-----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, VBCAIzcdF7Hu9WQtmwwU53Yp9ndn4pYMx0zecz2bDn53swT+/6maYMT/qQIUtxdd vcD0hFeRpWuwCuHElBC1Ug== 0000088121-98-000004.txt : 19980515 0000088121-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000088121-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 001-03390 FILM NUMBER: 98620137 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 1998 1ST QUARTER 10-Q FILING 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 March 31, 1998 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) (Registrant's telephone number, including area code) (913) 676-8800 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 ___. There were 1,487,520 shares of common stock, $.01 par value per share, outstanding on April 30, 1998. Total pages in filing - 13 pages PART I - FINANCIAL INFORMATION Item 1. Financial Statements SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets March 31, 1998 and December 31, 1997 (Thousands of dollars) March 31, December 31, 1998 1997 Assets Current assets: Cash and cash equivalents $ 8,751 $ 8,552 Short-term investments 109,385 108,744 Receivables, net 185,587 175,640 Inventories 190,019 211,024 Deferred income taxes 10,179 9,730 Prepaid expenses and deposits 19,556 15,545 Total current assets 523,477 529,235 Investments in and advances to foreign affiliates 100,089 93,668 Net property, plant and equipment 479,772 486,373 Other assets 18,892 15,109 Total assets $1,122,230 $1,124,385 Liabilities and Stockholders' Equity Current liabilities: Notes payable to banks $ 168,621 $ 157,445 Current maturities of long-term debt 6,854 6,843 Accounts payable 63,997 78,805 Other current liabilities 116,866 117,809 Total current liabilities 356,338 360,902 Long-term debt, less current maturities 306,393 306,666 Deferred income taxes 27,443 27,943 Other liabilities 30,549 29,859 Total non-current and deferred liabilities 364,385 364,468 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 (302) (302) 1,488 1,488 Additional capital 13,214 13,214 Accumulated other comprehensive income 11 10 Retained earnings 386,794 384,303 Total stockholders' equity 401,507 399,015 Total liabilities and stockholders' equity $1,122,230 $1,124,385 See notes to condensed consolidated financial statements. SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Earnings Three months ended March 31, 1998 and 1997 (Thousands of dollars except per share amounts) March 31, March 31, 1998 1997 Net sales $ 446,532 $ 400,180 Cost of sales and operating expenses 398,056 348,211 Gross income 48,476 51,969 Selling, general and administrative expenses 36,215 35,849 Operating income 12,261 16,120 Other income(expense): Interest income 1,616 1,211 Interest expense (7,812) (7,760) Loss from foreign affiliates (2,576) (1,649) Miscellaneous 620 303 Total other income (expense), net (8,152) (7,895) Earnings before income taxes 4,109 8,225 Income tax expense 1,245 2,889 Net earnings $ 2,864 $ 5,336 Earnings per common share $ 1.93 $ 3.59 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. SEABOARD CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Three months ended March 31, 1998 and 1997 (Thousands of dollars) March 31, March 31, 1998 1997 Cash flows from operating activities: Net earnings $ 2,864 $ 5,336 Adjustments to reconcile net earnings to cash from operating activities: Depreciation and amortization 15,334 13,904 Equity in losses of foreign affiliates 2,576 1,649 Deferred income taxes (949) 1,467 Changes in current assets and liabilities: Receivables, net of allowance (9,947) (7,984) Inventories 21,005 (15,280) Prepaid expenses and deposits (4,011) 892 Current liabilities exclusive of debt (15,751) 11,722 Other, net (925) 912 Net cash from operating activities 10,196 12,618 Cash flows from investing activities: Purchase of investments (66,758) (54,178) Proceeds from the sale or maturity of investments 66,118 39,538 Capital expenditures, net (12,644) (15,378) Proceeds from sale of equipment 3,848 865 Investments in and advances to foreign affiliates (8,997) 990 Investment in domestic affiliate (2,500) - Notes receivable 394 (320) Net cash from investing activities (20,539) (28,483) Cash flows from financing activities: Notes payable to bank, net 11,176 3,791 Proceeds from long-term debt - 10,032 Principal payments of long-term debt (262) (339) Bond construction fund - (3,634) Dividends paid (372) (372) Net cash from financing activities 10,542 9,478 Net change in cash and cash equivalents 199 (6,387) Cash and cash equivalents at beginning of year 8,552 11,467 Cash and cash equivalents at end of quarter $ 8,751 $ 5,080 See notes to condensed consolidated financial statements. SEABOARD CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Note 1 - Accounting Policies and Basis of Presentation The consolidated financial statements include the accounts of Seaboard Corporation and its wholly owned domestic and foreign subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. The Company's investments in non-controlled foreign affiliates are accounted for by the equity method. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 1997 as filed in its Annual Report on Form 10-K. The accompanying unaudited 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. The Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" as of January 1, 1998. This statement establishes requirements for reporting and display of comprehensive income and its components. For the three months ended March 31, 1998 and 1997, Other Comprehensive Income adjustments consisted of an immaterial unrealized gain on available-for-sale securities, net of tax. Note 2 - Inventories The following is a summary of inventories at March 31, 1998 and December 31, 1997 (in thousands): March 31, December 31, 1998 1997 At lower of last-in, first-out (LIFO) cost or market: Live poultry $ 26,139 $ 27,116 Dressed poultry 21,860 32,496 Feed and baking ingredients, packaging supplies and other 6,512 6,970 54,511 66,582 LIFO allowance (2,910) (4,744) Total inventories at lower of LIFO cost or market 51,601 61,838 At lower of first-in, first-out (FIFO) cost or market: Live hogs 79,764 76,484 Grain, flour and feed 22,459 37,575 Crops in production, fertilizers and pesticides 10,704 11,166 Dressed pork 8,300 8,388 Other 17,191 15,573 Total inventories at lower of FIFO cost or market 138,418 149,186 Total inventories $190,019 $211,024 Note 3 - Contingencies The Company is a defendant in a pending arbitration proceeding and related litigation in Puerto Rico brought by the owner of a chartered barge and tug which were damaged by fire after delivery of the cargo. Damages of $47.6 million are alleged. The Company is vigorously defending the action and believes that it has no responsibility for the loss. The Company also believes that it would have a claim for indemnity if it were held liable for any loss. The Company is subject to various other legal proceedings related to the normal conduct of its business. 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 the Company. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES March 31, December 31, 1998 1997 Current ratio 1.47:1 1.47:1 Working capital $167.1 $168.3 Cash from operating activities for the three months ended March 31, 1998 was $10.2 million, compared to $12.6 million in the same quarter one year earlier. The decrease in cash flows was primarily related to decreases in net income and changes in deferred income taxes, partially offset by increases in depreciation and amortization. Overall working capital did not change significantly in the first quarter of 1998 compared to the first quarter of 1997. Changes in individual components of working capital are primarily related to the sell-off of a build-up of poultry leg-quarter inventory, and the timing of normal transactions including voyage settlements and trade payables. The Company invested $11.0 million in property, plant and equipment in the food production and processing segment for the three months ended March 31, 1998. Capital expenditures in the pork division of $4.5 million were primarily for improvements to the pork processing plant. During 1998, an additional $15.0 million is expected to be spent on existing facilities. In connection with previously disclosed plans to expand production from two million to four million hogs per year, the Company is currently making arrangements to produce an additional one million hogs per year, increasing annual production to three million head. This increase in hog production will be accomplished through a combination of operating lease arrangements and third party contract growers. The timing of the second million head of additional annual production capacity, which would expand production to four million hogs per year, as well as the Company's previously announced plans to construct a second processing plant, has not been finalized. Capital expenditures of $5.9 million for the three months ended March 31, 1998 were made in the poultry division, primarily for the continuing expansion projects at the Athens and Elberton, Georgia, poultry facilities. The Company anticipates spending $15.0 million over the next nine months to complete these expansions and make general upgrades to other poultry facilities. Management anticipates these expenditures will be financed by internally generated cash. Other capital expenditures in the food production and processing segment for the three months ended March 31, 1998 included $0.6 million in general modernization and efficiency upgrades of plant and equipment. Capital expenditures in the transportation segment through March 31, 1998 totaled $1.1 million for general replacement and upgrades of property and equipment. During the three months ended March 31, 1998, the Company made $9.1 million in advances to and non-voting investments in Ingenio y Refineria San Martin del Tabacal S.A. (Tabacal) in which the Company owns a non-controlling interest. For the remainder of 1998, the Company anticipates guaranteeing loans made to Tabacal by third parties and/or making additional advances to and/or non-voting investments in Tabacal of approximately $10.0 million. In the first quarter of 1998, the Company's one-year revolving credit facilities maturing during the first quarter of 1998 were extended for an additional year. As of March 31, 1998, the Company had $141.4 million outstanding under one-year revolving credit facilities totaling $160.0 million and $27.2 million outstanding under short-term uncommitted credit lines totaling $92.5 million. In January 1998, the Company invested $2.5 million for a minority interest in a new limited liability company in Maine. The new company acquired the assets of an existing seafood company which processes and distributes prepackaged smoked seafood and related products. The investment is being accounted for using the equity method. 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 three months ended March 31, 1998 increased by $46.3 million compared to the three months ended March 31, 1997. Operating income decreased by $3.8 million compared to the same quarter one year ago. The segment distribution of net sales and operating income compared to the prior year are as follows (in millions): Net Sales Operating Income March 31, March 31, March 31, March 31, 1998 1997 1998 1997 Food Production and Processing Segment $ 277.2 $ 251.5 $ 1.7 $ 7.5 Commodity Trading and Milling Segment 82.6 70.8 2.5 2.7 Transportation Segment 78.3 68.6 7.9 6.6 Other 8.4 9.3 0.2 (0.7) $ 446.5 $ 400.2 $ 12.3 $ 16.1 Food Production and Processing Segment An industry wide surplus of meat has resulted in lower sales prices in most meat markets beginning in the latter part of 1997. Despite lower poultry and pork prices, net sales for the food production and processing segment increased $25.7 million for the first quarter of 1998 compared to the first quarter of 1997 primarily as a result of increased poultry and pork sales volumes. Operating income decreased $5.8 million for the first quarter of 1998 compared to the first quarter of 1997 primarily as a result of lower pork margins described below. Net sales of poultry products totaled $125.2 million in the first quarter of 1998, an increase of $8.7 million compared to the first quarter of 1997. This increase is primarily a result of increased sales volume at the Elberton, Georgia, plant and, to a lesser extent, selling off a build-up of leg-quarter inventory. The addition of an additional cooking line at the Elberton location in late 1997 has increased its processing capacity. Gross income from poultry sales increased to $7.5 million in the first quarter of 1998 from $6.3 million in the first quarter of 1997, primarily as a result of lower finished feed costs, partially offset by lower sales prices. Management cannot predict whether grain prices will remain at current levels during the remainder of the year. Net sales for the pork operations increased by $16.8 million to $121.7 million in the first quarter of 1998 compared to the first quarter of 1997. The increase primarily resulted from increased sales of pork at the hog processing plant, which operated at double-shift production during the first quarter of 1998, compared with single-shift production in the first quarter of 1997. Despite higher sales volumes, lower prices for finished pork products without a comparable decrease in the cost of production resulted in a decrease in gross income to $1.5 million for the first quarter of 1998 compared to $10.5 million for the first quarter of 1997. Management anticipates that lower pork prices will continue to have a negative effect on financial results during 1998 compared to 1997. Commodity Trading and Milling Segment Net sales from commodity trading and milling activity increased by $11.8 million to $82.6 million in the first quarter of 1998 compared to the first quarter of 1997. The increase is primarily a result of higher volumes of commodity sales, mainly soybeans, to foreign markets. Operating income for the first quarter of 1998 decreased $0.2 million when compared to the first quarter of 1997 primarily as a result of costs associated with the collection of certain receivables. Transportation Segment Net sales from containerized cargo operations increased by $9.7 million to $78.3 million in the first quarter of 1998 compared to the first quarter of 1997. Operating income from containerized cargo operations increased by $1.3 million in the first quarter of 1998 compared to the same quarter one year ago. These increases are primarily related to increased cargo volumes in certain markets that the Company serves. Selling, General and Administrative Expenses Selling, general and administrative (SG&A) expenses increased $0.4 million to $36.2 million for the first quarter of 1998 compared to the first quarter of 1997. As a percentage of revenues, SG&A decreased to 8.1% from 9.0% compared to the first quarter of 1997 primarily as a result of increased pork production. Other Income and Expense Interest income increased during the quarter compared to the same quarter one year earlier resulting primarily from an increase in average invested funds. Losses from foreign affiliates for the first quarter of 1998 are primarily attributable to the operations of Tabacal. During the first quarter of 1997, losses attributable to Tabacal were reduced by interest income recorded on the related advances. During the second quarter of 1997, the Company ceased recording interest income. Subsequently, the Company recorded the advances as long-term when it was determined that they would not be repaid on a short-term basis. The Company anticipates incurring losses during 1998 similar to 1997. Other Financial Information The Company will adopt Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information" for the year ending December 31, 1998. This statement requires companies to report certain information about operating segments in their financial statements and establishes standards for related disclosures about products and services, geographic areas and major customers. SFAS 131 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Application to interim financial statements in the year of adoption is not required, however, comparative information for interim periods in the year of adoption will be reported in the financial statements for interim periods in fiscal 1999. SEABOARD CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of stockholders was held on April 27, 1998 in Newton, Massachusetts. Two items were submitted to a vote of stockholders as described in the Company's Proxy Statement dated March 26, 1998. The table below briefly describes the proposals and results of the stockholders' vote. Votes in Votes Favor Against Abstain 1. To elect: H. Harry Bresky, 1,441,755.25 0 1,783 Joe E. Rodrigues 1,441,765.25 0 1,773 David A. Adamsen 1,441,665.25 0 1,873 and Thomas J. Shields 1,441,665.25 0 1,873 As directors. 2. To ratify selection of KPMG Peat Marwick LLP As independent auditors. 1,441,999.25 560 979 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 quarter ended March 31, 1998. This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which 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 price of feed stocks and other materials used by the Company, (iv) the price for the Company's products and services, (v) the anticipated improvement in the financial results of Tabacal, or (vi) 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 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" identifies important factors which could cause such differences. 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: May 14, 1998 Seaboard Corporation by: /s/ Robert L. Steer Robert L. Steer, Vice President-Chief Financial Officer (Authorized officer and principal financial and accounting officer) EX-27 2 EX-27 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST QUARTER 10-Q FILING AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 MAR-31-1998 8751 109385 185587 0 190019 523477 776673 296901 1122230 356338 0 0 0 1488 400019 1122230 446532 446532 398056 398056 36215 0 7812 4109 1245 2864 0 0 0 2864 1.93 1.93
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