Stockholders' Equity and Accumulated Other Comprehensive Loss

9 Months Ended

Oct. 03, 2015

Stockholders' Equity and Accumulated Other Comprehensive Loss

Stockholders' Equity and Accumulated Other Comprehensive Loss

Note 8 – Stockholders’ Equity and Accumulated Other Comprehensive Loss

On October 21, 2015, the Board of Directors extended through October 31, 2017 the share repurchase program initially approved in November 2009 and increased the authorized amount of repurchases from the $50,846,000 that remained available at October 3, 2015 to $100,000,000. For the nine months ended October 3, 2015, Seaboard did not repurchase any shares of common stock. Under this share repurchase program, Seaboard is authorized to repurchase its common stock from time to time in open market or privately negotiated purchases, which may be above or below the traded market price. During the period that the share repurchase program remains in effect, from time to time Seaboard may enter into a 10b5-1 plan authorizing a third party to make such purchases on behalf of Seaboard.  The stock repurchases are being funded by cash on hand, and shares repurchased are being retired and resume the status of authorized and unissued shares.  All stock repurchases are being made in compliance with applicable legal requirements and the timing of the repurchases and the number of shares repurchased at any given time depend upon market conditions, compliance with Securities and Exchange Commission regulations and other factors.  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 suspended at any time at Seaboard’s discretion.

In May 2014, Seaboard commenced a tender offer to repurchase shares.  On June 19, 2014 Seaboard completed the tender offer, pursuant to which it repurchased 16,738 shares of common stock at a price per share of $2,950, for a total cost of $49,377,000.

In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock.  The increased amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an annual basis) represented a prepayment of the annual 2013,  2014,  2015 and 2016 dividends ($3.00 per share per year).  Seaboard did not declare or pay a dividend in 2013 and 2014.  Seaboard does not currently intend to declare any further dividends for the years 2015 and 2016.

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

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
(Thousands of dollars)	2015			2014			2015			2014
Foreign currency translation adjustment	$	(7,001)		$	(3,120)		$	(21,795)		$	(32,685)
Investments:
Unrealized gain (loss)		(347)			274			400			842
Amounts reclassified from OCL to net earnings		5	(1)		(379)	(1)		(68)	(1)		77	(1)
Unrealized gain (loss) on investments		(342)			(105)			332			919
Unrealized gain on cash flow hedges		-			149			-			235
Pension cost:
Unrealized gain (loss)		(23)			-			260			-
Amounts reclassified from OCL to net earnings		961	(2)		320	(2)		2,905	(2)		960	(2)
Unrecognized pension cost		938			320			3,165			960
Other comprehensive loss, net of tax	$	(6,405)		$	(2,756)		$	(18,298)		$	(30,571)

⁽¹⁾ This represents realized losses (gains) on the sale of available-for-sale securities and was recorded in other investment income (loss), net.

⁽²⁾ This primarily represents the amortization of actuarial losses that were included in net periodic pension cost and was recorded in operating income. See Note 6 for further discussion.

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

	October 3,		December 31,
(Thousands of dollars)	2015		2014
Cumulative foreign currency translation adjustment	$	(215,832)	$	(194,037)
Unrealized gain on investments		1,666		1,334
Unrecognized pension cost		(56,769)		(59,934)
Total accumulated other comprehensive loss	$	(270,935)	$	(252,637)

The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange fluctuation on the net assets of the Sugar segment.  At October 3, 2015, the Sugar segment had $110,743,000 in net assets denominated in Argentine pesos and $966,000 in net assets denominated in U.S. dollars.  Management anticipates that the Argentine peso could continue to weaken against the U.S. dollar and thus it is anticipated that Seaboard could incur additional foreign currency translation adjustment losses in other comprehensive loss during the remainder of 2015.

At October 3, 2015 and September 27, 2014, income taxes for cumulative foreign currency translation adjustments were recorded using a 35% effective tax rate except for $71,917,000 and $50,801,000, respectively, related to certain subsidiaries for which no tax benefit was recorded. At October 3, 2015 and September 27, 2014, income taxes for all other components of accumulated other comprehensive loss were recorded using a 39% effective rate except for unrecognized pension cost of $19,175,000 and $8,415,000, respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.