Stockholders' Equity and Accumulated Other Comprehensive Loss

9 Months Ended

Oct. 01, 2016

Stockholders' Equity and Accumulated Other Comprehensive Loss

Stockholders' Equity and Accumulated Other Comprehensive Loss

Note 8 – Stockholders’ Equity and Accumulated Other Comprehensive Loss

Seaboard has a share repurchase program in place that was approved by its Board of Directors and is in effect through October 31, 2017. As of October 1, 2016, the authorized amount of repurchase under the share repurchase program remained at $100 million. Seaboard did not repurchase any shares of common stock for the nine months ended October 1, 2016. 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. All stock repurchased will be made in compliance with applicable legal requirements and funded by cash on hand. The timing of the repurchases and the number of shares repurchased at any given time will depend upon market conditions, compliance with Securities and Exchange Commission regulations, and other factors. The Board of Directors’ 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 December 2012, Seaboard declared and paid a dividend of $12.00 per share on 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 is currently evaluating whether to declare a dividend for 2017, although no assurance can be given as to whether or when any dividend would be declared and paid, or as to the amount of any dividend.

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

	Three Months Ended				Nine Months Ended
	October 1,		October 3,		October 1,		October 3,
(Millions of dollars)	2016		2015		2016		2015
Foreign currency translation adjustment	$	(7)	$	(7)	$	(23)	$	(22)
Unrealized gain on investments		1		—		1		1
Unrecognized pension cost (1)		—		1		2		3
Other comprehensive loss, net of tax	$	(6)	$	(6)	$	(20)	$	(18)

⁽¹⁾ 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 to the Condensed Consolidated Financial Statements for further discussion.

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

	October 1,		December 31,
(Millions of dollars)	2016		2015
Cumulative foreign currency translation adjustment	$	(251)	$	(228)
Unrealized gain on investments		2		1
Unrecognized pension cost		(49)		(51)
Total accumulated other comprehensive loss	$	(298)	$	(278)

The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange fluctuation on the net assets of the Sugar segment. During the nine months ended October 1, 2016, Seaboard recognized $22 million of other comprehensive loss, net of related taxes, related to the devaluation of the Argentine peso. At October 1, 2016, the Sugar segment had $96 million in net assets denominated in Argentine pesos and net assets denominated in U.S. dollars were less than $1 million. Management anticipates that the Argentine peso could continue to weaken against the U.S. dollar and that Seaboard could incur additional foreign currency translation adjustment losses in other comprehensive loss during the remainder of 2016.  

At October 1, 2016 and October 3, 2015, income taxes for the cumulative foreign currency translation adjustment was recorded using a 35% effective tax rate except for $87 million and $72 million, respectively, related to certain subsidiaries for which no tax benefit was recorded. At October 1, 2016 and October 3, 2015, income taxes for all other components of accumulated other comprehensive loss were recorded using a 39% effective tax rate except for unrecognized pension cost of $18 million and $19 million, respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.