-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NyzBbAJ3l/EeZhsHwm0nyWQXYxcUR7ywGniEYxyrtRnYdDY/qBDlNjfMSAmHUEnT 72QQr9JDw801IVgAQWYxjQ== 0000088121-96-000020.txt : 19960731 0000088121-96-000020.hdr.sgml : 19960731 ACCESSION NUMBER: 0000088121-96-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960615 FILED AS OF DATE: 19960730 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEABOARD CORP /DE/ CENTRAL INDEX KEY: 0000088121 STANDARD INDUSTRIAL CLASSIFICATION: POULTRY SLAUGHTERING AND PROCESSING [2015] IRS NUMBER: 042260388 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03390 FILM NUMBER: 96600911 BUSINESS ADDRESS: STREET 1: 9000 W. 67TH STREET CITY: SHAWNEE MISSION STATE: KS ZIP: 66201 BUSINESS PHONE: 913-676-8939 MAIL ADDRESS: STREET 1: 9000 W. 67TH STREET CITY: SHAWNEE MISSION STATE: KS ZIP: 66202 FORMER COMPANY: FORMER CONFORMED NAME: SEABOARD ALLIED MILLING CORP DATE OF NAME CHANGE: 19820328 FORMER COMPANY: FORMER CONFORMED NAME: HATHAWAY BAKERIES INC DATE OF NAME CHANGE: 19710315 10-Q 1 1996 2ND QUARTER 10-Q FILING FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 15, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Commission file number 1-3390 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Seaboard Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Exact name of registrant as specified in its charter) Delaware 04-2260388 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 9000 W. 67th Street, Shawnee Mission, KS 66202 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Address of principal executive offices) (Zip Code) 913-676-8800 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Registrant's telephone number, including area code) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 number of shares outstanding of each of the issuer's classes of common stock, as of latest practicable date. Common stock of $1 par value, 1,487,520 shares outstanding, as of June 15, 1996. Total pages in filing - 13 pages SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 15, 1996 and December 31, 1995 (Thousands of Dollars)
Part I - Financial Information June 15, December 31, 1996 1995 ------------ ------------ Assets -------- Current assets: Cash and cash equivalents $ 4,453 $ 5,529 Short-term investments 99,732 135,197 Receivables, net 135,449 117,709 Inventories 136,410 112,843 Income taxes receivable 8,538 -- Deferred income taxes 9,320 8,231 Prepaid expenses and deposits 16,281 14,251 ------------ ------------ Total current assets 410,183 393,760 ------------ ------------ Investments in and advances to foreign subsidiaries not consolidated 23,853 26,140 ------------ ------------ Property, plant and equipment 709,951 650,402 Accumulated depreciation (233,934) (211,987) ------------ ------------ Net property, plant and equipment 476,017 438,415 ------------ ------------ Other assets 16,462 19,817 ------------ ------------ Total assets $ 926,515 $ 878,132 ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Notes payable and current maturities of long-term debt $ 106,568 $ 40,826 Accounts payable 63,569 75,749 Income taxes payable -- 744 Other current liabilities 65,648 57,417 ------------ ------------ Total current liabilities 235,785 174,736 ------------ ------------ Long-term debt, less current maturities 297,361 297,440 ------------ ------------ Deferred income taxes 18,051 14,569 ------------ ------------ Other liabilities 26,000 25,577 ------------ ------------ Stockholders' equity: Common stock of $1 par value, Authorized 4,000,000 shares; issued 1,789,599 shares 1,790 1,790 Less 302,079 shares held in treasury, at par value 302 302 ------------ ------------ 1,488 1,488 Additional capital 13,214 13,214 Unrealized gain (loss) on debt securities, (net of deferred income tax benefit (expense) of $21 and ($150) at June 15, 1996 and December 31, 1995, respectively) (43) 251 Retained earnings 334,659 350,857 ------------ ------------ Total stockholders' equity 349,318 365,810 ------------ ------------ Total liabilities and stockholders' equity $ 926,515 $ 878,132 ============ ============ See notes to condensed consolidated financial statements.
Page 2 SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Earnings Twelve weeks ended June 15, 1996 and June 17, 1995 (Thousands of dollars except per share amounts)
June 15, June 17, 1996 1995 ----------- ----------- Net sales $ 330,503 $ 255,402 Cost of sales and operating expenses 302,602 215,189 ----------- ----------- Gross income 27,901 40,213 ----------- ----------- Selling, general and administrative expenses 31,880 31,101 ----------- ----------- Operating income (loss) (3,979) 9,112 ----------- ----------- Income (loss) from foreign subsidiaries not consolidated (499) 1,275 ----------- ----------- Other income(expense): Interest income 1,856 2,458 Interest expense (5,872) (3,228) Miscellaneous (37) (83) ----------- ----------- Total other income (expense) (4,053) (853) ----------- ----------- Earnings (loss) before income taxes (8,531) 9,534 ----------- ----------- Income tax expense(benefit): Current (6,007) 3,094 Deferred 1,815 (324) ----------- ----------- Total income taxes (4,192) 2,770 ----------- ----------- Net earnings (loss) $ (4,339) $ 6,764 =========== =========== Earnings (loss) per common share $ (2.92) $ 4.55 =========== =========== Dividends declared per common share $ .25 $ .25 =========== =========== Average number of shares outstanding 1,487,520 1,487,520 =========== =========== See notes to condensed consolidated financial statements.
Page 3 SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Earnings Twenty-Four weeks ended June 15, 1996 and June 17, 1995 (Thousands of dollars except per share amounts)
June 15, June 17, 1996 1995 ----------- ----------- Net sales $ 628,134 $ 491,325 Cost of sales and operating expenses 580,029 409,025 ----------- ----------- Gross income 48,105 82,300 Selling, general and administrative expenses 64,915 59,499 ----------- ----------- Operating income (loss) (16,810) 22,801 ----------- ----------- Income (loss) from foreign subsidiaries not consolidated (431) 256 ----------- ----------- Other income(expense): Interest income 3,600 4,759 Interest expense (11,555) (5,762) Miscellaneous 60 (130) ----------- ----------- Total other income (expense) (7,895) (1,133) ----------- ----------- Earnings (loss) before income taxes (25,136) 21,924 ----------- ----------- Income tax expense(benefit): Current (12,247) 7,625 Deferred 2,565 (505) ----------- ----------- Total income taxes (9,682) 7,120 ----------- ----------- Net earnings (loss) $ (15,454) $ 14,804 =========== =========== Earnings (loss) per common share $ (10.39) $ 9.95 =========== =========== Dividends declared per common share $ .50 $ .50 =========== =========== Average number of shares outstanding 1,487,520 1,487,520 =========== =========== See notes to condensed consolidated financial statements.
Page 4 SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Twenty-Four weeks ended June 15, 1996 and June 17, 1995 (Thousands of Dollars)
June 15, June 17, 1996 1995 ----------- ----------- Net cash provided by (used in) operating activities $ (43,959) $ 14,160 ----------- ----------- Cash flows from investing activities: Purchase of investments (154,022) (299,928) Proceeds from the sale or maturity of investments 189,022 225,410 Capital expenditures, net (62,005) (91,411) Notes receivable (243) 646 Investments and advances to foreign subsidiaries not consolidated 1,855 4,599 ----------- ----------- Net cash (used in) investing activities (25,393) (160,684) ----------- ----------- Cash flows from financing activities: Notes payable to bank 65,816 11,064 Proceeds from long-term debt 10,349 131,269 Principal payments (10,502) (2,115) Deferred grants -- 3,927 Bond construction fund 3,357 1,626 Dividends paid (744) (744) ----------- ----------- Net cash provided by financing activities 68,276 145,027 ----------- ----------- Net (decrease) in cash and cash equivalents (1,076) (1,497) Cash and cash equivalents at beginning of year 5,529 4,773 ----------- ----------- Cash and cash equivalents at end of quarter $ 4,453 $ 3,276 =========== =========== For purposes of the Condensed Consolidated Statements of Cash Flows, the Company considers all demand deposits and overnight investments as cash. See Notes to condensed consolidated financial statements.
Page 5 SEABOARD CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Note 1 - ------ In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position as of June 15, 1996, and the results of operations and cash flows for the periods ended June 15, 1996 and June 17, 1995. Note 2 - ------ The results of operations for the twenty-four weeks ended June 15, 1996 and June 17, 1995 are not necessarily indicative of the results to be expected for the full year. Note 3 - ------ The following is a summary of inventories at June 15, 1996 and December 31, 1995 (in thousands):
June 15, December 31, 1996 1995 ----------- ------------ At lower of last-in, first-out (LIFO) cost or market: Live poultry $ 30,542 $ 26,442 Dressed poultry 22,328 21,219 Feed and baking ingredients, packaging supplies and other 8,084 8,772 ----------- ------------ 60,954 56,433 LIFO allowance (12,224) (6,965) ----------- ------------ Total inventories at lower of LIFO cost or market 48,730 49,468 ----------- ------------ At lower of first-in, first-out (FIFO) cost or market: Live hogs 42,196 28,626 Grain, flour and feed 24,080 19,551 Dressed pork 3,580 166 Crops in production, fertilizers and pesticides 9,185 7,639 Other 8,639 7,393 ----------- ------------ Total inventories at lower of FIFO cost or market 87,680 63,375 ----------- ------------ Total inventories $ 136,410 $ 112,843 =========== ============
Page 6 Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES - ----------------------------------------------------------------------------- June 15, December 31, 1996 1995 - ----------------------------------------------------------------------------- Current ratio 1.74:1 2.25:1 Working capital $ 174.4 $ 219.0 - ----------------------------------------------------------------------------- Cash used in operating activities for the twenty-four weeks ending June 15, 1996 was $44 million compared to $14.2 million of cash provided by operations for the same period one year earlier. The decrease in cash was primarily related to the net loss of $15.5 million and increased inventories and receivables. Inventories increased primarily as a result of expansion of the live hog herds, higher priced corn to grow the hogs and finished product at the Company's pork processing plant which began operating in December, 1995. The increase in accounts receivable is primarily related to sales of pork and poultry products, sales of wheat to affiliated, nonconsolidated foreign flour mills and income taxes receivable resulting from the net loss. The Company invested $63.3 million in property, plant and equipment through June 15, 1996 in the food production and processing segment. Capital expenditures of $48.7 million were for construction of hog farrowing and finishing facilities, two feed mills and the Guymon pork processing plant. Cumulative capital expenditures on these facilities since 1992 total $270.9 million. The Company expects additional expenditures for hog farrowing and finishing facilities and working capital to total approximately $47 million in the next two years, of which approximately $15.2 million is currently under contract. Management anticipates the facilities will be financed from cash. Capital expenditures of $1 million were made to complete a $9.5 million expansion of processing capacity at the Company's poultry plant in Athens, Georgia. Other capital expenditures in the food production and processing segment through June 15, 1996 included $6.1 million in general modernization and efficiency upgrades of plant and equipment. Capital expenditures in the transportation segment through June 15, 1996 totaled $4.5 million for general replacement and upgrades of property and equipment. At December 31, 1995, the Company had $33.8 million outstanding under short- term uncommitted credit lines from banks that totaled $122 million. In the first quarter of 1996, the Company entered into a $75 million one-year revolving credit facility and a five-year $50 million revolving credit facility with a group of banks and certain uncommitted credit lines were reduced by $17 million. As of June 15, 1996, the Company had $73 million outstanding under the one-year revolving credit facility and $26.6 million outstanding under the remaining short-term uncommitted credit lines totaling Page 7 $105 million. The Company borrowed $10 million of the five-year revolving credit facility, the proceeds of which were used to retire $10 million in existing term loans. Utilization of the five-year revolving credit facility is limited by existing debt covenants. Subject to completion of definitive documentation, the Company intends to sell three vessels to a third party for $28.5 million. The vessels will then be chartered from the third party for terms ranging from seven to ten years. The Company will realize a $5.5 million gain on the sale of the vessels which will be deferred and recognized over the term of the charter agreements. The charters will be accounted for as operating leases. Subsequent to the end of the second quarter, the Company purchased a 50% interest in Ingenio Y Refineria San Martin Del Tabacal S.A. (Tabacal). Tabacal is an Argentinian company primarily engaged in growing and refining sugar cane for consumption in Argentina and for export. The Company's net equity investment in Tabacal is $8.1 million. The Company has not assumed or guaranteed any of the liabilities of Tabacal. The investment will be accounted for using the equity method of accounting. The Company also acquired a one-third interest in a holding company which owns 22% of the outstanding shares of Tabacal. The Company has no control over the manner in which the holding company votes its shares of Tabacal. The Company's investment in the holding company is approximately $700,000 and will be accounted for using the equity method of accounting. Management intends to continue seeking opportunities for expansion in the industries in which it operates and believes that the Company's liquidity, capital resources and borrowing capabilities are adequate for its current and intended operations. RESULTS OF OPERATIONS Net sales for the twelve and twenty-four weeks ended June 15, 1996 increased by $75.1 million and $136.8 million, respectively, compared to the same periods one year earlier. Operating income for the twelve and twenty- four weeks ended June 15, 1996 decreased by $13.1 million and $39.6 million, respectively, compared to the same periods one year ago. The segment distribution of the increase (decrease) in net sales and operating income compared to the prior year are as follows (in millions). Net Sales Operating Income ------------------------- ------------------------ Quarter Year-to-Date Quarter Year-to-Date ------------------------- ------------------------ Food Production and Processing Segment $ 36.2 $ 48.5 $ (7.9) $ (24.3) Commodity Segment 41.8 91.2 .3 2.3 Transportation Segment (4.9) (7.0) (8.2) (19.8) Other 2.0 4.1 2.7 2.2 ----------- ----------- ---------- ----------- $ 75.1 $ 136.8 $ (13.1) $ (39.6) =========== =========== ========== =========== Page 8 Food Production And Processing Segment Corn is the most significant component of the feed used to grow the Company's poultry and hog inventories. Gross income of both the poultry and pork product lines have been affected by the rising price of corn. The price of July corn futures on the Chicago Board of Trade as quoted on June 14, 1996 was $1.88 per bushel higher compared to the same time one year earlier. Management cannot predict if corn prices will recover to previous levels in the current year. The Company implements hedging strategies to manage exposure to fluctuations in these commodity markets; however, prolonged periods of high corn prices have caused and will continue to cause an increase in the cost to grow livestock. Because poultry inventories are valued at LIFO, the higher cost of corn is reflected in earnings when purchased. The pork inventories are valued at FIFO, accordingly most of the higher cost corn is in inventory and will affect cost of sales in future quarters as hogs mature and are processed. If the Company is not able to recover these higher costs through higher sales prices, the Company's gross income will continue to be negatively affected. While the Company realized higher sales prices for poultry products late in the second quarter, Management, at this time, is not able to assess whether the increases will be sustainable or the likelihood of further increases in sales price. Net sales of poultry products for the quarter and year-to-date were $112.1 million and $222.4 million, respectively. This is an increase of $5.2 million and $19.7 million, respectively, compared to the same periods one year earlier. The increase in sales of poultry products is primarily related to increased production resulting from expanded processing capacity and an increase in the average selling price of poultry products. The increased sales prices are partially attributable to higher poultry markets and partially attributable to a change in product mix which increased the volume of cooked products. Gross income on poultry products for the quarter and year-to-date were $3.1 million and $3.5 million, respectively. Gross income decreased for the quarter and year-to-date by $7.6 million and $18.3 million, respectively, compared to the same periods one year earlier. The decrease in gross income is primarily related to higher feed costs partially offset by higher poultry prices and improved yields. Net sales from the pork operations for the quarter and year-to-date totaled $39.5 million and $61.2 million, respectively. Net sales increased by $22.8 million and $26.5 million, respectively, compared to the same periods one year earlier. The increase resulted primarily from sales of pork products at the hog processing plant in Guymon, Oklahoma which began operations in December 1995. During the second quarter of 1996, sales of market hogs to third parties were discontinued. The market hogs produced at the Company's live hog operations are slaughtered at the hog processing plant. The net increase was partially offset by the discontinued operations at the Albert Lea, Minnesota hog processing plant in December 1995 when the Company leased the plant to a third party. Management expects increases in sales as the Oklahoma plant increases its production. Gross income in the pork operations for the quarter and year-to-date was a negative $0.2 million and a negative $4.9 million, respectively. The gross margin declined by $0.1 million and $3.1 million, respectively, compared to the same periods one year earlier. The decline is primarily related to the Page 9 hog processing plant in Guymon, Oklahoma. The plant is in the initial stage of operations and is not expected to operate at single shift capacity until the third quarter of 1996. The Company expects third quarter results to continue to be adversely affected from operating at less than full capacity and higher grain costs. Operating income decreased for the quarter and year-to-date by $7.9 million and $24.2 million, respectively, compared to the same period one year earlier. The decline was primarily related to higher finished feed costs and operating the pork plant at less than capacity. Commodity Trading Net sales from commodity trading activity increased for the quarter and year-to-date by $49.5 million and $91.2 million, respectively, compared to the same periods one year earlier. The increase is primarily related to expanded trading of wheat, soybeans, corn and other grains in foreign markets. Transportation Segment Net sales from containerized cargo operations decreased for the quarter and year-to-date by $4.9 million and $7 million, respectively, compared to the same periods one year earlier despite an increase in the number of revenue producing units moved. The decline was primarily related to lower freight rates in certain markets serviced by the Company compared to the same periods one year earlier. Operating income decreased by $8.2 million and $19.8 million, respectively, compared to the same periods one year earlier. The decrease was primarily related to lower freight rates. Management cannot predict when rates in these markets will improve. Other Operations Net sales from electric power generating increased for the quarter and year- to-date by $2.1 million and $4.6 million, respectively, compared to the same periods one year earlier. Operating income decreased for the same periods by $1 million and $1.5 million, respectively, primarily as a result of increasing reserves on the receivables from the sale of electric power in the Dominican Republic. Selling, General and Administrative Expenses Selling, general and administrative (SG&A) expenses for the quarter and year- to-date totaled $31.9 million and $64.9 million, respectively. SG&A increased by $.8 million and $5.4 million respectively, compared to the same periods one year earlier. The increase was primarily related to reserves for potential uncollectible receivables discussed above. The increased selling, general and administrative expenses associated with opening the pork plant in Oklahoma were offset by the decrease in selling, general and Page 10 administrative expenses from the discontinued operations at the Albert Lea, Minnesota pork processing plant in December, 1995. Interest Income and Expense Interest income declined for the quarter and year-to-date by $0.6 million and $1.2 million, respectively, compared to the same periods one year earlier. The decrease in interest income resulted primarily from a decline in invested funds. Interest expense increased during the quarter and year- to-date by $2.6 million and $5.8 million, respectively, compared to the same periods one year earlier. The increase was primarily related to the issuance of long-term debt in the second quarter of 1995 and increased short- term borrowings. Income Tax Benefit The second quarter effective rate of the income tax benefit increased compared to the first quarter as a result of reversing approximately $750,000 of deferred taxes provided on undistributed earnings of foreign subsidiaries recorded in the first quarter. These deferred taxes were reversed when the applicable earnings were permanently invested as part of the Tabacal purchase. The Company does not believe its businesses have been materially adversely affected by general inflation. Page 11 SEABOARD CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K. Seaboard Corporation has not filed any reports on Form 8-K during the twelve week period ended June 15, 1996. This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which may include statements concerning projection of revenues, income or loss, capital expenditures, capital structure or other financial items, statements regarding the plans and objectives of management for future operations, statements of future economic performance, statements of the assumptions underlying or relating to any of the foregoing statements and other statements which are other than statements of historical fact. These statements appear in a number of places in this Form 10-Q and include statements regarding the intent, belief or current expectations of the Company and its management with respect to (i) the cost and timing of the completion of new or expanded facilities, (ii) the Company's financing plans, (iii) the Company's competitive position, (iv) the supply and price of feed stocks and other materials used by the Company, (v) the demand and price for the Company's products and services, (vi) utilization of plant capacity, or (vii) other trends affecting the Company's financial condition or results of operations. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially as a result of various factors. The accompanying information contained in this Form 10-Q, including with limitation the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" identifies important factors which could cause such differences. Page 12 PART II - OTHER INFORMATION 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: July 29, 1996 Seaboard Corporation by: /s/ Robert Steer ------------------------------------- Robert Steer, Vice President-Finance by: /s/ Jesse H. Bechtold ------------------------------------ Jesse H. Bechtold, Chief Accounting Officer Page 13 EX-27 2 EX-27 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SECOND QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1996 JAN-01-1996 JUN-15-1996 4453 99732 135449 21610 136410 410183 709951 233934 926515 235785 297361 0 0 1488 347830 926515 628134 628134 580029 580029 64915 0 11555 (25136) (9682) (15454) 0 0 0 (15454) (10.39) (10.39)
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