaction") between
Seaboard and its parent company, Seaboard Flour LLC ("the Parent
Company"), whereby Seaboard effectively repurchased shares of its
common stock owned by the Parent Company in return for repayment of
all indebtedness owed by the Parent Company to Seaboard, the Parent
Company also transferred to Seaboard rights to receive possible future
cash payments from a subsidiary of the Parent Company and the benefit
of other assets owned by that subsidiary. To the extent Seaboard
receives cash payments as a result of the transferred rights, Seaboard
agreed to issue to the Parent Company new shares of common stock with
a value equal to the cash received. The value of the common stock for
purposes of determining the number of shares issued is equal to the
ten day rolling average closing price, determined as of the twentieth
day prior to the issue date. The maximum number of shares of common
stock which may be issued to the Parent Company under the Transaction
is capped at 232,414.85, the number of shares which were originally
purchased from the Parent Company, less 6,313.34 shares already issued
to the Parent Company on November 3, 2005. Seaboard does not
currently expect to receive any material amount of cash prior to the
expiring of the right to receive such payments on September 17, 2007.
8
Components of total comprehensive income, net of related taxes, are
summarized as follows:
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Thousands of dollars) 2007 2006 2007 2006
Net earnings $42,657 $69,190 $92,012 $120,730
Other comprehensive income (loss)
net of applicable taxes:
Foreign currency translation adjustment 740 228 260 (869)
Unrealized gains (losses) on
investments (1,277) 528 (711) 130
Unrecognized pension cost 357 - 2,960 -
Unrealized losses on cash flow hedges - - - (22)
Amortization of deferred gain on interest
rate swaps (43) (50) (86) (100)
Total comprehensive income $42,434 $69,896 $94,435 $119,869
The components of and changes in accumulated other comprehensive loss
for the six months ended June 30, 2007 are as follows:
Balance Balance
December 31, Period June 30,
(Thousands of dollars) 2006 Change 2007
Foreign currency translation adjustment $(55,811) $ 260 $(55,551)
Unrealized gain on investments 1,361 (711) 650
Unrecognized pension cost (28,140) 2,960 (25,180)
Net unrealized loss on cash flow hedges (55) - (55)
Deferred gain on interest rate swaps 152 (86) 66
Accumulated other comprehensive loss $(82,493) $ 2,423 $(80,070)
With the exception of the foreign currency translation loss to which a
35% federal tax rate is applied, income taxes for components of
accumulated other comprehensive loss were recorded using a 39%
effective tax rate. In addition, the unrecognized pension cost
includes $7,298,000 related to employees at certain subsidiaries for
which no tax benefit has been recorded.
On August 7, 2007, the Board of Directors authorized Seaboard to
repurchase from time to time prior to August 31, 2009 up to
$50 million market value of its Common Stock in open market or
privately negotiated purchases. The stock repurchase will be funded
by cash on hand. Any shares repurchased will be retired and shall
resume status of authorized and unissued shares.
Note 8 - Segment Information
Seaboard's investment in a Bulgarian wine business (the Business) and
related losses from this Business are included in the All Other
segment. The owners of this Business, including Seaboard, have been
trying to sell the remaining assets of this Business. Seaboard is
entitled to receive 50% of any net sales proceeds after all third
party bank debt has been repaid. Seaboard anticipates incurring
additional losses from the operation of this Business until the sale
of this Business is completed. Since March 2007, this Business has
been unable to make its scheduled loan payments and is in technical
default with its banks. Although the banks are discussing various
options with the Business, failure to reach agreement or receive a
waiver could result in the Business being forced into bankruptcy. If
this occurs prior to sale of the Business, this could eliminate the
remaining value of the Business to Seaboard resulting in a charge to
losses from foreign affiliates in the All Other segment. As of June
30, 2007, the remaining carrying value of Seaboard's investments in
and advances to this Business total $1,772,000, including $2,770,000
of foreign currency translation gains recorded in other comprehensive
income from this Business, which would be recognized in earnings upon
completion of any sale. This Business is considered a variable
interest entity and the related maximum exposure to Seaboard at June
30, 2007 is limited to its remaining carrying value.
9
The following tables set forth specific financial information about
each segment as reviewed by Seaboard's management. Operating income
for segment reporting is prepared on the same basis as that used for
consolidated operating income. Operating income, along with income or
losses from foreign affiliates for the Commodity Trading and Milling
segment, is used as the measure of evaluating segment performance
because management does not consider interest and income tax expense
on a segment basis.
Sales to External Customers:
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Thousands of dollars) 2007 2006 2007 2006
Pork $261,691 $252,139 $ 503,338 $ 497,433
Commodity Trading and Milling 223,401 201,141 470,089 378,711
Marine 205,813 178,901 396,872 346,284
Sugar and Citrus 24,463 28,929 51,796 47,443
Power 22,615 23,427 40,998 45,776
All Other 4,236 4,400 8,274 8,863
Segment/Consolidated Totals $742,219 $688,937 $1,471,367 $1,324,510
Operating Income:
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Thousands of dollars) 2007 2006 2007 2006
Pork $ 12,992 $ 29,808 $ 33,903 $ 59,908
Commodity Trading and Milling (4,155) 18,424 6,073 28,389
Marine 25,540 24,423 53,036 43,014
Sugar and Citrus 2,032 4,978 6,647 7,793
Power 1,546 3,035 2,017 5,035
All Other 487 705 602 1,374
Segment Totals 38,442 81,373 102,278 145,513
Corporate Items (3,980) (3,305) (10,998) (6,588)
Consolidated Totals $ 34,462 $ 78,068 $ 91,280 $ 138,925
Income (Loss) from Foreign Affiliates:
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Thousands of dollars) 2007 2006 2007 2006
Commodity Trading and Milling $ 190 $ 2,247 $ 2,545 $ 3,969
Sugar and Citrus 58 (50) 184 (1,107)
All Other (390) (77) (1,455) (833)
Segment/Consolidated Totals $ (142) $ 2,120 $ 1,274 $ 2,029
10
Total Assets:
June 30, December 31,
(Thousands of dollars) 2007 2006
Pork $ 760,403 $ 721,514
Commodity Trading and Milling 280,974 301,672
Marine 213,409 176,673
Sugar and Citrus 146,911 133,971
Power 60,788 66,978
All Other 10,648 8,464
Segment Totals 1,473,133 1,409,272
Corporate Items 545,372 552,161
Consolidated Totals $2,018,505 $1,961,433
Investments in and Advances to Foreign Affiliates:
June 30, December 31,
(Thousands of dollars) 2007 2006
Commodity Trading and Milling $ 41,281 $ 38,748
Sugar and Citrus 819 636
All Other 1,772 3,073
Segment/Consolidated Totals $ 43,872 $ 42,457
Administrative services provided by the corporate office allocated to
the individual segments represent corporate services rendered to and
costs incurred for each specific division with no allocation to
individual segments of general corporate management oversight costs.
Corporate assets include short-term investments, other current assets
related to deferred compensation plans, certain investments in and
advances to foreign affiliates, fixed assets, deferred tax amounts and
other miscellaneous items. Corporate operating losses represent
certain operating costs not specifically allocated to individual
segments.
11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Summary of Sources and Uses of Cash
Cash and short-term investments decreased $14.4 million from
December 31, 2006. This decrease was primarily the result of cash
from operating activities of $127.1 million being used for capital
expenditures of $80.2 million, a payment of $30.1 million for the
repurchase of the minority interest as discussed in Note 2 to the
Condensed Consolidated Financial Statements, and scheduled principal
payments of long-term debt of $28.8 million. Cash from operating
activities decreased $14.9 million for the six months ended June 30,
2007, primarily as the result of lower net earnings for the period.
Acquisitions, Capital Expenditures and Other Investing Activities
During the six months ended June 30, 2007, Seaboard invested $80.2
million in property, plant and equipment, of which $27.1 million was
expended in the Pork segment, $1.6 million was expended in the
Commodity Trading and Milling segment, $38.8 million in the Marine
segment, and $9.6 million in the Sugar and Citrus segment. The Pork
segment spent $19.4 million on constructing additional hog finishing
space and constructing a biodiesel plant as discussed below. The
Marine segment spent $31.4 million to purchase a containerized cargo
vessel previously chartered, purchase cargo carrying and handling
equipment and to purchase an additional containerized cargo vessel not
previously chartered. In the Sugar and Citrus segment, the capital
expenditures were primarily for expansion of cane growing operations,
expansion of alcohol distillery operations and various improvements to
the sugar mill. All other capital expenditures are of a normal
recurring nature and primarily include replacements of machinery and
equipment, and general facility modernizations and upgrades.
The Pork segment is constructing a processing plant at an approximate
cost of $37.0 million to utilize by-products primarily from its Guymon
processing plant to produce biodiesel, which will be sold to a third
party. Construction of this plant began in the fourth quarter of 2006
with approximately $23.7 million to be spent in the remainder of 2007.
The Pork segment is also currently constructing additional hog
finishing space to expand its live production facilities to support
the Guymon plant with approximately $9.1 million to be spent in the
remainder of 2007. In addition, the Pork segment plans to expand its
processed meats capabilities by constructing a separate further
processing plant in Guymon, Oklahoma, primarily for bacon and sausage
processing, at an approximate cost of $45.0 million. Construction of
this facility was anticipated to begin in the second half of 2007;
however the timing of this facility has been delayed with no related
capital expenditures currently expected in 2007.
For the remainder of 2007 management has budgeted capital expenditures
totaling $117.2 million. In addition to the projects detailed above,
the Pork segment plans to spend $15.5 million for improvement to
existing hog facilities and upgrades to the Guymon processing plant.
The Commodity Trading and Milling segment plans to spend $6.3 million
primarily for milling facility upgrades and related equipment. The
Marine segment has budgeted $47.1 million for additional cargo
carrying and handling equipment and expansion of port facilities. The
Sugar and Citrus segment plans to spend $14.7 million for expansion of
cane growing operations, expansion of alcohol distillery operations
and various improvements to the sugar mill. The balance of $0.8
million is planned to be spent in all other businesses. Management
anticipates funding these capital expenditures from available cash and
short-term investments.
During the third quarter of 2007 Seaboard will pay approximately $31.2
million to the former owners of Daily's as the final payment to
repurchase their minority interest in Seaboard Foods, LP, as discussed
in Note 2 to the Condensed Consolidated Financial Statements.
Financing Activities and Debt
As of June 30, 2007, Seaboard had committed lines of credit totaling
$100.0 million and uncommitted lines totaling $160.1 million.
Borrowings outstanding under the uncommitted lines as of June
30, 2007, totaled $63.7 million while there were no outstanding
borrowings under the committed credit facility. Outstanding standby
letters of credit reduced Seaboard's borrowing capacity under its
committed and uncommitted credit lines by $57.0 million and $1.7
million, respectively, primarily representing $42.7 million for
Seaboard's outstanding Industrial Development Revenue Bonds and $14.0
million related to insurance coverages.
Seaboard's remaining 2007 scheduled long-term debt maturities total
$34.6 million. Management believes that Seaboard's current
combination of internally generated cash, liquidity, capital resources
and short-term borrowing capabilities will be adequate for its
existing operations and any currently known potential plans for
expansion of existing operations or business segments. Management
intends to continue seeking opportunities for expansion
12
in the industries in which Seaboard operates and, based on existing
liquidity and available borrowing capacity, currently has no plans to
pursue other financing alternatives.
On August 7, 2007, the Board of Directors authorized Seaboard to
repurchase from time to time prior to August 31, 2009 up to
$50 million market value of its Common Stock in open market or
privately negotiated purchases. The stock repurchase will be funded
by cash on hand. Any shares repurchased will be retired and shall
resume status of authorized and unissued shares. The Board's stock
repurchase authorization does not obligate Seaboard to acquire a
specific amount of common stock and the stock repurchase program may
be modified or suspended at any time at Seaboard's discretion.
See Note 6 to the Condensed Consolidated Financial Statements for a
summary of Seaboard's contingent obligations, including guarantees
issued to support certain activities of non-consolidated affiliates or
third parties who provide services for Seaboard.
RESULTS OF OPERATIONS
Net sales for the three and six month periods of 2007 increased by
$53.3 million and $146.9 million, respectively, over the same periods
in 2006, primarily reflecting the result of higher volumes sold by the
commodity trading business and higher volumes for marine cargo
services.
Operating income decreased by $43.6 million and $47.6 million for the
three and six month periods of 2007, respectively, compared to the
same periods in 2006. The decrease for both periods is primarily the
result of higher feed costs for hogs, primarily from the increased
price of corn, the effect of the mark-to-market of derivatives and
decreased trading margins in the Commodity Trading and Milling
segment. The decrease for both periods was partially offset by higher
volumes for marine cargo services. The decrease for the six month
period also reflects the pension settlement loss in the first quarter
of 2007 as discussed in Note 5 to the Condensed Consolidated Financial
Statements.
Pork Segment
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $261.7 $252.1 $503.3 $497.4
Operating income $ 13.0 $ 29.8 $ 33.9 $ 59.9
Net sales for the Pork segment increased $9.6 million and $5.9 million
for the three and six month periods of 2007, respectively, compared to
the same periods in 2006. The increases are primarily the result of
higher prices for pork products sold and, to a lesser extent, higher
marketing fee income from increased number of head processed by
Triumph Foods. These increases were partially offset by lower
domestic sales volumes of pork products.
Operating income for the Pork segment decreased $16.8 million and
$26.0 million for the three and six month periods of 2007,
respectively, compared to the same periods of 2006. The decreases
primarily relate to higher feed costs, primarily from the increased
price of corn, and, to a lesser extent higher costs per hog for third
party hogs used for processing. Also decreasing operating income for
the three and six month periods for 2007 compared to 2006 was an
increase in change in the LIFO reserve of $5.6 million and $7.6
million, respectively, primarily as a result of the higher feed costs.
These higher costs were partially offset by a higher percentage of
Seaboard-raised hogs processed, which cost less than third party hogs,
higher prices for pork products sold and increased marketing fee
income discussed above.
Management is unable to predict future market prices for pork products
or the cost of feed and third party hogs. During the last half of
2006, the price of corn began to rise significantly as the demand for
corn increased due to, among other things, demand from ethanol plants.
Also, over the past three years, market prices for pork products have
been higher than historic norms. History has demonstrated that high
prices for pork products cannot be sustained over long periods of time
but rather rise and fall as market conditions change. Overall,
management expects this segment to remain profitable during 2007
although significantly lower than 2006.
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Commodity Trading and Milling Segment
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $223.4 $201.1 $470.1 $378.7
Operating income (loss) $ (4.2) $ 18.4 $ 6.1 $ 28.4
Income from foreign affiliates $ 0.2 $ 2.2 $ 2.5 $ 4.0
Net sales for the Commodity Trading and Milling segment increased
$22.3 million and $91.4 million for the three and six month periods of
2007, respectively, compared to the same periods of 2006. The
increases primarily reflect increased prices for commodities sold
partially offset by a decrease in sale volumes at certain African
milling operations. For the six month period, the increase also
reflects increased commodity trading volumes with third parties. The
increased trading volumes to third parties are primarily a result of
Seaboard expanding its business in new and existing markets it serves.
Operating income for this segment decreased $22.6 million and $22.3
million for the three and six month periods of 2007, respectively,
compared to the same periods of 2006. The decrease for the three and
six month periods of 2007 compared to 2006 primarily reflects the
$13.8 million and $14.0 million fluctuation, respectively, of marking
to market the derivative contracts as discussed below. The decreases
also reflect the decreased trading margins on commodities as the
result of losses accrued as of June 30, 2007 on certain wheat trades
entered into during the second quarter of 2007 for future sales
commitments. In addition, the decreases reflect lower margins from
certain milling operations, especially in Zambia. The lower sales and
margins at certain milling locations is the result of less favorable
market conditions. Due in large part to the uncertain political and
economic conditions in the countries in which Seaboard operates,
management is unable to predict future sales and operating results,
but anticipates positive operating income for the remainder of 2007,
excluding the potential effects of marking to market derivative
contracts. However, rising prices in the grain markets are reaching
levels that management believes could have an adverse effect on
operating income for the remainder of 2007.
Had Seaboard not applied mark-to-market accounting to its derivative
instruments, operating income would have been higher by $6.2 million
and $6.4 million for the three and six month periods of 2007,
respectively, while operating income for the three and six months of
2006 would have been lower by $7.6 million. While management believes
its commodity futures and options and foreign exchange contracts are
primarily economic hedges of its firm purchase and sales contracts,
Seaboard does not perform the type of extensive record-keeping
required to account for either type of derivative as hedges for
accounting purposes. Accordingly, while the changes in value of the
derivative instruments were marked to market, the changes in value of
the firm purchase or sales contracts were not. As products are
delivered to customers, these mark-to-market adjustments will be
primarily offset by realized margins as revenue is recognized.
Income from foreign affiliates for the three and six month periods of
2007 decreased $2.0 million and $1.5 million, respectively, from the
same 2006 periods as a result of less favorable market conditions.
Based on the uncertainty of local political and economic situations in
the countries in which the flour and feed mills operate, and
increasing grain prices as discussed above, management cannot predict
future results.
Marine Segment
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $205.8 $178.9 $396.9 $346.3
Operating income $ 25.5 $ 24.4 $ 53.0 $ 43.0
Net sales for the Marine segment increased $26.9 million and $50.6
million for the three and six month periods of 2007, respectively,
compared to the same periods of 2006 primarily reflecting higher cargo
volumes. Cargo volumes were higher as a result of favorable economic
conditions in most markets served. Partially offsetting these
increases was a slight decrease in cargo rates in certain markets,
primarily during the quarter, as a result of increased competition.
Operating income for the Marine segment increased $1.1 million and
$10.0 million for the three and six month periods of 2007,
respectively, compared to the same periods of 2006 primarily
reflecting the increased volumes, partially offset by lower cargo
rates and increased selling expenses. For the quarter, the increase
was also
14
partially offset by increased trucking expenses. For the six month
period, operating income also increased as a result of lower
fuel costs for vessels on a per unit shipped basis in the first
quarter of 2007. Although management cannot predict changes in future
volumes and cargo rates or to what extent changes in competition and
economic conditions will impact net sales or operating income, it does
expect this segment to remain profitable for the remainder of 2007.
Sugar and Citrus Segment
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $ 24.5 $ 28.9 $ 51.8 $ 47.4
Operating income $ 2.0 $ 5.0 $ 6.6 $ 7.8
Income (loss) from foreign affiliates $ 0.1 $ 0.0 $ 0.2 $ (1.1)
Net sales for the Sugar and Citrus segment decreased $4.4 million and
increased $4.4 million for the three and six month periods of 2007,
respectively, compared to the same periods of 2006. The decrease for
the quarter primarily reflects lower sales volumes partially offset by
slightly higher sugar prices. The increase for the six months
primarily reflects overall higher sugar prices partially offset by
lower sales volume. Sales volumes decreased primarily from lower
export sales as the result of fewer purchases of sugar from third
parties for resale. Export prices increased during 2007 while
Argentine prices increased to a lesser extent as governmental
authorities continue to attempt to control inflation by limiting the
price of basic commodities, including sugar. Accordingly, management
cannot predict whether sugar prices will continue to increase.
However, Seaboard expects to at least maintain its historical sales
volume to Argentinean customers.
Operating income decreased $3.0 million and $1.2 million for the three
and six month periods of 2007, respectively, compared to the same
periods of 2006. The decreases are primarily the result of lower
margins on purchased third party sugar for resale and, for the
quarter, lower export sale volumes that also have a higher margin than
domestic sales. Management expects operating income will remain
positive for the remainder of 2007.
A franchisee agreement was cancelled in the first quarter of 2006,
which resulted in a loss from foreign affiliates in the amount of $1.1
million.
Power Segment
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $ 22.6 $23.4 $ 41.0 $ 45.8
Operating income $ 1.5 $ 3.0 $ 2.0 $ 5.0
Net sales for the Power segment decreased $0.8 million and $4.8
million for the three and six month periods of 2007, respectively,
compared to the same periods of 2006 primarily reflecting lower rates.
Rates have decreased during 2007 primarily as a result of lower fuel
costs, a component of pricing. At times during 2007 and 2006,
Seaboard's power production was restricted by the regulatory
authorities in the Dominican Republic (DR). The DR regulatory body
schedules production based on the amount of funds available to pay for
the power produced and the relative costs of the power produced.
Operating income decreased $1.5 million and $3.0 million for the three
and six month periods of 2007, respectively, compared to the same
periods of 2006 primarily as a result of lower rates in excess of
lower fuel costs and, to a lesser extent, increased overhaul and other
operating expenses. Management cannot predict future fuel costs or
the extent to which the regulatory authority will restrict Seaboard's
future production of power, although management expects this segment
to remain profitable for the remainder of 2007.
15
All Other
Three Months Ended Six Months Ended
June 30, July 1, June 30, July 1,
(Dollars in millions) 2007 2006 2007 2006
Net sales $ 4.2 $ 4.4 $ 8.3 $ 8.9
Operating income $ 0.5 $ 0.7 $ 0.6 $ 1.4
Loss from foreign affiliate $ (0.4) $ (0.1) $ (1.5) $ (0.8)
Net sales and operating income decreased due to decreased volumes and
increased production costs in the jalapeno pepper operations. The
loss from foreign affiliate reflects Seaboard's share of losses from
its equity method investment in a Bulgarian wine business. Management
expects additional losses from the operations of this business for the
remainder of 2007. See Note 8 to the Condensed Consolidated Financial
Statements for further discussion of this business and intentions to
sell the business.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses increased by
$3.9 million and $11.1 million in the three and six month periods of
2007, respectively, compared to the same periods of 2006. These
increases are primarily the result of increased personnel costs
principally related to the growth of the business. In addition, the
increase for the six month period is also a result of the $3.7 million
pension settlement loss recognized in the first quarter of 2007
related to Mr. Bresky's retirement payment in February 2007 as
discussed in Note 5 to the Condensed Consolidated Financial
Statements. As a percentage of revenues, SG&A increased to 5.5% and
5.8% for the 2007 three and six month periods, respectively, compared
to 5.4% and 5.6% for the same periods in 2006 primarily from the
increases noted above.
Interest Expense
Interest expense decreased $1.4 million and $3.4 million in the three
and six month periods of 2007, respectively, compared to the same
periods of 2006 reflecting the lower average level of borrowings
during 2007 and lower average interest rates.
Interest Income
Interest income decreased $0.1 million and $1.5 million in the three
and six month periods of 2007, respectively, compared to the same
periods of 2006 primarily reflecting a decrease in interest received
on outstanding customer receivable balances in the Power segment,
partially offset by an increase in funds invested.
Minority and Other Noncontrolling Interests
Minority and other noncontrolling interests expense decreased
$1.9 million and $3.2 million in the three and six month periods of
2007, respectively, compared to the same periods of 2006 primarily as
a result of no longer having the minority interest associated with the
Daily's acquisition due to the equity interest being repurchased by
Seaboard effective January 1, 2007. See Note 2 to the Condensed
Consolidated Financial Statements for further discussion.
Foreign Currency Gains (Losses)
Seaboard realized net foreign currency gains of $1.9 million and
losses of $1.4 million in the three and six month periods of 2007,
respectively, compared to losses of $0.9 million and gains of $2.4
million for the same periods in 2006. The changes for the three and
six month periods primarily relates to currency fluctuations in
certain African operations of the Commodity Trading and Milling
segment.
Miscellaneous, Net
The increase in miscellaneous, net for the three month period of 2007
compared to 2006 primarily reflects a $4.2 million gain from a
favorable settlement received in June 2007 related to a land
expropriation in Argentina. This land settlement was recorded as
miscellaneous income since the land was expropriated prior to
Seaboard's purchase of the sugar and citrus business, thus never a
part of the sugar and citrus operations recorded by Seaboard. For the
six month period of 2006, miscellaneous, net included a mark-to-market
gain of $3.4 on interest rate exchange agreements. These interest
rate agreements did not qualify as hedges for accounting purposes and
all such agreements were terminated during the second quarter of 2006.
Income Tax Expense
The effective tax rate decreased during 2007 compared to 2006
primarily as a result of increased amounts of permanently deferred
foreign earnings and lower amounts of domestic taxable income.
16
OTHER FINANCIAL INFORMATION
In September 2006, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 157 (SFAS 157),
"Fair Value Measurements". This statement establishes a single
authoritative definition of fair value when accounting rules require
the use of fair value, sets out a framework for measuring fair value,
and requires additional disclosures about fair-value measurements. For
Seaboard, SFAS 157 is effective for the fiscal year beginning January
1, 2008. Management believes the adoption of SFAS 157 will not have
a material impact on Seaboard's financial position or net earnings.
In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159 (SFAS 159), "The Fair Value Option for Financial
Assets and Financial Liabilities." This statement provides companies
with an option to report selected financial assets and liabilities at
fair value. Seaboard will be required to adopt this statement as of
January 1, 2008. Management believes the adoption of SFAS 159 will
not have a material impact on Seaboard's financial position or net
earnings.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Seaboard is exposed to various types of market risks in its day-to-day
operations. Seaboard utilizes derivative instruments to mitigate some
of these risks including both purchases and sales of futures and
options to hedge inventories, forward purchase and sale contracts.
From time to time, Seaboard may enter into speculative derivative
transactions not directly related to its raw material requirements.
The nature of Seaboard's market risk exposure related to these items
has not changed materially since December 31, 2006.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures - Seaboard's
management 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) as
of June 30, 2007. Based upon and as of the date of that evaluation,
Seaboard's Chief Executive and Chief Financial Officers concluded that
Seaboard's disclosure controls and procedures were effective to ensure
that information required to be disclosed in the reports it files and
submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported as and when required. It should be
noted that any system of disclosure controls and procedures, however
well designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system are met. In
addition, the design of any system of disclosure controls and
procedures is based in part upon assumptions about the likelihood of
future events. Due to these and other inherent limitations of any
such system, there can be no assurance that any design will always
succeed in achieving its stated goals under all potential future
conditions.
Change in Internal Controls -There has been no change in Seaboard's
internal control over financial reporting required by Exchange Act
Rule 13a-15 that occurred during the fiscal quarter ended June 30,
2007 that has materially affected, or is reasonably likely to
materially affect, Seaboard's internal control over financial
reporting.
PART II - OTHER INFORMATION
Item 1A. Risk Factors
There have been no material changes in the risk factors as previously
disclosed in Seaboard's Annual Report on form 10-K for the year ended
December 31, 2006.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders, held on April 23, 2007, included
two items submitted to a vote of stockholders. Item 4 of the Form 10-Q
for the first quarter ended March 31, 2007, which was filed on May 2,
2007 discloses the results of the shareholder's vote, which disclosure
is incorporated herein by reference.
Item 6. Exhibits
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
17
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
This Form 10-Q contains forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of Seaboard Corporation and its subsidiaries
(Seaboard). Forward-looking statements generally may be identified as
statements that are not historical in nature; and statements preceded
by, followed by or that include the words "believes," "expects,"
"may," "will," "should," "could," "anticipates," "estimates,"
"intends," or similar expressions. In more specific terms, forward-
looking statements, include, without limitation: statements concerning
projection of revenues, income or loss, capital expenditures, capital
structure or other financial items, including the impact of mark-to-
market accounting on operating income; statements regarding the plans
and objectives of management for future operations; statements of
future economic performance; statements regarding the intent, belief
or current expectations of Seaboard and its management with respect
to: (i) Seaboard's ability to obtain adequate financing and liquidity,
(ii) the price of feed stocks and other materials used by Seaboard,
(iii) the sales price or market conditions for pork, sugar and other
products and services, (iv) statements concerning management's
expectations of recorded tax effects under existing circumstances, (v)
the ability of the Commodity Trading and Milling to successfully
compete in the markets it serves and the volume of business and
working capital requirements associated with the competitive trading
environment, (vi) the charter hire rates and fuel prices for vessels,
(vii) the stability of the Dominican Republic's economy and demand for
power, related spot market prices and collectibility of receivables in
the Dominican Republic, (viii) the effect of the fluctuation in
exchange rates for the Dominican Republic peso, (ix) statements
concerning profitability or sales volume of any of Seaboard's
segments, (x) the anticipated costs and completion timetable for
Seaboard's scheduled capital improvements, or (xi) 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 report, including without limitation the information
under the headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations," identifies important factors
which could cause such differences.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DATE: August 8, 2007
Seaboard Corporation
by: /s/ Robert L. Steer
Robert L. Steer, Senior Vice President,
Chief Financial Officer
(principal financial officer)
by: /s/ John A. Virgo
John A. Virgo, Vice President, Corporate
Controller
and Chief Accounting Officer
(principal accounting officer)
19