Stockholders' Equity and Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 28, 2013

Stockholders' Equity and Accumulated Other Comprehensive Loss

Stockholders' Equity and Accumulated Other Comprehensive Loss

Note 8 – Stockholders’ Equity and Accumulated Other Comprehensive Loss

The components of and changes in accumulated other comprehensive loss, net of tax, for the three months ended September 28, 2013 are as follows:

	Cumulative
	Foreign			Unrealized			Unrealized
	Currency			Gain (Loss)			Loss on			Unrecognized
	Translation			on			Cash Flow			Pension
(Thousands of dollars)	Adjustment			Investments			Hedges			Cost			Total
Balance June 29, 2013	$	(122,278	)	$	524		$	(113	)	$	(60,469	)	$(182,336	)
Other comprehensive income (loss) before reclassifications	(14,067		)	376			-			-			(13,691	)
Amounts reclassified from accumulated other comprehensive loss	-			(149		)(1)	-			1,192		(2)	1,043
Net current-period other comprehensive income (loss)	(14,067		)	227			-			1,192			(12,648	)
Balance September 28, 2013	$	(136,345	)	$	751		$	(113	)	$	(59,277	)	$(194,984	)

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

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

The components of and changes in accumulated other comprehensive loss, net of tax, for the nine months ended September 28, 2013 are as follows:

	Cumulative
	Foreign			Unrealized			Unrealized
	Currency			Gain (Loss)			Loss on			Unrecognized
	Translation			on			Cash Flow			Pension
(Thousands of dollars)	Adjustment			Investments			Hedges			Cost			Total
Balance December 31, 2012	$	(109,457	)	$	2,232		$	(113	)	$	(64,206	)	$	(171,544	)
Other comprehensive income (loss) before reclassifications	(26,888		)	(933		)	-			1,310			(26,511		)
Amounts reclassified from accumulated other comprehensive loss	-			(548		)(1)	-			3,619		(2)	3,071
Net current-period other comprehensive income (loss)	(26,888		)	(1,481		)	-			4,929			(23,440		)
Balance September 28, 2013	$	(136,345	)	$	751		$	(113	)	$	(59,277	)	$	(194,984	)

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

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

As discussed in Note 6 to the Condensed Consolidated Financial Statements, Seaboard recognized a one-time retirement agreement termination gain of $1,310,000 net of tax, in unrecognized pension cost in other comprehensive loss during the second quarter of 2013.

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 September 28, 2013, the Sugar segment had $175,807,000 in net assets denominated in Argentine pesos and $1,468,000 in net assets denominated in U.S. dollars.  Management anticipates that the Argentine peso may continue to weaken against the U.S. dollar and thus it is anticipated that Seaboard will incur additional foreign currency translation adjustment losses in other comprehensive loss during the remainder of 2013.

With the exception of the foreign currency translation adjustment to which a 35 percent federal tax rate is applied, income taxes for components of accumulated other comprehensive loss were recorded using a 39 percent effective tax rate.  In addition, the unrecognized pension cost includes $19,954,000 related to employees at certain subsidiaries for which no tax benefit has been recorded.

On November 1, 2013, Seaboard’s Board of Directors authorized an additional $75,000,000 for use in purchasing  Seaboard’s Common Stock pursuant to Seaboard’s share repurchase program initially approved in November 2009, and which previously had $100,000,000 of authority. As of September 28, 2013, $15,856,000 remained available for repurchases under this program, before the newly authorized additional $75,000,000.  For the nine months ended September 28, 2013, Seaboard repurchased 6,430 shares of common stock at a total cost of $17,349,000.  The share repurchase program is in effect through October 31, 2015.  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 repurchase will be funded by cash on hand.  Shares repurchased will be retired and resume the status of authorized and unissued shares.  All stock repurchased will be made in compliance with applicable legal requirements and 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’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 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 does not currently intend to declare any further dividends for the years 2013-2016.