Stockholders' Equity and Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 27, 2014

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 which was initially approved by its Board of Directors in November 2009, and is in effect through October 31, 2015.  In May 2014, the Board of Directors increased the dollar amount of Seaboard common stock authorized to be repurchased under the share repurchase program by $20,000,000, and 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. As of September 27, 2014, $50,846,000 remained available for repurchases under the share repurchase program.  For the nine months ended September 27, 2014, Seaboard repurchased 18,405 shares of common stock at a total cost of $53,781,000.  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 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 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. Seaboard does not currently intend to declare any further dividends for the years 2014-2016.

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

	Three Months Ended							Nine Months Ended
	September 27,			September 28,				September 27,			September 28,
(Thousands of dollars)	2014			2013				2014			2013
Foreign currency translation adjustment	$   (3,120	)			$   (14,067	)		$   (32,685	)			$   (26,888	)
Investments:
Unrealized gain (loss)	274				376			842				(933	)
Amounts reclassified from OCL to net earnings	(379	)	(1)		(149	)	(1)	77		(1)		(548	)	(1)
Unrealized gain (loss) on investments	(105	)			227			919				(1,481	)
Unrealized gain on cash flow hedges	149				-			235				-
Pension cost:
Unrealized gain	-				-			-				1,310
Amounts reclassified from OCL to net earnings	320		(2)		1,192		(2)	960		(2)		3,619		(2)
Unrecognized pension cost	320				1,192			960				4,929
Other Comprehensive Loss, Net of Tax	$   (2,756	)			$   (12,648	)		$   (30,571	)			$   (23,440	)

(1) This represents realized 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.

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 income during the second quarter of 2013.

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

	September 27,		December 31,
(Thousands of dollars)	2014		2013
Cumulative Foreign Currency Translation Adjustment:	$  (188,098	)	$  (155,413	)
Unrealized Gain on Investments:	1,400		481
Unrealized Gain (Loss) on Cash Flow Hedges:	122		(113	)
Unrecognized Pension Cost:	(25,792	)	(26,752	)
Total Accumulated Other Comprehensive Loss	$  (212,368	)	$  (181,797	)

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 27, 2014, the Sugar segment had $122,145,000 in net assets denominated in Argentine pesos and $2,556,000 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 could incur additional foreign currency translation adjustment losses in other comprehensive loss during the remainder of 2014.

At September 27, 2014 and September 28, 2013, income taxes for cumulative foreign currency translation adjustments were recorded using a 35% effective tax rate except for $50,801,000 and $10,514,000, respectively, related to certain subsidiaries for which no tax benefit was recorded. At September 27, 2014 and September 28, 2013, income taxes for all other components of accumulated other comprehensive loss were recorded using a 39% effective rate except for unrecognized pension cost of $8,415,000 and $19,954,000, respectively, related to employees at certain subsidiaries for which no tax benefit has been recorded.