2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Description of Business
Seaboard Corporation is a diverse global 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.
Table of Contents
Letter to Stockholders ....................................................................................................................................... 2
Principal Locations ........................................................................................................................................... 5
Division Summaries ...... ……………………………………………………………………………………………6
Summary of Selected Financial Data ................................................................................................................. 8
Company Performance Graph ........................................................................................................................... 9
Quarterly Financial Data (unaudited) ................................................................................................................10
Management’s Discussion & Analysis of Financial Condition and Results of Operations ..................................11
Management’s Responsibility for Consolidated Financial Statements................................................................25
Management’s Report on Internal Control over Financial Reporting .................................................................25
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements .....................26
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting ..........27
Consolidated Statements of Comprehensive Income .........................................................................................28
Consolidated Balance Sheets ............................................................................................................................29
Consolidated Statements of Cash Flows ...........................................................................................................30
Consolidated Statements of Changes in Equity .................................................................................................31
Notes to Consolidated Financial Statements......................................................................................................32
Stockholder Information ..................................................................................................................................60
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,
including the impact of mark-to-market accounting on operating income; 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
sales price or market conditions for pork, grains, sugar, turkey and other products and services; (iv) the recorded tax
effects under certain circumstances and changes in tax laws; (v) the volume of business and working capital
requirements associated with the competitive trading environment for the Commodity Trading and Milling segment;
(vi) the charter hire rates and fuel prices for vessels; (vii) the fuel costs and related spot market prices in the
Dominican Republic; (viii) the effect of the fluctuation in foreign currency exchange rates; (ix) the profitability or
sales volume of any of Seaboard’s segments; (x) the anticipated costs and completion timetable for Seaboard’s
scheduled capital improvements, acquisitions and dispositions; or (xi) 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 report, including, without limitation, the
information under the headings "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and “Letter to Stockholders” identifies important factors which could cause such differences.
2014 Annual Report
1
S E A B O A R D C O R P O R A T I O N
Letter to Stockholders
In last year’s letter I stressed the importance of not viewing one year’s performance as indicative of future results,
perhaps a bit defensively. I think these words still hold true despite the wide difference in financial results from year
to year. 2014 was a record year by a fairly wide margin, but I will again caveat that the market dynamics in the
divisions that outperformed our expectations are not sustainable year after year. Unless all business segments of the
Company perform at their highest levels, it will be several years before we repeat 2014’s financial results. As the
boilerplate disclaimer says: “Past performance is no guarantee of future results.”
The good news is that when we review our results over a longer time horizon, there is a trend of increasing and
consistent earnings. To gain some perspective on how Seaboard has grown during its 55 years as a public company,
consider that in the 23 years from 1960 through 1982, we earned approximately $70 million. In the following 21
years, we earned $572 million and in the last 11 years we earned $2.60 billion, $1.48 billion of which was earned in
the last five years. Today, Seaboard has $3.7 billion of assets, $2.7 billion of equity, $527 million of cash and short-
term investments and zero long term debt. We are seeing the results of an aggressive growth plan but with a
disciplined and conservative plan of execution and a focus on some simple and straightforward goals: quality
products and services, high standards in business behavior and durable partnerships with those who share similar
principles.
Financially, 2014 was an exceptionally good year. We finished the year with $534 million of income before taxes,
$90 million greater than our previous record. The strong results were led by our two meat businesses: Seaboard
Foods pork division earned $349 million of operating income and Butterball earned $141 million of operating
income ($55 million in our equity pick up). One of the benefits of being invested in various and somewhat distinct
businesses is that while we reap the rewards of an advantageous business cycle in one division, we are able to
support other divisions that may be temporarily struggling with difficult market conditions outside of their control.
This year was no different in that regard. Seaboard Marine had a second consecutive year of losses (although
substantially better than in 2013) and the Power division posted lower operating income. Commodity Trading &
Milling continued to see narrow margins along with significant start-up losses. Despite these difficulties, we remain
committed to these sectors and businesses as evidenced by increased operating and capital expenditure programs in
2015. These investments provide the platform for continued growth, greater efficiencies and improving value to our
customers.
Seaboard Foods
Extraordinarily high pork prices and declining input costs on grain helped fuel a record year for Seaboard Foods in
every aspect from live production to primary slaughter to further processing. We were not immune to the effects of
PEDV, the virus that spread through the pork industry last year, but through good management and a systemic
approach, we were able to limit mortality while vaccines were in their infant stage. We increased our case ready
business with an excellent co-packing partner which led to a significant increase in these retail sales. In the
wholesale and export markets, we maintained our strong position through our consistency in quality and long term
customer relationships. We have reinvested in our business with additional finishing barns in our live hog
operations, plant equipment and computer technology to add business tools and enhancements to our existing back
office systems. We added CNG trucks to our logistics platform in order to expand our clean energy program.
2014 was not just a year of extraordinary financial results but one of significant progress and company development.
With the sale of 50% of our interest in Daily’s, our raw and pre-cooked bacon business, we have set the stage for
continued growth in our further processing segment. Through our partnership with the Triumph Foods Group, we
will be able to better connect our vertically integrated model of pork production and processing with theirs and
better secure our raw material supplies of bellies for further processing and value added production. Moreover, we
have established a platform from which we can expand our further processing capabilities and capitalize on all the
attributes of our supply chain including traceability, food safety, superior quality and consistency in products.
The exceptional year did not spare us from a number of challenges that affected the pork industry. Disease issues
(including PEDV discussed above), West coast port strikes, Russian sanctions, Chinese import restrictions, a
stronger dollar, and high labor turnover all added to a challenging operating environment. However, with our very
strong management team and dedicated work force, we compared favorably in many key industry metrics. Staying
true to our overarching objective of producing consistent, high quality, safe and nutritious pork products should help
us grow with our loyal and valued customer base.
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2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Letter to Stockholders
Commodity Trading and Milling Division
While the milling and trading business continues to grow in volume (up over 15% over 2013), narrow industry
margins in general and larger than anticipated losses in certain locations, caused the division to underperform
relative to its earnings potential. Large start-up losses associated with our flour milling investment in Brazil and
continued technical problems in the DRC with our industrial bakery investment, depressed an otherwise reasonably
good year in trading and milling. Long term, we believe these two specific businesses are strategic and synergistic
with good earnings potential and we will support them through these tough but manageable times.
In 2014, we made a small investment in a non-controlling interest in an oilseed crushing business in South Africa.
In 2015, in addition to increasing milling capacities in West Africa and Latin America, we are pursuing additional
grain origination, grain processing and oilseed crushing worldwide.
Although our timing could be better, we will be taking delivery of four 28,000 deadweight eco-ships specifically
designed for our shallow draft ports, mainly in West Africa. Despite the current depressed state of the bulk shipping
industry today, we expect over the long term that these ships which will form an integral part of our logistics model
and will provide significant value over time.
This division has grown significantly over the last ten years as we have built on our integrated model of grain
processing assets combined with our grain trading and logistics. With locations covering 6 continents and 23
countries, we will naturally have growing pains and fluctuating results as each country has its own set of challenges
and opportunities. That said, we believe the consistent use of best practices and technical expertise, combined with
the efficiencies associated with scale, enhance our ability to compete in each country where we operate.
Seaboard Marine
Seaboard Marine started slowly but improved in the fourth quarter of the year due to lower fuel prices and
improving cargo volumes. Overall 2014 was a disappointing year for Marine but we saw a significant improvement
from 2013. Although the number of ships in our fleet has decreased, we have increased our net tonnage and
container capacity through larger, newer and more efficient vessels. Our competitive advantage in the Caribbean
Basin and Latin America is provided by our intimate knowledge and understanding of our customer’s needs which
we have built through strong lines of communication over the years. Coupled with our continued emphasis on cost
control and personal service, we expect to maintain our strong position in the markets we serve.
The shipping industry has been suffering from prolonged excess capacity and stagnant demand on a global basis and
this has resulted in depressed freight rates. Despite these challenges, we continue to be cash flow positive in the
markets we serve. As we patiently wait for a rebound in rates, we continue our spending programs to upgrade
terminal equipment, install new systems and focus on cost reductions through operating efficiencies. Seaboard has
been working internally and with port partners in enhancing gates, terminal land upgrades and berth extensions
throughout our international network. We are optimizing our mix of leased and owned dry and reefer containers to
match up with demand in the marketplace. In time, industry conditions will improve in our trade lanes and we will
be in position to take advantage of this turnaround.
Tabacal
Tabacal, our Argentine sugar and energy company, had another solid year despite many headwinds. The
macroeconomic environment for the company is a challenging one, with high inflation coupled with a devaluing
currency. Argentina seems mired in political scandals and other issues that hinder economic growth. The local and
world sugar markets continue to be oversupplied which has a negative effect on prices. To date, Tabacal has been
able to mitigate the effects by leveraging our brand and reputation as a reliable supplier of quality sugar, but if
demand continues to deteriorate, our sugar margins will suffer. Our strategy of diversifying the business into fuel
alcohol and electricity is working well, and we enjoyed good margins in these businesses in 2014. We were able to
deliver more than our quota into the domestic fuel program when it was undersupplied, which helped compensate
for decreased margins in the sugar business. Our electrical cogeneration operation sold all of its excess power to the
grid and we are actively pursuing other types of biomass to use in our facility so that we can more fully utilize these
assets.
2014 Annual Report
3
S E A B O A R D C O R P O R A T I O N
Letter to Stockholders
In addition to more alcohol and electricity generation, we are analyzing options to further diversify our business in
Argentina. We believe we can leverage our modern asset base, our excellent management team and our position as
one of the main agri-businesses in the north to profitably expand our footprint and to develop the area economically.
TCC
2014 was a year of ups and downs for our power business in the Dominican Republic. While the government
regulatory entity aggressively limited the amount of electricity supplied into the power market which put downward
pressure on spot electricity rates, the government also funded substantial payments to the sector which allowed our
business to significantly reduce the outstanding receivable balances. Declining oil prices during the second half of
2014 also helped reduce power prices and our cost of production, and this benefit will continue into 2015 resulting
in significant cash flow savings for the government.
The scale of our power operations shrank during 2014 with our cancellation of the short term lease on one power
barge that we had designed and built in 2000, operated for many years, sold, and subsequently leased back from the
purchaser. Our technical operations team cared for that power plant for 15 years. I would like to recognize the
efforts required to maintain our power assets in peak operating condition over the long term. We have assembled a
remarkable team of employees and I would like to thank them for maintaining the highest standards during a
difficult transition year.
Butterball
Butterball welcomed Kerry Doughty to the role of CEO in 2014. Kerry brings over thirty years of industry
experience, including the last seven with Butterball. He and his colleagues have a lot to be proud of after Butterball
earned record profits during the year. Similar to the Foods division, Butterball benefited from decreased feed costs
and record turkey prices. I hope as you shop at your local grocery store you notice that Butterball is not only about
whole birds on Thanksgiving. We continue to expand our product line and leverage the Butterball brand, while
making certain to uphold the quality standards that built the brand value. We have also worked to expand our
international presence. Butterball products were shipped to 47 different countries in 2014. Our commitment to best
practices was recognized in 2014 as Butterball became the first national branded turkey company to receive
certification from the American Humane Association for its Animal Care and Well Being Program.
We are very proud of our investment in Butterball and believe there is plenty of untapped potential going forward.
We are confident that management will capitalize on all resources to make this a bigger and better company. You
may begin to see Butterball advertisements on your television, in your favorite magazine, or even on the winning car
at the Indianapolis 500!
As always, I would again like to thank our customers, first and foremost for valuing quality and service as much as
price. We will continue to listen to your needs and will seek to fulfill those requirements as effectively as possible.
I thank our employees for their contribution to our breakout year in 2014, for taking such personal and company
pride in their work, for striving to continuously improve on yesterday’s achievements, and for helping to make
Seaboard what it is today.
Steven J. Bresky
President and
Chief Executive Officer
.
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2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Principal Locations
Corporate Office
Seaboard Corporation
Merriam, Kansas
Pork
Seaboard Foods LLC
Pork Division Office
Merriam, Kansas
Processing Plant
Guymon, Oklahoma
High Plains Bioenergy, LLC
Guymon, Oklahoma
Seaboard de Mexico USA LLC
Mexico
Daily’s Premium Meats, LLC*
Salt Lake City, Utah
Missoula, Montana
Commodity Trading and Milling
Commodity Trading Operations
Australia*
Canada
Chapel Hill, North Carolina
Colombia
Ecuador
Greece
Isle of Man
Kenya
Peru*
Singapore
South Africa
Africa Poultry Development Limited*
Kenya and Zambia
Belarina Alimentos S.A.*
Brazil
Compania Industrial de Productos
Agreopecuarios SA*
Rafael del Castillo & Cia. S.A*
Colombia
Gambia Milling Corporation*
Gambia
National Milling Company
of Guyana, Inc.
Guyana
Les Moulins d’Haiti S.E.M.*
Haiti
Lesotho Flour Mills Limited*
Lesotho
Flour Mills of Ghana
Ghana
Life Flour Mill Ltd.*
Nigeria
LMM Farine, S.A.
Madagascar
Congo Poultry Limited*
Minoterie de Matadi, S.A.R.L.*
Societe Africaine de Developpement
Industriel Alimentaire*
Democratic Republic of Congo
Minoterie du Congo, S.A.
Republic of Congo
Moderna Alimentos, S.A.*
Molinos Champion, S.A.*
Ecuador
Paramount Mills (Pty) Ltd.*
South Africa
National Milling Corporation Limited
Zambia
Unga Holdings Limited*
Kenya and Uganda
Marine
Seaboard Marine Ltd.
Marine Division Office
Miami, Florida
Port Operations
Brooklyn, New York
Houston, Texas
Miami, Florida
New Orleans, Louisiana
Agencias Generales Conaven, C.A.
Venezuela
Agencia Maritima del Istmo, S.A.
Costa Rica
Cayman Freight Shipping Services, Ltd.
Cayman Islands
JacintoPort International LLC
Houston, Texas
Representaciones Maritimas y Aereas, S.A.
Guatemala
Sea Cargo, S.A.
Panama
Seaboard de Colombia, S.A.
Colombia
Seaboard de Nicaragua, S.A.
Nicaragua
Seaboard del Peru, S.A.
Peru
Kingston Wharves Limited*
Seaboard Freight & Shipping Jamaica
Limited
Jamaica
Seaboard Honduras, S.de R.L. de C.V.
Honduras
Seaboard Marine (Trinidad) Ltd.
Trinidad
Seaboard Marine of Haiti, S.E.
Haiti
SEADOM, S.A.
Dominican Republic
SeaMaritima S.A. de C.V.
Mexico
Sugar
Alconoa S.R.L.
Ingenio y Refineria San Martin del
Tabacal SRL
Argentina
Power
Transcontinental Capital Corp.
(Bermuda) Ltd.
Dominican Republic
Turkey
Butterball LLC*
Division Office
Garner, North Carolina
Processing Plants
Huntsville, Arkansas
Ozark, Arkansas
Carthage, Missouri
Mt. Olive, North Carolina
Further Processing Plants
Jonesboro, Arkansas
Montgomery, Illinois
Other
Mount Dora Farms de Honduras,
S.R.L.
Honduras
Mount Dora Farms Inc.
Houston, Texas
*Represents a non-controlled, non-consolidated affiliate
2014 Annual Report
5
S E A B O A R D C O R P O R A T I O N
Division Summaries
Pork Division
Seaboard was a pioneer in the vertical integration of the U.S. pork industry and its Pork Division is one of the largest
producers and processors in the United States. Seaboard is able to efficiently control pork production across the
entire life cycle of the hog, beginning with research and development in nutrition and genetics and extending to the
production of high quality meat products at our processing and further processing facilities.
Seaboard’s hog processing facility is located in Guymon, Oklahoma. The facility is a double shift operation that
processes approximately 20,000 hogs per day and generally operates at capacity. Weekend shifts are added as
market conditions dictate. Hogs processed at the plant are primarily Seaboard raised hogs. In addition, the remaining
hogs processed are raised by third parties and purchased under contract or occasionally in the open market. Seaboard
produces and sells fresh and frozen pork products to further processors, food service operators, grocery stores,
distributors and retail outlets throughout the United States. Seaboard also sells to distributors, trading companies and
further processors in Japan, Mexico and numerous other foreign markets.
Seaboard’s hog production facilities consist of genetic and commercial breeding, farrowing, nursery and finishing
buildings located in Oklahoma, Kansas, Texas and Colorado. These facilities have a capacity to produce over four
million hogs annually. Seaboard owns and operates five centrally located feed mills to provide formulated feed to
these hogs.
Seaboard produces biodiesel at a facility in Guymon, Oklahoma. The biodiesel is primarily 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 blenders for distribution and in the retail markets. The facility can also produce biodiesel from
vegetable oil.
Seaboard’s Pork Division has an agreement with a similar size pork processor, Triumph Foods LLC (Triumph), to
market substantially all of the pork products produced at Triumph’s plant in St. Joseph, Missouri. The agreement
enhances the efficiency of Seaboard’s sales and marketing efforts and expands Seaboard’s geographic footprint.
Seaboard receives a fee on a per head basis on all Triumph products. In 2014, Seaboard was ranked number 3 in
pork production and number 4 in processing in the U.S. (including Triumph volume).
As of September 27, 2014, Seaboard’s Pork Division sold to Triumph a 50% interest in its processed meats division,
Daily’s Premium Meats (Daily’s). As a result, Seaboard’s Pork Division now has a 50% non-controlling interest in
Daily’s. Daily’s produces and markets raw and pre-cooked bacon, ham and sausage primarily for the food service
industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located in Salt Lake City,
Utah and Missoula, Montana. Seaboard and Triumph each supply raw product to Daily’s.
Commodity Trading and Milling Division
Seaboard’s Commodity Trading and Milling Division is an integrated agricultural commodity trading and
processing and logistics operation. This division sources, transports and markets approximately nine million metric
tons per year of wheat, corn, soybean meal and other commodities primarily to third party customers and affiliated
companies. These commodities are purchased worldwide, with primary destinations in Africa, South America and
the Caribbean. Seaboard integrates the delivery of commodities to its customers through the use of company owned
and short-term chartered bulk carriers.
Seaboard’s Commodity Trading and Milling Division operates facilities in 23 countries. The commodity trading
business has ten offices in nine countries in addition to two non-consolidated affiliates in two other countries. The
grain processing businesses operate facilities at 31 locations in 16 countries, and include five consolidated and
fourteen non-consolidated affiliates primarily in Africa, South America and the Caribbean. Seaboard and its
affiliates produce approximately four million metric tons of wheat flour, maize meal and manufactured feed per year
in addition to other related grain based products.
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2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Division Summaries
Marine Division
Seaboard’s Marine Division provides cargo shipping services between the United States, the Caribbean Basin and
Central and South America. Seaboard’s primary operations, located in Miami, include an off-port warehouse for
cargo consolidation and temporary storage and a terminal at Port Miami. At the Port of Houston, Seaboard operates
a cargo terminal facility that includes on-dock warehouse space for temporary storage of bagged grains, resins and
other cargoes. Seaboard also makes scheduled vessel calls to Brooklyn, New York, New Orleans, Louisiana and
various foreign ports in the Caribbean Basin and Central and South America.
This Division’s fleet consists of chartered and, to a lesser extent, owned vessels, and includes dry, refrigerated and
specialized containers and other cargo related equipment. Seaboard is the largest shipper in terms of cargo volume in
Port Miami. Seaboard provides extensive service between our domestic ports of call and multiple foreign
destinations.
To maximize fleet utilization, Seaboard uses a network of offices and agents throughout the United States, Canada,
Latin America and the Caribbean Basin to sell freight to and from multiple points. Seaboard’s full service
capabilities allow transport by truck or rail of import and export cargo to and from various U.S. ports. Seaboard’s
frequent sailings and fixed-day schedules allow customers to coordinate manufacturing schedules and maintain
inventories at cost-efficient levels.
Sugar Division
In Argentina, Seaboard grows sugarcane, produces and refines sugar and produces alcohol. The sugar is primarily
marketed locally, with some exports to the United States and other South American countries. Seaboard’s sugar
processing plant, one of the largest in Argentina, has an annual capacity to produce approximately 250,000 metric
tons of sugar and approximately 15 million gallons of alcohol per year. The mill is located in the Salta Province of
Argentina, with administrative offices in Buenos Aires. Land owned by Seaboard in Argentina is planted primarily
with sugarcane, which supplies the majority of the raw material processed. Depending on local market conditions,
sugar may also be purchased from third parties for resale. In addition, this division sells dehydrated alcohol to
certain oil companies under the Argentine governmental bio-ethanol program, which requires alcohol to be blended
with gasoline. This division also owns a 51 megawatt cogeneration power plant. The plant is fueled by the burning
of sugarcane by-products during the harvest season, which is typically between May and November.
Power Division
In the Dominican Republic, Seaboard is an independent power producer generating electricity for the local power
grid from one owned floating power generating facility with a capacity to generate 108 megawatts. Seaboard
previously leased another facility under a short-term lease which was canceled during 2014. Seaboard is not directly
involved in the transmission or distribution of electricity. Seaboard primarily sells power on the spot market.
Principal buyers are government-owned distribution companies and partially government-owned generation
companies.
Other Divisions
Seaboard has a 50 percent non-controlling voting interest in Butterball, LLC (Butterball). Butterball is the largest
vertically integrated producer, processor and marketer of branded and non-branded turkey and other products in the
United States. Butterball has four processing plants, two further processing plants and numerous live production and
feed milling operations located in North Carolina, Arkansas, Missouri, Illinois and Kansas. Butterball produces
approximately one billion pounds of turkey each year. Butterball is a national supplier to retail and foodservice
outlets, and also exports products to Mexico and numerous other foreign markets.
Seaboard processes jalapeño peppers at its plant in Honduras, which are primarily shipped to and sold in the United
States.
2014 Annual Report
7
S E A B O A R D C O R P O R A T I O N
Summary of Selected Financial Data
(Thousands of dollars except per share amounts)
Net sales
Operating income
Years ended December 31,
2014
$6,473,076
2013
$6,670,414
2012
2011
2010
$ 6,189,133
$ 5,746,902 $ 4,385,702
$ 423,559
$ 204,864
$ 309,661
$ 407,204 $ 321,066
Net earnings attributable to Seaboard
$ 365,270
$ 205,236
$ 282,311
$ 345,847 $ 283,611
Basic earnings per common share
$ 309.96
$ 171.92
$
234.54
$
284.66 $
231.69
Total assets
$3,677,320
$3,418,048
$ 3,347,781
$ 3,006,728 $ 2,734,086
Long-term debt, less current maturities $
-
$ 80,480
$ 120,825
$ 116,367 $
91,407
Stockholders’ equity
Dividends per common share
$2,720,273
-
$
$2,479,970
-
$
$ 2,308,189
12.00
$
$ 2,079,467 $ 1,778,249
9.00
- $
$
As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods LLC a 50% interest in Daily’s Premium
Meats, its processed meats division. Included in net earnings attributable to Seaboard for 2014 is a gain on sale of
controlling interest in subsidiary of $40,233,000 net of taxes, or $34.14 per common share ($65,955,000 gain before
taxes).
On January 2, 2013, the American Taxpayer Relief Act of 2012 (the Tax Act) was signed into law. As the Tax Act
was signed into law in 2013, the effects of the retroactive provisions in the new law on current and deferred taxes
assets and liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a tax benefit of
$7,945,000, or $6.66 per common share, recorded in the first quarter of 2013 related to certain 2012 income tax
credits. In addition to this amount was a credit of approximately $11,260,000, or $9.43 per common share, for 2012
Federal blender’s credits that was recognized as revenues in the first quarter of 2013. There was no tax expense on
this transaction.
In December 2012, Seaboard declared and paid a dividend of $12.00 per common share. The increased amount of
the dividend (which has historically been $0.75 per common share on a quarterly basis or $3.00 per common share
on an annual basis) represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per
common share per year). Seaboard does not currently intend to declare any further dividends for the years 2015 and
2016. Seaboard did not declare a dividend in 2014, 2013 and 2011. In 2010, Seaboard declared and paid dividends
of $9.00 per common share, which included a prepayment of the annual 2011 and 2012 dividends ($3.00 per
common share per year). Basic and diluted earnings per common share are the same for all periods presented.
In 2011, Seaboard closed the sale of its two floating power generating facilities in the Dominican Republic resulting
in a gain on sale of assets of $52,923,000, or $43.56 per common share, included in operating income. There was no
tax expense on this transaction.
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2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Company Performance Graph
The Securities and Exchange Commission requires a five-year comparison of stock performance for Seaboard with
that of an appropriate broad equity market index and similar industry index. Seaboard’s common stock is traded on
the NYSE MKT (formerly the NYSE Amex Equities) and provides an appropriate comparison for Seaboard’s stock
performance. Because there is no single industry index to compare stock performance, the companies comprising
the Dow Jones Food and Marine Transportation Industry indices (the “Peer Group”) were chosen as the second
comparison.
The following graph shows a five-year comparison of cumulative total return for Seaboard, the NYSE MKT Index
and the companies comprising the Dow Jones Food and Marine Transportation Industry indices, weighted by market
capitalization for the five fiscal years commencing December 31, 2009 and ending December 31, 2014. The
information presented in the performance graph is historical in nature and is not intended to represent or guarantee
future returns.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Seaboard Corporation, the NYSE MKT Composite Index, and a Peer Group
$350
$300
$250
$200
$150
$100
$50
$0
12/09
12/10
12/11
12/12
12/13
12/14
Seaboard Corporation
NYSE MKT Composite
Peer Group
*$100 invested on 12/31/09 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
The comparison of cumulative total returns presented in the above graph was plotted using the following index
values and common stock price values:
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
Seaboard Corporation
NYSE MKT Composite
Peer Group
$100.00
$100.00
$100.00
$ 148.31
$ 129.56
$ 113.14
$ 151.66
$ 133.75
$ 130.19
$ 189.39
$ 140.87
$ 140.29
$ 209.23
$ 150.79
$ 188.47
$ 314.26
$ 153.24
$ 211.18
2014 Annual Report
9
S E A B O A R D C O R P O R A T I O N
Quarterl y Financial Data (unaudited)
1st
(UNAUDITED)
(Thousands of dollars except per share amounts) Quarter
2014
$ 1,479,636
Net sales
65,203
Operating income
$
48,166
Net earnings attributable to Seaboard $
40.55
$
Earnings per common share
-
$
Dividends per common share
Closing market price range per common share:
2nd
Quarter
3rd
Quarter
4th
Quarter
Total for
the Year
$ 1,694,591
$ 134,339
93,677
$
79.01
$
-
$
$ 1,622,641
$
96,086
$ 104,749
89.49
$
-
$
$ 1,676,208 $ 6,473,076
$ 127,931 $ 423,559
$ 118,678 $ 365,270
309.96
$
-
$
101.39 $
- $
High
Low
$ 2,771.00
$ 2,455.01
$ 3,069.45
$ 2,356.00
$ 3,097.60
$ 2,480.15
$ 4,197.95
$ 2,606.00
2013
$ 1,582,296
Net sales
63,458
Operating income
$
57,454
Net earnings attributable to Seaboard $
47.98
$
Earnings per common share
-
$
Dividends per common share
Closing market price range per common share:
$ 1,684,039
53,549
$
39,547
$
33.07
$
-
$
$ 1,648,105
33,770
$
30,969
$
25.99
$
-
$
$ 1,755,974 $ 6,670,414
54,087 $ 204,864
$
77,266 $ 205,236
$
171.92
64.91 $
$
-
- $
$
High
Low
$ 2,881.94
$ 2,504.00
$ 2,825.92
$ 2,594.78
$ 2,945.00
$ 2,680.00
$ 2,874.99
$ 2,695.70
On December 19, 2014, the Tax Increase Prevention Act of 2014 (the 2014 Tax Act) was signed into law. The 2014
Tax Act extended for 2014 only many expired corporate income tax provisions that impact current and deferred
taxes for financial reporting purposes. The total annual effects of the provisions in the new law on current and
deferred taxes assets and liabilities for Seaboard were recorded in the fourth quarter of 2014. The impact was a tax
benefit of $11,410,000, or $9.75 per common share, primarily related to certain income tax credits. In addition to
this amount was a credit of $15,450,000, or $13.20 per common share, for the 2014 Federal blender’s credits that
was recognized as revenues in the fourth quarter of 2014. There was no tax expense on this transaction.
As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods LLC a 50% interest in Daily’s Premium
Meats, its processed meats division. Included in net earnings attributable to Seaboard for third and fourth quarters
of 2014 is a gain on sale of controlling interest in subsidiary of $39,279,000 and $954,000, respectively, net of taxes,
or $33.56 per common share and $0.82 per common share, respectively ($65,955,000 total gain before taxes).
On January 2, 2013, the American Taxpayer Relief Act of 2012 (the Tax Act) was signed into law. As the Tax Act
was signed into law in 2013, the effects of the retroactive provisions in the new law on current and deferred taxes
assets and liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a tax benefit of
$7,945,000, or $6.63 per common share, recorded in the first quarter of 2013 related to certain 2012 income tax
credits. In addition to this amount was a credit of approximately $11,260,000, or $9.40 per common share, for 2012
Federal blender’s credits that was recognized as revenues in the first quarter of 2013. There was no tax expense on
this transaction.
No dividends were paid during 2014 or 2013 as they were declared and prepaid in December 2012. During 2014,
Seaboard repurchased 1,667 and 16,738 common shares in the first and second quarters, respectively. During 2013,
Seaboard repurchased 147, 4,945, 1,338 and 2,275 common shares in the first, second, third and fourth quarters,
respectively.
10 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Seaboard is a diverse global agribusiness and transportation company, with operations in several industries. Most of
the sales and costs of Seaboard’s segments are significantly influenced by worldwide fluctuations in commodity
prices and changes in foreign political and economic conditions. Accordingly, sales, operating income and cash
flows can fluctuate significantly from year to year. As each segment operates in distinct industries and different
geographical locations, management evaluates their operations separately. Seaboard’s reporting segments are based
on information used by Seaboard’s Chief Executive Officer in his capacity as chief operating decision maker to
determine allocation of resources and assess performance.
Pork Segment
The Pork segment is primarily a U.S. business, with some export sales to Japan, Mexico, and numerous other
foreign markets. Revenues from the sale of pork products are primarily generated from a single hog processing plant
in Guymon, Oklahoma, which generally operates at daily double shift processing capacity of approximately 20,000
hogs and a ham boning and processing plant in Mexico. In 2014, Seaboard raised approximately 75% of the hogs
processed at the Guymon plant, with the remaining hog requirements purchased primarily under contracts from
independent producers. This segment is Seaboard’s most capital intensive segment, representing approximately 49%
of Seaboard’s total fixed assets in addition to material amounts of inventories.
Within the portfolio of Seaboard’s businesses, management believes profitability of the Pork segment is most
susceptible to commodity price fluctuations. As a result, this segment’s operating income and cash flows can
materially fluctuate from year to year, significantly affecting Seaboard’s consolidated operating income and cash
flows. Sales prices are directly affected by both domestic and worldwide supply and demand for pork products and
other proteins. Feed accounts for the largest input cost in raising hogs and is materially affected by price changes for
corn and soybean meal. Market prices for hogs purchased from third parties for processing at the plant also represent
a major cost factor. With the Guymon plant generally operating at capacity, Seaboard is constantly looking for ways
to enhance the facility’s operational efficiency while also looking to increase margins by introducing new, higher
value products.
The Pork segment also produces biodiesel which is sold to third parties. Biodiesel is produced from pork fat from
Seaboard’s pork processing plant and from animal fat purchased from third parties. The processing plant also is
capable of producing biodiesel from vegetable oil.
The Pork segment has an agreement with Triumph Foods LLC (Triumph) to market substantially all of the pork
products produced at Triumph’s plant in St. Joseph, Missouri. The Pork segment markets the related pork products
for a fee primarily based on the number of head processed by Triumph. Triumph has processing capacity similar to
that of Seaboard’s Guymon plant and operates with an integrated model similar to Seaboard’s. Seaboard’s sales
prices for its pork products are primarily based on a margin sharing arrangement that considers the average sales
price and mix of products sold from both Seaboard’s and Triumph’s hog processing plants.
At the end of the third quarter of 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in its processed
meats division, Daily’s Premium Meats (Daily’s). As a result, Seaboard’s Pork segment now has a 50% non-
controlling interest in Daily’s. Daily’s produces and markets raw and pre-cooked bacon, ham and sausage primarily
for the food service industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located
in Salt Lake City, Utah and Missoula, Montana. Seaboard and Triumph each supply raw product to Daily’s.
Commodity Trading and Milling Segment
The Commodity Trading and Milling segment, which is managed under the name of Seaboard Overseas and Trading
Group, primarily operates overseas and is an integrated agricultural commodity trading and processing and logistics
operation with locations in Africa, South America, the Caribbean, Europe and Asia. These foreign operations can be
significantly impacted by changes in local crop production, political instability and local government policies, as
well as fluctuations in economic and industry conditions and currency fluctuations. This segment's sales are also
significantly affected by fluctuating prices of various commodities, such as wheat, corn, soybean meal and, to a
lesser degree, various other agricultural commodity products. Although this segment owns four ships, the majority
of the third party trading business is transacted with short-term chartered ships. Freight rates, influenced by available
charter capacity for worldwide trade in bulk cargoes, and related fuel costs affect business volumes and margins.
The grain processing businesses, both consolidated and non-consolidated affiliates, operate in foreign and, in most
cases, lesser developed countries. Flour exports of various countries can exacerbate volatile market conditions that
2014 Annual Report 11
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
may have a significant impact on both the trading and milling businesses’ sales and operating income. This segment
is Seaboard’s most working capital intensive segment, representing approximately 39% of Seaboard’s total working
capital at December 31, 2014, and primarily consisted of inventories and receivables.
The majority of the Commodity Trading and Milling segment’s sales derive from its commodity trading business in
which agricultural commodities are sourced from multiple origins and delivered to third party and affiliate
customers in various international locations. The execution of these purchase and delivery transactions have long
cycles of completion which may extend for several months with a high degree of price volatility. As a result, these
factors can significantly affect sales volumes, operating income, working capital and related cash flows from quarter
to quarter. Profit margins are sometimes protected by using commodity derivatives and other risk management
practices. Seaboard invested in several entities in recent years and continues to seek opportunities to expand its
trading and milling businesses.
Marine Segment
The Marine segment provides cargo shipping services primarily between the United States and 26 countries in the
Caribbean Basin, Central and South America. Fluctuations in economic conditions and political instability in the
regions or countries in which Seaboard operates, most notably Venezuela in recent years, may affect trade volumes
and operating profits. In addition, cargo rates can fluctuate depending on local supply and demand for shipping
services. This segment time-charters or leases the majority of its ocean cargo vessels and is thus affected by
fluctuations in charter hire rates, as well as fuel costs.
Seaboard continues to explore ways to increase volumes on existing routes, while seeking opportunities to broaden
its route structure in the regions it serves.
Sugar Segment
The Sugar segment operates a vertically integrated sugar and alcohol production facility in Argentina. This
segment’s sales and operating income are significantly affected by local and worldwide sugar prices. Domestic
sugar production levels in Argentina may affect the local price. Global sugar price fluctuations, to a lesser extent,
have an impact in Argentina as well. Depending on local market conditions, this business purchases sugar from
third parties for resale. Over the past several years, Seaboard has taken a number of steps to enhance the efficiency
of its operations and expand its sugar and alcohol production capacity. This segment sells dehydrated alcohol to
certain oil companies under an Argentine government bio-ethanol program, which mandates alcohol to be blended
with gasoline. This segment also owns a 51 megawatt cogeneration power plant which is fueled by the burning of
sugarcane by-products during the harvest season, which is typically between May and November.
The functional currency of the Sugar segment is the Argentine peso. The currency exchange rate can have an impact
on reported U.S. dollar sales, operating income and cash flows. Following several years of heavy capital investment
in this segment to expand production capacity and to construct a 51 megawatt cogeneration power plant, financing
needs for this segment were minimal in 2014 and should remain minimal in 2015. Seaboard continues to explore
various ways to improve and expand this segment.
Power Segment
The Power segment is an independent power producer in the Dominican Republic (DR) generating electricity from a
system of diesel engines mounted on a floating power generating facility for the local power grid. Seaboard
previously leased another facility under a short-term lease which was canceled during 2014. Seaboard primarily
sells power on the spot market primarily to government-owned distribution companies and partially government-
owned generation companies. This segment is subject to delays in obtaining timely collections from sales to these
government related entities. In some prior years, operating cash flows have fluctuated from inconsistent customer
collections.
Supply of power in the DR is determined by a government body and is subject to fluctuations based on government
budgetary constraints. While fuel is this segment’s largest cost component and is subject to price swings, higher fuel
costs generally have been passed on to customers. Seaboard may pursue further power industry investments in the
future.
Turkey Segment
In December 2010, Seaboard purchased a 50 percent non-controlling voting interest in Butterball, LLC (Butterball).
Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other
products. Butterball has four processing plants, two further processing plants and numerous live production and feed
milling operations located in North Carolina, Arkansas, Missouri, Illinois and Kansas. Sales prices are directly
12 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
affected by both domestic and worldwide supply and demand for turkey products and other proteins. Feed accounts
for the largest input cost in raising turkeys and is materially affected by price changes for corn and soybean meal. As
a result, commodity price fluctuations can significantly affect the profitability and cash flows of Butterball. The
turkey business is seasonal only on the whole bird side, with Thanksgiving and Christmas holidays driving the
majority of those sales.
LIQUIDITY AND CAPITAL RESOURCES
Summary of Sources and Uses of Cash
Cash and short-term investments as of December 31, 2014 increased $181.3 million from December 31, 2013. The
increase was primarily the result of net cash from operating activities of $374.1 million, proceeds from sale of
controlling interest in subsidiary of $74.1 million and increases in notes payable of $16.9 million. Partially
offsetting the increase was cash used for capital expenditures of $121.2 million, principal payments of long-term
debt of $91.4 million, repurchases of common stock of $53.8 million and investments in affiliates of $31.4 million.
Cash from operating activities increased $249.1 million for 2014 primarily as a result of changes in working capital,
principally from changes in receivables. Receivables were relatively unchanged for 2014 compared to 2013,
principally related to significant collections of past due amounts in the Power segment offsetting other segments’
increases, while receivables increased significantly in 2013 compared to 2012 for the Power segment and U.S.
income tax receivables.
Cash and short-term investments as of December 31, 2013 decreased $15.3 million from December 31, 2012. The
decrease was primarily the result of cash used for capital expenditures of $149.7 million, principal payments of
long-term debt of $53.8 million, investments in and advances to affiliates discussed below of $39.5 million, and
repurchases of common stock of $23.6 million. Partially offsetting the decrease was net cash from operating
activities of $125.0 million, principal repayments received on notes receivable from affiliate of $81.4 million and an
increase in notes payable of $41.1 million. Cash from operating activities for 2013 decreased $136.7 million
compared to 2012, primarily as a result of timing of payments related to certain current liabilities in the Commodity
Trading and Milling and, to a lesser degree, Power segments as total current liabilities decreased in 2013 while they
increased in 2012.
Capital Expenditures, Acquisitions and Other Investing Activities
During 2014, Seaboard invested $121.2 million in property, plant and equipment, of which $54.2 million was
expended in the Pork segment, $21.4 for the Commodity Trading and Milling segment and $29.4 million in the
Marine segment. The Pork segment expenditures were primarily for improvements to existing facilities and related
equipment, additional finishing barns and compressed natural gas semi-tractors and related refueling stations. The
Commodity Trading and Milling segment expenditures were primarily for payments related to building four vessels
as discussed below. The Marine segment expenditures were primarily for purchases of cargo carrying and handling
equipment. All other capital expenditures were of a normal recurring nature and primarily included replacements of
machinery and equipment, and general facility modernizations and upgrades.
The total 2015 capital expenditures budget is $229.1 million. The Pork segment plans to spend $71.3 million
primarily for improvements to existing facilities and related equipment, additional finishing barns and compressed
natural gas semi-tractors and related refueling stations. The Commodity Trading and Milling segment plans to spend
$75.2 million primarily for payments of $58.8 million for four dry bulk vessels being built for a total estimated cost
of $90.0 million and improvements to existing facilities and related equipment. However, Seaboard currently
anticipates selling and leasing back these four vessels as they are completed which would result in Seaboard
receiving back the amounts spent to build at each individual lease inception with no gain or loss on sale. Payments
under the lease agreements will be finalized upon delivery of the vessels. The four vessels are scheduled for
delivery in 2015. The Marine segment has budgeted $62.1 million primarily for additional cargo carrying and
handling equipment and purchase of an additional containerized cargo vessel. In addition, management will be
evaluating whether to purchase additional containerized cargo vessels for the Marine segment during 2015. The
balance of $20.5 million is planned to be spent in all other businesses primarily for normal upgrades to existing
operations. Management anticipates paying for these capital expenditures from a combination of available cash, the
use of available short-term investments and Seaboard’s available borrowing capacity.
During 2013, Seaboard invested $149.7 million in property, plant and equipment, of which $79.6 million was
expended in the Pork segment, $24.2 million in the Commodity Trading and Milling segment, $22.8 million in the
Marine segment, $17.1 million in the Sugar segment and $4.2 million in the Power segment. The Pork segment
expenditures were primarily for additional finishing barns, semi-tractors, improvements to existing facilities and
2014 Annual Report 13
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
related equipment and construction of a new feed mill. The Commodity Trading and Milling segment expenditures
were primarily for the purchase of two dry bulk vessels and improvements to existing facilities and related
equipment. The Marine segment expenditures were primarily for purchases of cargo carrying and handling
equipment. In the Sugar segment, the capital expenditures were primarily for normal upgrades to existing
operations, including cane re-planting. All other capital expenditures were of a normal recurring nature and
primarily included replacements of machinery and equipment, and general facility modernizations and upgrades.
During 2012, Seaboard invested $158.8 million in property, plant and equipment, of which $52.3 million was
expended in the Pork segment, $22.8 million in the Commodity Trading and Milling segment, $35.4 million in the
Marine segment, $22.1 million in the Sugar segment and $25.0 million in the Power segment. The Pork segment
expenditures were primarily for additional finishing barns, improvements to existing facilities and related equipment
and construction of a new feed mill. The Commodity Trading and Milling segment expenditures were primarily for
the purchase of a dry bulk vessel and for a down payment of $8.3 million made in July 2012 on four dry bulk vessels
being built as discussed above. The Marine segment expenditures were primarily for purchases of cargo carrying
and handling equipment and the purchase of a cargo vessel. In the Sugar segment, the capital expenditures were
primarily for expansion of cane growing operations and normal upgrades to existing operations. The Power segment
expenditures were primarily used to complete the construction in the Dominican Republic of a 108 megawatt power
generating facility, which began commercial operations in March 2012. The total cost of the project was $136.0
million, including capitalized interest. All other capital expenditures were of a normal recurring nature and
primarily included replacements of machinery and equipment, and general facility modernizations and upgrades.
As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods, LLC a 50% interest in its Daily’s
Premium Meats division for cash of $74.1 million. In September 2014, Seaboard invested $17.3 million in a cargo
terminal business in Jamaica for a 21% non-controlling interest. See Note 4 to the Consolidated Financial
Statements for further discussion.
In September 2013, Seaboard invested $17.0 million in a flour production business in Brazil for a 50% non-
controlling equity interest and provided a $13.0 million long-term loan to this business. See Note 4 to the
Consolidated Financial Statements for further discussion. Also in September 2013, Seaboard invested $7.4 million
in a flour milling business located in South Africa for a 49% non-controlling interest. In July 2013, Seaboard
acquired a 50% non-controlling interest in a flour milling business located in Gambia by making a total investment
in and advances to this affiliate of $9.1 million during 2013.
On December 31, 2012, Seaboard provided a loan of $81.2 million to its non-consolidated affiliate, Butterball, LLC
(Butterball) to fund its purchase of assets from Gusto Packing Company, Inc. On March 28, 2013, Butterball repaid
in full this $81.2 million loan. See Note 4 to the Consolidated Financial Statements for further discussion of these
transactions.
Beginning in 2010, Seaboard invested in a bakery built in the Democratic Republic of Congo for a 50 percent
non-controlling interest in this business. During 2014, 2013 and 2012, Seaboard invested $2.6 million, $4.5 million,
and $24.8 million, respectively, in equity, long-term advances and long-term notes receivable for a total investment
of $53.4 million in this business. The bakery began operations in the fourth quarter of 2012. See Note 4 to the
Consolidated Financial Statements for further discussion of this investment.
Starting in 2011, Seaboard began to invest in various limited partnerships as a limited partner that are expected to
enable Seaboard to obtain certain low income housing tax credits over a period of approximately ten years. During
2014, 2013 and 2012, Seaboard invested $0.1 million, $3.8 million and $8.4 million, respectively. Additional
investments are required to be made in future years but are not deemed material in total.
In February 2015, Seaboard committed to invest in a limited liability company that will operate a refined coal
processing plant in Oklahoma. Production of refined coal generates federal income tax credits. Seaboard’s funding
commitment for this company can vary depending on production and, based on current production estimates, is
anticipated to be approximately $7.0 million in 2015 with anticipated future annual contributions of between $4.0
million and $9.0 million per year until 2021, for a total estimate of approximately $53.0 million.
14 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
Financing Activities, Debt and Related Covenants
The following table presents a summary of Seaboard’s available borrowing capacity as of December 31, 2014. At
December 31, 2014, there were no borrowings outstanding under the committed lines of credit and borrowings
under the uncommitted lines of credit totaled $75.5 million, with all such borrowings related to foreign subsidiaries.
On October 24, 2014, Seaboard entered into a Credit Agreement for a committed line of credit totaling $50.0 million
related to a foreign subsidiary for the Commodity Trading and Milling segment. This credit facility matures on
October 23, 2015. See Note 7 to the Consolidated Financial Statements for further discussion.
(Thousands of dollars)
Long-term credit facility – committed
Short-term credit facility – committed
Short-term uncommitted demand notes
Total borrowing capacity
Amounts drawn against lines
Letters of credit reducing borrowing availability
Available borrowing capacity at December 31, 2014
Total amount
available
$
200,000
50,000
243,620
493,620
(75,524)
(1,544)
$
416,552
In July 2014, Seaboard provided notice of optional prepayment to its lenders related to a credit agreement with an
original maturity date of 2021. The total principal payment of $85.5 million was made on August 29, 2014. During
2012, Seaboard borrowed $32.7 million from this credit agreement. In November 2013, Seaboard provided notice of
call for early redemption to holders of certain Industrial Development Revenue Bonds (IDRBs) effective December
20, 2013 and paid $18.0 million in the fourth quarter of 2013. In April 2013, Seaboard provided notice of call for
early redemption to holders of certain IDRBs effective May 13, 2013 and paid $10.8 million in the second quarter of
2013. In December 2012, Seaboard provided notice of call for early redemption to holders of certain IDRBs
effective January 14, 2013 and paid $13.0 million in the first quarter of 2013. See Note 7 to the Consolidated
Financial Statements for further discussion.
As of December 31, 2014, Seaboard has capacity under existing loan covenants to undertake additional debt
financings of approximately $2,185.5 million. As of December 31, 2014, Seaboard was in compliance with all
restrictive covenants related to these loans and facilities. See Note 7 to the Consolidated Financial Statements for a
summary of the material terms of Seaboard’s credit facilities, including financial ratios and covenants.
As of December 31, 2014, Seaboard had cash and short-term investments of $527.0 million, additional total working
capital of $891.1 million and a $200.0 million long-term committed line of credit maturing on February 20, 2018.
Accordingly, management believes Seaboard’s combination of internally generated cash, liquidity, capital resources
and borrowing capabilities will be adequate for its existing operations and any currently known potential plans for
expansion of existing operations or business segments for 2015. Management intends to continue seeking
opportunities for expansion in the industries in which Seaboard operates, utilizing existing liquidity, available
borrowing capacity and other financing alternatives.
As of December 31, 2014, $76.7 million of the $527.0 million of cash and short-term investments were held by
Seaboard’s foreign subsidiaries and Seaboard could be required to accrue and pay taxes to repatriate these funds if
needed for Seaboard’s operations in the U.S. However, Seaboard’s intent is to permanently reinvest these funds
outside the U.S. and current plans do not demonstrate a need to repatriate them to fund Seaboard’s U.S. operations.
Seaboard used cash to repurchase 18,405, 8,705 and 12,937 shares of common stock at a total price of $53.8 million,
$23.6 million and $26.8 million in 2014, 2013 and 2012, respectively. See Note 11 to the Consolidated Financial
Statements for further discussion.
In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock which
represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per share per year). Seaboard
does not currently intend to declare any further dividends for the years 2015 and 2016. Seaboard did not declare or
pay any dividends in 2014, 2013 and 2011. In December 2010, Seaboard declared and prepaid the 2012 and 2011
dividends of $3.00 per share per year.
2014 Annual Report 15
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
Contractual Obligations and Off-Balance Sheet Arrangements
The following table provides a summary of Seaboard’s contractual obligations as of December 31, 2014.
Payments due by period
(Thousands of dollars)
Vessel time and voyage-charter commitments
Contract grower finishing agreements
Other operating lease payments
Total lease obligations
Other long-term liabilities
Short-term notes payable
Interest payments
Other purchase commitments
Total contractual cash obligations
Less than 1-3
1 year years
Total
$ 174,529 $ 58,223 $ 38,366
20,622
47,479
106,467
12,968
-
2,257
212,902
41,455
332,626
548,610
87,746
75,524
7,739
1,055,414
11,124
25,407
94,754
4,283
75,524
4,288
786,288
3-5
years
$ 36,500
9,687
47,351
93,538
15,217
-
1,050
56,158
More than
5 years
$ 41,440
22
212,389
253,851
55,278
-
144
66
and commitments
$ 1,775,033 $ 965,137 $ 334,594
$ 165,963
$ 309,339
The Marine segment enters into contracts to time-charter vessels for use in its operations. To support the operations
of the Pork segment, Seaboard has contract grower finishing agreements in place with farmers to raise a portion of
Seaboard’s hogs. Seaboard has entered into grain and feed ingredient purchase contracts to support the live hog
operations of the Pork segment, and has contracted for the purchase of additional hogs from third parties. The
Commodity Trading and Milling segment enters into commodity purchase contracts, primarily to support sales
commitments. Seaboard also leases various facilities and equipment under non-cancelable operating lease
agreements. Seaboard guarantees to third parties were not material as of December 31, 2014. See Note 10 to the
Consolidated Financial Statements for a further discussion and for a more detailed listing of other purchase
commitments.
Other long-term liabilities in the table above represent expected benefit payments for various non-qualified pension
plans and supplemental retirement arrangements as discussed in Note 9 to the Consolidated Financial Statements,
which are unfunded obligations that are deemed to be employer contributions. No contributions are planned at this
time to the two qualified pension plans. Non-current deferred income taxes and certain other long-term liabilities on
the Consolidated Balance Sheets are not included in the table above as management is unable to reliably estimate the
timing of the payments for these items. In addition, deferred revenues and other deferred credits included in other
long-term liabilities on the Consolidated Balance Sheets have been excluded from the table above since they do not
represent contractual obligations.
Interest payments in the table above include the net payments for interest rate exchange agreements based on the
fixed amounts paid and the variable amount received, which is estimated using the projected yield as of December
31, 2014.
RESULTS OF OPERATIONS
Net sales for the years ended December 31, 2014, 2013 and 2012 were $6,473.1 million, $6,670.4 million and
$6,189.1 million, respectively. The decrease in net sales for 2014 compared to 2013 primarily reflected lower sales
volume for the Power segment, lower cargo volumes in certain markets for the Marine segment and lower volumes
of sugar sold for the Sugar segment. The increase in net sales for 2013 compared to 2012 primarily reflected higher
sales for commodity trading from increased volumes to third parties and, to a lesser extent, increased sale prices as
discussed below.
Operating income for the years ended December 31, 2014, 2013 and 2012 were $423.6 million, $204.9 million and
$309.7 million, respectively. The increase for 2014 compared to 2013 primarily reflected higher prices for pork
products sold. The decrease for 2013 compared to 2012 primarily reflected increased operating costs and lower
cargo rates for the Marine segment, lower sale prices and increased production costs for the sugar segment, and
lower margins on wheat sales to a non-consolidated affiliate in Africa and, to a lesser extent, to third parties for the
Commodity Trading and Milling segment. Partially offsetting the decrease was higher biodiesel margins primarily
from increased government payments for the Pork segment.
16 2014 Annual Report
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Management’s Discussion & Anal ysis
Pork Segment
(Dollars in millions)
2014
$ 1,717.3
349.0
$
3.7
$
2013
$ 1,713.1
147.7
$
-
$
2012
$ 1,638.4
122.6
$
-
$
Net sales
Operating income
Income from affiliate
Net sales for the Pork segment increased $4.2 million for the year ended December 31, 2014 compared to 2013. The
increase was primarily the result of higher prices for pork products sold. Partially offsetting the increase was lower
sales volume of pork products from processing fewer internally grown hogs, lower sales prices and volumes for
biodiesel, decreased payments received from the U.S. Government for biodiesel production, and the decrease in
fourth quarter sales from the sale of a 50% interest in Daily’s as discussed in Note 4 to the Consolidated Financial
Statements. In December 2014, the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it
blends was reinstated for 2014, retroactive to January 1, 2014. As a result, the 2014 Federal blender’s credit of
$15.5 million was recorded as revenues in the fourth quarter of 2014. See Note 12 to the Consolidated Financial
Statements for further discussion of the Federal blender’s credit.
Operating income increased $201.3 million for the year ended December 31, 2014 compared to 2013. The increase
was primarily the result of higher prices for pork products sold and, to a lesser extent, lower feed costs for hogs
internally grown. Partially offsetting the increase was lower margins for biodiesel from items discussed above and
increased costs for third party hogs.
Management is unable to predict future market prices for pork products or the cost of feed. In addition, the Federal
blender’s credit expired December 31, 2014. However, management anticipates positive operating income for this
segment in 2015, although significantly lower than 2014.
Income from affiliate is from Seaboard’s 50% proportionate share of 2014 fourth quarter earnings from Daily’s,
accounted for using the equity method, as discussed in Note 4 to the Consolidated Financial Statements.
Net sales for the Pork segment increased $74.7 million for the year ended December 31, 2013 compared to 2012.
The increase primarily reflected higher prices for pork products sold in the domestic market and increased payments
received from the U.S. government for biodiesel production in 2013 compared to 2012. Partially offsetting the
increase were lower sales volume of pork products in the domestic market and lower prices for biodiesel sold in
2013 compared to 2012. U.S. Government payments included credits of $11.3 million recorded as revenues in the
first quarter of 2013 related to the Tax Act, for the total Federal blender’s credits for 2012. See Note 12 to the
Consolidated Financial Statements for further discussion of the Federal blender’s credit.
Operating income increased $25.1 million for the year ended December 31, 2013 compared to 2012. The increase
was the result of higher biodiesel margins primarily from increased government payments, including the credit of
$11.3 million, discussed above. Higher prices for pork products were offset by increased costs, principally for hogs
internally grown and, to a lesser extent, for third party hogs. However, higher feed costs were offset by positive
changes from using the LIFO method for determining certain inventory costs.
Commodity Trading and Milling Segment
(Dollars in millions)
Net sales
Operating income as reported
Mark-to-market adjustments
Operating income excluding mark-to-market adjustments
Income (loss) from affiliates
2014
$ 3,499.3
$
$
$
53.9
(12.5)
41.4
(23.7)
2013
$ 3,501.5
2012
$ 3,023.5
$
$
$
38.3
3.7
42.0
(0.6)
$
$
$
71.9
0.9
72.8
10.5
Net sales for the Commodity Trading and Milling segment decreased $2.2 million for the year ended December 31,
2014 compared to 2013. Lower sales prices for various commodities were principally offset by higher sales
volumes for such commodities, especially corn.
Operating income increased $15.6 million for the year ended December 31, 2014, compared to 2013. The increase
primarily reflected fluctuations of $16.2 million of marking to market derivative contracts as discussed below.
Excluding the effects of mark-to-market adjustment for derivatives contracts as discussed below, operating income
2014 Annual Report 17
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Management’s Discussion & Anal ysis
decreased $0.6 million. The decrease primarily reflected recoveries of $5.2 million in 2013 of inventory write-
downs for customer contract performance issues recognized in prior years partially offset by improved operating
income at certain milling locations.
Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in
which Seaboard operates and the current volatility in the commodity markets, management is unable to predict
future sales and operating results for this segment. However, management anticipates positive operating income for
this segment in 2015, excluding the effects of marking to market derivative contracts.
Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this
segment in 2014 would have been lower by $12.5 million and in 2013 and 2012 would have been higher by $3.7
million and $0.9 million, respectively. While management believes its commodity futures and options and foreign
exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales
contracts, Seaboard does not perform the extensive record-keeping required to account for these types of
transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative
instruments were marked to market, the changes in value of the firm purchase or sales contracts were not. As
products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by
realized margins or losses as revenue is recognized over time and thus, these mark-to-market adjustments could
reverse in fiscal 2015. Management believes eliminating these adjustments, as noted in the table above, provides a
more reasonable presentation to compare and evaluate period-to-period financial results for this segment.
Loss from affiliates for the year ended December 31, 2014 increased by $23.1 million from 2013. The increase
primarily reflected a $10.8 million write-down recorded in the fourth quarter of 2014 as a result of a decline in value
considered other than temporary for Seaboard’s investment in a bakery located in the Democratic Republic of
Congo and losses incurred in 2014 from an affiliate in Brazil newly invested by Seaboard during the latter part of
2013. See Note 4 to the Consolidated Financial Statements for further discussion of the write-down and investments
in these affiliates. Based on the uncertainty of local political and economic environments in the countries in which
Seaboard’s affiliates operate, management cannot predict future results.
Net sales for the Commodity Trading and Milling segment increased $478.0 million for the year ended December
31, 2013 compared to 2012. The increase primarily reflected higher sales for commodity trading from increased
volumes to third parties for wheat, soybean meal and various agricultural commodities and, to a lesser extent,
increased sale prices for soybean meal and soybeans.
Operating income decreased $33.6 million for the year ended December 31, 2013, compared to 2012. The decrease
primarily reflected certain unfavorable market conditions which resulted in lower margins on wheat sales to a non-
consolidated affiliate in Africa and, to a lesser extent, to third parties. Partially offsetting the decrease were
recoveries of $5.2 million in 2013 of the inventory write-downs for customer contract performance issues
recognized in prior years. Excluding the effects of the mark-to-market adjustments for derivative contracts as
discussed below, operating income decreased $30.8 million for 2013 compared to 2012.
Income from affiliates for the year ended December 31, 2013 decreased by $11.1 million from 2012. The decrease
was primarily the result of certain unfavorable market conditions for an affiliate in Africa. Based on the uncertainty
of local political and economic environments in the countries in which the flour and feed mills operate, management
cannot predict future results.
Marine Segment
(Dollars in millions)
Net sales
Operating income (loss)
2014
$ 852.7
(2.7)
$
2013
913.8
(25.8)
$
$
2012
$ 969.6
26.1
$
Net sales for the Marine segment decreased $61.1 million for the year ended December 31, 2014, compared to 2013.
The decrease was primarily the result of lower cargo volumes in certain markets, most notably Venezuela, during
2014 compared to 2013.
Operating loss decreased by $23.1 million for the year ended December 31, 2014, compared to 2013. The decrease,
which occurred during the second half of 2014, was primarily the result of lower voyage costs, such as fuel costs
and, to a lesser extent, charter hire, on a per unit shipped basis partially offset by lower operating results related to
the Venezuela operations. Management cannot predict changes in future cargo volumes and cargo rates or to what
18 2014 Annual Report
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Management’s Discussion & Anal ysis
extent changes in economic conditions in markets served will affect net sales or operating income during 2015.
However, based on recent improved market conditions, management anticipates this segment will be profitable in
2015.
Net sales for the Marine segment decreased $55.8 million for the year ended December 31, 2013, compared to 2012.
The decrease was primarily the result of lower volumes in certain markets, most notably Venezuela, and, to a lesser
extent, decreased cargo rates in certain markets served during 2013 compared to 2012.
Operating income decreased by $51.9 million for the year ended December 31, 2013, compared to 2012. The
decrease was primarily the result of increased trucking costs and certain terminal operating costs on a per unit
shipped basis impacted by the decreased volumes and, to a lesser extent, decreased cargo rates noted above.
Sugar Segment
(Dollars in millions)
Net sales
Operating income
Income from affiliates
2014
$ 199.5
26.6
$
0.7
$
2013
245.5
24.5
0.6
$
$
$
2012
$ 288.3
60.2
$
0.1
$
Net sales for the Sugar segment decreased $46.0 million for the year ended December 31, 2014 compared to 2013.
The decrease primarily reflected lower volumes of sugar sold and, to a much lesser extent, lower sales prices for
sugar. Sugar sales are denominated in Argentine pesos and the lower sales prices for sugar in terms of U.S. dollars
was the result of the exchange rate changes as the Argentine peso continued to weaken against the U.S. dollar in
2014, especially in the first quarter of 2014. Management cannot predict sugar and alcohol prices for 2015, but
management anticipates that the Argentine peso may continue to weaken against the U.S. dollar.
Operating income increased $2.1 million for the year ended December 31, 2014 compared to 2013. The increase
primarily represents a $4.3 million gain recorded in the second quarter of 2014 from a final insurance settlement for
property damage and business interruption claims related to prior years and lower selling, general and administrative
expenses from the exchange rate changes discussed above. Partially offsetting the increase was lower income from
sugar sales as a result of lower volumes of sugar sold and lower sales prices as noted above. Management
anticipates positive operating income for this segment in 2015, although lower than 2014.
Net sales for the Sugar segment decreased $42.8 million for the year ended December 31, 2013 compared to 2012.
The decrease primarily reflects lower sales prices for sugar and, to a lesser extent, lower volumes of sugar sold.
Sugar sales are denominated in Argentine pesos and the lower sales prices for sugar in terms of U.S. dollars were
primarily the result of the exchange rate differences as the Argentine peso continued to weaken against the U.S,
dollar in 2013. Partially offsetting the decrease in net sales was increased sales volume of alcohol.
Operating income decreased $35.7 million for the year ended December 31, 2013 compared to 2012. The decrease
primarily represents lower income from sugar sales as a result of lower sale prices as noted above and, to a lesser
extent, increased costs of production. Partially offsetting this decrease was higher income from alcohol sales from
increased sales volume as noted above.
Power Segment
(Dollars in millions)
Net sales
Operating income
2014
$ 189.1
19.0
$
2013
$ 283.8
42.9
$
2012
$ 255.4
$ 55.0
Net sales for the Power segment decreased $94.7 million for the year ended December 31, 2014 compared to 2013.
The decrease primarily reflected lower volumes and, to a lesser extent, lower spot market rates. Although
management cannot predict future spot market rates, sales volumes for 2015 are anticipated to be lower than 2014 as
a result of cancelling the short-term leasing of a power generating facility on September 3, 2014 as discussed in
Note 12 to the Consolidated Financial Statements.
Operating income decreased $23.9 million for the year ended December 31, 2014 compared to 2013. The decrease
primarily reflected lower spot market rates and lower volumes partially offset by lower fuel costs per kilowatt hour
generated and a gain on sale of assets of $5.0 million as discussed in Note 12 to the Consolidated Financial
2014 Annual Report 19
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Management’s Discussion & Anal ysis
Statements. Management cannot predict future fuel costs or the extent that spot market rates will fluctuate
compared to fuel costs. However, management anticipates positive operating income for this segment in 2015.
Net sales for the Power segment increased $28.4 million for the year ended December 31, 2013 compared to 2012.
The increase primarily reflected increased volumes from operating the new power generating facility the entire first
quarter in 2013. The new power generating facility started operating in March 2012.
Operating income decreased $12.1 million for the year ended December 31, 2013 compared to 2012. The decrease
primarily reflected higher operating costs and higher fuel costs per kilowatt hour generated, partially offset by higher
production volumes noted above.
Turkey Segment
(Dollars in millions)
Income (loss) from affiliate
2014
$ 54.7
2013
$ (10.3)
2012
$ 20.2
The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball. The
increase in income from affiliate for 2014 compared to 2013 was primarily the result of lower feed costs and higher
prices of turkey products sold. In addition, Butterball incurred charges in 2013 for impairment of fixed assets
related to the planned sale of its closed processing plant in Longmont, Colorado. Seaboard’s proportionate share
was $3.7 million recognized in loss from affiliate for 2013. This plant was sold in the second quarter of 2014 for
approximately the remaining net book value. Management anticipates positive income for this segment in 2015.
The decrease in income from affiliate for 2013 compared to 2012 was primarily the result of higher feed costs and,
to a lesser extent, various production inefficiencies experienced especially during the fourth quarter of 2013 related
to the Montgomery, Illinois operation acquired in December 2012. In addition, Butterball incurred additional
charges in 2013 for impairment of fixed assets related to the Longmont, Colorado facility as discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses for the year ended December 31, 2014 decreased by $9.5
million over 2013 to $254.5 million. The decrease was primarily the result of lower expenses for the Sugar segment
from the exchange rate changes discussed above and lower bad debt expense. As a percentage of revenues, SG&A
decreased to 3.9% for 2014 compared to 4.0% for 2013.
SG&A expenses for the year ended December 31, 2013 increased by $12.6 million over 2012 to $264.0 million.
The increase was primarily the result of increased administrative expenses and personnel costs in most segments.
As a percentage of revenues, SG&A decreased to 4.0% for 2013 compared to 4.1% for 2012.
Interest Expense
Interest expense totaled $20.2 million, $11.4 million and $11.0 million for the years ended December 31, 2014, 2013
and 2012, respectively. The increase in 2014 compared to 2013 primarily reflected higher interest rates on notes
payable related to foreign subsidiaries and a $3.8 million charge for early payment of debt, as discussed in Note 7.
Interest Income
Interest income totaled $14.0 million, $17.6 million and $11.1 million for the years ended December 31, 2014, 2013
and 2012, respectively. The decrease for 2014 compared to 2013 primarily reflected a decrease in interest received
on outstanding customer receivable balances in the Power segment. The increase for 2013 compared to 2012
primarily reflected an increase in interest received on outstanding customer receivable balances in the Power
segment.
Interest Income from Affiliates
Interest income from affiliates totaled $27.4 million, $24.7 million and $20.6 million for the years ended December
31, 2014, 2013 and 2012, respectively. The increases primarily represented increased interest income from notes
receivable from Butterball.
Other Investment Income, Net
Other investment income, net totaled $2.1 million, $7.8 million and $8.5 million for the years ended December 31,
2014, 2013 and 2012, respectively. The fluctuations primarily reflect mark-to-market fluctuations from investments,
especially high yield trading debt securities in 2014.
20 2014 Annual Report
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Management’s Discussion & Anal ysis
Foreign Currency Gains (Losses), Net
Foreign currency gains (losses), net totaled $(9.3) million, $0.1 million and $0.4 million for the years ended
December 31, 2014, 2013 and 2012, respectively. The increase in foreign currency losses, net in 2014 compared to
2013 reflects increased losses related to multiple currencies with the more significant changes related to the Euro
Zone euro, Zambian kwacha and South African rand. Seaboard operates in many foreign countries which are less
developed than the U.S. The political and economic conditions of these markets, along with fluctuations in the
value of the U.S. dollar cause volatility in currency exchange rates which exposes Seaboard to fluctuating foreign
currency gains and losses which cannot be predicted by Seaboard. Although Seaboard does not utilize hedge
accounting, the commodity trading business does utilize foreign currency exchange contracts to manage its risks and
exposure to foreign currency fluctuations primarily related to the South African rand and the Euro Zone euro.
Management believes these gains and losses, including the mark-to-market effects, of these foreign currency
contracts relate to the underlying commodity transactions and classifies such gains and losses in cost of sales.
Gain on Sale of Controlling Interest in Subsidiary
Seaboard’s Pork segment sold to Triumph Foods, LLC a 50% interest in its Daily’s Premium Meats division
resulting in a pre-tax gain of $66.0 million recognized in the third quarter of 2014 related to this transaction. See
Note 4 to the Consolidated Financial Statements for further discussion.
Miscellaneous, Net
Miscellaneous, net totaled $(5.1) million, $5.9 million and $(3.0) million for the years ended December 31, 2014,
2013 and 2012, respectively. Miscellaneous, net primarily reflected mark-to-market fluctuations on interest rate
exchange agreements.
Income Tax Expense
The effective tax rate for 2014 was higher than 2013 primarily as the mix of domestic and foreign earnings for 2014
fluctuated from prior year resulting in more income taxed at a higher tax rate and because the 2013 rate included two
years of tax benefits due to the retroactive nature of the Tax Act as discussed below. The effective tax rate for 2013
was lower than 2012 primarily from tax-exempt income related to biodiesel production recognized in 2013 and a
one-time tax benefit of $7.9 million recorded in 2013 related to certain 2012 income tax credits as further discussed
in Note 6 to the Consolidated Financial Statements. Excluding these tax benefits, the effective tax rate for 2013 was
higher than 2012 as the mix of domestic and foreign earnings fluctuated. Certain U.S. income tax provisions
expired on December 31, 2014. Seaboard’s effective tax rate could increase in 2015 compared to 2014 related to
domestic earnings if the expired income tax provisions are not retroactively extended.
OTHER FINANCIAL INFORMATION
In May 2014, the Financial Accounting Standards Board issued guidance to develop a single, comprehensive
revenue recognition model for all contracts with customers. This guidance requires an entity to recognize the amount
of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This
guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
Seaboard is currently evaluating the impact this new guidance will have on its consolidated financial statements and
related disclosures. Seaboard will be required to adopt this guidance on January 1, 2017 and it is currently
anticipated that Seaboard will apply this guidance using the cumulative effect transition method.
Management does not believe its businesses have been materially adversely affected by inflation.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could
differ from those estimates. Management has identified the accounting estimates believed to be the most important
to the portrayal of Seaboard’s financial condition and results, and which require management’s most difficult,
subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. Management has reviewed these critical accounting estimates with the Audit Committee of the
Board of Directors. These critical accounting estimates include:
2014 Annual Report 21
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Management’s Discussion & Anal ysis
Allowance for Doubtful Accounts – Seaboard primarily uses a specific identification approach, in management’s best
judgment, to evaluate the adequacy of this reserve for estimated uncollectible receivables at the consolidated balance
sheet date. Changes in estimates, developing trends and other new information can have a material effect on future
evaluations. Furthermore, Seaboard’s total current receivables are heavily weighted toward foreign receivables
($456.8 million or 77.3% at December 31, 2014), including foreign receivables due from affiliates ($190.3 million at
December 31, 2014), which generally represent more of a collection risk than its domestic receivables. Receivables
due from affiliates are generally associated with entities located in foreign countries considered less developed than
the U.S., which can experience conditions causing sudden changes to their ability to pay such receivables on a
timely basis or in full. Although in recent years collections have been fairly stable, based on various historical
experiences future collections of receivables or lack thereof could result in a material charge or credit to earnings
depending on the ultimate resolution of each individual customer past due receivable. Bad debt expense for the
years ended December 31, 2014, 2013 and 2012 was $0.4 million, $3.4 million and $3.1 million, respectively.
Valuation of Inventories – Inventories are generally valued at the lower of cost or market. In determining market,
management makes assumptions regarding replacement costs, estimated sales prices, estimated costs to complete,
estimated disposal costs and normal profit margins. For commodity trading inventories, when contract performance
by a customer becomes a concern, management must also evaluate available options to dispose of the inventory,
including assumptions about potential negotiated changes to sales contracts, sales prices in alternative markets in
various foreign countries and potentially additional transportation costs. At times, management must consider
probability weighting various viable alternatives in its determination of the net realizable value of the inventories.
These assumptions and probabilities are subjective in nature, and are based on management’s best estimates and
judgments existing at the time of preparation. Changes in future market prices of grains or facts and circumstances
could result in a material write-down in value of inventory or decreased future margins on the sale of inventory.
Impairment of Long-Lived Assets – At each balance sheet date, long-lived assets, primarily property, plant and
equipment, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount
may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of the asset to future undiscounted net cash flows expected to be generated by the asset group. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Some of the key assumptions utilized in determining future
projected cash flows include estimated growth rates, expected future sales prices and estimated costs. In some cases,
judgment is also required in assigning probability weighting to the various future cash flow scenarios. The
probability weighting percentages used and the various future projected cash flow models prepared by management
are based on facts and circumstances existing at the time of preparation and management’s best estimates and
judgment of future operating results. Seaboard cannot predict the occurrence of certain future events that might
adversely affect the reported value of long-lived assets, which include, but are not limited to, a change in the
business climate, government incentives, a negative change in relationships with significant customers, and changes
to strategic decisions made in response to economic and competitive conditions. Changes in these facts,
circumstances and management’s estimates and judgment could result in an impairment of fixed assets resulting in a
material charge to earnings.
Investments in and advances to Affiliates and Notes Receivable from Affiliates – Seaboard has numerous investments
in and advances to various businesses that it owns 50% or less for a non-controlling interest and are accounted for
using the equity method. In addition, for some of these investments, Seaboard also has Notes Receivable for loans
Seaboard provided to these businesses. For the Commodity Trading and Milling segment, these investments are
primarily in various foreign countries which are less developed than the U.S. and thus expose Seaboard to various
greater financial risks. At certain times when there are ongoing operating losses, local economies are depressed,
commodity based markets are less stable, or foreign governments cause challenging business conditions, the fair
value of the equity method investment is evaluated by management. The fair value of these investments is not
readily determinable as almost all of these investments are not publicly traded. Management will use other methods
to determine fair value such as estimated future cash flows, including assumptions on growth rates, for the business
and consideration of other local business conditions as applicable. If the fair value of the investment is determined
to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate
write-down is recorded to income (loss) from affiliate based on the excess of the carrying value over the best
estimate of fair value of the investment. In addition, if based on current information and events it is probable that
Seaboard will be unable to collect all amounts due according to the contractual terms of the Notes Receivable from
Affiliates and an amount can be reasonably estimated, Seaboard will write down the amounts to estimated realizable
22 2014 Annual Report
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Management’s Discussion & Anal ysis
value. Information and events creating uncertainty about the realization of recorded amounts for notes from
affiliates include, but are not limited to, the estimated cash flows generated by the affiliates’ business, the
sufficiency of collateral securing the amounts, the creditworthiness of the counterparties involved, and consideration
of other local business conditions as applicable. Changes in facts, circumstances and management’s estimates and
judgment could result in a material charge to earnings. See Note 4 to the Consolidated Financial Statements for
further discussion on the Commodity Trading and Milling segment and its $10.8 million write-down recorded in loss
from affiliates in 2014 related to its investment in a bakery located in the Democratic Republic of Congo.
Income Taxes – Income taxes are determined by management based on current tax regulations in the various
worldwide taxing jurisdictions in which Seaboard conducts its business. In various situations, accruals have been
made for estimates of the tax effects for certain transactions, business structures, the estimated reversal of timing
differences and future projected profitability of Seaboard’s various business units based on management’s
interpretation of existing facts, circumstances and tax regulations. Should new evidence come to management’s
attention which could alter previous conclusions or if taxing authorities disagree with the positions taken by
Seaboard, the change in estimate could result in a material adverse or favorable impact on the financial statements.
As of December 31, 2014, Seaboard had deferred tax assets of $162.1 million, net of the valuation allowance of
$20.6 million, and deferred tax liabilities of $212.0 million. For the years ended December 31, 2014, 2013 and 2012,
income tax expense included $25.4 million, $35.0 million and $(22.4) million, respectively, for deferred taxes to
federal, foreign, state and local taxing jurisdictions.
Accrued Pension Liability – The measurement of Seaboard’s pension liability and related expense is dependent on a
variety of assumptions and estimates regarding future events. These assumptions include discount rates, assumed
rate of return on plan assets, compensation increases, turnover rates, mortality rates and retirement rates. The
discount rate and return on plan assets are important elements of liability and expense measurement, and are
reviewed on an annual basis. The effect of decreasing both the discount rate and assumed rate of return on plan
assets by 50 basis points would be an increase in pension expense of approximately $2.7 million per year. The
effects of actual results differing from the assumptions (i.e. gains or losses) are primarily accumulated in accrued
pension liability and amortized over future periods if it exceeds the 10 percent corridor and, therefore, could affect
Seaboard’s recognized pension expense in such future periods, as permitted under U.S. GAAP. Accordingly,
accumulated gains or losses in excess of the 10 percent corridor are amortized over the average future service of
active participants. See Note 9 to the Consolidated Financial Statements for further discussion.
DERIVATIVE INFORMATION
Seaboard is exposed to various types of market risks in its day-to-day operations. Primary market risk exposures
result from changing commodity prices, foreign currency exchange rates and interest rates. Derivatives are used to
manage these overall market risks; however, Seaboard does not perform the extensive record-keeping required to
account for derivative transactions as hedges. Management believes it uses derivatives primarily as economic
hedges, although they do not qualify as hedges for accounting purposes. Since these derivatives are not accounted
for as hedges, fluctuations in the related prices could have a material impact on earnings in any given year. Seaboard
also enters into speculative derivative transactions related to its market risks.
Changes in commodity prices affect the cost of necessary raw materials and other inventories, finished product sales
and firm sales commitments. Seaboard uses various grain, oilseed and other commodity futures and options
purchase contracts to manage certain risks of increasing prices of raw materials and firm sales commitments or
anticipated sales contracts. Short sales contracts are then used to offset the open purchase derivatives when the
related commodity inventory is purchased in advance of the derivative maturity, effectively offsetting the initial
futures or option purchase contract. From time to time, hog futures are used to manage risks of increasing prices of
live hogs acquired for processing, and hog futures are used to manage risks of fluctuating prices of pork product
inventories and related future sales. From time to time, Seaboard may enter into short positions in energy related
resources (i.e., heating oil, crude oil, etc.) to manage certain exposures related to bio-energy margins. Inventories
that are sensitive to changes in commodity prices, including carrying amounts at December 31, 2014 and 2013, are
presented in Note 3 to the Consolidated Financial Statements. Raw material requirements, finished product sales and
firm sales commitments are also sensitive to changes in commodity prices.
2014 Annual Report 23
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Management’s Discussion & Anal ysis
Because changes in foreign currency exchange rates affect the cash paid or received on foreign currency
denominated receivables and payables, Seaboard manages certain of these risks through the use of foreign currency
forward exchange agreements. Changes in interest rates affect the cash required to service variable rate debt.
Seaboard uses interest rate swaps to manage risks of increasing interest rates.
During 2014, Seaboard put into place four, approximately eight-year interest rate exchange agreements with
mandatory early termination dates in the second half of 2014 and 2015 for one of the agreements. Three of these
agreements have since been terminated that had mandatory early termination dates in 2014. Payments made by
Seaboard to unwind these agreements were not material. Also in 2014, Seaboard entered into three new interest rate
exchange agreements to replace the three that were terminated as noted above, each with a mandatory early
termination date in 2015 and similar terms as the interest rate exchange agreements terminated. These four exchange
agreements, still outstanding as of December 31, 2014, involve the exchange of fixed-rate and variable-rate interest
payments without the exchange of the underlying notional amounts to mitigate the potential effects of fluctuations in
interest rates on the anticipated dry bulk vessel leases in 2015. Seaboard pays a fixed rate and receives a variable
rate of interest on these four notional amounts of $22.0 million each. During 2010, Seaboard entered into three
ten-year interest rate exchange agreements which involve the exchange of fixed-rate and variable-rate interest
payments over the life of the agreements without the exchange of the underlying notional amounts to mitigate the
effects of fluctuations in interest rates on variable rate debt. Seaboard pays a fixed rate and receives a variable rate of
interest on three notional amounts of $25.0 million each. All seven of these interest rate exchange agreements do not
qualify as hedges for accounting purposes. Accordingly, the changes in fair value of these agreements are recorded
in Miscellaneous, net in the Consolidated Statements of Comprehensive Income.
The following table presents the sensitivity of the fair value of Seaboard’s open net commodity future and option
contracts, foreign currency contracts and interest rate exchange agreements to a hypothetical 10 percent change in
market prices or in foreign exchange rates and interest rates as of December 31, 2014 and December 31, 2013. For
all open derivatives, the fair value of such positions is a summation of the fair values calculated for each item by
valuing each net position at quoted market prices as of the applicable date.
(Thousands of dollars)
Grains and oilseeds
Hogs
Energy related resources
Vegetable oils
Sugar
Dry dairy products
Foreign currencies
Interest rates
December 31, 2014
December 31, 2013
$
8,108
1,652
786
629
466
3
19,016
1,203
$
14,281
3,275
-
453
994
102
19,629
830
Seaboard does not have any long-term debt outstanding as of December 31, 2014. At December 31, 2013,
long-term debt included foreign subsidiary obligations payable in U.S. dollars $91.2 million. Short-term
instruments, including short-term investments, non-trade receivables and current notes payable have carrying values
that approximate market and are not included in this table due to their short-term nature.
Non-trading financial instruments sensitive to changes in interest rates at December 31, 2013 consisted of fixed rate
long-term debt totaling $92.2 million, with an average interest rate of 5.44 percent.
24 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Management’s Reports
Management’s Responsibility for Consolidated Financial Statements
The management of Seaboard Corporation and its consolidated subsidiaries (Seaboard) is responsible for the
preparation of its consolidated financial statements and related information appearing in this report. Management
believes that the consolidated financial statements fairly present Seaboard’s financial position and results of
operations in conformity with U.S. generally accepted accounting principles, and necessarily includes amounts that
are based on estimates and judgments which it believes are reasonable based on current circumstances with due
consideration given to materiality.
Management relies on a system of internal controls over financial reporting that is designed to provide reasonable
assurance that assets are safeguarded, transactions are executed in accordance with company policy and U.S.
generally accepted accounting principles and are properly recorded, and accounting records are adequate for
preparation of financial statements and other information and disclosures. The concept of reasonable assurance is
based on recognition that the cost of a control system should not exceed the benefits expected to be derived, and
such evaluations require estimates and judgments. The design and effectiveness of the system are monitored by a
professional staff of internal auditors.
All internal control systems, no matter how well designed, have inherent limitations. Internal control over financial
reporting is a process that involves human diligence and compliance, and is subject to lapses in judgment and
breakdowns resulting from human failures. Therefore, even those systems determined to be effective can provide
only reasonable assurance with respect to financial statement preparation and presentation.
The Board of Directors pursues its review of auditing, internal controls and financial statements through its audit
committee, composed entirely of independent directors. In the exercise of its responsibilities, the audit committee
meets periodically with management, with the internal auditors and with the independent registered public
accounting firm to review the scope and results of audits. Both the internal auditors and the independent registered
public accounting firm have unrestricted access to the audit committee, with or without the presence of
management.
Management’s Report on Internal Control Over Financial Reporting
The management of Seaboard Corporation and its consolidated subsidiaries (Seaboard) is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Under the supervision, and with the participation of management and its Internal Audit
Department, Seaboard conducted an evaluation of the effectiveness of its internal control over financial reporting
based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under the framework in Internal
Control - Integrated Framework (2013), management concluded that Seaboard’s internal control over financial
reporting was effective as of December 31, 2014.
Seaboard’s independent registered public accounting firm, that audited the consolidated financial statements
included in the annual report, has issued an audit report on the effectiveness of Seaboard’s internal control over
financial reporting. Their report is included herein.
2014 Annual Report 25
S E A B O A R D C O R P O R A T I O N
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Seaboard Corporation:
We have audited the accompanying consolidated balance sheets of Seaboard Corporation and subsidiaries (the
Company) as of December 31, 2014 and 2013 and the related consolidated statements of comprehensive income,
changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2014. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Seaboard Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of
their operations and their cash flows for each of the years in the three-year period ended December 31, 2014, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), Seaboard Corporation's internal control over financial reporting as of December 31, 2014, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 26, 2015 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Kansas City, Missouri
February 26, 2015
26 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Seaboard Corporation:
We have audited Seaboard Corporation’s internal control over financial reporting as of December 31, 2014, based
on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Seaboard Corporation’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying “Management’s Report on Internal Control over
Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, Seaboard Corporation maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Seaboard Corporation and subsidiaries as of December 31, 2014 and
2013, and the related consolidated statements of comprehensive income, changes in equity and cash flows for each
of the years in the three-year period ended December 31, 2014, and our report dated February 26, 2015 expressed an
unqualified opinion on those consolidated financial statements.
Kansas City, Missouri
February 26, 2015
2014 Annual Report 27
S E A B O A R D C O R P O R A T I O N
Consolidated Statements of Comprehensive Income
(Thousands of dollars except per share amounts)
Net sales:
Products (includes sales to affiliates
of $846,076, $744,965 and $747,064)
Service revenues
Other
Total net sales
Cost of sales and operating expenses:
Products
Services
Other
Total cost of sales and operating expenses
Gross income
Selling, general and administrative expenses
Operating income
Other income (expense):
Interest expense
Interest income
Interest income from affiliates
Income (loss) from affiliates
Other investment income, net
Foreign currency gains (losses), net
Gain on sale of controlling interest in subsidiary
Miscellaneous, net
Total other income, net
Earnings before income taxes
Income tax expense
Net earnings
Less: Net income attributable to noncontrolling interests
Net earnings attributable to Seaboard
2014
Years ended December 31,
2013
2012
$
5,372,547
$
5,431,402
$
4,916,322
906,402
194,127
6,473,076
4,818,242
813,179
163,633
5,795,054
678,022
254,463
423,559
(20,178)
14,009
27,399
35,356
2,146
(9,319)
65,955
(5,128)
110,240
533,799
(167,799)
366,000
(730)
365,270
$
$
952,596
286,416
6,670,414
5,089,959
877,848
233,758
6,201,565
468,849
263,985
204,864
(11,422)
17,580
24,695
(10,292)
7,846
77
-
5,867
34,351
239,215
(32,450)
206,765
(1,529)
205,236
$
$
1,015,481
257,330
6,189,133
4,536,582
896,062
195,431
5,628,075
561,058
251,397
309,661
(11,049)
11,050
20,570
30,707
8,461
352
-
(2,974)
57,117
366,778
(84,190)
282,588
(277)
282,311
$
$
Earnings per common share
$
309.96
$
171.92
$
234.54
Other comprehensive income (loss), net
of income tax benefit (expense) of $26,835, $(10,318) and $9,197:
Foreign currency translation adjustment
Unrealized gain (loss) on investments
Unrealized gain (loss) on cash flow hedges
Unrecognized pension cost
Other comprehensive loss, net of tax
Comprehensive income
Less: Comprehensive income attributable to
the noncontrolling interest
Comprehensive income attributable to Seaboard
Average number of shares outstanding
(38,624)
853
113
(33,182)
$
(70,840)
295,160
(718)
294,442
$
1,178,441
(45,956)
(1,751)
-
37,454
$
(10,253)
196,512
(1,561)
194,951
$
1,193,801
(15,788)
2,543
(113)
(2,121)
$
(15,479)
267,109
(279)
266,830
$
1,203,698
See accompanying notes to consolidated financial statements.
28 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Consolidated Balance Sheets
(Thousands of dollars except per share amounts)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Receivables:
Trade
Due from affiliates
Other
Allowance for doubtful accounts
Net receivables
Inventories
Deferred income taxes
Other current assets
Total current assets
Net property, plant and equipment
Investments in and advances to affiliates
Notes receivable from affiliates
Goodwill
Other intangible assets, net
Other assets
Total Assets
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks
Current maturities of long-term debt
Accounts payable
Payables due to affiliates
Accrued compensation and benefits
Deferred revenue
Accrued voyage costs
Accrued commodity inventory
Other current liabilities
Total current liabilities
Long-term debt, less current maturities
Accrued pension liability
Deferred income taxes
Other liabilities and deferred credits
Total non-current liabilities
Commitments and contingent liabilities
Stockholders' equity:
Common stock of $1 par value. Authorized 1,250,000 shares;
issued and outstanding 1,170,550 and 1,188,955 shares
Accumulated other comprehensive loss
Retained earnings
Total Seaboard stockholders' equity
Noncontrolling interests
Total equity
Total Liabilities and Stockholders' Equity
December 31,
2014
2013
$
36,459
490,566
$
55,055
290,649
328,015
201,870
116,041
645,926
(11,961)
633,965
736,302
45,647
110,053
2,052,992
846,757
523,063
197,270
14,846
3,872
38,520
3,677,320
$
$
75,524
-
181,686
32,532
126,513
51,158
45,092
29,532
92,795
634,832
-
135,673
95,538
91,004
322,215
419,598
145,041
99,597
664,236
(12,832)
651,404
698,998
23,449
134,394
1,853,949
863,573
406,900
180,386
43,218
18,997
51,025
3,418,048
$
$
67,699
11,697
186,468
13,774
127,212
46,192
49,621
29,248
83,416
615,327
80,480
80,918
73,336
88,017
322,751
1,171
(252,637)
2,967,364
2,715,898
4,375
2,720,273
3,677,320
$
1,189
(181,797)
2,655,857
2,475,249
4,721
2,479,970
3,418,048
$
See accompanying notes to consolidated financial statements.
2014 Annual Report 29
S E A B O A R D C O R P O R A T I O N
Consolidated Statements of Cash Flows
(Thousands of dollars)
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to cash
from operating activities:
Depreciation and amortization
Gain from sale of fixed assets
Gain from sale of power generating facility assets
Deferred income taxes
Pay-in-kind interest and accretion on notes receivable from affiliates
(Income) loss from affiliates
Dividends received from affiliates
Other investment income, net
Gain on sale of controlling interest in a subsidiary
Foreign currency exchange gain
Other, net
Changes in assets and liabilities, net of business acquired:
Receivables, net of allowance
Inventories
Other current assets
Current liabilities, exclusive of debt
Other, net
Net cash from operating activities
Cash flows from investing activities:
Purchase of short-term investments
Proceeds from the sale of short-term investments
Proceeds from the maturity of short-term investments
Capital expenditures
Proceeds from the sale of fixed assets
Proceeds from the sale of power generating facility assets
Investments in and advances to affiliates, net
Long-term notes receivable issued to affiliates
Principal payments received on long-term notes receivable from affiliates
Principal payments received on notes receivable
Purchase of long-term investments
Proceeds from the sale of controlling interest in a subsidiary
Other, net
Net cash from investing activities
Cash flows from financing activities:
Notes payable to banks, net
Proceeds from the issuance of long-term debt
Principal payments of long-term debt
Repurchase of common stock
Dividends paid
Other, net
Net cash from financing activities
Effect of exchange rate change on cash
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Years ended December 31,
2013
2012
2014
$
366,000
$
206,765
$
282,588
92,385
(2,832)
(4,953)
25,900
(15,837)
(35,356)
14,444
(2,146)
(65,955)
(239)
(296)
(6,730)
(81,280)
23,833
44,165
22,999
374,102
(1,096,681)
876,313
18,058
(121,178)
7,663
8,115
(31,368)
(1,179)
1,300
1,709
(2,597)
74,142
1,200
(264,503)
16,917
-
(91,403)
(53,781)
-
(913)
(129,180)
985
(18,596)
55,055
36,459
$
93,077
(4,433)
-
30,233
(13,642)
10,292
11,340
(7,846)
-
(222)
1,585
(154,036)
35,600
(12,642)
(73,210)
2,137
124,998
(611,737)
625,414
5,612
(149,652)
14,538
-
(39,485)
(17,531)
81,397
19,483
(4,357)
-
(1,695)
(78,013)
90,216
(8,710)
-
(24,560)
(11,936)
(30,707)
785
(8,461)
-
(244)
3,614
(66,583)
(64,943)
(18,167)
93,246
25,565
261,703
(773,111)
755,141
36,693
(158,755)
15,906
-
(24,927)
(81,231)
1,139
1,499
(9,789)
-
(3,836)
(241,271)
41,092
-
(53,756)
(23,578)
-
(1,416)
(37,658)
(1,923)
7,404
47,651
55,055
$
12,592
32,682
(43,947)
(26,830)
(14,376)
(2,589)
(42,468)
(1,823)
(23,859)
71,510
47,651
$
See accompanying notes to consolidated financial statements.
30 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Consolidated Statements of Changes in Equity
(Thousands of dollars except per share amounts)
Balances, January 1, 2012
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Repurchase of common stock
Dividends on common stock
Addition of noncontrolling interests
Dividends paid to noncontrolling interests
Balances, December 31, 2012
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Repurchase of common stock
Reduction to noncontrolling interests
Dividends paid to noncontrolling interests
Balances, December 31, 2013
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Repurchase of common stock
Reduction to noncontrolling interests
Dividends paid to noncontrolling interests
Balances, December 31, 2014
Accumulated
Other
Common Comprehensive
Stock
Loss
Retained
Earnings
$
1,211
$
(156,065)
$
2,233,778
Noncontrolling
Interests
$
543
Total
2,079,467
$
(15,479)
(13)
282,311
(26,817)
(14,376)
1,198
(171,544)
2,474,896
(10,253)
(9)
205,236
(23,569)
(706)
1,189
(181,797)
2,655,857
(70,840)
(18)
365,270
(53,763)
277
2
2,853
(36)
3,639
1,529
32
(254)
(225)
4,721
730
(12)
$
1,171
$
(252,637)
$
2,967,364
(386)
(678)
4,375
$
282,588
(15,477)
(26,830)
(14,376)
2,853
(36)
2,308,189
206,765
(10,221)
(23,578)
(960)
(225)
2,479,970
366,000
(70,852)
(53,781)
(386)
(678)
2,720,273
$
See accompanying notes to consolidated financial statements.
2014 Annual Report 31
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 1
Summary of Significant Accounting Policies
Operations of Seaboard Corporation and its Subsidiaries
Seaboard Corporation and its subsidiaries (Seaboard) is a diverse global 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. Seaboard Flour
LLC and SFC Preferred LLC (Parent Companies) are the owners of 76.4 percent of Seaboard’s outstanding common
stock.
Principles of Consolidation and Investments in Affiliates
The consolidated financial statements include the accounts of Seaboard Corporation and its domestic and foreign
subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.
Investments in non-controlled affiliates are accounted for by the equity method. Financial information from certain
foreign subsidiaries and affiliates is reported on a one- to three-month lag, depending on the specific entity.
Short-Term Investments
Short-term investments are retained for future use in the business and may include money market funds, corporate
bonds, U.S. government agency securities, high yield debt securities, equity mutual funds, domestic equity ETFs
and, on a limited basis, foreign government bonds. Investments held by Seaboard that are categorized as
available-for-sale are reported at their estimated fair value with any related unrealized gains and losses reported net
of tax, as a component of accumulated other comprehensive income (loss). Investments held by Seaboard that are
categorized as trading securities are reported at their estimated fair value with any unrealized gains and losses
included in other investment income, net on the Consolidated Statements of Comprehensive Income. Gains and
losses on sale of investments are generally based on the specific identification method.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and generally do not bear interest. The Power segment,
however, collects interest on certain past due accounts, and the Commodity Trading and Milling segment provides
extended payment terms for certain customers in certain countries due to local market conditions. The allowance for
doubtful accounts is Seaboard’s best estimate of the amount of probable credit losses. For most operating segments,
Seaboard uses a specific identification approach to determine, in management’s judgment, the collection value of
certain past due accounts based on contractual terms. For the Marine segment, the allowance for doubtful accounts is
based on an aging percentage methodology primarily based on historical write-off experience. Seaboard reviews its
allowance for doubtful accounts monthly. Account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered remote.
Inventories
Seaboard uses the lower of last-in, first-out (LIFO) cost or market for determining inventory cost of live hogs, fresh
pork product and related materials. Grain, flour and feed inventories at foreign milling operations are valued at the
lower of weighted average cost or market. All other inventories, including further processed pork products, are
valued at the lower of first-in, first-out (FIFO) cost or market.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and are being depreciated on the straight-line method over useful
lives, ranging from 3 to 30 years. Property, plant and equipment leases which are deemed to be installment purchase
obligations have been capitalized and included in the property, plant and equipment accounts. Routine and planned
major maintenance, repairs and minor renewals are expensed as incurred, while major renewals and improvements
are capitalized.
Impairment of Long-Lived Assets
Long-lived assets, primarily property, plant and equipment, are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows
expected to be generated by the asset. If such assets are determined to be impaired, the impairment to be recognized
is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
32 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Notes Receivable from Affiliates
Seaboard monitors the credit quality of notes receivable from its affiliates by obtaining and reviewing financial
information for these affiliates on a monthly basis and by having Seaboard representatives serve on the Board of
Directors of these affiliates. If based on current information and events it is probable that Seaboard will be unable to
collect all amounts due according to the contractual terms of the Notes Receivable from Affiliates and an amount
can be reasonably estimated, Seaboard will write down the Notes Receivable to estimated realizable value.
Goodwill and Other Intangible Assets
Goodwill is assessed annually for impairment by each reporting unit at the quarter end closest to the anniversary
date of the acquisition, or more frequently if circumstances indicate that impairment is likely. Separable intangible
assets with finite lives are amortized over their estimated useful lives. Any one event or a combination of events
such as change in the business climate, a negative change in relationships with significant customers and changes to
strategic decisions, including decisions to expand made in response to economic or competitive conditions could
require an interim assessment prior to the next required annual assessment. Goodwill is primarily related to the
repurchase in 2007 of a non-controlling interest of Seaboard Foods LLC in the Pork segment for a total of
$12,256,000 as of December 31, 2014 and 2013. Both goodwill and other intangible assets, net decreased in 2014 as
a result of a transaction in the Pork segment discussed in Supplemental Non–Cash Transactions below. Based on the
annual assessments conducted by each reporting unit during 2014, there were no impairment charges recorded for
the year ended December 31, 2014.
Accrued Self-Insurance
Seaboard is self-insured for certain levels of workers’ compensation, health care coverage, property damage and
general, vehicle and product recall liability. The cost of these self-insurance programs is accrued based upon
estimated settlements for known and anticipated claims. Changes in estimates to previously recorded reserves are
reflected in current operating results.
Asset Retirement Obligation
Seaboard has recorded long-lived assets and a related liability for the asset retirement obligation costs associated
with the closure of the hog lagoons it is legally obligated to close in the future should Seaboard cease operations or
plan to close such lagoons voluntarily in accordance with a changed operating plan. Based on detailed assessments
and appraisals obtained to estimate the future retirement costs, Seaboard has determined and recorded the present
value of the projected costs in non-current other liabilities on the Consolidated Balance Sheets, with the retirement
asset depreciated over the economic life of the related asset. The following table shows the changes in the asset
retirement obligation during 2014 and 2013:
(Thousands of dollars)
Beginning balance
Accretion expense
Disposals
Liability for additional lagoons placed in service
Ending balance
Years ended December 31,
2013
$ 14,315
1,177
-
86
$ 15,578
2014
$ 15,578
1,263
(114)
-
$ 16,727
Income Taxes
Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted
statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the
tax bases of existing assets and liabilities. However, in the future, as these timing differences reverse, a lower
statutory tax rate may apply pursuant to the provisions for domestic manufacturers of the American Jobs Creation
Act of 2004. In accordance with U.S. generally accepted accounting principles (GAAP), Seaboard will recognize
the benefit or cost of this change in the future.
Revenue Recognition
As a result of a marketing agreement with Triumph Foods LLC (Triumph), Seaboard’s sales prices for its pork
products included in product revenues are primarily based on a margin sharing arrangement that considers the
average sales price and mix of products sold from both Seaboard’s and Triumph’s hog processing plants. Seaboard
earns a fee for marketing the pork products of Triumph, and recognizes this fee as service revenue primarily based
2014 Annual Report 33
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
on the number of head processed by Triumph. Revenues for the commodity trading business are recognized when
the commodity is delivered to the customer, collection is reasonably assured and the sales price is fixed or
determinable. Revenues for cargo services are recognized ratably over the transit time for each voyage, with
expenses associated with cargo services recognized as incurred. Revenues for all other commercial exchanges are
recognized at the time products are shipped or delivered in accordance with shipping terms or services rendered, the
customer takes ownership and assumes risk of loss, collection is reasonably assured and the sales price is fixed or
determinable.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions
include those related to allowance for doubtful accounts, valuation of inventories, impairment of long-lived assets,
potential write-down related to investments in and advances to affiliates and notes receivable from affiliates, income
taxes and accrued pension liability. Actual results could differ from those estimates.
Earnings Per Common Share
Earnings per common share are based upon the weighted average shares outstanding during the period. Basic and
diluted earnings per share are the same for all periods presented.
Reclassifications
Prior year amounts for accounts payable were increased and payables due to affiliates decreased by $10,552,000 on
the consolidated balance sheet as of December 31, 2013 to properly reflect the obligations.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, management considers all demand deposits and overnight
investments as cash equivalents. The following table shows the amounts paid for interest and income taxes:
(Thousands of dollars)
Interest
Income taxes (net of refunds)
Years ended December 31,
2014
$ 20,177
135,393
2013
$ 11,119
59,899
2012
$ 11,674
69,760
Supplemental Non-Cash Transactions
As more fully described in Note 4, as of September 27, 2014 Seaboard’s Pork segment sold to Triumph Foods LLC
(Triumph) a 50% interest in its processed meats division, Daily’s Premium Meats (Daily’s). As a result, Seaboard
deconsolidated Daily’s from its Consolidated Balance Sheet as of September 27, 2014. The following table
summarizes the non-cash transactions resulting from this deconsolidation:
(Thousands of dollars)
Decrease in net working capital
Increase in investment in and advances to affiliates
Decrease in fixed assets
Decrease in goodwill
Decrease in other intangible assets, net (not subject to amortization)
Decrease in noncontrolling interest
Gain on sale of controlling interest in subsidiary
$
21,070
(74,142)
16,038
28,372
17,000
(151)
65,955
Net proceeds from sale of controlling interest in subsidiary
$
74,142
As discussed in Note 4, as of December 31, 2014 and 2013, Seaboard has notes receivable from affiliates which
accrue pay-in-kind interest income. Non-cash, pay-in-kind interest income and accretion of discount recognized on
these notes receivable for the years ended December 31, 2014, 2013 and 2012 was $15,837,000, $13,642,000 and
$11,936,000, respectively.
34 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
During the third quarter of 2013, Seaboard finalized the details of its investment in and long-term loan to a bakery
business in the Democratic Republic of Congo in which Seaboard has a 50% non-controlling interest, resulting in
decreasing investments in and advances to affiliates and increasing long-term notes receivable from affiliates by
$26,290,000 for amounts previously advanced prior to 2013. See Note 4 for further discussion.
Foreign Currency Transactions and Translation
Seaboard has operations in and transactions with customers in a number of foreign countries. The currencies of the
countries fluctuate in relation to the U.S. dollar. Certain of the major contracts and transactions, however, are
denominated in U.S. dollars. In addition, the value of the U.S. dollar fluctuates in relation to the currencies of
countries where certain of Seaboard’s foreign subsidiaries and affiliates primarily conduct business. These
fluctuations result in exchange gains and losses. The activities of these foreign subsidiaries and affiliates are
primarily conducted with U.S. subsidiaries or operate in hyper-inflationary environments. As a result, the financial
statements of certain foreign subsidiaries and affiliates are re-measured using the U.S. dollar as the functional
currency.
Seaboard’s Sugar segment, two consolidated subsidiaries (Commodity Trading and Milling segment businesses in
Canada and Zambia) and eight non-controlled, non-consolidated affiliates (Commodity Trading and Milling
segment businesses in Australia, Brazil, Colombia, Kenya, Lesotho, South Africa and Zambia), use local currency as
their functional currency. Assets and liabilities of these subsidiaries are translated to U.S. dollars at year-end
exchange rates, and income and expense items are translated at average rates. Translation gains and losses are
recorded as components of other comprehensive loss. For these entities, U.S. dollar denominated net asset or
liability conversions to the local currency are recorded through income.
Derivative Instruments and Hedging Activities
Seaboard recognizes all derivatives as either assets or liabilities at their fair values. Accounting for changes in the
fair value of a derivative depends on its designation and effectiveness. Derivatives qualify for treatment as hedges
for accounting purposes when there is a high correlation between the change in fair value of the instrument and the
related change in value of the underlying commitment. Additionally, in order to designate a derivative financial
instrument as a hedge for accounting purposes, extensive record keeping is required. For derivatives that qualify as
hedges for accounting purposes, the change in fair value has no net impact on earnings, to the extent the derivative is
considered effective, until the hedged transaction affects earnings. For derivatives that are not designated as hedging
instruments for accounting purposes, or for the ineffective portion of a hedging instrument, the change in fair value
does affect current period net earnings.
Seaboard uses various derivative instruments to manage various types of market risks from its day-to-day
operations, primarily including commodity futures and option contracts, foreign currency exchange agreements and
interest rate exchange agreements. While management believes each of these instruments primarily are entered into
in order to effectively manage various market risks, as of December 31, 2014, none of the derivatives are designated
and accounted for as hedges, primarily as a result of the extensive record-keeping requirements. Seaboard also
enters into speculative derivative transactions not directly related to its raw material requirements.
Recently Issued Accounting Standards Not Yet Adopted
In May 2014, the Financial Accounting Standards Board issued guidance to develop a single, comprehensive
revenue recognition model for all contracts with customers. This guidance requires an entity to recognize the amount
of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This
guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
Seaboard is currently evaluating the impact this new guidance will have on its consolidated financial statements and
related disclosures. Seaboard will be required to adopt this guidance on January 1, 2017 and it is currently
anticipated that Seaboard will apply this guidance using the cumulative effect transition method.
2014 Annual Report 35
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 2
Investments
All of Seaboard’s available-for-sale and trading securities are classified as current assets, as they are readily
available to support Seaboard’s current operating needs. At December 31, 2014 and 2013, money market funds
included $4,210,000 and $16,144,000 denominated in Canadian dollars, respectively, and $3,588,000 and
$11,715,000 denominated in Euros, respectively. Unrealized gains (losses) related to trading securities were
$(6,880,000), $(736,000) and $1,669,000 for the years ended December 31, 2014, 2013 and 2012, respectively.
The following is a summary of the amortized cost and estimated fair value of short-term investments for both
available for sale and trading securities at December 31, 2014 and 2013:
(Thousands of dollars)
Money market funds
Corporate bonds
U.S. Government agency securities
Asset backed debt securities
Collateralized mortgage obligations
U.S. Treasury securities
Emerging markets debt mutual fund
Total available-for-sale short-term investments
High yield trading debt securities
Equity mutual fund
Domestic equity ETF
Money market funds held in trading accounts
Emerging markets trading debt mutual fund
Other trading investments
Total trading short-term investments
Total short-term investments
2014
2013
Amortized
Cost
$ 142,432
11,000
9,684
2,260
1,150
523
-
167,049
187,491
83,809
31,307
21,401
3,323
2,850
330,181
$ 497,230
Fair
Value
$ 142,432
11,015
9,666
2,291
1,170
522
-
167,096
181,483
82,542
32,651
21,401
2,614
2,779
323,470
$ 490,566
Amortized
Cost
$ 88,430
69,591
27,299
8,446
7,597
5,258
17,693
224,314
49,352
-
-
11,033
3,202
2,141
65,728
$ 290,042
Fair
Value
$ 88,430
70,258
27,147
8,477
7,600
5,223
16,941
224,076
50,428
-
-
11,033
2,858
2,254
66,573
$ 290,649
The following table summarizes the estimated fair value of fixed rate securities designated as available-for-sale,
classified by the contractual maturity date of the security as of December 31, 2014:
(Thousands of dollars)
Due within one year
Due after one year through three years
Due after three years
Total fixed rate securities
2014
$ 546
9,956
11,105
$ 21,607
In addition to its short-term investments, Seaboard also has trading securities related to Seaboard’s deferred
compensation plans classified in other current assets on the Consolidated Balance Sheets. See Note 8 for information
on the types of trading securities held related to the deferred compensation plans and Note 9 for a discussion of
assets held in conjunction with investments related to Seaboard’s defined benefit pension plan.
36 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 3
Inventories
The following table is a summary of inventories at the end of each year:
(Thousands of dollars)
At lower of LIFO cost or market:
Live hogs and materials
Fresh pork and materials
LIFO adjustment
Total inventories at lower of LIFO cost or market
At lower of FIFO cost or market:
Grains, oilseeds and other commodities
Sugar produced and in process
Other
Total inventories at lower of FIFO cost or market
Grain, flour and feed at lower of weighted average cost or market
Total inventories
December 31,
2014
2013
$
208,641
28,573
237,214
(36,560)
200,654
320,066
48,863
57,344
426,273
109,375
736,302
$
$
207,310
33,485
240,795
(62,236)
178,559
299,229
53,325
74,289
426,843
93,596
698,998
$
The use of the LIFO method increased 2014 and 2013 net earnings by $15,662,000 ($13.29 per common share) and
by $17,381,000 ($14.56 per common share), respectively, and decreased 2012 net earnings by $20,098,000 ($16.70
per common share). If the FIFO method had been used for certain inventories of the Pork segment, inventories
would have been higher by $36,560,000 and $62,236,000 as of December 31, 2014 and 2013, respectively.
Note 4
Investments in and Advances to Affiliates and Notes Receivable from Affiliates
Seaboard’s investments in and advances to non-controlled, non-consolidated affiliates are primarily related to
Butterball, LLC (Butterball), as discussed below, Commodity Trading and Milling segment foreign businesses
conducting flour, maize and feed milling, baking operations and poultry production and processing and Daily’s in
the Pork segment, also discussed below. As of December 31, 2014, the location and percentage ownership of these
foreign affiliates are as follows: Democratic Republic of Congo (50%), Gambia (50%), Kenya (35%-49%), Lesotho
(50%), Nigeria (25%-48%), South Africa (30%-50%) and Zambia (49%) in Africa; Brazil (50%), Colombia (40%-
42%) and Ecuador (25%-50%) in South America, and Haiti (23%) in the Caribbean. Also, Seaboard has investments
in agricultural commodity trading businesses in Australia (25%) and Peru (50%). Seaboard generally is the primary
provider of choice for grains, feed and supplies purchased by these non-controlled affiliates. As Seaboard conducts
its agricultural commodity trading business with third parties, consolidated subsidiaries and affiliates on an
interrelated basis, cost of sales on affiliates cannot be clearly distinguished without making numerous assumptions,
primarily with respect to mark-to-market accounting for commodity derivatives. In addition, Seaboard has
investments in and advances to a cargo terminal business in Jamaica (21%) in the Marine segment and two
sugar-related businesses in Argentina (46%-50%) in the Sugar segment. The equity method is used to account for
all of the above investments.
Seaboard Corporation also has a 50% non-controlling voting interest in Butterball. Butterball is a vertically
integrated producer, processor and marketer of branded and non-branded turkey and other products. As of December
31, 2014, Butterball had intangible assets of $111,000,000 for trade name and $73,667,000 for goodwill. The equity
method is used to account for this investment.
2014 Annual Report 37
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
In connection with its initial investment in Butterball in December 2010, Seaboard provided Butterball with a
$100,000,000 unsecured subordinated loan (the 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 which accumulates and is paid at maturity. In connection with providing the subordinated loan,
Seaboard received detachable warrants, which upon exercise for a nominal price, would enable Seaboard to acquire
an additional 5% equity interest in Butterball. Seaboard can exercise these warrants at any time before December 6,
2020. Butterball has the right to repurchase the warrants for fair market value. The warrant agreement essentially
provides Seaboard with a 52.5% economic interest, as these warrants are in substance an additional equity interest.
Therefore, Seaboard records 52.5% of Butterball’s earnings as Income from Affiliates in the Consolidated
Statements of Comprehensive Income. However, all significant corporate governance matters would continue to be
shared equally between Seaboard and its partner in Butterball even if the warrants are exercised, unless Seaboard
already owns a majority of the voting rights at the time of exercise. The warrants qualify for equity treatment under
accounting standards. Accordingly, as of December 2010, the warrants were allocated a value of $10,586,000,
classified as Investments in and Advances to Affiliates on the Consolidated Balance Sheets, and the subordinated
loan was allocated a discounted value of $89,414,000, classified as Notes Receivable from Affiliates on the
Consolidated Balance Sheets, of the total $100,000,000 subordinated financing discussed above. The discount on
the subordinated loan is being accreted monthly in Interest Income From Affiliates through the maturity date of
December 6, 2017. At December 31, 2014 and 2013, the recorded balance of this Note Receivable from Affiliates
was $141,260,000 and $126,082,000, respectively.
On December 31, 2012, Seaboard provided a loan of $81,231,000 to Butterball and was included in Notes
Receivable from Affiliates. This loan was made to fund Butterball’s purchase of assets from Gusto Packing
Company, Inc., a pork and turkey further processor located in Montgomery, Illinois. In late March 2013, Butterball
renegotiated its third party financing and on March 28, 2013 repaid in full this loan from Seaboard.
During the third quarter of 2011, Seaboard provided a term loan of $13,037,000 to Butterball to pay off capital
leases for certain fixed assets which originally were financed with third parties. The effective interest rate on this
term loan is approximately 12%. Although the term loan expires on January 31, 2018, Butterball can pay off the
term loan prior to such expiration date as Butterball has for sale all of the related assets and is required to remit the
proceeds from such sale to Seaboard to repay the loan. As of December 31, 2014 and 2013, the balance of the term
loan included in Notes Receivable from Affiliates was $7,606,000 and $8,905,000, respectively.
As of September 27, 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in Daily’s for cash proceeds of
$74,142,000 resulting in a gain on sale of controlling interest in subsidiary of $65,955,000 ($40,233,000 net of
taxes, or $34.14 per share) in 2014. Daily’s produces and markets raw and pre-cooked bacon, ham and sausage and
has two further processing plants located in Salt Lake City, Utah and Missoula, Montana. The Pork segment
currently has a business relationship with Triumph under which Seaboard markets substantially all of the pork
products produced at Triumph’s plant in St. Joseph, Missouri. Through September 27, 2014, Seaboard consolidated
the operating results of Daily’s as part of its Pork segment operations. As a result of this transaction, Seaboard
deconsolidated Daily’s from its Consolidated Balance Sheet as of September 27, 2014 (see Note 1, Supplemental
Non-Cash Transactions, for details of the impact on the Consolidated Balance Sheet from this deconsolidation).
Seaboard’s remaining 50% investment in Daily’s is accounted for in the Pork segment by using the equity method of
accounting. Based on the cash consideration received for this transaction and third party valuations for fixed assets
and certain intangible assets, it was determined the fair value of Seaboard’s remaining 50% investment in Daily’s
exceeded book value by $32,978,000, which is included in the gain on sale above, for a total fair value of
$74,142,000. In addition, both Seaboard and Triumph contributed $2,000,000 each to Daily’s as additional equity to
provide Daily’s with additional working capital resulting in a beginning total investment in affiliate of $76,142,000
related to Daily’s. Pro forma results of operations are not presented as the effects of deconsolidation are not
material to Seaboard’s results of operations, primarily as Seaboard supplies raw product to Daily’s. Triumph also
supplies raw product to Daily’s. It is expected that both Seaboard and Triumph will continue to sell raw product to
Daily’s.
38 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Beginning in 2010, Seaboard invested in a bakery built in the Democratic Republic of Congo (DRC) for a 50%
non-controlling interest in this business. During 2014, 2013 and 2012, Seaboard invested $2,595,000, $4,531,000,
and $24,814,000, respectively, in equity, long-term advances and long-term notes receivable. The bakery began
operations in the fourth quarter of 2012. During 2013, Seaboard finalized details of this investment resulting in
decreasing investments in and advances to affiliates and increasing long-term notes receivable from affiliates by
$26,290,000 for amounts previously advanced as noted above prior to 2013. This interest bearing long-term note
receivable from this affiliate has a decreasing balance with the first payment due in June 2015 and a final maturity
date of December 2020. Repayment of this note is primarily dependent upon this business improving existing
operations to generate adequate future cash flows to make scheduled payments when due. In addition, the bakery
has been incurring operating losses since it began operations as it continues to resolve equipment problems and
attempts to gain market share. As a result of continuing equipment problems, other production challenges and
unfavorable local market conditions causing challenges in gaining market share, Seaboard’s management
determined achieving improved operating results would take significantly longer than initially and recently
anticipated. As a result, Seaboard’s management determined there was a decline in value considered other than
temporary as of December 31, 2014 and thus Seaboard recorded a write-down of $10,772,000 in loss from affiliate
in the fourth quarter of 2014, which represented the remaining equity investment in this business and suspended the
use of the equity method as of December 31, 2014. There was no tax benefit from this transaction. In addition,
Seaboard discontinued recognizing further interest income on the note receivable during the fourth quarter of 2014.
As of December 31, 2014, the recorded balance of this note receivable and previous accrued interest was
$34,556,000, all classified as long-term given uncertainty of the timing of payments in the future. If the future long-
term cash flows of this bakery do not improve, there is a possibility that some of the recorded value of the Note
Receivable from Affiliate could be deemed uncollectible in the future, which may result in a material charge to
earnings. Including this business, as of December 31, 2014 Seaboard had a total of $57,390,000 of investments in,
advances to and notes receivable from all of its affiliates in the DRC, which represents the single largest foreign
country risk exposure for Seaboard’s equity method investments. One of the other affiliates in the DRC, to which
Seaboard sells wheat, is the only supplier of flour to this bakery.
In September 2013, Seaboard invested $17,000,000 in a flour production business in Brazil for a 50% non-
controlling equity interest and provided a $13,000,000 long-term loan to this business. Half of the interest on this
long-term note receivable from affiliate is paid currently in cash and the other half accrues as pay-in-kind interest.
This note receivable matures in September 2020 but can be repaid after one year with Seaboard having the option to
convert the note receivable to equity after one year and the other equity holders having the option to match such
conversion with a purchase of new shares to avoid dilution. In addition, at the time of Seaboard’s initial investment
in this business, plans included potential future equal additional investments by the owners to improve existing
operations and expand operations to improve long-term operating results. In 2014, Seaboard’s share of additional
investment totaled $3,886,000. This business also incurred significant operating losses in 2014. Discussions are
ongoing between the owners to determine the extent and timing of future additional investments for possible
expansion plans to improve operating results. As of December 31, 2014, the recorded balance of this Note
Receivable from Affiliates was $13,849,000 and Seaboard’s equity investment in this business was $11,669,000. As
of December 31, 2014, Seaboard also has Receivables-Due from Affiliates of $13,969,000 from sales of grain and
supplies related to this business.
Also in September 2013, Seaboard invested $7,351,000 in a flour milling business located in South Africa for a 49%
non-controlling interest. In July 2013, Seaboard acquired a 50% non-controlling interest in a flour milling business
located in Gambia by making a total investment in and advances to this affiliate of $9,099,000 during 2013.
In September 2014, Seaboard invested $17,333,000 in a cargo terminal business in Jamaica for a 21% non-
controlling interest. This investment will be accounted for in the Marine segment using the equity method reported
on a three-month lag basis and thus Seaboard’s first proportionate share of earnings will not be recognized until the
first quarter of 2015.
2014 Annual Report 39
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Combined condensed financial information of the non-controlled, non-consolidated affiliates for their fiscal periods
ended within each of Seaboard’s years ended were as follows:
Pork Segment
(Thousands of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
Commodity Trading and Milling Segment
(Thousands of dollars)
Net sales
Net income (loss)
Total assets
Total liabilities
Total equity
Marine Segment
(Thousands of dollars)
Total assets
Total liabilities
Total equity
Sugar Segment
(Thousands of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
Turkey Segment
(Thousands of dollars)
Net sales
Net income (loss)
Total assets
Total liabilities
Total equity
December 31,
2014
$
$
$
$
$
71,173
7,381
175,055
15,238
159,817
December 31,
2013
(20,169)
2014
$ 2,222,591
$
$ 1,132,120
731,984
$
400,136
$
1,907,647
7,857
1,038,978
614,623
424,355
2012
1,510,101
24,686
862,992
469,265
393,727
December 31,
2014
$
$
$
118,823
36,379
82,444
2014
December 31,
2013
$
$
$
$
$
9,191
1,684
8,178
1,660
6,518
12,073
1,349
9,271
3,158
6,113
2012
12,107
194
8,865
2,839
6,026
2014
December 31,
2013
$ 1,833,141
104,130
$
$ 1,021,182
547,398
$
473,784
$
1,729,568
(19,556)
907,004
504,581
402,423
2012
1,437,376
38,384
871,945
443,291
428,654
At December 31, 2014, Seaboard’s carrying value of certain of these investments in affiliates in the Commodity
Trading and Milling segment was $13,655,000 more than its share of the affiliate’s book value. The excess is
attributable primarily to the valuation of property, plant and equipment and intangible assets. The amortizable assets
are being amortized to income (loss) from affiliates over the remaining life of the assets.
40 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 5
Net Property, Plant and Equipment
The following table is a summary of property, plant and equipment at the end of each year:
(Thousands of dollars)
Land and improvements
Buildings and improvements
Machinery and equipment
Vessels and vehicles
Office furniture and fixtures
Construction in progress
Accumulated depreciation and amortization
Net property, plant and equipment
Useful
Lives
0-15 years
30 years
3-20 years
3-18 years
5 years
December 31,
2014
$ 184,647
389,193
1,001,061
160,310
25,965
25,535
1,786,711
(939,954)
$ 846,757
2013
$ 194,237
395,598
990,553
126,502
30,102
40,317
1,777,309
(913,736)
$ 863,573
Note 6
Income Taxes
Income taxes attributable to continuing operations for the years ended December 31, 2014, 2013 and 2012 differed
from the amounts computed by applying the statutory U.S. Federal income tax rate of 35% to earnings before
income taxes excluding non-controlling interest for the following reasons:
Years ended December 31,
(Thousands of dollars)
2014
Computed “expected” tax expense excluding non-controlling interest $ 186,574
Adjustments to tax expense attributable to:
Foreign tax differences
Tax-exempt income
State income taxes, net of federal benefit
Federal tax credits
Change in pension deferred tax
Domestic manufacturing deduction
Other
4,314
(8,793)
10,021
(11,765)
(331)
(10,667)
(1,554)
2013
83,190
2012
128,275
$
$
1,808
(33,183)
3,139
(21,095)
(397)
(1,488)
476
(36,139)
(62)
658
(1,693)
(1,252)
(5,643)
46
Total income tax expense
$ 167,799
$
32,450
$
84,190
Certain of Seaboard's foreign operations are subject to no income tax or a tax rate which is considerably lower than
the U.S. corporate tax rate. Fluctuation of earnings or losses incurred from certain foreign operations conducting
business in these jurisdictions can impact the mix of taxable earnings for each fiscal year. The treatment of
biodiesel production credits as tax-exempt income was clarified by the U.S. Internal Revenue Service (IRS) in 2013
for 2013 and prior years and thus the amount of benefit recognized in 2013 above includes $16,523,000 for related
refund claims for prior years not previously treated as tax-exempt.
2014 Annual Report 41
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Earnings before income taxes consisted of the following:
(Thousands of dollars)
United States
Foreign
Total earnings excluding non-controlling interest
Less: net income attributable to non-controlling interest
Total earnings before income taxes
The components of total income taxes were as follows:
(Thousands of dollars)
Current:
Federal
Foreign
State and local
Deferred:
Federal
Foreign
State and local
Income tax expense
Unrealized changes in other comprehensive income
2014
$ 471,744
61,325
533,069
(730)
$ 533,799
Years ended December 31,
2013
$ 164,285
73,401
237,686
(1,529)
$ 239,215
2012
$ 178,821
187,680
366,501
(277)
$ 366,778
Years ended December 31,
2013
2012
2014
$ 111,120
19,729
11,505
$ (33,679)
28,048
3,093
$ 68,928
31,149
6,507
19,953
976
4,516
167,799
(26,835)
24,698
5,575
4,715
32,450
10,318
(16,818)
(935)
(4,641)
84,190
(9,197)
Total income taxes
$ 140,964
$ 42,768
$ 74,993
As of December 31, 2014 and 2013, Seaboard had income taxes receivable of $49,298,000 and $60,456,000,
respectively, primarily related to domestic tax jurisdictions, and had income taxes payable of $4,673,000 and
$2,974,000, respectively, primarily related to foreign tax jurisdictions.
42 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Components of the net deferred income tax liability at the end of each year were as follows:
(Thousands of dollars)
Deferred income tax liabilities:
Depreciation
Domestic partnerships
LIFO
Cash basis farming adjustment
Other
Deferred income tax assets:
Reserves/accruals
Deferred earnings of foreign subsidiaries
Net operating and capital loss carry-forwards
Tax credit carry-forwards
Other
Valuation allowance
December 31,
2014
2013
$ 107,091
48,592
42,193
9,763
4,391
$ 212,030
$ 110,662
34,853
18,853
14,760
3,569
182,697
20,558
$ 114,519
29,871
17,212
9,983
4,300
$ 175,885
$ 83,408
24,266
17,725
14,933
3,535
143,867
17,869
Net deferred income tax liability
$ 49,891
$ 49,887
Seaboard recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. For
the years ended December 31, 2014, 2013 and 2012, such interest and penalties were not material. The Company
had approximately $3,097,000 and $2,120,000 accrued for the payment of interest and penalties on uncertain tax
positions at December 31, 2014, and 2013, respectively.
As of December 31, 2014 and 2013, Seaboard had $6,888,000 and $7,301,000, respectively, in total unrecognized
tax benefits all of which, if recognized, would affect the effective tax rate. Seaboard does not have any material
uncertain tax positions in which it is reasonably possible that the total amounts of the unrecognized tax benefits will
significantly increase or decrease within 12 months of the reporting date. The following table is a reconciliation of
the beginning and ending amount of unrecognized tax benefits:
(Thousands of dollars)
Beginning balance at January 1
Additions for uncertain tax positions of prior years
Decreases for uncertain tax positions of prior years
Additions for uncertain tax positions of current year
Lapse of statute of limitations
Ending balance at December 31
$
2014
7,301
454
(288)
44
(623)
$
2013
5,053
2,300
(238)
422
(236)
$
6,888
$
7,301
Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material
adjustments. Seaboard’s U.S. federal income tax years’ are closed through 2009. The IRS examination of
Seaboard’s 2010 U.S. income tax return has been finalized. The jurisdictions that most significantly impact
Seaboard’s effective tax rate are the United States and Argentina.
As of December 31 2014, Seaboard had not provided for U.S. Federal Income and foreign withholding taxes on
$999,524,000 of undistributed earnings from foreign operations, as Seaboard intends to reinvest such earnings
indefinitely outside of the United States. Determination of the tax that might be paid on these undistributed earnings
if eventually remitted is not practical. If Seaboard decided at a later date to repatriate these earnings to the U.S.,
Seaboard would be required to provide for the net tax effects on these amounts.
2014 Annual Report 43
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Management believes Seaboard’s future taxable income will be sufficient for full realization of the net deferred tax
assets. The valuation allowance relates to the tax benefits from foreign net operating losses. Management does not
believe these benefits are more likely than not to be realized due to limitations imposed on the deduction of these
losses. At December 31, 2014, Seaboard had foreign net operating loss carry-forwards of approximately
$51,876,000 a portion of which expire in varying amounts between 2015 and 2032, while others have indefinite
expiration periods.
At December 31, 2014, Seaboard had state tax credit carry-forwards of approximately $22,708,000, net of valuation
allowance, all of which carry-forward indefinitely.
Seaboard has certain investments in various limited partnerships as a limited partner that are expected to enable
Seaboard to obtain certain low income housing tax credits over a period of approximately ten years. Seaboard uses
the proportional amortization method of accounting for all of its qualified affordable housing project investments by
amortizing the initial cost of the investment in proportion to the income tax credits received and recognizing the net
investment performance in the Comprehensive Statements of Income as a component of income tax expense. The
amounts of affordable housing tax credits and other tax benefits and related amortization expense recognized as
components of income tax expense were not material for the years ended December 31, 2014, 2013 and 2012. The
balance of these investments recognized on the Consolidated Balance Sheets as of December 31, 2014 and 2013 was
$11,625,000 and $13,189,000, respectively.
On December 19, 2014, the Tax Increase Prevention Act of 2014 (the 2014 Tax Act) was signed into law. The 2014
Tax Act extended many expired corporate income tax provisions through December 31, 2014 which impacted
current and deferred income taxes for financial reporting purposes. The total annual effects of the provisions in the
new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the fourth quarter of 2014.
The impact was a tax benefit of $11,410,000, or $9.68 per common share, recorded primarily related to certain
income tax credits. In addition to this amount was a credit of $15,450,000 for the Federal blender’s credits for 2014
that was recognized as revenues in the fourth quarter of 2014. See Note 12 for further discussion of this Federal
blender’s credit. Since the 2014 Tax Act only extended these tax provisions, including the Federal blender’s credits,
through December 31, 2014, future legislation would be required to extend these expired tax provisions.
On January 2, 2013, the American Taxpayer Relief Act of 2012 (the Tax Act) was signed into law. The Tax Act
extended many expired corporate income tax provisions that impact current and deferred taxes for financial
reporting purposes. In accordance with U.S. GAAP, the determination of current and deferred taxes is based on the
provisions of the enacted law as of the balance sheet date; the effects of future changes in tax law are not
anticipated. The effects of changes in tax laws, including retroactive changes, are recognized in the financial
statements in the period that the changes are enacted. Accordingly, as the Tax Act was signed into law in 2013, the
effects of the retroactive provisions in the new law on current and deferred taxes assets and liabilities for Seaboard
were recorded in the first quarter of 2013. The total impact was a one-time tax benefit of $7,945,000 recorded in the
first quarter of 2013 related to certain 2012 income tax credits. In addition to this amount was a credit of
approximately $11,260,000 for 2012 Federal blender’s credits that was recognized as revenues in the first quarter of
2013. See Note 12 for further discussion of this Federal blender’s credit.
Note 7
Notes Payable and Long-Term Debt
Notes payable amounting to $75,524,000 and $67,699,000 at December 31, 2014 and 2013, respectively, consisted
of obligations due to banks on demand or based on Seaboard’s ability and intent to repay within one year. On
October 24, 2014, Seaboard entered into a Credit Agreement for a committed line of credit totaling $50,000,000
related to a foreign subsidiary for the Commodity Trading and Milling segment, with a maturity date of October 23,
2015. At December 31, 2014, Seaboard also had another committed bank line totaling $200,000,000, with a maturity
date of February 20, 2018, for a total of $250,000,000 in committed bank lines. As of December 31, 2014, Seaboard
also had uncommitted bank lines totaling $243,620,000, of which $193,620,000 of the uncommitted lines relate to
foreign subsidiaries. At December 31, 2014, there were no borrowings outstanding under the committed lines and
there were $75,524,000 outstanding under the uncommitted lines, respectively, all related to foreign subsidiaries.
The uncommitted borrowings outstanding at December 31, 2014 primarily represented $33,421,000 denominated in
South African rand and $28,383,000 denominated in Argentine pesos. The weighted average interest rates for
outstanding notes payable were 14.34% and 13.10% at December 31, 2014 and 2013, respectively.
44 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
At December 31, 2014, Seaboard’s borrowing capacity under its committed and uncommitted lines was reduced by
letters of credit totaling $10,000 and $1,534,000, respectively. The notes payable to banks under the credit lines are
unsecured. The lines of credit do not require compensating balances. Facility fees on these agreements are not
material.
In July 2014, Seaboard provided notice of optional prepayment to its lenders related to a credit agreement with an
original maturity of 2021. The total principal payment of $85,500,000 was made on August 29, 2014. In addition,
Seaboard was required to pay an approximately $3,760,000 fee for early payment of this long-term debt that was
charged to interest expense in the third quarter of 2014. In November 2013, Seaboard provided notice of call for
early redemption to holders of certain IDRBs effective December 20, 2013 and paid $18,000,000 in the fourth
quarter of 2013. In April 2013, Seaboard provided notice of call for early redemption to holders of certain IDRBs
effective May 13, 2013 and paid $10,800,000 in the second quarter of 2013. In December 2012, Seaboard provided
notice of call for early redemption to holders of certain IDRBs effective January 14, 2013 and paid $13,000,000 in
the first quarter of 2013.
The terms of the note agreements pursuant to which the bank debt and credit lines were issued require, among other
terms, the maintenance of certain ratios and minimum net worth, the most restrictive of which requires an adjusted
leverage ratio of less than 3.5 to 1.0; requires the maintenance of consolidated tangible net worth, as defined, of not
less than $1,870,445,000, plus 25% of cumulative consolidated net income beginning after December 31, 2012;
limits aggregate dividend payments to $25,000,000 per year under certain circumstances; limits the sum of
subsidiary indebtedness and priority indebtedness to 20% of consolidated tangible net worth; and limits Seaboard’s
ability to acquire investments and sell assets under certain circumstances. Seaboard is in compliance with all
restrictive debt covenants relating to these agreements as of December 31, 2014.
Note 8
Derivatives and Fair Value of Financial Instruments
U.S. GAAP discusses several valuation techniques, such as the market approach (prices and other relevant
information generated by market conditions involving identical or comparable assets or liabilities), the income
approach (techniques to convert future amounts to single present amounts based on market expectations including
present value techniques and option pricing) and the cost approach (amount that would be required to replace the
service capacity of an asset which is often referred to as replacement cost). U.S. GAAP utilizes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The
following is a brief description of those three levels:
Level 1: Quoted Prices in Active Markets for Identical Assets - Observable inputs such as unadjusted quoted prices
in active markets for identical assets or liabilities that the Company has the ability to access at the measurement
date.
Level 2: Significant Other Observable Inputs - Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not
active.
Level 3: Significant Unobservable Inputs - Unobservable inputs that reflect the reporting entity’s own assumptions.
The following tables show assets and liabilities measured at fair value (derivatives exclude margin accounts) on a
recurring basis as of December 31, 2014 and 2013, respectively, and also the level within the fair value hierarchy
used to measure each category of assets. Seaboard uses the end of the reporting period to determine if there were
any transfers between levels. There were no transfers between levels that occurred in 2014 and 2013.
2014 Annual Report 45
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
(Thousands of dollars)
Assets:
Available-for-sale securities-short-term
investments:
Money market funds
Corporate bonds
U.S. Government agency securities
Asset backed debt securities
Collateralized mortgage obligations
U.S. Treasury securities
Trading securities-short term investments:
Balance
December 31,
2014
$ 142,432
11,015
9,666
2,291
1,170
522
High yield debt securities
Equity mutual fund
Domestic equity ETF
Money market funds held in trading accounts
Emerging markets trading debt mutual fund
Other trading investments
181,483
82,542
32,651
21,401
2,614
2,779
Trading securities-other current assets:
33,857
6,532
4,570
2,676
6,136
1,675
$ 546,012
Domestic equity securities
Foreign equity securities
Fixed income mutual funds
Other
Derivatives
Commodities (1)
Foreign currencies
Total Assets
Liabilities:
Derivatives:
Commodities (1)
Interest rate swaps
Foreign currencies
Level 1
Level 2
Level 3
$ 142,432
-
-
-
-
-
-
82,542
32,651
21,401
2,614
-
33,857
6,532
4,570
2,405
6,136
-
$ 335,140
$
-
11,015
9,666
2,291
1,170
522
181,483
-
-
-
-
2,779
-
-
-
271
-
1,675
$ 210,872
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
1,779
7,715
407
9,901
1,779
-
-
1,779
-
7,715
407
8,122
Total Liabilities
(1) Seaboard’s commodities derivative assets and liabilities are presented in the Consolidated Balance Sheets on
a net basis, including netting the derivatives with the related margin accounts. As of December 31, 2014, the
commodity derivatives had a margin account balance of $4,314,000 resulting in a net other current asset on the
Consolidated Balance Sheets of $9,267,000 and other current liabilities of $596,000.
$
$
$
$
46 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
(Thousands of dollars)
Assets:
Available-for-sale securities – short-term
investments:
Money market funds
Corporate bonds
U.S. Government agency securities
Emerging markets debt mutual fund
Asset backed debt securities
Collateralized mortgage obligations
U.S. Treasury securities
$
Trading securities- short term investments:
High yield debt securities
Money market funds held in trading accounts
Emerging markets trading debt mutual fund
Other trading investments
Trading securities – other current assets:
Domestic equity securities
Foreign equity securities
Fixed income mutual funds
Other
Derivatives
Commodities (1)
Foreign currencies
Total Assets
Liabilities:
Derivatives:
Commodities (1)
Interest rate swaps
Foreign currencies
Balance
December 31,
2013
Level 1
Level 2
Level 3
88,430
70,258
27,147
16,941
8,477
7,600
5,223
50,428
11,033
2,858
2,254
26,672
9,570
3,974
5,134
2,331
2,763
$ 341,093
$
16,014
4,103
101
20,218
$ 88,430
-
-
16,941
-
-
-
-
11,033
2,858
-
26,672
7,317
3,974
3,559
2,331
-
$ 163,115
$
-
70,258
27,147
-
8,477
7,600
5,223
50,428
-
-
2,254
-
2,253
-
1,575
-
2,763
$ 177,978
$ 15,422
-
-
$ 15,422
$
592
4,103
101
4,796
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Liabilities
(1) Seaboard’s commodities derivative assets and liabilities are presented in the Consolidated Balance Sheets on
a net basis, including netting the derivatives with the related margin accounts. As of December 31, 2013, the
commodity derivatives had a margin account balance of $29,822,000 resulting in a net other current asset on the
Consolidated Balance Sheets of $16,731,000 and other current liabilities of $592,000.
$
$
$
Financial instruments consisting of cash and cash equivalents, net receivables, notes payable and accounts payable
are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments.
The fair value of long-term debt is estimated by comparing interest rates for debt with similar terms and maturities.
If Seaboard’s debt was measured at fair value on its Consolidated Balance Sheets, it would have been classified as
level 2 in the fair value hierarchy. The amortized cost and estimated fair values of investments and long-term debt at
December 31, 2014 and 2013, are presented below:
2014 Annual Report 47
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
December 31,
(Thousands of dollars)
2014
Amortized Cost Fair Value
Short-term investments, available-for-sale
Short-term investments, trading debt securities
Long-term debt
$ 167,049
330,181
-
$ 167,096
323,470
-
2013
Amortized Cost
Fair Value
$ 224,314
65,728
92,177
$ 224,076
66,573
94,578
While management believes its derivatives are primarily economic hedges of its firm purchase and sales contracts or
anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these
types of transactions as hedges for accounting purposes.
Commodity Instruments
Seaboard uses various derivative futures and options to manage its risk to price fluctuations for raw materials and
other inventories, finished product sales and firm sales commitments. Seaboard also enters into speculative
derivative transactions not directly related to its raw material requirements. The nature of Seaboard’s market risk
exposure has not changed materially since December 31, 2013. Commodity derivatives are recorded at fair value,
with any changes in fair value being marked to market as a component of cost of sales on the Consolidated
Statements of Comprehensive Income. Since these derivatives are not accounted for as hedges, fluctuations in the
related commodity prices could have a material impact on earnings in any given period.
At December 31, 2014, Seaboard had open net derivative contracts to purchase 19,800,000 pounds of hogs,
19,620,000 pounds of soybean oil, 15,551,000 pounds of sugar, 10,697,000 bushels of grain, 88,000 pounds of dry
whey powder and 85,000 tons of soybean meal and open net derivative contracts to sell 4,326,000 gallons of heating
oil. At December 31, 2013, Seaboard had open net derivative contracts to purchase 51,184,000 pounds of sugar,
32,440,000 pounds of hogs, 6,540,000 bushels of grain, 440,000 pounds of cheese and 308,000 pounds of dry whey
powder and open net derivative contracts to sell 12,125,000 pounds of palm oil and 76,000 tons of soybean meal.
For the years ended December 31, 2014, 2013 and 2012, Seaboard recognized net realized and unrealized gains
(losses) of $18,355,000, $(17,016,000) and $(6,098,000), respectively, related to commodity contracts, primarily
included in cost of sales on the Consolidated Statements of Comprehensive Income.
Foreign Currency Exchange Agreements
Seaboard enters into foreign currency exchange agreements to manage the foreign currency exchange rate risk with
respect to certain transactions denominated in foreign currencies. Foreign exchange agreements that were primarily
related to the underlying commodity transaction were recorded at fair value, with changes in value marked to market
as a component of cost of sales on the Consolidated Statements of Comprehensive Income. Foreign exchange
agreements that were not related to an underlying commodity transaction were recorded at fair value, with changes
in value marked to market as a component of foreign currency gains (losses), net on the Consolidated Statements of
Comprehensive Income. Since these agreements are not accounted for as hedges, fluctuations in the related currency
exchange rates could have a material impact on earnings in any given year.
At December 31, 2014 and 2013, Seaboard had trading foreign exchange contracts to cover its firm sales and
purchase commitments and related trade receivables and payables, with notional amounts of $143,961,000 and
$127,389,000, respectively, primarily related to the South African rand.
Interest Rate Exchange Agreements
During 2014, Seaboard put into place four, approximately eight-year interest rate exchange agreements with
mandatory early termination dates in the second half of 2014 and 2015 for one of the agreements. Three of these
agreements have since been terminated that had mandatory early termination dates in 2014. Payments made by
Seaboard to unwind these agreements were not material. Also in 2014, Seaboard entered into three new interest rate
exchange agreements to replace the three that were terminated as noted above, each with a mandatory early
termination in 2015 and similar terms as the interest rate exchange agreements terminated. These four exchange
agreements, still outstanding as of December 31, 2014, involve the exchange of fixed-rate and variable-rate interest
payments without the exchange of the underlying notional amounts to mitigate the potential effects of fluctuations in
interest rates on the anticipated dry bulk vessel leases in 2015. Seaboard pays a fixed rate and receives a variable
rate of interest on these four notional amounts of $22,000,000 each. In May 2010, Seaboard entered into three
ten-year interest rate exchange agreements which involve the exchange of fixed-rate and variable-rate interest
payments over the life of the agreements without the exchange of the underlying notional amounts to mitigate the
48 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
effects of fluctuations in interest rates on variable rate debt. Seaboard pays a fixed rate and receives a variable rate of
interest on three notional amounts of $25,000,000 each. In August 2010, Seaboard entered into another ten-year
interest rate exchange agreement, with a notional amount of $25,000,000 that has terms similar to those for the other
three interest rate exchange agreements referred to above. In September 2012, Seaboard terminated one interest rate
exchange agreement with a notional value of $25,000,000. Seaboard made a payment in the amount of $3,861,000
to unwind this agreement. These interest rate exchange agreements do not qualify as hedges for accounting
purposes. Accordingly, the changes in fair value of these agreements are recorded in Miscellaneous, net in the
Consolidated Statements of Comprehensive Income. At December 31, 2014 and 2013, Seaboard had seven
agreements and three agreements outstanding, respectively, with a total notional value of $163,000,000 and
$75,000,000, respectively.
The following table provides the amount of gain or (loss) recognized for each type of derivative and where it was
recognized in the Consolidated Statements of Comprehensive Income for the year ended December 31, 2014 and
2013:
(Thousands of dollars)
Commodities
Foreign currencies
Foreign currencies
Interest rate
Cost of sales-products
Cost of sales-products
Foreign currency gains, net
Miscellaneous, net
2014
2013
$ 18,355
4,302
4,255
(7,988)
$
(17,016)
15,801
6,532
3,535
The following table provides the fair value of each type of derivative held as of December 31, 2014 and 2013 and
where each derivative is included on the Consolidated Balance Sheets:
(Thousands of dollars)
Asset Derivatives
Liability Derivatives
2014
$6,136
1,675
-
Commodities(1)
Other current assets
Foreign currencies Other current assets
Other current assets
Interest rate
2013
2013
$ 16,014
$2,331
101
2,763
4,103
-
(1) Seaboard’s commodities derivative assets and liabilities are presented in the Consolidated Balance Sheets on
a net basis, including netting the derivatives with the related margin accounts. As of December 31, 2014 and
2013, the commodity derivatives had a margin account balance of $4,314,000 and $29,822,000, respectively,
resulting in a net other current asset on the Consolidated Balance Sheets of $9,267,000 and $16,731,000,
respectively, and other current liabilities of $596,000 and $592,000 as of December 31, 2014 and 2013.
2014
Other current liabilities $ 1,779
407
Other current liabilities
7,715
Other current liabilities
Counterparty Credit Risk
From time to time Seaboard is subject to counterparty credit risk related to its foreign currency exchange agreements
and interest rate swaps, should the counterparties fail to perform according to the terms of the contracts. As of
December 31, 2014, Seaboard had $1,675,000 of credit risk to six counterparties related to its foreign currency
exchange agreements and no credit risk related to its interest rate swaps. Seaboard does not hold any collateral
related to these agreements.
Note 9
Employee Benefits
Seaboard maintains two defined benefit pension plans (“the Plans”) for its domestic salaried and clerical employees.
The Plans generally provide eligibility for participation after one year of service upon attaining the age of 21.
Effective January 1, 2014, newly hired employees do not qualify for participation. Benefits are generally based upon
the number of years of service and a percentage of final average pay.
2014 Annual Report 49
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Seaboard has historically based pension contributions on minimum funding standards to avoid the Pension Benefit
Guaranty Corporation (PBGC) variable rate premiums established by the Employee Retirement Income Security Act
(ERISA) of 1974. During the third quarter of 2013, Seaboard completed future funding analyses for these plans and
in September 2013 made a deductible contribution of $10,000,000 for the 2012 plan year, principally to avoid future
PBGC variable rate premiums established pursuant to the ERISA. Management did not make any contributions in
2014 and 2012 and currently does not plan on making any contributions to the Plans in 2015.
Seaboard has separate investment policies for each Plan. The difference in target allocation percentages are based on
one plan having more current retirees and thus a more conservative portfolio versus the other plan, which can
assume greater risk as it will have a longer investment time horizon. In July 2013, Seaboard modified its investment
policy for each plan by decreasing the percentage of fixed income investments of the total for its allocation targets
and actual investment composition within each plan. Assets are invested in the Plans to achieve a diversified target
allocation of approximately 40-50% in domestic equities, 20-25% in international equities, 10-25% in fixed income
securities and 10-15% in alternative investments. The investment strategy provides investment managers’ discretion,
and is periodically reviewed by management for adherence to policy and performance against benchmarks.
As described in Note 8 to the Consolidated Financial Statements, U.S. GAAP utilizes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following tables
show the Plans’ assets measured at estimated fair value as of December 31, 2014 and 2013, respectively, and also
the level within the fair value hierarchy used to measure each category of assets:
(Thousands of dollars)
Assets:
Domestic equity securities
Foreign equity securities
Real estate mutual fund
Fixed income mutual funds
Commodity mutual funds
International fixed income mutual funds
Money market funds
Other
Total Assets
(Thousands of dollars)
Assets:
Domestic equity securities
Foreign equity securities
Real estate mutual fund
Commodity mutual funds
International fixed income mutual funds
Money market funds
Fixed income mutual funds
Corporate bonds
Other
Total Assets
Balance
December 31,
2014
$ 66,618
27,945
8,977
4,683
3,831
2,808
2,205
5,037
$ 122,104
Balance
December 31,
2013
$ 65,998
30,348
8,866
2,756
2,485
1,938
1,786
1,528
3,850
$ 119,555
Level 1
Level 2
Level 3
$ 66,618
27,945
8,977
4,683
3,831
2,808
2,205
174
$117,241
$
-
-
-
-
-
-
-
4,863
$ 4,863
$
$
-
-
-
-
-
-
-
-
-
Level 1
Level 2
Level 3
$ 65,998
30,348
8,866
2,756
2,485
1,938
1,786
-
-
$114,177
$
-
-
-
-
-
-
-
1,528
3,850
$ 5,378
$
$
-
-
-
-
-
-
-
-
-
-
Seaboard also sponsors non-qualified, unfunded supplemental executive plans, and has certain individual,
non-qualified, unfunded supplemental retirement agreements for certain retired employees. The unamortized prior
service cost is being amortized over the average remaining working lifetime of the active participants for these
plans. Management has no plans to provide funding for these supplemental executive plans in advance of when the
benefits are paid.
50 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Assumptions used in determining pension information for all of the above plans were:
Weighted-average assumptions
Discount rate used to determine obligations
Discount rate used to determine net periodic benefit cost
Expected return on plan assets
Long-term rate of increase in compensation levels
Years ended December 31,
2013
2012
2014
3.15-4.40%
3.55-5.20%
7.00-8.00%
4.00%
3.55-5.20%
2.50-4.15%
6.50-7.25%
4.00%
2.50-4.15%
3.75-4.70%
6.50-7.25%
4.00%
Management selected the discount rate based on a model-based result where the timing and amount of cash flows
approximates the estimated payouts. The expected returns on the Plans’ assets assumption are based on the weighted
average of asset class expected returns that are consistent with historical returns. The assumed rate selected was
based on model-based results that reflect the Plans’ asset allocation and related long-term projected returns. The
measurement date for all plans is December 31. The unrecognized net actuarial losses are generally amortized over
the average remaining working lifetime of the active participants for all of these plans.
The changes in the plans’ benefit obligations and fair value of assets for the Plans, supplemental executive plans and
retirement agreements and the funded status were as follows:
(Thousands of dollars)
Reconciliation of benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial losses (gains)
Benefits paid
Plan settlement
Agreement termination gain
Benefit obligation at end of year
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Plan settlement
Fair value of plan assets at end of year
Funded status
December 31,
2014
2013
$
$
203,263
7,701
9,627
44,322
(6,699)
(638)
-
257,576
$
119,555
6,473
3,413
(6,699)
(638)
$
122,104
$ (135,472)
$ 226,725
9,427
8,199
(30,968)
(6,916)
-
(3,204)
$ 203,263
$
97,586
15,494
13,391
(6,916)
-
$ 119,555
(83,708)
$
The net funded status of the Plans was $(47,725,000) and $(8,820,000) at December 31, 2014 and 2013,
respectively. The benefit obligation increased primarily due to a decrease in discount rates for all plans. The
accumulated benefit obligation for the Plans was $144,110,000 and $110,653,000, and for all the other plans was
$72,816,000 and $61,462,000 at December 31, 2014 and 2013, respectively. Expected future net benefit payments
for all plans during each of the next five years and in aggregate for the five year period beginning with the sixth year
are as follows: $8,723,000, $10,751,000, $12,026,000, $13,667,000, $12,921,000, and $85,984,000, respectively.
In late April 2013, Mr. Joseph E. Rodrigues, Seaboard’s board member and retired former Executive Vice President
and Treasurer of Seaboard Corporation, passed away. During retirement, Mr. Rodrigues received retirement
payments under an individual, non-qualified, unfunded supplemental retirement agreement. Upon his death, this
agreement terminated which eliminated the remaining accrued pension liability. This resulted in a one-time
agreement termination gain of $3,204,000, or $1,954,000 net of tax, which was recognized in net earnings in
addition to a gain of $2,148,000, or $1,310,000 net of tax, from the elimination of unrecognized pension cost in
other comprehensive income in 2013.
2014 Annual Report 51
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
The net periodic cost of benefits of these plans was as follows:
(Thousands of dollars)
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization and other
Agreement termination gain
Settlement
Curtailment
Net periodic benefit cost
Years ended December 31,
2013
2014
2012
$
7,701
9,627
(8,695)
2,075
-
156
-
$ 10,864
$ 9,427
8,199
(6,458)
6,303
(3,204)
-
-
$ 14,267
$
8,843
8,918
(6,431)
6,748
-
1,796
1,134
$ 21,008
The amounts not reflected in net periodic benefit cost and included in accumulated other comprehensive loss
(AOCL) before taxes at December 31, 2014 and 2013 are $85,604,000 and $38,571,000, respectively. Such
amounts primarily represent accumulated losses, net of gain. The amounts in AOCL expected to be recognized as
components of net periodic benefit cost in 2015 are $5,494,000.
Seaboard participates in a multi-employer pension fund, the United Food & Commercial Workers International
Union-Industry Pension Fund, which covers certain union employees under a collective bargaining agreement. This
fund’s employer identification plan is 51-6055922 and this plan’s number is 001. For the plan year beginning July
1, 2014, this plan’s “zone status” is green and is not subject to a funding improvement plan. Seaboard is required to
make contributions to this plan in amounts established under the collective bargaining agreement that expires in July
2019. Contribution expense for this plan was $593,000, $594,000 and $584,000 for the years ended December 31,
2014, 2013 and 2012, respectively, which represents less than five percent of total contributions to this plan. The
applicable portion of the total plan benefits and net assets of this plan is not separately identifiable, although
Seaboard has received notice that, under certain circumstances, it could be liable for unfunded vested benefits or
other expenses of this jointly administered union plan. Seaboard has not established any liabilities for potential
future withdrawal, as such withdrawal from this plan is not probable.
Seaboard maintains a defined contribution plan covering most of its domestic salaried and clerical employees. In
2014, 2013 and 2012, Seaboard contributed to this plan an amount equal to 50% of the first 6% of each employee’s
contributions to the plan. Employee vesting is based upon years of service, with 20% vested after one year of service
and an additional 20% vesting with each additional complete year of service. Contribution expense for this plan was
$2,245,000, $2,142,000 and $2,063,000 for the years ended December 31, 2014, 2013 and 2012, respectively.
Seaboard has a deferred compensation plan which allows certain employees to reduce their compensation in
exchange for values in various investments. Seaboard also has an Investment Option Plan which allowed certain
employees to reduce their compensation in exchange for an option to acquire interests measured by reference to
three investments. However, as a result of U.S. tax legislation passed in 2004, reductions to compensation earned
after 2004 are no longer allowed under the Investment Option Plan. The exercise price for each investment option
was established based upon the fair market value of the underlying investment on the date of grant. Under both
plans, Seaboard contributes 3% of the employees’ reduced compensation. Seaboard’s expense for these two deferred
compensation plans, which primarily includes amounts related to the change in fair value of the underlying
investment accounts, was $3,142,000, $5,942,000 and $4,148,000 for the years ended December 31, 2014, 2013 and
2012, respectively. Included in other liabilities at December 31, 2014 and 2013 are $42,759,000 and $41,144,000,
respectively, representing the market value of the payable to the employees upon distribution or exercise for each
plan. In conjunction with these plans, Seaboard purchased the specified number of units of the employee-designated
investment, plus the applicable option price for the Investment Option Plan. These investments are treated as trading
securities and are stated at their fair market values. Accordingly, as of December 31, 2014 and 2013, $47,635,000
and $45,350,000, respectively, were included in other current assets on the Consolidated Balance Sheets. Investment
income related to the mark-to-market of these investments for 2014, 2013, and 2012 totaled $3,086,000, $5,863,000
and $4,076,000, respectively.
52 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 10
Commitments and Contingencies
On September 19, 2012, the United States Immigration and Customs Enforcement (“ICE”) executed three search
warrants authorizing the seizure of certain records from Seaboard’s offices in Merriam, Kansas and at the Seaboard
Foods employment office and the human resources department in Guymon, Oklahoma. The warrants generally
called for the seizure of employment-related files, certain e-mails and other electronic records relating to Medicaid
and Medicaid recipients, certain health care providers in the Guymon area, and Seaboard’s health plan and certain
personnel issues. The United States Attorney’s Office for the Western District of Oklahoma (“USAO”), which has
been leading the investigation, previously advised Seaboard it intended to close its investigation and that no charges
would be brought against Seaboard. However, discussions with the USAO continue regarding the status of the
investigation and the possibility of proceedings by the USAO, ICE and/or the Oklahoma Attorney General’s office
remains. No proceedings have been filed or brought as of this time. It is not possible at this time to determine
whether any agencies will continue to pursue an investigation or whether Seaboard will incur any material fines,
penalties or liabilities in connection with this matter.
Seaboard is subject to various administrative and judicial proceedings and other legal matters related to the normal
conduct of its business. In the opinion of management, the ultimate resolutions of these items are not expected to
have a material adverse effect on the Consolidated Financial Statements of Seaboard.
Contingent Obligations
Certain of the non-consolidated affiliates and third party contractors who perform services for Seaboard have bank
debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in
order to further business objectives. Seaboard does not issue guarantees of third parties for compensation. As of
December 31, 2014, guarantees outstanding to third parties were not material. Seaboard has not accrued a liability
for any of the third party or affiliate guarantees as management considers the likelihood of loss to be remote. See
Note 7 for discussion of letters of credit.
Commitments
As of December 31, 2014 Seaboard had various firm non-cancelable purchase commitments and commitments
under other agreements, arrangements and operating leases, as described in the table below:
2015
$ 188,281
80,989
370,540
43,251
Purchase commitments
(Thousands of dollars)
Hog procurement contracts
Grain and feed ingredients
Grain purchase contracts for resale
Fuel supply contract
Equipment purchases
34,385
and facility improvements
58,842
Construction of new dry bulk vessels
10,000
Other purchase commitments
786,288
Total firm purchase commitments
58,223
Vessel, time and voyage-charters
11,124
Contract grower finishing agreements
Other operating lease payments
25,407
Total unrecognized firm commitments $ 881,042
Years ended December 31,
2016
$ 134,284
1,535
-
-
-
-
745
136,564
20,116
10,438
23,342
$ 190,460
2017
2018
$ 76,084 $ 56,090 $
220
-
-
-
-
-
2019 Thereafter
-
-
-
-
- $
-
-
-
-
-
-
-
66
34
66
76,338
41,440
18,250
22
10,184
24,137
23,640 212,389
$ 128,909 $ 105,403 $ 44,293 $ 253,917
-
-
34
34
18,250
2,369
-
-
34
56,124
18,250
7,318
23,711
Seaboard has contracted with third parties for the purchase of live hogs to process at its pork processing plant, and
has entered into grain and feed ingredient purchase contracts to support its live hog operations. The commitment
amounts included in the table are based on projected market prices as of December 31, 2014. During 2014, 2013
and 2012, this segment paid $226,925,000, $190,519,000 and $190,471,000, respectively, for live hogs purchased
under committed contracts.
The Commodity Trading and Milling segment enters into grain purchase contracts, primarily to support firm sales
commitments. These contracts are valued based on projected commodity prices as of December 31, 2014.
2014 Annual Report 53
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
The Power segment has a natural gas supply contract for 2015 for a significant portion of the fuel required for the
operation of the dual fuel power generating facility. The commitment has both fixed and variable price components
and thus the amount included in the table above is partially based on market prices as of December 31, 2014.
In June 2012, Seaboard entered into an agreement to build four dry bulk vessels to be used by the Commodity
Trading and Milling segment at an estimated total cost of $90,000,000. A down payment of $8,300,000 was made in
July 2012. Additional payments of $19,153,000 were made in 2014 and the final payments are scheduled to be
made in 2015 when the vessels are delivered. However, Seaboard currently anticipates selling and leasing back
these four vessels as they are completed which would result in Seaboard receiving back the amounts spent to build at
each individual lease inception with no gain or loss on sale.
The Marine segment enters into contracts to time-charter vessels for use in its operations which include short-term
time charters for a few months and long-term commitments ranging from one to ten years. This segment’s charter
hire expenses during 2014, 2013 and 2012 totaled $86,816,000, $90,784,000 and $88,110,000, respectively.
To support the operations of the Pork segment, Seaboard has contract grower finishing agreements in place with
farmers to raise a portion of Seaboard’s hogs according to Seaboard’s specifications under long-term service
agreements. Under the terms of the agreements, additional payments would be required if the grower achieves
certain performance standards. The contract grower finishing obligations shown above do not reflect these incentive
payments which, given current operating performance, total approximately $1,300,000 per year. In the event the
farmer is unable to perform at an acceptable level, Seaboard has the right to terminate the contract. During the years
ended 2014, 2013 and 2012, Seaboard paid $12,922,000, $13,194,000 and $13,641,000, respectively, under contract
grower finishing agreements.
Seaboard also leases various facilities and equipment under non-cancelable operating lease agreements including a
terminal operations agreement at Port Miami which runs through 2028. Rental expense for operating leases for all
segments amounted to $35,252,000, $33,995,000 and $29,224,000 in 2014, 2013 and 2012, respectively.
Note 11
Stockholders’ Equity and Accumulated Other Comprehensive Loss
Seaboard has a share repurchase program in place which was initially approved by its Board of Directors in
November 2009, and is in effect through October 31, 2015. In May 2014, the Board of Directors increased the
dollar amount of Seaboard common stock authorized to be repurchased under the share repurchase program by
$20,000,000, and Seaboard commenced a tender offer to repurchase shares. On June 19, 2014, Seaboard completed
the tender offer, pursuant to which it repurchased 16,738 shares of common stock at a price per share of $2,950, for
a total cost of $49,377,000. As of December 31, 2014, $50,846,000 remained available for repurchases under this
program. Seaboard used cash to repurchase 18,405, 8,705 and 12,937 shares of common stock at a total price of
$53,781,000, $23,578,000 and $26,830,000 in 2014, 2013 and 2012, respectively. Under this share repurchase
program, Seaboard is authorized to repurchase its Common Stock from time to time in open market or privately
negotiated purchases, which may be above or below the traded market price. During the period that the share
repurchase program remains in effect, from time to time, Seaboard may enter into a 10b5-1 plan authorizing a third
party to make such purchases on behalf of Seaboard. The stock repurchase will be funded by cash on hand. Shares
repurchased will be retired and resume the status of authorized and unissued shares. All stock repurchased will be
made in compliance with applicable legal requirements and the timing of the repurchases and the number of shares
repurchased at any given time will depend upon market conditions, compliance with Securities and Exchange
Commission regulations and other factors. The Board’s stock repurchase authorization does not obligate Seaboard
to acquire a specific amount of common stock and the stock repurchase program may be suspended at any time at
Seaboard’s discretion.
In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock. The increased
amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an
annual basis) represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per share per
year). Seaboard does not currently intend to declare any further dividends for the years 2015 and 2016. Seaboard
did not declare or pay a dividend in 2014, 2013 and 2011. In 2010, Seaboard declared and prepaid the 2012 and
2011 dividends of $3.00 per share per year.
54 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
The components of accumulated other comprehensive loss, net of related taxes, for 2012, 2013 and 2014 are as
follows:
Cumulative
Foreign
Currency
Translation
Adjustment
Unrealized
Unrealized
Gain (Loss) Gain (Loss) on Unrecognized
Cash Flow
Hedges
on
Investments
Pension
Cost
Total
$ (109,457) $ 2,232 $ (113) $ (64,206) $(171,544)
(Thousands of dollars)
Balance December 31, 2012
Other comprehensive income (loss)
before reclassifications
(45,956) (1,124)
- 32,938 (14,142)
Amounts reclassified from
accumulated other
comprehensive loss
to net earnings
Other comprehensive income (loss),
-
(627)(1)
- 4,516(2) 3,889
net of tax
(45,956) (1,751)
- 37,454 (10,253)
Balance December 31, 2013
Other comprehensive income (loss)
$
(155,413) $
481
$
(113) $ (26,752) $(181,797)
before reclassifications
(38,624) 775
(122) (34,664) (72,635)
Amounts reclassified from
accumulated other
comprehensive loss
to net earnings
Other comprehensive income (loss),
-
78(1)
235 1,482(2) 1,795
net of tax
(38,624)
853
113 (33,182) (70,840)
Balance December 31, 2014 $ (194,037) $ 1,334
$
- $ (59,934) $ (252,637)
(1) This represents realized gains and losses on the sale of available-for-sale securities and was recorded in other
investment income, net.
(2) This primarily represents the amortization of actuarial losses that were included in net periodic pension cost
and was recorded in operating income. See Note 9 for further discussion.
In 2013, Seaboard recognized a one-time retirement agreement termination gain of $1,310,000 net of tax, in
unrecognized pension cost in other comprehensive income. See Note 9 for further discussion.
The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange
fluctuation on the net assets of the Sugar segment. At December 31, 2014, the Sugar segment had $121,920,000 in
net assets denominated in Argentine pesos and $492,000 in net assets denominated in U.S. dollars in Argentina. At
December 31, 2013, the Sugar segment had $151,769,000 in net assets denominated in Argentine pesos and
$2,957,000 in net assets denominated in U.S. dollars in Argentina. Management anticipates that the Argentine peso
could continue to weaken against the U.S. dollar and thus it is anticipated that Seaboard could incur additional
foreign currency translation adjustment losses in other comprehensive loss in 2015.
Income taxes for cumulative foreign currency translation adjustments were recorded using a 35% effective tax rate
except for $55,745,000 and $41,380,000 in 2014 and 2013, respectively, related to certain subsidiaries for which no
tax benefit was recorded. Income taxes for all other components of accumulated other comprehensive loss were
recorded using a 39% effective rate except for unrecognized pension cost of $20,001,000 and $8,663,000 in 2014
and 2013, respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.
2014 Annual Report 55
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Note 12
Segment Information
Seaboard Corporation had six reportable segments through December 31, 2014: Pork, Commodity Trading and
Milling (CT&M), Marine, Sugar, Power and Turkey, each offering a specific product or service. Seaboard’s
reporting segments are based on information used by Seaboard’s Chief Executive Officer in his capacity as chief
operating decision maker to determine allocation of resources and assess performance. Each of the six main
segments is separately managed, and each was started or acquired independent of the other segments. The Pork
segment produces and sells fresh and frozen pork products to further processors, foodservice operators, grocery
stores, distributors and retail outlets throughout the United States, and to Japan, Mexico and numerous other foreign
markets. This segment also produces biodiesel primarily from pork fat for sale to third parties. The Commodity
Trading and Milling segment is an integrated agricultural commodity trading and processing and logistics operation
that internationally markets wheat, corn, soybean meal and other agricultural commodities in bulk to third party
customers and to non-consolidated affiliates. This segment also operates flour, maize and feed mills, baking
operations, and poultry production and processing in numerous foreign countries. The Marine segment, based in
Miami, Florida, provides cargo shipping services between the United States, the Caribbean Basin and Central and
South America. The Sugar segment produces and processes sugar and alcohol in Argentina, primarily to be
marketed locally. The Power segment is an unregulated independent power producer in the Dominican Republic
operating a floating power generating facility. The Turkey segment, accounted for using the equity method,
produces and sells branded and non-branded turkeys and other turkey products. Total assets for the Turkey segment
represents Seaboard’s investment in and notes receivable from this affiliate. Revenues for the All Other segment are
primarily derived from a jalapeño pepper processing operation.
As more fully described in Note 4, as of September 27, 2014 Seaboard’s Pork segment sold to Triumph a 50%
interest in its processed meats division, Daily’s. As a result, Seaboard deconsolidated Daily’s from its Consolidated
Balance Sheet as of September 27, 2014. Seaboard’s remaining 50% investment in Daily’s is accounted for using
the equity method of accounting. Substantially all of its hourly employees at its Guymon processing plant are
covered by a collective bargaining agreement.
The 2014 Tax Act signed into law in December 2014 as discussed in Note 6, renewed the Federal blender’s credit
that Seaboard is entitled to receive for biodiesel it blends which had previously expired on December 31, 2013
retroactively to January 1, 2014 with an expiration of December 31, 2014. As a result, in the fourth quarter of 2014
the Pork segment recognized as revenues the 2014 Federal blender’s credits of $15,450,000. Also, the Tax Act
signed into law in January 2013 as discussed in Note 6, renewed and extended the Federal blender’s credits which
had previously expired on December 31, 2011 and renewed retroactively to January 1, 2012 with an expiration of
December 31, 2013. As a result, in the first quarter of 2013 the Pork segment recognized approximately
$11,260,000 as revenues related to this Federal blender’s tax incentive for gallons produced and sold in fiscal 2012.
In the fourth quarter of 2014, the CT&M segment recorded a $10,772,000 write-down in loss from affiliate from a
decline in value considered other than temporary for its investment in a bakery located in the Democratic Republic
of Congo (DRC). The CT&M segment historically derived a significant portion of its operating income from wheat
sales to another non-consolidated affiliate in the DRC, although such portion has been declining significantly since
2012. Also, Seaboard historically had derived a significant portion of its income from affiliates from this same
affiliate but in 2014 and 2013 Seaboard incurred significant losses from this affiliate for its proportionate share. See
Note 4 for further discussion of the write-down and investments in affiliates in the DRC.
The Power segment had been operating a floating power generating facility (72 megawatts) in the Dominican
Republic under a short-term lease agreement. On April 1, 2014, Seaboard provided notice to cancel the lease.
Seaboard ceased operations of the leased facility on September 3, 2014. Seaboard had previously sold this facility
to the current owner in 2011. In conjunction with ceasing operations, Seaboard sold inventory related to these
operations, the sale of which had been deferred until the end of the lease term. In addition, $1,500,000 of the
original sale price for this facility, which remained in escrow as security for the lease, was paid to Seaboard.
Finalization of the transfer of the leased facility to the owner and related settlement of all items occurred on
September 18, 2014. As a result, Seaboard recognized a $4,953,000 gain from sale of assets in operating income
related to these items in the third quarter of 2014.
56 2014 Annual Report
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
The Turkey segment accounted for using the equity method, had operating income in 2014, 2013 and 2012 of
$140,990,000, $4,892,000 and $65,694,000, respectively. In 2013, Butterball incurred charges for impairment of
fixed assets related to the planned sale of its closed processing plant in Longmont, Colorado of which Seaboard’s
proportionate share of these charges represented $(3,662,000) recognized in loss from affiliates. This plant was sold
in May 2014 for the approximate remaining net book value.
The following tables set forth specific financial information about each segment as reviewed by management, except
for the Turkey segment information previously disclosed in Note 4 to the Consolidated Financial Statements.
Operating income for segment reporting is prepared on the same basis as that used for consolidated operating
income. Operating income, along with income (loss) from affiliates for the Commodity Trading and Milling and
Turkey segment, is used as the measure of evaluating segment performance because management does not consider
interest and income tax expense on a segment basis.
Sales to External Customers:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment/Consolidated Totals
Operating Income (Loss):
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment Totals
Corporate
Consolidated Totals
Income (Loss) from Affiliates:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Sugar
Turkey
Segment/Consolidated Totals
Years ended December 31,
2013
2014
2012
$
$
$
1,717,329
3,499,290
852,749
199,503
189,119
15,086
6,473,076
1,713,077
3,501,498
913,776
245,541
283,796
12,726
6,670,414
1,638,404
3,023,531
969,575
288,315
255,390
13,918
6,189,133
$
$
$
Years ended December 31,
2013
2014
2012
$
$
$
348,987
53,941
(2,693)
26,635
18,971
1,173
447,014
(23,455)
423,559
147,695
38,339
(25,783)
24,453
42,939
745
228,388
(23,524)
204,864
122,556
71,852
26,111
60,180
55,042
607
336,348
(26,687)
309,661
$
$
$
Years ended December 31,
2013
2014
2012
$
3,690
(23,740)
738
54,668
35,356
$
$
-
(639)
614
(10,267)
(10,292)
$
$
-
10,467
88
20,152
30,707
$
2014 Annual Report 57
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Depreciation and Amortization:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment Totals
Corporate
Consolidated Totals
Total Assets:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Turkey
All Other
Segment Totals
Corporate
Consolidated Totals
Investments in and Advances to Affiliates:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Turkey
Segment/Consolidated Totals
Capital Expenditures:
(Thousands of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment Totals
Corporate
Consolidated Totals
58 2014 Annual Report
Years ended December 31,
2013
2014
2012
$
$
$
$
$
$
December 31,
2014
2013
$
$
46,196
5,146
24,740
7,998
7,517
382
91,979
406
92,385
43,306
5,553
25,136
10,726
7,395
363
92,479
598
93,077
821,172
1,103,461
283,276
198,271
199,256
393,425
5,887
3,004,748
672,572
3,677,320
43,014
6,330
23,490
11,222
5,467
366
89,889
327
90,216
773,641
1,056,930
271,012
226,245
267,431
342,083
6,428
2,943,770
474,278
3,418,048
$
$
December 31,
2014
2013
$
79,832
178,344
17,333
2,994
244,560
523,063
$
-
197,036
-
2,768
207,096
406,900
$
$
Years ended December 31,
2013
2014
2012
$
$
$
54,244
21,351
29,381
13,592
2,243
115
120,926
252
121,178
79,637
24,213
22,817
17,117
4,207
247
148,238
1,414
149,652
52,333
22,817
35,365
22,066
25,022
112
157,715
1,040
158,755
$
$
$
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Administrative services provided by the corporate office allocated to the individual segments represent corporate
services rendered to and costs incurred for each specific segment, with no allocation to individual segments of
general corporate management oversight costs. Corporate assets include short-term investments, other current assets
related to deferred compensation plans, fixed assets, deferred tax amounts and other miscellaneous items. Corporate
operating losses represent certain operating costs not specifically allocated to individual segments and includes all
costs related to Seaboard’s deferred compensation programs (which are offset by the effect of the mark-to-market
investments recorded in Other Investment Income, Net).
Geographic Information
No individual foreign country accounted for 10% or more of sales to external customers. The following table
provides a geographic summary of net sales based on the location of product delivery:
(Thousands of dollars)
Caribbean, Central and South America
Africa
United States
Pacific Basin and Far East
Canada/Mexico
Eastern Mediterranean
Europe
Totals
$
$
2014
2,414,181
1,661,325
1,396,769
424,551
347,684
156,167
72,399
6,473,076
Years ended December 31,
2013
$ 2,571,970
1,578,341
1,389,784
383,105
393,502
186,127
167,585
$ 6,670,414
$
$
2012
2,566,056
1,471,574
1,303,533
334,215
351,505
74,509
87,741
6,189,133
The following table provides a geographic summary of Seaboard’s long-lived assets according to their physical
location and primary port for the vessels:
(Thousands of dollars)
United States
Dominican Republic
Argentina
All other
Totals
December 31,
2014
$ 543,111
134,460
70,531
99,889
$ 847,991
2013
555,882
140,536
90,367
83,015
869,800
$
$
At December 31, 2014 and 2013, Seaboard had approximately $266,510,000 and $340,748,000, respectively, of
foreign receivables, excluding receivables due from affiliates, which generally represent more of a collection risk
than the domestic receivables. Management believes its allowance for doubtful accounts is adequate and reduces
receivables recorded to their expected net realizable value.
2014 Annual Report 59
S E A B O A R D C O R P O R A T I O N
Stockholder Information
Board of Directors
Steven J. Bresky
Director and Chairman of the Board
President and Chief Executive Officer of Seaboard
David A. Adamsen
Director and Audit Committee Member
Former Vice President – Wholesale Sales,
C&S Wholesale Grocers
Officers
Steven J. Bresky
President and Chief Executive Officer
Robert L. Steer
Executive Vice President, Chief Financial Officer
David M. Becker
Senior Vice President, General Counsel and Secretary
James L. Gutsch
Senior Vice President, Engineering
Ralph L. Moss
Senior Vice President, Governmental Affairs
David S. Oswalt
Senior Vice President, Finance and Treasurer
Douglas W. Baena
Director and Audit Committee Chair
Self-employed, engaging in facilitation of equipment
leasing financings and consulting
Edward I. Shifman, Jr.
Director and Audit Committee Member
Retired, former Managing Director and Executive
Vice President of Wachovia Capital Finance
John A. Virgo
Senior Vice President, Corporate Controller and Chief
Accounting Officer
David H. Rankin
Vice President, Taxation and Business Development
Ty A. Tywater
Vice President, Audit Services
Zachery J. Holden
Assistant Secretary
Adriana N. Hoskins
Assistant Treasurer
Chief Executive Officers of Principal Seaboard Operations
Terry J. Holton
Pork
David M. Dannov
Commodity Trading and Milling
Edward A. Gonzalez
Marine
Hugo D. Rossi
Sugar
Armando G. Rodriguez
Power
Stock Transfer Agent and Registrar of Stock
Availability of Form 10-K Report
Wells Fargo
P.O. Box 64874
St. Paul, MN 55164-0874
(800) 468-9716
www.shareowneronline.com
Independent Registered Public Accounting Firm
KPMG LLP
1000 Walnut, Suite 1100
Kansas City, Missouri 64106
Stock Listing
Seaboard’s common stock is traded on the NYSE MKT
under the symbol SEB. Seaboard had 2,277
shareholders of record of its common stock as of
January 31, 2015.
Seaboard files its Annual Report on Form 10-K with
the Securities and Exchange Commission. Copies of
the Form 10-K for fiscal 2014 are available without
charge by writing Seaboard Corporation, 9000 West
67th Street, Merriam, Kansas 66202, Attention:
Shareholder Relations or via
Internet at
the
http://www.seaboardcorp.com/investors
Seaboard provides access to its most recent Form 10-K,
Form 10-Q and Form 8-K reports on its Internet
website, free of charge, as soon as reasonably
practicable after those reports are electronically filed
with the Securities and Exchange Commission.
60 2014 Annual Report