UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
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)
(913) 676-8800
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered
Common Stock $1.00 Par Value NYSE Amex Equities
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ]
No [ X ]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No
[ X ]
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 [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (232.405 of this chapter)
during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "larger
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ X ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [ ] No [X ]
The aggregate market value of the 323,395 shares of Seaboard
common stock held by nonaffiliates was approximately
$454,693,370, based on the closing price of $1,406.00 per share
on July 2, 2010, the end of Seaboard's second fiscal quarter. As
of February 4, 2011, the number of shares of common stock
outstanding was 1,215,879.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated parts of this report: (1) Seaboard
Corporation's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) - Parts I and II; and (2)
Seaboard Corporation's definitive proxy statement filed pursuant
to Regulation 14A for the 2011 annual meeting of stockholders -
Part III.
Forward-Looking Statements
This report, including information included or incorporated by
reference in this report, contains certain forward-looking
statements with respect to the financial condition, results of
operations, plans, objectives, future performance and business of
Seaboard Corporation and its subsidiaries (Seaboard). Forward-
looking statements generally may be identified as:
- statements that are not historical in nature; and
- statements preceded by, followed by or that include the
words "believes," "expects," "may," "will," "should,"
"could," "anticipates," "estimates," "intends" or similar
expressions.
In more specific terms, forward-looking statements include,
without limitation:
- statements concerning the 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 regarding the intent, belief or current
expectations of Seaboard and its management with respect to:
(i) Seaboard's ability to obtain adequate financing and
liquidity;
(ii) the price of feed stocks and other materials used by
Seaboard;
(iii) the sale price or market conditions for pork, grains,
sugar, turkey and other products and services;
(iv) statements concerning management's expectations of
recorded tax effects under certain circumstances;
(v) the volume of business and working capital
requirements associated with the competitive trading
environment for the Commodity Trading and Milling
division;
(vi) the charter hire rates and fuel prices for vessels;
(vii) the stability of the Dominican Republic's economy,
fuel cost and related spot market prices and
collections of receivables in the Dominican Republic;
(viii) the ability of Seaboard to sell certain grain
inventories in foreign countries at current cost basis
and the related contract performance by customers;
(ix) the effect of the fluctuation in foreign currency
exchange rates;
(x) statements concerning profitability or sales volume of
any of Seaboard's divisions;
(xi) the anticipated costs and completion timetable for
Seaboard's scheduled capital improvements,
acquisitions and dispositions; and
(xii) other trends affecting Seaboard's financial condition
or results of operations, and statements of the
assumptions underlying or relating to any of the
foregoing statements.
This list of forward-looking statements is not exclusive.
Seaboard undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events, changes in assumptions or otherwise.
Forward-looking statements are not guarantees of future
performance or results. They involve risks, uncertainties and
assumptions. Actual results may differ materially from those
contemplated by the forward-looking statements due to a variety
of factors. The information contained in this Form 10-K and in
other filings Seaboard makes with the Commission, including
without limitation, the information under the headings "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this Form 10-K,
identifies important factors which could cause such differences.
2
PART I
Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, and its subsidiaries
(Seaboard), is a diversified international agribusiness and
transportation company. In the United States, Seaboard is
primarily engaged in pork production and processing and ocean
transportation. Overseas, Seaboard is primarily engaged in
commodity merchandising, grain processing, sugar production, and
electric power generation. Seaboard also has an interest in turkey
operations in the United States. See Item 1(c) (1) (ii) "Status of
Product or Segment" below for a discussion of acquisitions,
dispositions and other developments in specific divisions.
Seaboard Flour LLC and SFC Preferred LLC, Delaware limited
liability companies, collectively own approximately 73.5 percent of
the outstanding common stock of Seaboard. Mr. Steven J. Bresky,
President and Chief Executive Officer of Seaboard, and other
members of the Bresky family, including trusts created for their
benefit, own the equity interests of Seaboard Flour LLC and SFC
Preferred LLC.
(b) Financial Information about Industry Segments
The financial information relating to Industry Segments required by
Item 1 of Form 10-K is incorporated herein by reference to Note 13
of the Consolidated Financial Statements appearing on pages 55
through 59 of the Seaboard Corporation Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this Report.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done by the Registrant
(i) Principal Products and Services
Pork Division - Seaboard, through its subsidiary Seaboard
Foods LLC, engages in the businesses of hog production and
pork processing in the United States. Through these
operations, Seaboard produces and sells fresh and frozen pork
products to further processors, foodservice operators, grocery
stores, distributors and retail outlets throughout the United
States. Internationally, Seaboard sells to these same types
of customers in Japan, Mexico and other foreign markets.
Other further processing companies also purchase Seaboard's
fresh and frozen pork products in bulk and produce products,
such as lunchmeat, ham, bacon, and sausage. Fresh pork, such
as loins, tenderloins and ribs are sold to distributors and
grocery stores. Seaboard also sells further processed pork
products consisting primarily of raw and pre-cooked bacon from
its two bacon further processing plants. Seaboard sells some
of its fresh products under the brand name Prairie Freshr and
its bacon and other further processed products under the
Daily'sr brand name. Seaboard's hog processing plant is
located in Guymon, Oklahoma, and operates at double shift
capacity. Seaboard's bacon plants are located in Salt Lake
City, Utah and Missoula, Montana. Seaboard also earns fees,
based primarily on the number of head processed, to market all
of the products produced by Triumph Foods LLC at their pork
processing plant located in St. Joseph, Missouri.
Seaboard's hog production operations consist of the breeding
and raising of approximately four million hogs annually
primarily at facilities owned by Seaboard or at facilities
owned and operated by third parties with whom Seaboard has
grower contracts. The hog production operations are located
in the States of Oklahoma, Kansas, Texas and Colorado. As a
part of the hog production operations, Seaboard produces
specially formulated feed for the hogs at six owned feed
mills. The remaining hogs processed are purchased from third
party hog producers, primarily pursuant to purchase contracts.
Seaboard produces biodiesel at a facility in Guymon, Oklahoma.
The biodiesel is produced from pork fat from Seaboard's Guymon
pork processing plant and from animal fat supplied by non-
Seaboard facilities. The biodiesel is sold to third parties.
The facility can also produce biodiesel from vegetable oil.
Seaboard is able to reduce or stop production when it isn't
economically feasible to produce based on input costs or the
price of biodiesel.
Seaboard has a majority interest in a ham-boning and
processing plant in Mexico.
Commodity Trading and Milling Division - Seaboard's Commodity
Trading and Milling Division markets wheat, corn, soybean
meal, rice and other similar commodities in bulk to third
parties and affiliated companies. This division is managed
under the name of Seaboard Overseas and Trading Group,
conducts business primarily through
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its subsidiaries, Seaboard Overseas Limited with offices in
Bermuda, Colombia, Ecuador, Isle of Man and South
Africa, Seaboard Overseas Trading and Shipping (PTY), Ltd.
located in South Africa, SeaRice Limited located in Geneva,
Switzerland, SeaRice Caribbean located in Miami, Florida,
and its non-consolidated affiliates, ContiLatin del Peru
S.A. located in Lima, Peru, and Plum Grove Pty Ltd located
in Fremantle, Australia. In addition, although to a
lesser degree, Seaboard also markets various
specialty grains and other similar commodities to third party
customers through its subsidiaries SeaRice Caribbean and Fill-
more Seeds, Inc. located in Fillmore, Canada, and its non-
consolidated affiliate PS International located in Chapel
Hill, North Carolina, with additional international offices.
All of the commodities marketed by this division are purchased
from growing regions worldwide, with primary destinations
being Africa, South America, Asia, Europe and the Caribbean.
The division sources, transports and markets approximately
five million tons of grains and proteins on an annual basis.
Seaboard integrates the service of delivering commodities to
its customers through the use of chartered bulk vessels and
its eight owned bulk carriers.
This division also operates milling and related businesses
with 32 locations in 14 countries, which are primarily
supplied by the trading locations discussed above. The grain
processing businesses are operated through four consolidated
and fourteen non-consolidated affiliates in Africa, the
Caribbean and South America. These are flour, feed and maize
milling businesses which produce approximately three million
metric tons of finished products per year. Most of the
products produced by the milling operations are sold in the
countries in which the products are produced or into adjacent
countries.
In addition, this division has a 50 percent non-controlling
interest in a newly combined poultry business in Africa and a
50 percent non-controlling interest in a bakery to be built in
Central Africa. The bakery is not anticipated to be fully
operational until the second half of 2011.
Marine Division - Seaboard, through its subsidiary, Seaboard
Marine Ltd., and various foreign affiliated companies and
third party agents, provides containerized cargo shipping
service to 26 countries between the United States, the
Caribbean Basin, and Central and South America. Seaboard uses
a network of offices and agents throughout the United States,
Canada, Latin America and the Caribbean Basin to book both
northbound and southbound cargo to and from the United States
and between the countries it serves. Through agreements with
a network of connecting carriers, Seaboard can transport cargo
to and from numerous U.S. locations by either truck or rail to
and from one of its U.S. port locations, where it is staged
for export via vessel or received as import cargo from abroad.
Seaboard's primary marine operation is located in Miami and
includes an 81 acre terminal located at the Port of Miami and
a 135,000 square foot off-dock warehouse for cargo
consolidation and temporary storage. Seaboard also operates a
62 acre cargo terminal facility at the Port of Houston that
includes approximately 690,000 square feet of on-dock
warehouse space for temporary storage of bagged grains, resins
and other cargoes. Seaboard also makes scheduled vessel calls
in Brooklyn, New York, Fernandina Beach, Florida, New Orleans,
Louisiana and 42 foreign ports. At December 31, 2010,
Seaboard's fleet consisted of 10 owned and approximately 29
chartered vessels, and dry, refrigerated and specialized
containers and other related equipment.
Sugar Division - Seaboard, through its subsidiary, Ingenio y
Refineria San Martin del Tabacal and other Argentine non-
consolidated affiliates, grows sugar cane, produces and
refines sugar, and produces alcohol in Argentina. This
division also purchases sugar in bulk from third parties
within Argentina for subsequent resale. The sugar products
are mostly sold in Argentina, primarily to retailers, soft
drink manufacturers, and food manufacturers, with some exports
to the United States and South America. Seaboard grows a
large portion of the sugar cane on more than 60,000 acres of
land it owns in northern Argentina. The cane is processed at
an owned mill, with a current processing capacity of
approximately 250,000 metric tons of sugar and approximately
14 million gallons of alcohol per year (hydrated and
dehydrated). The sugar mill is one of the largest in
Argentina. Also, during 2008 this division began construction
of a 40 megawatt cogeneration power plant, which is expected
to be completed during the second quarter of 2011.
Power Division - Seaboard, through its subsidiary,
Transcontinental Capital Corp. (Bermuda) Ltd., operates as an
independent power producer in the Dominican Republic. This
operation is exempt from U.S. regulation under the Public
Utility Holding Company Act of 1938, as amended. This
division operates two floating barges with a system of diesel
engines capable of generating a combined rated capacity of
approximately 112 megawatts of electricity. See "Status of
Product or Segment" below for discussion of the pending sale
of the two barges and the construction
4
of a new replacement power barge. Seaboard generates
electricity into the local Dominican Republic power grid.
Seaboard is not directly involved in the transmission
or distribution of the electricity but does have contracts
to sell directly to third party users. The barges are secured
on the Ozama River in Santo Domingo, Dominican Republic.
Turkey Segment - Seaboard owns a 50 percent non-controlling
voting interest in Butterball, LLC ("Butterball"). The other
50 percent ownership interest is owned by a group consisting
of Maxwell Farms, LLC, Goldsboro Milling Company and GM
Acquisition LLC (collectively, the "Maxwell Group") based in
North Carolina. Butterball is a vertically integrated
producer, processor and marketer of branded and non-branded
turkeys, and other turkey products. Butterball has seven
processing plants and numerous live production and feed
milling operations located in Arkansas, Colorado, Kansas,
Missouri and North Carolina. Butterball produces
approximately 1 billion pounds of turkey each year, and the
company supplies its products to more than 30 countries.
Butterball is a national supplier to retail and foodservice
outlets and also exports products to Mexico and overseas.
Other Businesses - Seaboard purchases and processes jalapeno
peppers at its owned plant in Honduras. The processed peppers
are primarily sold to a customer in the United States, and are
shipped to the United States by Seaboard's Marine Division and
distributed from Seaboard's port facilities.
The information required by Item 1 of Form 10-K with respect
to the amount or percentage of total revenue contributed by
any class of similar products or services which account for
10 percent or more of consolidated revenue in any of the last
three fiscal years is set forth in Note 13 of Seaboard's
Consolidated Financial Statements, appearing on pages 55
through 59 of the Seaboard's Annual Report to Stockholders,
furnished to the Commission pursuant to rule 14a-3(b) and
attached as Exhibit 13 to this report, which information is
incorporated herein by reference.
(ii) Status of Product or Segment
During the fourth quarter of 2010, Seaboard acquired for $5.0
million a 25% non-controlling interest in a commodity trading
business in Australia. Also during the fourth quarter of
2010, Seaboard combined its existing investment in poultry
operations in Africa with another existing African based
poultry business. Seaboard invested an additional $10.5
million in this newly combined poultry business for a total
investment of $17.0 million, which represents a 50% non-
controlling interest. This newly combined business has
operations in parts of Eastern and Southern Africa and is also
expanding by building new operations in Central Africa.
During the third quarter of 2010, Seaboard acquired a majority
interest in a commodity origination, storage and processing
business in Canada for approximately $6.7 million. The assets
acquired included $1.2 million of cash.
In late July 2010, Seaboard finalized an agreement to invest
in a bakery to be built in Central Africa. Seaboard will have
a 50% non-controlling interest in this business. The total
project cost is estimated to be $58.0 million but Seaboard's
total investment has not yet been determined pending
finalization of third party financing alternatives for a
significant portion of the project. The bakery is anticipated
to be fully operational during the second half of 2011.
In late March 2010, Seaboard acquired a 50% non-controlling
interest in an international commodity trading business
located in North Carolina for approximately $7.6 million.
During 2008 Seaboard discontinued operations of its flour
milling operations in Mozambique as a result of its Mozambican
subsidiary entering into an agreement to exchange its flour
milling facility for a ten percent ownership interest in a
food processing company in that country. This exchange
transaction was completed in the first half of 2010.
On January 12, 2010, Haiti was struck by an earthquake.
Seaboard has a non-controlling interest in an affiliate with a
flour mill operation in Lafiteau, Haiti. Part of this
facility was severely damaged as a result of the earthquake.
This affiliate business is in the process of rebuilding the
damaged part of the facility and continues to operate the
portion of the facility that was not damaged. This facility
was fully insured, including business interruption and
inventory coverage. Construction is anticipated to be
completed in late 2011. Seaboard also sells wheat and flour
to this business through Seaboard's commodity trading
operations. In addition, the primary port in Haiti, located
in Port-au-Prince from which Seaboard Marine's vessels
normally dock, was severely damaged. Seaboard resumed its
regular service to Haiti during the first half of 2010.
5
The Sugar Division is in the process of developing a 40
megawatt cogeneration power plant. This plant is expected
to be completed during the second quarter of 2011. In
addition, in the first quarter of 2010, the Company began
sales of dehydrated alcohol to certain oil companies under the
Argentine government bio-ethanol program which requires
alcohol to be blended with gasoline.
The Power Division's short-term contract with a government-
owned distribution company, which represents approximately 34%
of its sales, will expire before the sale of the existing
power barges is completed as discussed below.
On March 2, 2009, an agreement became effective under which
Seaboard sold its two power barges in the Dominican Republic
for $70.0 million to a third party, which will use such barges
for private use. It is anticipated that the sale will be
completed during the second quarter of 2011. Seaboard will be
responsible for the wind down and decommissioning costs of the
barges. Completion of the sale is dependent upon the
satisfaction of several conditions, including meeting certain
baseline performance and emissions tests. Failure to satisfy
or cure any deficiencies could result in the agreement being
terminated. Seaboard retained all other physical properties
of its power generation business and is currently building a
106 megawatt power barge for use in the Dominican Republic for
approximately 83,573,000 Euros (approximately US $107,650,000)
plus additional project costs for a total of approximately
$125,000,000. Operations are anticipated to begin by the end
of 2011 or early 2012 resulting in decreased sales during 2011
for this division.
On December 6, 2010, Seaboard acquired a 50 percent non-
controlling voting interest in Butterball from the Maxwell
Group, for a cash purchase price equal to approximately $177.5
million. Butterball is a vertically integrated producer,
processor and marketer of branded and non-branded turkeys, and
other turkey products. The other 50 percent ownership
interest in Butterball will continue to be owned by the
Maxwell Group. In connection with the purchase, Butterball
acquired the live turkey growing and related assets of the
Maxwell Group (which previously owned a 51 percent interest in
Butterball) and of Murphy-Brown LLC ("Murphy Brown"), a
subsidiary of Smithfield Foods, Inc., which previously owned a
49 percent interest in Butterball. Butterball previously
purchased a portion of the turkeys it processed from the
Maxwell Group and Murphy Brown. In connection with this
transaction, Seaboard provided Butterball with a $100,000,000
unsecured subordinated loan with a seven year maturity and
interest of 15% per annum, comprised of 5% payable in cash
semi-annually, plus 10% pay-in-kind interest compounded semi-
annually and paid at maturity. As part of the subordinated
financing, Seaboard received detachable warrants representing
5% of the fully diluted equity units in Butterball with a
strike price of $0.01 per unit.
(iii) Sources and Availability of Raw Materials
None of Seaboard's businesses utilize material amounts of raw
materials that are dependent on purchases from one supplier or
a small group of dominant suppliers. However, the Turkey
Segment purchases a significant portion of its feed for its
turkeys in North Carolina from the Maxwell Group.
(iv) Patents, Trademarks, Licenses, Franchises and
Concessions
Seaboard uses the registered trademark of Seaboard.
The Pork Division uses registered trademarks relating to its
products, including Seaboard Farms, Prairie Fresh, A Taste
Like No Other, Daily's, Daily's Premium Meats Since 1893,
High Plains Bioenergy, Prairie Fresh Prime, Seaboard Foods,
Buffet Brand, Seaboard Farms, Inc. and Del Pueblo.
Seaboard considers the use of these trademarks important to
the marketing and promotion of its pork products.
The Marine Division uses the trade name Seaboard Marine and
Seaboard Solutions which are all registered trademarks.
Seaboard believes there is significant recognition of these
trademarks in the industry and by many of its customers.
Part of the sales within the Sugar Division are made under the
Chango brand in Argentina, where this division operates.
Local sales prices are affected by government price control
and sugar import duties imposed by the Argentine government,
impacting local volume sold, as well as imported and exported
volumes to and from international markets. Sourcing in the
domestic market is also closely monitored by the local
government.
6
Seaboard's Power Division benefits from a tax exempt
concession granted by the Dominican Republic government
through 2012.
The Turkey Segment uses registered trademarks relating to its
products, including Butterball and Carolina Turkeys.
Seaboard considers the use of these trademarks important to
marketing and promotion of its turkey products.
Patents, trademarks, franchises, licenses and concessions are
not material to any of Seaboard's other divisions.
(v) Seasonal Business
Sugar prices in Argentina are generally lower during the
typical sugarcane harvest period between May and November.
The Turkey business is seasonal only on the whole bird side
with Thanksgiving and Christmas holidays driving the majority
of those sales. Seaboard's other divisions are not seasonally
dependent to any material extent.
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of
Seaboard relating to working capital items.
(vii) Depending on a Single Customer or Few Customers
Seaboard does not have sales to any one customer equal to ten
percent or more of consolidated revenues. The Pork Division
derives approximately 11 percent of its revenues from a few
customers in Japan through one agent. The Commodity Trading
and Milling Division derives a significant portion of its
operating income from sales to a non-consolidated affiliate
and also derives a significant portion of its income from
affiliates from this same affiliate. The Power Division sells
power in the Dominican Republic to a limited number of
contract customers and on the spot market accessed primarily
by three wholly government-owned distribution companies.
Approximately 34% of the Power Division's power generation is
provided for one government-owned distribution company under a
short-term contract for which Seaboard bears a concentrated
credit risk as this customer, from time to time, has
significant past due balances. No other division has sales
to a few customers which, if lost, would have a material
adverse effect on any such division or on Seaboard taken as a
whole.
(viii) Backlog
Backlog is not material to Seaboard's businesses.
(ix) Government Contracts
No material portion of Seaboard's business involves government
contracts.
(x) Competitive Conditions
Competition in Seaboard's Pork Division comes from a variety
of national, international and regional producers and
processors and is based primarily on product quality, customer
service and price. According to recent publications by
Successful Farming and Informa Economics, trade publications,
Seaboard ranks as one of the nation's top five pork producers
(based on sows in production) and top ten pork processors
(based on daily processing capacity).
Seaboard's ocean liner service for containerized cargoes faces
competition based on price, reliable sailing frequencies and
customer service. Seaboard believes it is among the top five
ranking ocean liner services for containerized cargoes in the
Caribbean Basin based on cargo volume.
Seaboard's sugar business owns one of the largest sugar mills
in Argentina and faces significant competition for sugar sales
in the local Argentine market. Sugar prices in Argentina can
fluctuate compared to world markets due to current Argentine
government price control and protection policies.
Seaboard's Power Division is located in the Dominican
Republic. Power generated by this division is sold on the
spot market or to contract customers at prices primarily based
on market conditions rather than cost-based rates.
Competition for the Turkey Segment comes from a variety of
national and regional producers and processors and is based
primarily on product quality, customer service and price.
Butterball ranks as one of the nation's top three turkey
producers (based on live production).
(xi) Research and Development Activities
Seaboard and its Turkey Segment conducts research and
development activities focused on various aspects of
7
Seaboard's vertically integrated pork and turkey processing
system, including improving product quality, production
processes, animal genetics, nutrition and health. Incremental
costs incurred to perform these tests are expensed as incurred
and are not material to operating results.
(xii) Environmental Compliance
Seaboard and its Turkey Segment are subject to numerous
Federal, state and local provisions relating to the
environment which require the expenditure of funds in the
ordinary course of business. Seaboard and its Turkey Segment
do not anticipate making expenditures for these purposes,
which, in the aggregate would have a material or significant
effect on Seaboard's financial condition or results of
operations.
(xiii) Number of Persons Employed by Registrant
As of December 31, 2010, Seaboard, excluding non-consolidated
affiliates, had 10,865 employees, of whom 5,778 were employed
in the United States. Approximately 2,000 employees in
Seaboard's Pork Division were covered by collective bargaining
agreements as of December 31, 2010. Seaboard considers its
employee relations to be satisfactory.
(d) Financial Information about Geographic Areas
In addition to the narrative disclosure provided below, the
financial information relating to export sales required by Item 1
of Form 10-K is incorporated herein by reference to Note 13 of
Seaboard's Consolidated Financial Statements appearing on pages 55
through 59 of Seaboard's Annual Report to Stockholders furnished to
the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13
to this report.
Seaboard considers its relations with the governments of the
countries in which its foreign subsidiaries and affiliates are
located to be satisfactory, but foreign operations in lesser-
developed countries are subject to risks of doing business such as
potential civil unrests and government instabilities, increasing
the exposure to potential expropriation, confiscation, war,
insurrection, civil strife and revolution, sales price controls,
currency inconvertibility and devaluation, and currency exchange
controls. To minimize certain of these risks, Seaboard has insured
certain investments in its affiliate flour mills in Democratic
Republic of Congo, Haiti, Lesotho, Republic of Congo and Zambia, to
the extent available and deemed appropriate against certain of
these risks with the Overseas Private Investment Corporation, an
agency of the United States Government. At the date of this
report, Seaboard is not aware of any situations which could have a
material effect on Seaboard's business, although the January 2010
earthquake in Haiti could result in civil unrest over a period of
time if local conditions do not improve from continuing poor
conditions.
(e) Available Information
Seaboard electronically files with the Commission annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports pursuant to Section 13(a) or
15(d) of the Exchange Act. The public may read and copy any
materials filed with the Commission at their public reference room
located at 100 F Street N.E., Washington, D.C. 20549. The public
may obtain further information concerning the public reference room
and any applicable copy charges, as well as the process of
obtaining copies of filed documents by calling the Commission at 1-
800-SEC-0330.
The Commission maintains an internet website that contains reports,
proxy and information statements, and other information regarding
electronic filers at www.sec.gov. Seaboard provides access to its
most recent Form 10-K, 10-Q and 8-K reports, and any amendments to
these reports, on its internet website, www.seaboardcorp.com, free
of charge, as soon as reasonably practicable after those reports
are electronically filed with the Commission.
Please note that any internet addresses provided in this report are
for information purposes only and are not intended to be
hyperlinks. Accordingly, no information provided at such Internet
addresses is intended or deemed to be incorporated herein by
reference.
Item 1A. Risk Factors
Seaboard has identified important risks and uncertainties that
could affect the results of operations, financial condition or
business and that could cause them to differ materially from
Seaboard's historical results of operations, financial condition or
business, or those contemplated by forward-looking statements made
herein or elsewhere, by, or on behalf of, Seaboard. Factors that
could cause or contribute to such differences include, but are not
limited to, those factors described below.
8
(a) General
(1) Seaboard's Operations are Subject to the General Risks of
the Food Industry. The divisions of the business that are
in the food products manufacturing industry are subject to
the risks posed by:
- food spoilage or food contamination;
- evolving consumer preferences and nutritional and
health-related concerns;
- federal, state, national, provincial and local food
processing controls;
- consumer product liability claims;
- product tampering; and
- the possible unavailability and/or expense of
liability insurance.
If one or more of these risks were to materialize, Seaboard's
revenues could decrease, costs of doing business could
increase, and Seaboard's operating results could be adversely
affected.
(2) Foreign Political and Economic Conditions Have a Significant
Impact on Seaboard's Business. Seaboard is a diverse
agribusiness and transportation company with global
operations in several industries. Most of the sales and
costs of Seaboard's divisions are significantly influenced by
worldwide fluctuations in commodity prices or changes in
foreign political and economic conditions. Accordingly,
sales, operating income and cash flows can fluctuate
significantly from year to year. In addition, Seaboard's
international activities pose risks not faced by companies
that limit themselves to United States markets. These risks
include:
- changes in foreign currency exchange rates;
- foreign currency exchange controls;
- changes in a specific country's or region's political
or economic conditions, particularly in emerging
markets;
- hyperinflation;
- heightened customer credit and execution risk;
- tariffs, other trade protection measures and import or
export licensing requirements;
- potentially negative consequences from changes in tax
laws;
- different legal and regulatory structures and
unexpected changes in legal and regulatory
requirements; and
- negative perception within a foreign country of a
United States company doing business in that foreign
country.
Seaboard cannot provide assurance that it will be successful
in competing effectively in international markets.
(3) Deterioration of Economic Conditions Could Negatively Impact
Seaboard's Business. Seaboard's business may be adversely
affected by changes in national or global economic conditions,
including inflation, interest rates, availability of capital
markets, consumer spending rates, energy availability and
costs and the effects of governmental initiatives to manage
economic conditions. Any such changes could adversely affect
the demand for our meat products, grains and shipping
services, or the cost and availability of our needed raw
materials and packaging materials, thereby negatively
affecting our financial results. The current national and
global economic conditions, could, among other things:
- impair the financial condition of some of our
customers and suppliers thereby increasing customer
bad debts or non-performance by customers and
suppliers;
- negatively impact global demand for protein and grain-
based products, which could result in a reduction of
sales, operating income and cash flows;
- decrease the value of our investments in equity and
debt securities, including pension plan assets; and
- impair the financial viability of our insurers.
(4) Ocean Transportation Has Inherent Risks. Seaboard's owned
and chartered vessels along with related cargoes are at risk
of being damaged or lost because of events such as:
- marine disasters;
- bad weather;
- mechanical failures;
- grounding, fire, explosions and collisions;
- human error; and
- war, piracy and terrorism.
9
All of these hazards can result in death or injury to
persons, loss of property, environmental damages, delays or
rerouting. If one of Seaboard's vessels were involved in an
accident, the resulting media coverage could have a material
adverse effect on Seaboard's business, financial condition
and results of operations.
(5) Seaboard's Common Stock is Thinly Traded and Subject to Daily
Price Fluctuations. The common stock of Seaboard is closely
held (73.5% is collectively owned by Seaboard Flour and SFC
Preferred LLC, which are owned by S. Bresky and other members
of the Bresky family) and thinly traded on a daily basis on
the NYSE Amex Equities. Accordingly, the price of a share
of common stock can fluctuate more significantly from day-to-
day than that of a share of widely held stock that is
actively traded on a daily basis.
(b) Pork Division
(1) Fluctuations in Commodity Pork Prices Could Adversely Affect
Seaboard's Results of Operations. Sales prices for
Seaboard's pork products are directly affected by both
domestic and world wide supply and demand for pork products
and other proteins, all of which are determined by constantly
changing market forces of supply and demand as well as other
factors over which Seaboard has little or no control.
Commodity pork prices demonstrate a cyclical nature over
periods of years, reflecting changes in the supply of fresh
pork and competing proteins on the market, especially beef
and chicken. Seaboard's results of operations could be
adversely affected by fluctuations in pork commodity prices.
(2) Increases in Costs of Seaboard's Feed Components and Hog
Purchases Could Adversely Affect Seaboard's Costs and
Operating Margins. Feed costs are the most significant
single component of the cost of raising hogs and can be
materially affected by commodity price fluctuations for corn
and soybean meal. The results of Seaboard's Pork Division
can be negatively affected by increased costs of Seaboard's
feed components. The recent increase in construction and
operation of ethanol plants has elevated this risk as it has
increased the competing demand for feed ingredients,
primarily corn. Similarly, accounting for approximately 25%
of Seaboard's total hogs slaughtered, the cost of third party
hogs purchased fluctuates with market conditions and can have
an impact on Seaboard's total costs. The cost and supply of
feed components and the third party hogs that we purchase are
determined by constantly changing market forces of supply and
demand, which are driven by matters over which we have no
control, including weather, current and projected worldwide
grain stocks and prices, grain export prices and supports and
governmental agricultural policies. Seaboard attempts to
manage certain of these risks through the use of financial
instruments, however this may also limit its ability
to participate in gains from favorable commodity fluctuations.
Unless wholesale pork prices correspondingly increase,
increases in the prices of Seaboard's feed components or in
the cost of third party hogs purchased would adversely affect
Seaboard's operating margins.
(3) Seaboard May be Unable to Obtain Appropriate Personnel at
Remote Locations. The remote locations of the pork processing
plant and live hog operations, and a more restrictive
national policy on immigration could negatively affect the
availability and cost of labor. Seaboard is dependent on
having sufficient properly trained operations personnel.
Attracting and retaining qualified personnel is important to
Seaboard's success. The inability to acquire and retain the
services of such personnel could have a material adverse
effect on Seaboard's operations.
(4) The Loss of Seaboard's Sole Hog Processing Facility Could
Adversely Affect Seaboard's Business. Seaboard's Pork
Division is largely dependent on the continued operation of
a single hog processing facility. The loss of or damage to
this facility for any reason - including fire, tornado,
governmental action or other reason - could adversely affect
Seaboard and Seaboard's pork business.
(5) Environmental Regulation and Related Litigation Could Have a
Material Adverse Effect on Seaboard. Seaboard's operations
and properties are subject to extensive and increasingly
stringent laws and regulations pertaining to, among other
things, odors, the discharge of materials into the
environment and the handling and disposition of wastes
(including solid and hazardous wastes) or otherwise relating
to protection of the environment. Failure to comply with
these laws and regulations and any future changes to them may
result in significant consequences to Seaboard, including
civil and criminal penalties, liability for damages and
negative publicity. Some requirements applicable to Seaboard
may also be enforced by citizen groups. Seaboard has
incurred, and will continue to incur, operating expenditures
to comply with these laws and regulations.
(6) Health Risk to Livestock Could Adversely Affect Production,
the Supply of Raw Materials and Seaboard's Business.
Seaboard is subject to risks relating to its ability to
maintain animal health and control diseases. The general
health of the hogs and the reproductive performance of the
sows can have an adverse impact on production and production
costs, the supply of raw material to Seaboard's pork
processing operations and consumer confidence. If Seaboard's
hogs are affected by disease, Seaboard may be required
to destroy infected livestock, which could adversely affect
10
Seaboard's production or ability to sell or export its
products. Moreover, the herd health of third party suppliers
could adversely affect the supply and cost of hogs available
for purchase by Seaboard. Adverse publicity concerning any
disease or health concern could also cause customers to lose
confidence in the safety and quality of Seaboard's food
products.
(7) If Seaboard's Pork Products Become Contaminated, We May be
Subject to Product Liability Claims and Product Recalls.
Pork products may be subject to contamination by disease
producing organisms. These organisms are generally found in
the environment and as a result, regardless of the
manufacturing practices employed, there is a risk that they
could be present in Seaboard's processed pork products as a
result of food processing. Once contaminated products have
been shipped for distribution, illness and death may result
if the organisms are not eliminated at the further processing,
foodservice or consumer level. Even an inadvertent shipment
of contaminated products is a violation of law and may lead
to increased risk of exposure to product liability claims,
product recalls and increased scrutiny by federal and state
regulatory agencies and may have a material adverse effect on
Seaboard's business, reputation, prospects, results of
operations and financial condition.
(8) Corporate Farming Legislation Could Result in the Divestiture
or Restructuring of Seaboard's Pork Operations. The
development of large corporate farming operations and
concentration of hog production in larger-scale facilities
has engendered opposition from residents of states in which
Seaboard conducts its pork processing and live hog operations.
From time-to-time, corporate farming legislation has been
introduced in the United States Senate and House of
Representatives, as well as in several state legislatures.
These proposed anti-corporate farming bills have included
provisions to prohibit or restrict meat packers, such as
Seaboard, from owning or controlling livestock intended for
slaughter, which would require divestiture or
restructuring of Seaboard's operations.
(9) International Trade Barriers Could Adversely Affect
Seaboard's Pork Operations. This division realizes a
significant portion of its revenues from international
markets, particularly Japan and Mexico. International sales
are subject to risks related to general economic conditions,
imposition of tariffs, quotas, trade barriers and other
restrictions, enforcement of remedies in foreign
jurisdictions and compliance with applicable foreign laws,
and other economic and political uncertainties. These and
other risks could result in border closings or other
international trade barriers having an adverse effect on
Seaboard's earnings.
(10) Discontinuation of Tax Credits for Biodiesel Could
Adversely Affect Seaboard's Results of Operations. Seaboard
obtains Federal and State tax credits for the biodiesel it
produces and sells. The Federal tax credit expired on
December 31, 2009, but was renewed by Congress in late
December 2010 retroactive to January 1, 2010 with a new
expiration date of December 31, 2011. If Congress does not
extend this tax credit beyond 2011 and other factors
including government mandates to use biofuels don't create
sufficient demand, Seaboard's results of operations could be
adversely affected and the recorded value of property,
plant and equipment related to the biodiesel processing
facility could be impaired.
(11) Operations of Biodiesel Production Facility. The
profitability of Seaboard's biodiesel plant could be
adversely affected by various factors, including the market
price of pork and other animal fat which is utilized to
produce biodiesel, and the market price for biodiesel.
Unfavorable changes in these prices over extended periods of
time could adversely affect Seaboard's results of operations
and could result in the potential impairment of the recorded
value of the property, plant and equipment related to this
facility.
(c) Commodity Trading & Milling Division
(1) Seaboard's Commodity & Milling Division is Subject to Risks
Associated with Foreign Operations. This division
principally operates in Africa, Bermuda, South America and
the Caribbean and, in most cases, in what are generally
regarded to be lesser developed countries. Many of these
foreign operations are subject to risks of doing business in
lesser-developed countries which are subject to potential
civil unrests and government instabilities, increasing the
exposure to potential expropriation, confiscation, war,
insurrection, civil strife and revolution, currency
inconvertibility and devaluation, and currency exchange
controls, in addition to the risks of overseas operations
mentioned in clause (a)(2) above. In addition, foreign
government policies and regulations could restrict the
purchase of various grains, reducing or limiting Seaboard's
ability to access grains or to limit Seaboard's sales price
for grains sold in local markets.
(2) Fluctuations in Commodity Grain Prices Could Adversely Affect
the Business of Seaboard's Commodity & Milling Division.
This division's sales are significantly affected by
fluctuating worldwide prices for various commodities, such as
wheat, corn, soybeans and rice. These prices are determined
by constantly changing market forces of supply and demand as
well as other factors over which Seaboard has little or no
control. North American and European
11
subsidized wheat and flour exports, including donated food
aid, and world-wide and local crop production can contribute
to these fluctuating market conditions and can have a
significant impact on the trading and milling businesses'
sales, value of commodities held in inventory and operating
income. Seaboard's results of operations could be adversely
affected by fluctuations in commodity prices.
(3) Seaboard's Commodity & Milling Division Largely Depends on
the Availability of Chartered Ships. Most of Seaboard's
third party trading is transported with chartered ships.
Charter hire rates, influenced by available charter capacity
and demand for worldwide trade in bulk cargoes, port access
and throughput time, and related fuel costs can impact
business volumes and margins.
(4) This Division Uses a Material Amount of Derivative Products
to Manage Certain Market Risks. The commodity trading
portion of the business enters into various commodity
derivatives, foreign exchange derivatives and freight
derivatives to create what management believes is an economic
hedge for commodity trades it executes or intends to execute
with its customers. From time to time, this portion of the
business may enter into speculative derivative transactions
related to its market risks. Failure to execute or improper
execution of a derivative position or a firmly committed sale
or purchase contract, a speculative transaction that closes
without the desired result or exposure to counter party risk
could have an adverse impact on the results of operations and
liquidity.
(5) This Division is Subject to Higher than Normal Risks for
Attracting and Retaining Key Personnel. In the commodity
trading environment, a loss of a key employee such as a
commodity trader can have a negative impact resulting from
the loss of revenues as personal customer relationships can
be vital to obtaining and retaining business with various
foreign customers. In the milling portion of this division,
employing and retaining qualified expatriate personnel is a
key element of success given the difficult living conditions,
the unique operating environments and the reliance on a
relatively small number of executives to manage each
individual location.
(d) Marine Division
(1) The Demand for Seaboard's Marine Division's Services Are
Affected by International Trade and Fluctuating Freight Rates.
This division provides containerized cargo shipping services
primarily from the United States to twenty-six different
countries in the Caribbean Basin, Central and South America.
In addition to the risks of overseas operations mentioned in
clause (a)(2) above, fluctuations in economic conditions,
unstable or hostile local political situations in the
countries in which Seaboard operates can affect import/export
trade volumes and the price of container freight rates and
adversely affect Seaboard's results of operations.
(2) Chartered Ships Are Subject to Fluctuating Rates. Time
charter expenses are one of the division's largest expenses.
Certain ships are under charters longer than one year while
others are less than one year. These costs can vary greatly
due to a number of factors including the worldwide supply and
demand for shipping. It is not possible to determine in
advance whether a charter contract for more or less than one
year will be favorable to Seaboard's business. Accordingly,
entering into long-term charter hire contracts during periods
of decreasing charter hire costs or short term charter hire
contracts during periods of increasing charter hire costs
could have an adverse effect on Seaboard's results of
operation.
(3) Increased Fuel Prices May Adversely Affect Seaboard's
Business. Ship fuel expenses are one of the division's
largest expenses. These costs can vary greatly from year-to-
year depending on world fuel prices. Also, but to a lesser
extent, fuel price increases can impact the cost of inland
transportation costs.
(4) Hurricanes May Disrupt Operations in the Caribbean Basin.
Seaboard's port operations throughout the Caribbean Basin can
be subject to disruption due to hurricanes, especially at
Seaboard's major ports in Miami, Florida and Houston, Texas,
which could have an adverse effect on our results of
operations.
12
(5) Seaboard is Subject to Complex Laws and Regulations that May
Adversely Affect the Revenues, Cost, Manner or Feasibility of
Doing Business. Federal, state and local laws and domestic
and international regulations governing worker health and
safety, environmental protection, port and terminal security,
and the operation of vessels significantly affect Seaboard's
operations, including rate discussions and other related
arrangements. Many aspects of the marine industry, including
rate agreements, are subject to extensive governmental
regulation by the Federal Maritime Commission, the U.S. Coast
Guard, and U.S. Customs and Border Protection, and to
regulation by private industry organizations. Compliance
with applicable laws, regulations and standards may require
installation of costly equipment or operational changes,
while the failure to comply may result in administrative and
civil penalties, criminal sanctions or the suspension or
termination of Seaboard's operations or detention of its
vessels. In addition, future changes in laws, regulations and
standards, including allowed freight rate discussions and
other related arrangements, may result in additional costs or
a reduction in revenues.
(e) Sugar Division
(1) The Success of this Division Depends on the Condition of the
Argentinean Economy and Political Climate. This division
operates a sugar mill and alcohol production facility in
Argentina, locally growing a substantial portion of
the sugar cane processed at the mill. The majority of the
sales are within Argentina. Fluctuations in economic
conditions or changes in the Argentine political climate can
have an impact on the costs of operations, the sales prices
of products and export opportunities and the exchange rate of
the Argentine peso to the U.S. dollar. In this regard, local
sales prices are affected by government price control and
sugar import duties imposed by the Argentine government,
impacting local volume sold, as well as imported and exported
volumes to and from international markets. If import duties
are changed, this could have a negative impact on Seaboard's
sale price of its products. In addition, the Argentine
government attempts to control inflation through price
controls on commodities, including sugar, which could
adversely impact the local sales price of its products and
the results of operations for this division. A devaluation
of the Argentine peso would have a negative impact on
Seaboard's financial position.
(2) This Division is Subject to the Risks that Are Inherent in
any Agricultural Business. Seaboard's results of operations
for this division may be adversely affected by numerous
factors over which we have little or no control and that
are inherent in any agricultural business, including
reductions in the market prices for Seaboard's products,
adverse weather and growing conditions, pest and disease
problems, and new government regulations regarding
agriculture and the marketing of agricultural products. Of
these risks, weather particularly can adversely affect the
amount and quality of the sugar cane produced by Seaboard and
Seaboard's competitors located in other regions of Argentina.
(3) The Loss of Seaboard's Sole Processing Facility Would
Adversely Affect the Business of This Division. Seaboard's
Sugar Division is largely dependant on the continued
operation of a single processing facility. The loss of or
damage to this facility for any reason - including fire,
tornado, governmental action, labor unrest resulting in labor
strikes or other reasons - would adversely affect the
business of this division.
(4) Labor Relations. This division is dependent on unionized
labor at its single sugar mill in Argentina. The current
nature of the political environment in Argentina makes normal
labor relations very challenging. Contributing to the
situation are the policies of Argentina's National Government,
the failure of the Argentine courts to enforce contractual
obligations with unions and basic property rights.
Interruptions in production as a result of labor unrest can
adversely impact the quantity of sugar cane harvested and the
amount of sugar and alcohol produced and can interfere with
the distribution of products stored at the facility in the
Salta Province.
(f) Power Division
(1) This Division is Subject to Risks of Doing Business in the
Dominican Republic. This division operates in the Dominican
Republic (DR). In addition to significant currency
fluctuations and the other risks of overseas operations
mentioned in clause (a)(2) above, this division can
experience difficulty in obtaining timely collections of
trade receivables from the government partially-owned
distribution companies or other companies that must also
collect from the government in order to make payments on
their accounts. Currently, the DR does not allow a free
market to enable prices to rise with demand which would limit
our profitability in this business. The government has the
ability to arbitrarily decide which power units will be able
to operate, which could have adverse effects on results of
operations.
13
(2) Increases in Fuel Costs Could Adversely Affect Seaboard's
Operating Margins. Fuel is the largest cost component of
this division's business and, therefore, margins may be
adversely affected by fluctuations in fuel if such increases
can not be fully passed to customers.
(3) Seaboard could Incur Significant Damages if it Fails to Meet
Obligations Under A Power Barge Sale Agreement. Seaboard's
agreement to sell its Dominican Republic barges requires that
it meet certain performance standards at closing. If these
standards are not met, Seaboard would be in breach of the
agreement and may incur significant damages for that breach.
(g) Turkey Segment
(1) Fluctuations in Commodity Turkey Prices Could Adversely
Affect the Results of Operations. Sales prices for turkey
products are directly affected by both domestic and world
wide supply and demand for turkey products which are
determined by constantly changing market forces of supply and
demand as well as other factors over which Butterball has
little or no control. Butterball's results of operations
and Seaboard's investment in Butterball could be adversely
affected by fluctuations in the turkey commodity prices.
(2) Increases in Costs of Turkey's Feed Components and Turkey
Purchases Could Adversely Affect Costs and Operating Margins.
Feed costs are the most significant single component of the
cost of raising turkeys and can be materially affected by
commodity price fluctuations for corn, soybean meal, and
other commodity grain inputs. Butterball's results may be
negatively affected by increased costs of the feed components.
The recent increase in construction and operation of ethanol
plants has elevated this risk as it has increased the
competing demand for feed ingredients, primarily corn.
Butterball attempts to manage some of these risks through the
use of financial instruments; however this may also limit its
ability to participate in gains from favorable commodity
fluctuations. Unless wholesale turkey prices correspondingly
increase, increases in the prices of Butterball's feed
components would adversely affect Butterball's results of
operations and Seaboard's investment in Butterball.
(3) Decreased Perception of Value in the Butterball's Brand
Could Adversely Affect Sales Quantity and Price of Butterball
Products. Butterball is a premium brand name, built on a
long history of offering a quality product that has been
differentiated in the market. The value of the Butterball
brand allows for sales of a higher unit price than other
turkey products. In order to maintain this advantage,
Butterball must continue to support the brand with successful
marketing efforts. In addition, negative news reports for any
reason in a variety of areas on the company or the
turkey/poultry industry could negatively impact this brand
perception and Butterball's results of operation and the
value of Seaboard's investment in Butterball.
(4) The Loss of Butterball's Primary Further Processing
Facility Could Adversely Affect Butterball's Business.
Although Butterball has five processing plants, Butterball is
disproportionately dependent on the continued operation of
the further processing plant in Mt. Olive, North Carolina
that handles the significant production of further processed
turkey products. The loss of or damage to this facility for
any reason - including fire, tornado, governmental action or
other reason - could adversely affect the results of
operation for Butterball and the value of Seaboard's
investment in Butterball.
(5) If Butterball's Turkey Products Become Contaminated, the
Company May be subject to Product Liability Claims and
Product Recalls. Turkey products may be subject to
contamination by disease producing organisms. These organisms
are generally found in the environment and as a result, there
is a risk that they may contaminate products. Even an
inadvertent shipment of contaminated products is a violation
of law and may lead to increased risk of exposure to
product liability claims, product recalls and increased
scrutiny by federal and state regulatory agencies and may
have a material adverse effect on the company's business,
reputation, and prospects. This could adversely affect the
results of operations and financial condition of Butterball
and the value of the Seaboards investment in Butterball.
(6) Health Risk to Poultry Could Adversely Affect Production,
the Supply of Raw Materials and Butterball's Business.
Butterball is subject to risks relating to its ability to
maintain animal health and control diseases. The general
health of the turkeys and reproductive performance can have
an adverse impact on production and production costs, the
supply of raw material to Butterball's processing operations
and consumer confidence. If Butterball's turkeys are affected
by disease, Butterball may be required to destroy infected
birds, which could adversely affect Butterball's production
or ability to sell or export its products. Adverse
publicity concerning any disease or health concern could
also cause customers to lose confidence in the safety and
quality of Butterball food products, resulting in an adverse
affect on Butterball's results of operations and the value of
Seaboards investment in Butterball.
14
(7) Butterball May be Unable to Obtain Appropriate Personnel
at Remote Locations. The remote locations of some of the
turkey processing plants and live turkey operations along
with a more restrictive national policy on immigration
could negatively affect the availability and cost of labor.
Butterball is dependent on having sufficient properly trained
operations personnel. Attracting and retaining qualified
personnel is important to Butterball's success. The inability
to acquire and retain the services of such personnel could
have a material adverse effect on Butterball's operations and
the value of Seaboards investment in Butterball.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
(1) Pork - Seaboard's Pork Division owns a hog processing plant in
Guymon, Oklahoma, which opened in 1995. It has a daily double
shift capacity to process approximately 19,400 hogs and generally
operates at capacity with additional weekend shifts depending on
market conditions. Seaboard's hog production operations consist of
the breeding and raising of approximately 4.0 million hogs annually
at facilities it primarily owns or at facilities owned and operated
by third parties with whom it has grower contracts. This business
owns and operates six centrally located feed mills which have a
combined capacity to produce approximately 1,700,000 tons of
formulated feed annually used primarily to support Seaboard's
existing hog production, and have the capability of supporting
additional hog production in the future. These facilities are
located in Oklahoma, Texas, Kansas and Colorado.
Seaboard's Pork Division also owns two bacon further processing
plants located in Salt Lake City, Utah and Missoula, Montana.
These plants are utilized near capacity throughout the year, which
is a combined daily smoking capacity of approximately 300,000
pounds of raw pork bellies. The Pork Division also operates a
majority-owned ham-boning and processing plant in Mexico that has
the capacity to process 74.0 million pounds of ham annually.
The Pork Division owns a processing plant in Guymon, Oklahoma with
the capacity to produce 30.0 million gallons of biodiesel annually,
which is currently produced from pork fat from Seaboard's Guymon
pork processing plant and from animal fat supplied by non-Seaboard
facilities. The facility can also produce biodiesel from vegetable
oil.
(2) Commodity Trading and Milling - Seaboard's Commodity Trading
and Milling Division owns, in whole or in part, grain-processing
and related agribusiness operations in 14 countries which have the
capacity to mill approximately 6,400 metric tons of wheat and maize
per day. In addition, Seaboard has feed mill capacity of in excess
of 200 metric tons per hour to produce formula animal feed. The
milling operations located in Colombia, Democratic Republic of
Congo, Ecuador, Guyana, Haiti, Kenya, Lesotho, Nigeria, Republic of
Congo, Sierra Leone, Uganda and Zambia own their facilities; and in
Kenya, Lesotho, Nigeria, Republic of Congo and Sierra Leone the
land on which the mills are located is leased under long-term
agreements. Certain foreign milling operations may operate at
less than full capacity due to low demand related to poor consumer
purchasing power, excess milling capacity in their competitive
environment and European-subsidized wheat and flour exports. In
addition, this division also has an investment through non-
consolidate affiliates in poultry businesses operating in parts of
Eastern and Southern Africa. Seaboard also owns seven 9,000 metric-
ton deadweight dry bulk carriers, one 23,400 metric ton deadweight
dry bulk carrier, and "time charters" (the charter of a vessel,
whereby the vessel owner is responsible to provide the captain and
crew necessary to operate the vessel) under short-term agreements,
between 13 and 44 bulk carrier ocean vessels with deadweights
ranging from 500 to 44,000 metric tons.
(3) Marine - Seaboard's Marine Division leases a 135,000 square
foot off-port warehouse and 81 acres of port terminal land and
facilities in Miami, Florida which are used in its containerized
cargo operations. Seaboard also leases an approximately 62 acre
cargo handling and terminal facility in Houston, Texas, which
includes several on-dock warehouses totaling approximately 690,000
square feet for cargo storage. At December 31, 2010, Seaboard
owned 10 ocean cargo vessels with deadweights ranging from 2,600 to
19,500 metric tons and time chartered 29 vessels under contracts
that typically range from approximately five months to two years
with deadweights ranging from 3,400 to nearly 26,500 metric tons.
Seaboard also owns or leases dry, refrigerated and specialized
containers and other related equipment.
15
(4) Sugar - Seaboard's Argentine Sugar Division owns more than
60,000 acres of planted sugarcane. Depending on local market
conditions, this business also purchases third party sugar for
resale. In addition, this division owns a sugar mill with a
current capacity to process approximately 250,000 metric tons of
sugar and an alcohol distillery with a current capacity of
approximately 14 million gallons of alcohol per year. This
capacity is sufficient to process all of the cane harvested by this
division and certain additional quantities purchased from third
party farmers in the region. The sugarcane fields and processing
mill are located in northern Argentina in the Salta Province, which
experiences seasonal rainfalls that may limit the harvest season,
which then affects the duration of mill operations and quantities
of sugar produced. During the second quarter of 2011, it is
anticipated that construction will be completed on a 40 megawatt
cogeneration power plant.
(5) Power - Seaboard's Power Division owns two floating electric
power generating facilities, consisting of a system of diesel
engines mounted onto barge-type vessels, with a combined rated
capacity of approximately 112 megawatts, both located on the Ozama
River in Santo Domingo, Dominican Republic. Seaboard operates as
an independent power producer. Seaboard is not directly involved
in the transmission and distribution facilities that deliver the
power to the end users but does have contracts to sell directly to
third party users. See "Status of Product or Segment" under Item 1
of this report for discussion of the sale of the two barges and the
construction of a new replacement power barge.
(6) Turkey - Seaboard's Turkey Segment has a total of seven
processing plants and numerous company and third party live
production facilities and feed milling operations, all of which are
located in Arkansas, Colorado, Kansas, Missouri and North Carolina.
These plants produce approximately one billion pounds of turkey
each year.
(7) Other - Seaboard owns a jalapeno pepper processing plant and
warehouse in Honduras.
In addition to the information provided above, the information
under "Principal Locations" of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this report is incorporated herein by
reference.
Management believes that Seaboard's present facilities are adequate
and suitable for its current purposes.
Item 3. Legal Proceedings
The information required by Item 3 of Form 10-K is incorporated
herein by reference to Note 11 of Seaboard's Consolidated Financial
Statements appearing on pages 53 and 54 of Seaboard's Annual Report
to Stockholders furnished to the Commission pursuant to Rule 14a-
3(b) and attached as Exhibit 13 to this Report.
Item 4. Reserved
Executive Officers of the Registrant
The following table lists the executive officers and certain
significant employees of Seaboard. Generally, executive officers
are elected at the annual meeting of the Board of Directors
following the Annual Meeting of Stockholders and hold office until
the next such annual meeting or until their respective successors
are duly chosen and qualified. There are no arrangements or
understandings pursuant to which any executive officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
Steven J. Bresky (57) President and Chief Executive Officer
Robert L. Steer (51) Senior Vice President, Chief Financial Officer
David M. Becker (49) Vice President, General Counsel and Secretary
Barry E. Gum (44) Vice President, Finance and Treasurer
James L. Gutsch (57) Vice President, Engineering
Ralph L. Moss (65) Vice President, Governmental Affairs
David S. Oswalt (43) Vice President, Taxation and Business Development
16
David H. Rankin (39) Vice President
Ty A. Tywater (41) Vice President, Audit Services
John A. Virgo (50) Vice President, Corporate Controller and
Chief Accounting Officer
Rodney K. Brenneman (46) President, Seaboard Foods, LLC
David M. Dannov (49) President, Seaboard Overseas and Trading Group
Edward A. Gonzalez (45) President, Seaboard Marine Ltd.
Mr. Steven J. Bresky has served as President and Chief Executive
Officer since July 2006 and previously as Senior Vice President,
International Operations of Seaboard from February 2001 to July
2006.
Mr. Steer has served as Senior Vice President, Chief Financial
Officer of Seaboard since December 2006 and previously as Senior
Vice President, Treasurer and Chief Financial Officer from 2001-
2006.
Mr. Becker has served as Vice President, General Counsel and
Secretary of Seaboard since December 2003.
Mr. Gum has served as Vice President, Finance and Treasurer of
Seaboard since December 2006 and previously as Vice President,
Finance from 2003-2006.
Mr. Gutsch has served as Vice President, Engineering of Seaboard
since December 1998.
Mr. Moss has served as Vice President, Governmental Affairs of
Seaboard since December 2003.
Mr. Oswalt has served as Vice President, Taxation and Business
Development of Seaboard since December 2003.
Mr. Rankin has served as Vice President of Seaboard since December
2010 and previously as Director of Taxation and Business
Development since January 2006.
Mr. Tywater has served as Vice President, Audit Services of
Seaboard since November 2008 and previously as Internal Audit
Director from 2002 to 2008.
Mr. Virgo has served as Vice President, Corporate Controller and
Chief Accounting Officer of Seaboard since December 2003.
Mr. Brenneman has served as President of Seaboard Foods, LLC
(previously Seaboard Farms Inc.) since June 2001.
Mr. Dannov has served as President of Seaboard Overseas and Trading
Group since August 2006 and previously as Vice President, Treasurer
of Seaboard Overseas and Trading Group from 1996 to 2006.
Mr. Gonzalez has served as President of Seaboard Marine, Ltd. since
January 2005.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
In December 2010, Seaboard declared and paid a dividend of $6.75
per share on its 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
payment of the regular fourth quarter dividend of $0.75 per share
and a prepayment of the annual 2011 and 2012 dividends ($3.00 per
share per year). Seaboard does not intend to declare any further
dividends for the years 2011 and 2012. As discussed in Note 8 of
the consolidated financial statements appearing on pages 45 and 46
of the Seaboard Corporation Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit
13 to this Report (which discussion is incorporated herein by
reference), Seaboard's ability to declare and pay dividends is
subject to limitations imposed by the note agreements referred to
there.
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock, may be granted.
17
There were no purchases made by or on behalf of Seaboard or any
"affiliated purchaser" (as defined by applicable rules of the
Commission) of shares of Seaboard's common stock during the fourth
quarter of the fiscal year covered by this report.
In addition to the information provided above, the information
required by Item 5 of Form 10-K is incorporated herein by reference
to (a) the information under "Stockholder Information - Stock
Listing," (b) the dividends per common share information and closing
market price range per common share information under "Quarterly
Financial Data" and (c) the information under "Company Performance
Graph" appearing on pages 60, 10 and 9, respectively, of Seaboard's
Annual Report to Stockholders furnished to the Commission pursuant
to Rule 14a-3(b) and attached as Exhibit 13 to this report.
Item 6. Selected Financial Data
The information required by Item 6 of Form 10-K is incorporated
herein by reference to the "Summary of Selected Financial Data"
appearing on page 8 of Seaboard's Annual Report to Stockholders
furnished to the Commission pursuant to Rule 14a-3(b) and attached
as Exhibit 13 of this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information required by Item 7 of Form 10-K is incorporated
herein by reference to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages
11 through 25 of Seaboard's Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit
13 to this Report.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
The information required by Item 7A of Form 10-K is incorporated
herein by reference to (a) the material under the captions
"Derivative Instruments and Hedging Activities" within Note 1 and 9
of Seaboard's Consolidated Financial Statements appearing on pages
36, 48 and 49 of Seaboard's Annual Report to Stockholders furnished
to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit
13 to this Report, and (b) the material under the caption
"Derivative Information" within "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
appearing on pages 24 and 25 of Seaboard's Annual Report to
Stockholders furnished to the Commission pursuant to Rule 14a-3(b)
and attached as Exhibit 13 to this Report.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 of Form 10-K is incorporated
herein by reference to Seaboard's "Quarterly Financial Data,"
"Report of Independent Registered Public Accounting Firm,"
"Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Changes in Equity" and "Notes to Consolidated
Financial Statements" appearing on page 10 and pages 27 through 59
of Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to
this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures - As of December
31, 2010, Seaboard's management has evaluated, under the direction
of our chief executive and chief financial officers, the
effectiveness of Seaboard's disclosure controls and procedures, as
defined in Exchange Act rule 13a - 15(e). Based upon and as of the
date of that evaluation, Seaboard's chief executive and chief
financial officers concluded that Seaboard's disclosure controls
and procedures were effective to ensure that information required
to be disclosed in the reports it files and submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported as and when required. It should be noted that any
system of disclosure controls and procedures, however well designed
and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system are met. In addition,
the design of any system of disclosure controls and procedures is
based in part upon assumptions about the likelihood of future
events. Due to these and other inherent limitations of any such
system, there can be no assurance that any design will always
succeed in achieving its stated goals under all potential future
conditions.
Management's Report on Internal Control Over Financial Reporting -
Information required by Item 9A of Form 10-K concerning
management's report on Seaboard's internal control over financial
reporting, as defined in Exchange Act rule 13a-15(f) is
incorporated herein by reference to Seaboard's "Management's Report
on Internal Control over Financial Reporting"
18
appearing on page 26 of Seaboard's Annual Report to Stockholders
furnished to the Commission pursuant to Rule 14a-3(b) and attached
as Exhibit 13 to this report.
Registered Public Accounting Firm's Attestation Report -
Information required by Item 9A of Form 10-K with respect to the
registered public accounting firm's attestation report on
Seaboard's internal controls over financial reporting is
incorporated herein by reference to "Report of Independent
Registered Public Accounting Firm" appearing on page 27 of
Seaboard's Annual Report to Stockholders furnished to the
Commission pursuant to Rule 14-3(b) and attached as Exhibit 13 to
this report.
Change in Internal Controls - There has been no change in
Seaboard's internal control over financial reporting that occurred
during the fiscal quarter ended December 31, 2010 that has
materially affected, or is reasonably likely to materially affect,
Seaboard's internal control over financial reporting.
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We refer you to the information under the caption "Executive
Officers of Registrant" appearing immediately following the
disclosure in Item 4 of Part I of this report.
Seaboard has a Code of Ethics Policy (the Code) for directors,
officers (including our chief executive officer, chief financial
officer, chief accounting officer, controller and persons
performing similar functions) and employees. Seaboard has posted
the Code on its internet website, www.seaboardcorp.com, under the
"About Us" tab and intends to disclose any future changes and
waivers to the Code by posting such information on that website.
In addition to the information provided above, the information
required by Item 10 of Form 10-K is incorporated herein by
reference to (a) the disclosure relating to directors under "Item
1: Election of Directors" appearing on pages 5 through 7 of
Seaboard's definitive proxy statement filed pursuant to Regulation
14A for the 2010 annual meeting of Stockholders ("2011 Proxy
Statement"), (b) the disclosure relating to Seaboard's audit
committee and "audit committee financial expert" and its director
nomination procedures under "Board of Directors Information --
Committees of the Board -- Audit Committee" and "Board of
Directors Information -- Director Nominations" appearing on pages
8 and 9 of the 2011 Proxy Statement, and (c) the disclosure
relating to late filings of reports required under Section 16(a)
of the Securities Exchange Act of 1934 under "Section 16(a)
Beneficial Ownership Reporting Compliance" appearing on page 27 of
the 2011 Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 of Form 10-K is incorporated
herein by reference to (a) the disclosure relating to compensation
of directors under "Board of Directors Information -- Compensation
of Directors" and "Employment Arrangements with Named Executive
Officers" appearing on page 9 and pages 12 and 13 of the 2011 Proxy
Statement, and (b) the disclosure relating to compensation of
executive officers under "Executive Compensation and Other
Information," "Benefit Plans" and "Compensation Committee
Interlocks and Insider Participation," "Compensation Committee
Report" and "Compensation Discussion and Analysis" appearing on
pages 10 and 11 and pages 13 through 22 of the 2011 Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Seaboard has not established any equity compensation plans or
individual agreements for its employees under which Seaboard common
stock, or options, rights or warrants with respect to Seaboard
common stock may be granted.
In addition to the information provided above, the information
required by Item 12 of Form 10-K is incorporated herein by
reference to the disclosure under "Principal Stockholders" and
"Share Ownership of Management and Directors" appearing on pages 3
through 5 of the 2011 Proxy Statement.
19
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The information required by Item 13 of Form 10-K is incorporated
herein by reference to the disclosure under "Compensation Committee
Interlocks and Insider Participation" appearing on page 22 of the
2011 Proxy Statement, and the disclosure under "Board of Directors
Information - Controlled Corporation" and "Board of Directors
Information - Committees of the Board" appearing on pages 7 and 8
of the 2011 Proxy Statement.
Item 14. Principal Accounting Fees and Services
The information required by Item 14 of Form 10-K is incorporated
herein by reference to the disclosure under "Item 2 Selection of
Independent Auditors" appearing on pages 25 through 27 of the 2011
Proxy Statement.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
1.Consolidated financial statements.
See Index to Consolidated Financial Statements on page F-1.
2.Consolidated financial statement schedules.
See Index to Consolidated Financial Statements on page F-1.
3.Exhibits.
3.1 Seaboard's Restated Certificate of Incorporation.
Incorporated herein by reference to Exhibit 3.1 of
Seaboard's Form 10-Q for the quarter ended April 4, 2009.
3.2 Seaboard's By-laws, as amended. Incorporated herein by
reference to Exhibit 3.2 of Seaboard's Form 10-K for
fiscal year ended December 31, 2005.
4.1 Seaboard Corporation Note Purchase Agreement dated as of
September 30, 2002 between Seaboard and various purchasers
as listed in the exhibit. Incorporated herein by
reference to Exhibit 4.3 of Seaboard's Form 10-Q for the
quarter ended September 28, 2002.
4.2 Seaboard Corporation $7,500,000 6.21% Senior Note, Series
C, due September 30, 2012 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.6 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.3 Seaboard Corporation $31,000,000 6.92% Senior Note, Series
D, due September 30, 2012 issued pursuant to the Note
Purchase Agreement described above. Incorporated herein
by reference to Exhibit 4.7 of Seaboard's Form 10-Q for
the quarter ended September 28, 2002.
4.4 Amended and Restated Terminal Agreement between Miami-Dade
County and Seaboard Marine Ltd. for Marine Terminal
Operations, dated May 30, 2008. Incorporated herein by
reference to Exhibit 10.1 of Seaboard's Form 8-K dated May
30, 2008.
4.5 Amended and Restated Credit Agreement between Borrowers
and Bank of America, N.A., dated July 10, 2008
($300,000,000 revolving credit facility expiring July 10,
2013). Incorporated herein by reference to Exhibit 10.1
of Seaboard's Form 8-K dated July 10, 2008.
4.6 Amendment No. 1 to Credit Agreement between Borrowers and
Bank of America N.A., dated December 17, 2010.
20
10.1* Seaboard Corporation 409A Executive Retirement Plan
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Executive Retirement Plan, 2005 Amendment and
Restatement dated March 6, 2006. Incorporated herein by
reference to Exhibit 10.1 of Seaboard's Form 10-K for
fiscal year ended December 31, 2008.
10.2* Seaboard Corporation Executive Deferred Compensation Plan
as Amended and Restated Effective January 1, 2009 and
dated December 22, 2008, amending and restating the
Seaboard Corporation Executive Deferred Compensation Plan
dated December 29, 2005. Incorporated herein by reference
to Exhibit 10.2 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.3* Seaboard Corporation Executive Retirement Plan Trust
dated November 5, 2004 between Seaboard Corporation and
Robert L. Steer as trustee. Incorporated herein by
reference to Exhibit 10.2 of Seaboard's Form 10-Q for the
quarter ended October 2, 2004.
10.4* Seaboard Corporation Investment Option Plan dated
December 18, 2000. Incorporated herein by reference to
Exhibit 10.7 of Seaboard's Form 10-K for fiscal year ended
December 31, 2000.
10.5 Marketing Agreement dated February 2, 2004 by and among
Seaboard Corporation, Seaboard Farms, Inc., Triumph Foods
LLC, and for certain limited purposes only, the members of
Triumph Foods LLC. Incorporated herein by reference to
Exhibit 10.2 of Seaboard's Form 8-K dated February 3,
2004.
10.6* Seaboard Corporation Retiree Medical Benefit Plan as
Amended and Restated Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Retiree Medical Benefit Plan dated March 4,
2005. Incorporated herein by reference to Exhibit 10.6 of
Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.7* Seaboard Corporation Executive Officers' Bonus
Policy. Incorporated herein by reference to Exhibit 10.10
of Seaboard's Form 10-K for fiscal year ended December 31,
2005.
10.8* Employment Agreement between Seaboard Corporation and
Steven J. Bresky dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.1 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.9* Employment Agreement between Seaboard Corporation and
Robert L. Steer dated July 1, 2005. Incorporated herein
by reference to Exhibit 10.2 of Seaboard's Form 10-Q for
the quarter ended July 2, 2005.
10.10* Employment Agreement between Seaboard Farms, Inc. and
Rodney K. Brenneman dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.3 of Seaboard's Form 10-
Q for the quarter ended July 2, 2005.
10.11* Employment Agreement between Seaboard Corporation and
Edward A. Gonzalez dated July 1, 2005. Incorporated
herein by reference to Exhibit 10.14 of Seaboard's Form 10-
K for fiscal year ended December 31, 2006.
10.12* Seaboard Corporation Nonqualified Deferred
Compensation Plan Effective January 1, 2009 and dated
December 22, 2008, amending and restating the Seaboard
Corporation Nonqualified Deferred Compensation Plan dated
December 29, 2005. Incorporated herein by reference to
Exhibit 10.12 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.13* Amendment to Employment Agreement between Seaboard
Corporation and Edward A. Gonzalez dated August 8, 2006.
Incorporated herein by reference to Exhibit 10.1 of
Seaboard's Form 10-Q for the quarter ended July 1, 2006.
10.14* Employment Agreement between Seaboard Overseas
Trading Group and David M. Dannov dated July 1, 2006.
Incorporated herein by reference to Exhibit 10.17 of
Seaboard's Form 10-K for fiscal year ended December 31,
2006.
21
10.15* Second Amendment to Employment Agreement between
Seaboard Corporation and Edward A. Gonzalez dated January
17, 2007. Incorporated herein by reference to Exhibit
10.18 of Seaboard's Form 10-K for fiscal year ended
December 31, 2006.
10.16* First Amendment to Employment Agreement between
Seaboard Corporation and Steven J. Bresky dated December
15, 2008. Incorporated herein by reference to Exhibit
10.16 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.17* First Amendment to Employment Agreement between
Seaboard Corporation and Robert L. Steer dated December
15, 2008. Incorporated herein by reference to Exhibit
10.17 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.18* First Amendment to Employment Agreement between
Seaboard Foods LLC, formerly known as Seaboard Farms Inc.,
and Rodney K. Brenneman dated December 15, 2008.
Incorporated herein by reference to Exhibit 10.18 of
Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.19* Third Amendment to Employment Agreement between
Seaboard Marine Ltd. and Edward A. Gonzalez dated December
15, 2008. Incorporated herein by reference to Exhibit
10.19 of Seaboard's Form 10-K for fiscal year ended
December 31, 2008.
10.20* First Amendment to Employment Agreement between
Seaboard Overseas Trading Group and David M. Dannov dated
December 15, 2008. Incorporated herein by reference to
Exhibit 10.20 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.21 Asset Purchase Agreement by and among
Transcontinental Capital Corporation (Bermuda) Ltd. (as
Seller), Seaboard Corporation (as Seller-Parent) and
Pueblo Viejo Dominicana Corporation (as Buyer), dated as
of September 23, 2008. Incorporated herein by reference
to Exhibit 10.21 of Seaboard's Form 10-K for fiscal year
ended December 31, 2008.
10.22 Amendment to Asset Purchase Agreement amount
Transcontinental Capital Corporation (Bermuda) Ltd.,
Seaboard Corporation and Pueblo Viejo dated as of March 2,
2009. Incorporated herein by reference to Exhibit 10.22
of Seaboard's Form 10-K for fiscal year ended December 31,
2008.
10.23* Seaboard Corporation Cash Balance Executive
Retirement Plan effective January 1, 2009 and dated
December 18, 2009. Incorporated herein by reference to
Exhibit 10.23 of Seaboard's Form 10-K for fiscal year
ended December 31, 2009.
10.24* Seaboard Marine Ltd. 401(k) Excess Plan effective
January 1, 2009 and dated December 18, 2009. Incorporated
herein by reference to Exhibit 10.2 of Seaboard's Form 10-
K for fiscal year ended December 31, 2009.
10.25* Amendment No. 1 to the Seaboard Corporation Non-
Qualified Deferred Compensation Plan effective January 1,
2009 and dated December 17, 2009. Incorporated herein by
reference to Exhibit 10.2 of Seaboard's Form 10-K for
fiscal year ended December 31, 2009.
10.26 Engineering, Procurement and Construction Contract
dated as of August 17, 2010 by and between Seaboard
Corporation and Wartsila Finland OY. Incorporated herein
by reference to Exhibit 10.1 of Seaboard's Form 10-Q for
the quarter ended October 2, 2010.
10.27 Purchase Agreement by and among Seaboard Corporation,
Maxwell Farms, LLC, Goldsboro Milling Company and GM
Acquisition, LLC as of September 9, 2010.
13 Sections of Annual Report to security holders specifically
incorporated herein by reference herein.
21 List of subsidiaries.
31.1 Certification of the Chief Executive Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer Pursuant to
Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
22
32.1 Certification of the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
* Management contract or compensatory plan or arrangement.
(b) Exhibits.
See exhibits identified above under Item 15(a)3.
(c) Financial Statement Schedules.
See financial statement schedules identified above under Item
15(a)2.
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEABOARD CORPORATION
By /s/Steven J. Bresky By /s/Robert L. Steer
Steven J. Bresky, President and Robert L. Steer, Senior Vice President,
Chief Executive Officer Chief Financial Officer (principal
(principal executive officer) financial officer)
Date: March 9, 2011 Date: March 9, 2011
By /s/John A. Virgo
John A. Virgo, Vice President, Corporate
Controller and Chief Accounting Officer
(principal accounting officer)
Date: March 9, 2011
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of registrant and in the capacities and on the dates
indicated.
By /s/Steven J. Bresky By /s/Edward I. Shifman, Jr.
Steven J. Bresky, Director and Edward I. Shifman, Jr., Director
Chairman of the Board
Date: March 9, 2011 Date: March 9, 2011
By /s/David A. Adamsen By /s/Joseph E. Rodrigues
David A. Adamsen, Director Joseph E. Rodrigues, Director
Date: March 9, 2011 Date: March 9, 2011
By /s/Douglas W. Baena
Douglas W. Baena, Director
Date: March 9, 2011
24
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
Stockholders'
Annual Report Page
Report of Independent Registered Public Accounting Firm 27
Consolidated Statement of Earnings for the years
ended December 31, 2010, December 31, 2009 and
December 31, 2008 29
Consolidated Balance Sheets as of December 31, 2010
and December 31, 2009 30
Consolidated Statement of Cash Flows for the years
ended December 31, 2010, December 31, 2009 and
December 31, 2008 31
Consolidated Statement of Changes in Equity for the
years ended December 31, 2010, December 31, 2009 and
December 31, 2008 32
Notes to Consolidated Financial Statements 33
The foregoing is incorporated herein by reference.
The individual financial statements of the nonconsolidated
affiliates, which would be required if each such affiliate were a
Registrant, are omitted because (a) Seaboard's and its other
subsidiaries' investments in and advances to such affiliates do
not exceed 20% of the total assets as shown by the most recent
consolidated balance sheet and (b) Seaboard's and its other
subsidiaries' equity in the earnings before income taxes and
extraordinary items of the affiliates does not exceed 20% of such
income of Seaboard and consolidated subsidiaries compared to the
average income for the last five fiscal years.
Combined condensed financial information as to assets,
liabilities and results of operations have been presented for
nonconsolidated affiliates in Note 5 of "Notes to the
Consolidated Financial Statements."
II - Valuation and Qualifying Accounts for the years ended
December 31, 2010, 2009 and 2008 F-3
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related consolidated notes.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Seaboard Corporation:
Under date of March 9, 2011, we reported on the consolidated
balance sheets of Seaboard Corporation and subsidiaries (the
Company) as of December 31, 2010 and 2009, and the related
consolidated statements of earnings, changes in equity, and cash
flows for each of the years in the three-year period ended
December 31, 2010, as contained in the annual report on Form 10-K
for the year 2010. In connection with our audits of the
aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedule as listed
in the accompanying index. This financial statement schedule is
the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Kansas City, Missouri
March 9, 2011
F-2
Schedule II
SEABOARD CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In Thousands)
Balance at Provision Net deductions Balance at
beginning of year (1) (2) end of year
Year ended December 31, 2010:
Allowance for doubtful accounts $ 7,330 2,771 (1,931) $ 8,170
Year ended December 31, 2009:
Allowance for doubtful accounts $ 7,303 2,088 (2,061) $ 7,330
Year ended December 31, 2008:
Allowance for doubtful accounts $ 8,060 776 (1,533) $ 7,303
(1) The allowance for doubtful accounts provision is charged to selling, general and administrative expenses.
(2) Includes write-offs net of recoveries and currency translation adjustments.
F-3