2016 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 and its subsidiaries (“Seaboard”) are a diverse global agribusiness and transportation company. In
the United States (“U.S.”), 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 a turkey operation in the U.S.
Table of Contents
Letter to Stockholders
Principal Locations
Division Summaries
Summary of Selected Financial Data
Company Performance Graph
Quarterly Financial Data (unaudited)
Management’s Discussion & Analysis of Financial Condition and Results of Operations
Management’s Responsibility for Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Stockholder Information
2
4
5
7
8
9
10
24
24
25
26
27
28
29
30
31
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. 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 (“CT&M”) segment; (vi) the charter hire rates and fuel prices for vessels; (vii) the fuel costs and
spot market prices for electricity 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 timetables for Seaboard’s scheduled capital improvements, acquisitions and dispositions; (xi) the productive
capacity of facilities that are planned or under construction, and the timing of the commencement of operations at such
facilities; (xii) the increase in Seaboard's hog and other production capacity attributable to acquisitions; or (xiii) 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 captions “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and “Letter to Stockholders” identifies important factors which could cause such differences.
2016 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
2016 was one of our better years by most financial measures and it was certainly one of the more exciting in terms of
continued expansion, divisional improvements and potential opportunities. We achieved record cash flows in Seaboard’s
near 100 year history with cash generated from operations of $427 million. It was also our third most profitable year
with $384 million in pre-tax earnings. This was accomplished despite the volatile commodity elements that drive most of
our businesses.
As many of you know, Seaboard and its affiliates are rooted in commodity-based businesses with operations in 45
countries, primarily the US, Latin America, the Caribbean and Africa. Our footprint is global, covering 6 of the 7
continents with a multitude of commercial, political and economic issues. Over the last several years, we have been
increasingly impacted by US and non-US government influences in our different industries. No issue is more important
now than the issue of worldwide trade policies and the movement away from a free market system. Our businesses
operate with very narrow margins and success and failure are measured in small increments. When governments choose
to erect trade barriers or impose protectionist measures or other regulations with unintended consequences, the economic
impact for us can be severe. Hopefully, governments will weigh long term fundamental factors first and political impact
second and make wise decisions.
We have been aided by a strong balance sheet, which allows us the flexibility to expand and contract working capital as
we see fit, to make capital expenditures that are not solely driven by financial returns and to look externally for business
opportunities to expand and better our position in the marketplace. With a healthy cash position, we continue to invest
heavily in our businesses. Over the last five years we have invested on average $1.55 for every dollar of depreciation
expense. This includes strategic outside investments in partnerships as well as fixed assets. Significantly, our acquisition
of a 50% interest in Butterball and our continued investments with Triumph Foods have been instrumental in increasing
our presence in the US protein market over the last decade.
In 2016 our Pork Division made significant progress toward our goal of becoming a more significant player in the
industry. Together with Triumph, we successfully opened a new Daily’s bacon plant in St. Joseph, Missouri that will
eventually produce 60 million pounds of bacon annually. In 2017 we, together with Triumph, will be opening a new
pork processing plant in Sioux City, Iowa that will have an initial capacity to process three million hogs a year on a
single shift. As an integrated pork company, we will also be expanding our hog production base to complement the
additional hog processing capacity. The Pork Division also purchased and began rehabilitating an idled biodiesel facility
located in St Joseph, Missouri. Together with our other biodiesel plant in Guymon, Oklahoma, we expect to produce 64
million gallons of biodiesel fuel per year. The next three years will be interesting as significant new hog processing
capacity comes online, US government trade policy and regulatory activity become clearer and special interest groups
map their strategies. Overall, in 2016 the Pork Division surpassed the “solid year” we forecasted in last year’s letter.
Our 50% interest in the #1 branded turkey business in the US, Butterball, had another excellent year and the second most
profitable in its history. More importantly, Butterball continued its focus on value-added products and improved product
mix. We launched a new line of antibiotic free offerings under the Farm to Family brand and strengthened brand
recognition with increased consumer promotions, social marketing programs and national advertising. Perhaps you
caught the two consecutive nights in November where Late Show host Stephen Colbert worked the Butterball Turkey
Talk Line by giving Thanksgiving Turkey Tips. Aside from his humorous responses to consumer questions, the publicity
helped the Butterball brand reach households across the country. Butterball continues to robustly invest in capital
expenditures on all fronts – processing, further processing and live production. Of note in 2017 we will be implementing
a High Pressure Pasteurization system into our operations platform which will be the most technologically advanced
food safety application commercially available in the industry today.
Our overseas commodity trading and milling division also had a solid year, increasing its operating income as compared
to 2015, largely from grain trading to third-parties and affiliate businesses. But for difficult operating conditions in
Brazil and Congo (DRC), this division has done well and improved over the last several years. During 2016, we finally
took over the day-to-day operations of the Brazilian flour milling operations via a restructuring and consolidation.
Although challenges remain, we are optimistic that we will be able to realize a lower cost model by focusing on single
site production. In the Congo, we expect conditions to improve in the marketplace and we are making efforts to improve
our management structure. We took delivery of the last two of four 28,000 dwt shallow draft bulk carriers which will
predominately serve our West African businesses. Although the ocean freight market continues to be oversupplied, our
fleet of seven bulk carriers fits well logistically into our trade routes in Africa and the Americas. 2017 will likely bring
increased competitive pressure on the commodity trade segment, continued grain processing overcapacity, problematic
2 2016 Annual Report
S E A B O A R D C O R P O R A T I O N
Letter to Stockholders
currency issues in key countries in Africa and political problems worldwide. Despite this, we have carved a niche in the
marketplace with our model of flexibility and customer orientation and look forward to improved earnings over the long
term. Going forward, our focus will be on internal improvements in our industrial businesses, both affiliated and
controlled to ensure that we can effectively compete in all our markets. We will continue to evaluate investment
opportunities in our core African, Caribbean and Latin markets which would add value to our integrated supply chain
model.
Our Marine Division had an outstanding year, particularly in light of the dismal results of the major container shipping
companies worldwide. After the Marine Division’s return to profitability in 2015, we managed to increase operating
income $14 million in 2016 despite a decline in average freight rates and excess capacity on many routes. Overall the
shipping industry continued to shrink through consolidation, bankruptcies and elimination. Our volumes and market
share increased slightly in most regions we serve as we improved our product mix with increased refrigerated cargo
volume. We continue to spend aggressively on containers, port equipment and selected port infrastructure as we extend
our network of ports of call with larger and more fuel efficient ships. We believe our competitive advantage is our
knowledge, understanding and flexibility with our loyal customers in the markets we serve with whom we have done
business with for over three decades. To do this, we continue to place emphasis on cost control and port productivity
while selectively expanding where it makes sense. While there is some nervousness over US government trade policy
and the strength of the dollar which would depress US competitiveness and stifle natural trade patterns, we believe the
Marine Division will maintain its market position and price wars will abate. We are moderately optimistic.
Our Dominican-based Power Division had another profitable year in 2016 with most of our production sold on the spot
market to the three government-owned distribution companies. Although average spot energy prices were slightly lower
in 2016, our margins remained stable given slightly higher production output. The investments we have previously made
in our power production asset – the Estrella del Mar II barge – has made it one of the more efficient and well-maintained
power plants in the Dominican power system resulting in consistent dispatch.
Our only division with negative operating results was Tabacal, our Argentine sugar company. This division struggled
against a recessive economic environment, which is the result of long overdue macroeconomic adjustments implemented
by the new government, as well as inclement weather and labor issues that reduced production and cut into our harvest.
Some cost reductions were achieved by improving levels of automation as well as continuing efforts to diversify into
sales of biofuels and bioenergy as part of an integrated approach to sugar production. In 2017, we hope to complete a
biofuel capacity expansion project to meet growing demand for blended fuels from the government. We will also
investigate further diversification into other businesses, such as additional soybean rotations and forestation projects for
biomass. We are cautiously optimistic for some recovery in 2017 based on what appears to be improving international
and Argentinian domestic prices of sugar and the elimination of the prior year’s surplus inventory. However, last year’s
labor disputes and the resulting costs embedded in our current inventory will be a hindrance to the profitability of this
division in 2017.
As we look toward 2017 and beyond, I am reminded of Seaboard’s near 100 year history. We have faced many
challenges, seized (and lost) many opportunities but managed to progress in good times and bad. I always warn that
“past performance is no guarantee of future results” and the last three years are a perfect example as Seaboard has
careened from the highs of 2014 to the mixed results of 2015 to a very respectable year in 2016. 2017 will be
challenging in many ways as we face unpredictable political winds and commodity markets which are largely out of our
control. However, as always, we continue to focus on the areas where we do exert control by maintaining our customer-
first approach, emphasizing quality and value and operating with integrity and honesty in all that we do.
Many thanks to our customers, associates, partners, vendors and stockholders – many of whom have shown their loyalty
and support for decades. We are grateful and appreciative of your continued support.
Steven J. Bresky
President and
Chief Executive Officer
2016 Annual Report 3
S E A B O A R D C O R P O R A T I O N
Principal Locations
National Milling Company of Guyana, Inc.
Seaboard de Nicaragua, S.A.
Guyana
Les Moulins d’Haiti S.E.M.*
Haiti
Nicaragua
Seaboard del Peru, S.A.
Peru
Lesotho Flour Mills Limited*
Seaboard Freight & Shipping Jamaica
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
HPB – St. Joe Biodiesel LLC
St. Joseph, Missouri
Seaboard de Mexico USA LLC
Mexico
Lesotho
Life Flour Mill Ltd.*
Nigeria
LMM Farine, S.A.
Madagascar
Minoterie de Matadi, S.A.*
Democratic Republic of Congo
Minoterie du Congo, S.A.
Republic of Congo
Moderna Alimentos, S.A.*
Molinos Champion, S.A.*
Daily’s Premium Meats, LLC*
Ecuador
Missoula, Montana
Salt Lake City, Utah
St. Joseph, Missouri
Commodity Trading and Milling
Commodity Trading Operations
Atlanta, Georgia*
Australia*
Canada
Chapel Hill, North Carolina
Colombia
Ecuador
Greece
Isle of Man
Kenya
Peru*
Singapore
South Africa
Uruguay*
Africa Poultry Development Limited*
Kenya and Zambia
Bag Yaglari Sanayi ve Ticaret T.A.S.*
Turkey
Beira Grain Terminal, S.A.
Mozambique
Belarina Alimentos S.A.
Brazil
National Milling Corporation Limited
Zambia
Paramount Mills (Pty) Ltd.*
South Africa
Rafael del Castillo & Cia. S.A.*
Colombia
Societe Africaine de Developpement
Industriel Alimentaire, S.P.R.L.*
Democratic Republic of Congo
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
Philadelphia, Pennsylvania
Agencia Maritima del Istmo, S.A.
Costa Rica
Cayman Freight Shipping Services, Ltd.
Cayman Islands
JacintoPort International LLC
Bolux Group Proprietary Limited*
Houston, Texas
Botswana
Kingston Wharves Limited*
Compania Industrial de Productos
Jamaica
Agropecuarios S.A.*
Lafito Logistics Holdings, Ltd.*
Colombia
Congo Poultry Limited*
Democratic Republic of Congo
Flour Mills of Ghana Limited
Ghana
Bahamas
Representaciones Maritimas y Aereas, S.A.
Guatemala
Sea Cargo, S.A.
Panama
Gambia Milling Corporation*
Seaboard de Colombia, S.A.
Gambia
Colombia
*Represents a non-controlled, non-consolidated affiliate
4 2016 Annual Report
Limited
Jamaica
Seaboard Honduras, S. de R.L. de C.V.
Honduras
Seaboard Marine (Trinidad) Ltd.
Trinidad
Seaboard Marine of Haiti, S.A.
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 S.R.L.
Argentina
Power
Transcontinental Capital Corp.
(Bermuda) Ltd.
La Compania de Electricidad de San
Pedro de Macoris*
Dominican Republic
Turkey
Butterball, LLC*
Division Office
Garner, North Carolina
Processing Plants
Carthage, Missouri
Huntsville, Arkansas
Mt. Olive, North Carolina
Ozark, Arkansas
Further Processing Plants
Jonesboro, Arkansas
Montgomery, Illinois
Raeford, North Carolina
Other
Mount Dora Farms de Honduras,
S.R.L.
Honduras
Mount Dora Farms Inc.
Houston, Texas
S E A B O A R D C O R P O R A T I O N
Division Summaries
Pork Division
Seaboard’s Pork Division is a vertically integrated pork producer and one of the largest producers and processors in the
U.S. Seaboard is able to efficiently control pork production across the entire life cycle of a 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 20,500 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. 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 U.S. Seaboard also sells to distributors, trading companies and further processors in Japan, Mexico,
China and numerous other foreign markets.
Seaboard’s hog production facilities consist of genetic and commercial breeding, farrowing, nursery and finishing
buildings located in the Central U.S. These facilities have a capacity to produce over five million hogs annually.
Seaboard owns and operates seven centrally located feed mills to provide formulated feed to these hogs.
Seaboard produces biodiesel at facilities in Guymon, Oklahoma, and St. Joseph, Missouri. The biodiesel is produced
from pork fat supplied by Seaboard’s Guymon pork processing plant and from other animal fat or vegetable oil supplied
by non-Seaboard facilities. The biodiesel is sold to fuel blenders for distribution and in the retail markets.
Seaboard’s Pork Division has an agreement with a similarly-sized 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. According to the trade publications Successful
Farming and Informa Economics Seaboard was ranked number three in pork production (based on sows in production)
and number four (based on daily processing capacity, including Triumph’s capacity) in processing in the U.S. in 2016.
Seaboard’s Pork Division has a 50% noncontrolling interest in Daily’s Premium Meats, LLC (“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 three further processing plants located in Salt Lake City, Utah, Missoula,
Montana, and St. Joseph, Missouri. Seaboard and Triumph each supply raw product to Daily’s.
In May 2015, Seaboard’s Pork Division and Triumph entered into a new joint venture, Seaboard Triumph Foods, LLC,
which is constructing a new pork processing facility in Sioux City, Iowa. Construction is expected to be completed in
mid-2017. The plant is designed to process about three million market hogs annually operating a single shift. As part of
the operations, Seaboard’s Pork Division agreed to provide a portion of the hogs to be processed at the facility. During
2016, the Pork Division acquired hog inventory and related assets that increased Seaboard’s hog production capacity to
meet the majority of such hog supply commitment for single shift processing at the new plant.
Commodity Trading and Milling Division
Seaboard’s Commodity Trading and Milling (“CT&M”) Division is an integrated agricultural commodity trading,
processing and logistics operation. This Division sources, transports and markets approximately ten million metric tons
per year of wheat, corn, soybeans, 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, the
Caribbean and Asia. Seaboard integrates the delivery of commodities to its customers through the use of owned or
chartered bulk vessels.
2016 Annual Report 5
S E A B O A R D C O R P O R A T I O N
Division Summaries
Seaboard’s CT&M Division operates facilities in 29 countries. The commodity trading business has 11 offices in 10
countries, in addition to four non-consolidated affiliates in three other countries. The grain processing businesses operate
facilities at 41 locations in 22 countries, and include 7 consolidated and 18 non-consolidated affiliates primarily in
Africa, South America, the Caribbean and Asia. Seaboard and its affiliates produce approximately five million metric
tons of wheat flour, maize meal, manufactured feed and oilseed crush commodities per year in addition to other related
grain-based products.
Marine Division
Seaboard’s Marine Division provides cargo shipping services between the U.S., the Caribbean 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 PortMiami. 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, Philadelphia, Pennsylvania, and various
foreign ports in the Caribbean 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
PortMiami. 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 U.S., Canada, Latin
America and the Caribbean to sell freight at 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, which it uses to produce refined sugar and alcohol. The sugar is primarily
marketed locally, with some exports to the U.S. 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 20 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, which is fueled by the burning of sugarcane by-products, natural gas and
other biomass when available.
Power Division
In the Dominican Republic, Seaboard is an unregulated independent power producer generating electricity for the local
power grid from an owned floating power generating facility with a capacity to generate 108 megawatts. Seaboard
primarily sells power on the spot market and is not directly involved in the transmission or distribution of electricity.
Principal buyers are government-owned distribution companies and partially government-owned generation companies.
Other Divisions
Seaboard has a 50% noncontrolling 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 U.S. Butterball
has four processing plants, three further processing plants and numerous live production and feed milling operations
located in North Carolina, Arkansas, Missouri, Illinois and Kansas. Butterball produces over one billion pounds of
turkey each year. Butterball is a national supplier to retail stores, foodservice outlets, and industrial entities but 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 U.S.
6 2016 Annual Report
S E A B O A R D C O R P O R A T I O N
Summary of Selected Financial Data
(Millions of dollars except per share amounts)
Net sales
Operating income
Net earnings attributable to Seaboard
Basic earnings per common share
Total assets
Long-term debt, less current maturities
Stockholders’ equity
Dividends per common share
Years ended December 31,
2013
2012
2015
126 $
171 $
424 $
367 $
222 $
312 $
2014
2016
$ 5,379 $ 5,594 $ 6,473 $ 6,670 $ 6,189
310
$
287
$
$ 266.50 $ 146.44 $ 311.44 $ 177.53 $ 238.24
$ 4,755 $ 4,431 $ 3,692 $ 3,431 $ 3,354
121
$
$ 3,175 $ 2,882 $ 2,735 $ 2,493 $ 2,314
— $ 12.00
$
204 $
212 $
499 $
518 $
— $
— $
— $
— $
80 $
In the fourth quarter of 2015, Seaboard recorded interest income of $23 million, net of taxes ($31 million before taxes),
or $19.49 per common share, for interest recognized on certain outstanding customer receivable balances in its Power
segment. This interest income related to amounts determined to be collectible as of December 31, 2015, but previously
had been considered uncollectable in prior years. This amount was fully collected by Seaboard in January 2016.
As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods, LLC a 50% interest in Daily’s. Included in
net earnings attributable to Seaboard for 2014 is a gain on sale of controlling interest in subsidiary of $40 million, net of
taxes ($66 million gain before taxes), or $34.14 per common share.
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 this law on current and deferred tax assets and
liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a tax benefit of $8 million 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 million, 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 these transactions.
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 did not declare a dividend in 2016, 2015, 2014 or 2013. 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). See the Liquidity and Capital Resources section of Management’s Discussion and Analysis for
2017 dividend plans. Basic and diluted earnings per common share are the same for all periods presented.
2016 Annual Report 7
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 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 Corporation, the NYSE MKT
Index and the companies comprising the Dow Jones U.S. Food Products and the Dow Jones U.S. Marine Transportation
indices, weighted by market capitalization for the five fiscal years commencing December 31, 2011 and ending
December 31, 2016. The information presented in the performance graph is historical in nature and is not intended to
represent or guarantee future returns.
The comparison of cumulative total returns presented in the above graph was plotted using the following index values
and common stock price values:
Seaboard Corporation
NYSE MKT Composite
Peer Group
12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 12/31/16
$ 100.00 $ 124.88 $ 137.96 $ 207.21 $ 142.89 $ 195.07
$ 100.00 $ 106.15 $ 115.07 $ 118.71 $ 106.60 $ 117.67
$ 100.00 $ 107.99 $ 144.96 $ 157.25 $ 169.52 $ 191.29
8 2016 Annual Report
S E A B O A R D C O R P O R A T I O N
Quarterl y Financial Data (unaudited)
(UNAUDITED)
(Millions of dollars except per share amounts)
2016
Net sales
Operating income
Net earnings attributable to Seaboard
Earnings per common share
Dividends per common share
Closing market price range per common share:
High
Low
2015
Net sales
Operating income
Net earnings attributable to Seaboard
Earnings per common share
Dividends per common share
Closing market price range per common share:
High
Low
1st
2nd
3rd
4th
Quarter
Quarter Quarter
Quarter
Total for
the Year
$
$
$
$
$
1,319 $
36 $
54 $
45.91 $
— $
1,357 $
76 $
80 $
68.34 $
— $
1,330 $
42 $
75 $
64.42 $
— $
68 $
103 $
1,373 $ 5,379
222
312
87.83 $ 266.50
—
— $
$ 3,054.00 $ 3,125.00 $ 3,440.00 $ 4,444.14
$ 2,483.00 $ 2,726.50 $ 2,782.92 $ 3,201.95
$
$
$
$
$
1,452 $
28 $
33 $
28.11 $
— $
1,428 $
32 $
32 $
27.04 $
— $
1,411 $
23 $
3 $
2.59 $
— $
43 $
103 $
1,303 $ 5,594
126
171
88.70 $ 146.44
—
— $
$ 4,640.00 $ 4,005.00 $ 3,675.00 $ 3,441.00
$ 3,705.00 $ 3,253.00 $ 2,971.95 $ 2,892.00
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Tax Act”) was signed into
law. The 2015 Tax Act reinstated and made permanent certain expired corporate income tax provisions that impact
current and deferred taxes for financial reporting purposes. The annual effects of the provisions in this law on current
and deferred tax assets and liabilities for Seaboard were recorded in the fourth quarter of 2015. The impact was a tax
benefit of $13 million, or $10.92 per common share, primarily related to certain income tax credits. In addition to this
amount was a credit of $17 million, or $14.88 per common share, for the 2015 Federal blender’s credits (extended by the
2015 Tax Act through December 31, 2016) that was recognized as revenues in the fourth quarter of 2015. There was no
tax expense on these transactions. Since the 2015 Tax Act extended the provisions through December 31, 2016, revenue
was recognized ratably throughout 2016. The Federal blender’s credits have not been renewed for 2017.
In the fourth quarter of 2015, Seaboard recorded interest income of $23 million, net of taxes ($31 million before taxes),
or $19.49 per common share, for interest recognized on certain outstanding customer receivable balances in its Power
segment. This interest income related to amounts determined to be collectible as of December 31, 2015, but previously
had been considered uncollectable in prior years. This amount was fully collected by Seaboard in January 2016.
No dividends were paid during 2016 and 2015 as they were declared and prepaid in December 2012. During 2016 and
2015, Seaboard did not repurchase any common shares. See the Liquidity and Capital Resources section of
Management’s Discussion and Analysis for 2017 dividend plans.
2016 Annual Report 9
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, China 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 20,500 hogs,
and a ham boning and processing plant in Mexico. In 2016, Seaboard raised approximately 81% 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 57% of Seaboard’s
total fixed assets, in addition to 40% of total 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 other animal fat or vegetable oil purchased from third parties.
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 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 model. 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.
The Pork segment has a 50% noncontrolling interest in Daily’s Premium Meats, LLC (“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 three further processing plants located in Salt Lake City, Utah, Missoula, Montana, and St. Joseph,
Missouri.
In May 2015, Seaboard’s Pork segment and Triumph entered into a new joint venture, Seaboard Triumph Foods, LLC
(“STF”), which is constructing a new pork processing facility in Sioux City, Iowa. Construction is expected to be
completed in mid-2017. The plant is designed to process about three million market hogs annually operating a single
shift. As part of the operations, Seaboard’s Pork segment agreed to provide a portion of the hogs to be processed at the
facility. During 2016, the Pork segment acquired hog inventory and related assets in the Central U.S. that increased
Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at
the new plant.
Commodity Trading and Milling Segment
The Commodity Trading and Milling (“CT&M”) segment, which is managed under the name of Seaboard Overseas and
Trading Group, primarily operates overseas and is an integrated agricultural commodity trading, 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
10 2016 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
fluctuations in economic and industry conditions and foreign currency exchange rates. This segment’s sales are also
significantly affected by fluctuating prices of various commodities, such as wheat, corn, soybeans and soybean meal.
Although this segment owns three vessels, the majority of the trading business is transacted with chartered ships. Freight
rates, influenced by available charter capacity for worldwide trade in bulk cargoes, and related fuel costs affect business
volumes and margins. Consolidated and non-consolidated affiliates operate the grain processing businesses in foreign
countries that are in most cases lesser developed. Flour exports of various countries can exacerbate volatile market
conditions that may have a significant impact on both the trading and milling businesses’ sales and operating income.
This segment represents approximately 51% of Seaboard’s total inventories at December 31, 2016.
The majority of CT&M segment’s sales are derived 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, milling and agro-processing business.
Marine Segment
The Marine segment provides cargo shipping services primarily between the U.S. and 26 countries in the Caribbean and
Central and South America. Fluctuations in economic conditions and political instability in the regions or countries in
which Seaboard operates 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 the majority of its ocean cargo vessels and
is therefore 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 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. This segment
sells dehydrated alcohol to certain oil companies under an Argentine government bio-ethanol program, which mandates
that alcohol be blended with gasoline. This segment also owns a 51 megawatt cogeneration power plant, which is fueled
by the burning of sugarcane by-products, natural gas and other biomass when available. 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. Seaboard continues to explore various ways to improve and expand this segment,
investing in efficiency improvements and production capacity increases.
Power Segment
The Power segment is an unregulated independent power producer in the Dominican Republic generating electricity
from a system of diesel engines mounted on a floating power generating facility for the local power grid. Seaboard 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. Supply of power in the Dominican Republic is determined by a government body and is subject to
fluctuations based on governmental 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. In 2015, Seaboard invested an
additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic,
increasing Seaboard’s ownership interest to 29.9%. See Note 4 to the consolidated financial statements for further
discussion. Seaboard may pursue further power industry investments in the future.
Turkey Segment
Seaboard has a 50% noncontrolling 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, three further processing plants and numerous live production and feed milling operations located in North
Carolina, Arkansas, Missouri, Illinois and Kansas. Sales prices are directly 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
2016 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
significantly affect the profitability and cash flows of Butterball. The turkey business is seasonal only on the whole bird
side, with the 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, 2016 increased $50 million from December 31, 2015. The increase
was primarily the result of net cash from operating activities of $427 million, net proceeds from short-term investments
of $53 million and proceeds from sale of fixed assets of $47 million. Partially offsetting the increase was cash used for
acquisition of businesses of $219 million, capital expenditures of $158 million, investments in affiliates of $71 million
and purchase of long-term investments of $31 million. Cash from operating activities increased $11 million for 2016
primarily as a result of higher net earnings, partially offset by working capital changes.
Cash and short-term investments as of December 31, 2015 increased $777 million from December 31, 2014. The
increase was primarily the result of net cash from proceeds related to issuance of long-term debt of $522 million,
operating activities of $416 million, notes payable borrowings of $83 million and proceeds from sale of fixed assets of
$48 million. Partially offsetting the increase was cash used for capital expenditures of $139 million, investments in
affiliates of $119 million and purchase of long-term investments of $28 million. Cash from operating activities increased
$42 million for 2015 primarily as a result of decreases in accounts receivable and increases in current liabilities,
principally in the CT&M segment, partially offset by lower net earnings.
Capital Expenditures, Acquisitions and Other Investing Activities
During 2016, Seaboard invested $158 million in property, plant and equipment, of which $69 million was in the Pork
segment, $35 million in the CT&M segment, $19 million in the Marine segment and $34 million in the Sugar Segment.
The Pork segment expenditures were primarily for improvements to existing facilities and related equipment, additional
hog finishing barns and the June 2016 purchase and improvement of a biodiesel plant in St. Joseph, Missouri, for $6
million that became operational in the third quarter. Of the CT&M segment expenditures, $29 million was for the
construction of two dry bulk vessels, which were delivered and then sold and leased back by Seaboard at book value of
$44 million during the first quarter of 2016. The Marine segment expenditures were primarily for purchases of cargo
carrying and handling equipment. The Sugar segment expenditures were primarily for milling capacity increase and
fermentation and distillery equipment upgrades. All other capital expenditures were primarily of a normal recurring
nature and included replacements of machinery and equipment, and general facility modernizations and upgrades.
The total 2017 capital expenditures budget is $231 million. The Pork segment plans to spend $75 million primarily for
improvements to existing facilities and related equipment and additional hog finishing barns. The CT&M segment plans
to spend $72 million primarily for milling assets, a pulse and grain elevator, and other improvements to existing facilities
and related equipment. The Marine segment has budgeted $59 million primarily for additional cargo carrying and
handling equipment and port improvements. The Sugar segment plans to spend $24 million primarily for increasing the
milling capacity, enhancing energy production installations, and improving logistics infrastructure. The balance of $1
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 2015, Seaboard invested $139 million in property, plant and equipment, of which $40 million was in the Pork
segment, $40 million in the CT&M segment and $43 million in the Marine segment. The Pork segment expenditures
were primarily for improvements to existing facilities and related equipment and additional hog finishing barns. Of the
CT&M segment expenditures, $30 million was for the construction of dry bulk vessels, two of which were delivered and
then sold and leased back by Seaboard at book value of $44 million in 2015. The Marine segment expenditures were
primarily for purchases of cargo carrying and handling equipment and $8 million for the purchase of a containerized
cargo vessel. 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 2014, Seaboard invested $121 million in property, plant and equipment, of which $54 million was in the Pork
segment, $21 million in the CT&M segment and $29 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 CT&M segment expenditures were primarily for payments
related to building four vessels. The Marine segment expenditures were primarily for purchases of cargo carrying and
12 2016 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
handling equipment. All other capital expenditures were of a normal recurring nature and primarily included
replacements of machinery and equipment, and general facility modernizations.
During 2016 and 2015, Seaboard contributed $51 million and $26 million, respectively, to STF, its newly formed 50%
joint venture, for construction of a pork processing facility in Sioux City, Iowa. As the joint venture obtained third-party
financing in March 2016, the original subscription agreement was amended to modify the total contribution amount and
timing of payments. Seaboard’s remaining commitment of approximately $73 million is expected to be contributed in
2017. In addition to capital contributions, Seaboard also agreed to provide a portion of the hogs to be processed at the
facility. During 2016, Seaboard acquired hog inventory and related assets through acquisitions of existing farm
operations for a total investment of $219 million. These assets increased Seaboard’s hog production capacity to meet the
majority of such hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying
additional hog inventory and related assets during 2017 to further increase its hog supply capacity. See Note 12 to the
consolidated financial statements for further discussion of the significant acquisitions. The new pork processing facility
is expected to begin operations in mid-2017. During the first quarter of 2017, STF announced plans to expand the pork
processing plant to be capable of processing an additional three million market hogs annually by operating a second
shift. The expansion is estimated to cost approximately $47 million, of which Seaboard could be required to commit up
to 50% of the amount.
Also during 2016, Seaboard invested $7 million of cash and converted its $8 million note receivable to equity for a 36%
noncontrolling interest in a holding company that owns a controlling interest in two Haitian start-up projects consisting
of a marine terminal operation and a free trade zone development, which includes a planned power plant. The investment
is accounted for in the Marine segment using the equity method and reported on a three-month lag. Seaboard’s first
proportionate share of income (loss) from affiliates was recognized in the second quarter of 2016. The note receivable,
which included $4 million loaned in 2014 and $4 million loaned in 2015, was converted into equity by Seaboard once
certain business operating conditions were met in Haiti.
Seaboard continued to invest in a flour production business in Brazil, of which Seaboard now holds a 98%
noncontrolling interest. During 2016, 2015 and 2014, Seaboard invested an additional $14 million, $28 million and $4
million, respectively, in equity and long-term advances. See Note 4 to the consolidated financial statements for further
discussion of this investment.
Seaboard invested in two limited liability companies that operate refined coal processing plants, one in Oklahoma during
2015 and one in Nebraska during 2016. Production of refined coal generates federal income tax credits. Seaboard’s
funding commitment for these companies varies depending on production and, based on current production estimates, is
anticipated to each be between $7 million and $9 million per year until 2021, for a total estimate of approximately $73
million as of December 31, 2016. Seaboard invested $14 million and $9 million during 2016 and 2015, respectively.
During 2015, the CT&M and Power segments invested in several businesses. Seaboard contributed $13 million in cash,
a small amount of other assets, certain employees and rights to sell certain agricultural commodities that Seaboard had
previously sold through its subsidiary, PS International, LLC, for a 40% noncontrolling interest in a commodity trading
business in Atlanta, Georgia. Also, Seaboard invested $8 million in a flour milling business in Botswana for a 49%
noncontrolling interest, $10 million for a 45% noncontrolling interest in a commodity trading and flour milling business
in Uruguay, $10 million in an oilseed crushing business in the Republic of Turkey for a 25% noncontrolling interest, and
$18 million for a 12% noncontrolling interest in a grain trading and poultry business in Morocco, which is accounted for
using the cost method. During 2015, the Power segment invested $10 million in a business operating a 300 megawatt
electricity generating facility in the Dominican Republic, increasing Seaboard’s ownership interest to 29.9%. See Note 4
to the consolidated financial statements for further discussion.
During 2014, the Pork segment sold a business, and the Marine segment invested in a business. In September 2014, the
Pork segment sold to Triumph Foods, LLC a 50% interest in its Daily’s Premium Meats division for $74 million. Also in
that month, Seaboard’s Marine segment invested $17 million in a cargo terminal business in Jamaica for a 21%
noncontrolling interest. See Note 4 to the consolidated financial statements for further discussion.
2016 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
Financing Activities, Debt and Related Covenants
The following table presents a summary of Seaboard’s available borrowing capacity as of December 31, 2016. At
December 31, 2016, borrowings under the uncommitted lines of credit totaled $121 million, with all such borrowings
related to foreign subsidiaries. See Note 7 to the consolidated financial statements for further discussion.
(Millions of dollars)
Short-term uncommitted and committed lines
Amounts drawn against lines
Letters of credit reducing borrowing availability
Available borrowing capacity at December 31, 2016
Total amount
available
$
$
480
(121)
(4)
355
On September 30, 2016, Seaboard entered into a $100 million committed line of credit with Wells Fargo Bank, National
Association (“Wells Fargo”) that matures on September 29, 2017. Interest is computed at LIBOR plus 0.50%, and
Seaboard incurs an unused commitment fee of 0.09% per annum. This line of credit is secured by certain short-term
investments. The line of credit is subject to standard representations and covenants. There was no outstanding balance as
of December 31, 2016.
At December 31, 2016, Seaboard had an unsecured term loan, which matures in 2022, with a balance of $497 million
and $20 million of foreign subsidiary debt, primarily denominated in Argentine pesos. Seaboard was in compliance with
all restrictive covenants related to these loans and facilities as of December 31, 2016. Seaboard has capacity under
existing loan covenants to undertake additional debt financings of approximately $1,605 million at December 31, 2016.
See Note 7 to the consolidated financial statements for further discussion of notes payable and long-term debt.
As of December 31, 2016, Seaboard had cash and short-term investments of $1,354 million and additional total working
capital of $709 million. 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 2017. 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, 2016, $441 million of the $1,354 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 shares of common stock at a total price of $53 million in 2014. No common
stock was repurchased in 2016 or 2015. There were no dividends paid in 2016, 2015 or 2014. On February 2, 2017,
Seaboard declared a quarterly dividend of $1.50 per share of common stock payable on February 23, 2017. Seaboard’s
Board of Directors intends that Seaboard will continue to pay quarterly dividends for the reasonably foreseeable future,
with the amount of any dividends being dependent upon such factors as Seaboard’s financial condition, results of
operations and current and anticipated cash needs, including capital requirements. See Note 11 to the consolidated
financial statements for further discussion on stockholders’ equity.
14 2016 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
Contractual Obligations and Off-Balance Sheet Arrangements
The following table provides a summary of Seaboard’s contractual obligations as of December 31, 2016.
Payments due by period
(Millions of dollars)
Vessel, time and voyage-charter commitments
Contract grower agreements
Other operating lease payments
Total lease obligations
Short-term notes payable
Long-term debt
Interest payments (1)
Retirement benefit payments (2)
Investment in affiliates (3)
Other purchase commitments
Total contractual cash obligations and commitments
$
1 year
Total
198 $
100
307
605
121
517
77
96
150
947
Less than 1-3 3-5 More than
years years 5 years
46
9
176
231
—
366
9
54
—
118
778
47 $ 53 $ 52 $
29
31
107
121
17
17
8
91
638
999 $ 385 $ 351 $
22
46
120
—
80
21
16
28
86
40
54
147
—
54
30
18
31
105
$ 2,513 $
(1) Interest payments in the table above include cash payments for interest on variable rate long-term debt based on
interest rates as of December 31, 2016. Interest payments also 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, 2016.
(2) Retirement benefit payments 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. Effective January 1, 2017, the assets and liabilities of
the two plans were merged, so that only one qualified defined benefit pension plan remains.
(3) Investment in affiliates represents obligations made to equity method investments of Seaboard, primarily $73
million committed to STF for construction of its Sioux City pork processing facility and $73 million of
expected funding commitments based on production levels for two limited liability companies that operate
refined coal processing plants.
Several of Seaboard’s segments have long-term contractual obligations, including non-cancelable operating lease
agreements for facilities and equipment. The Marine and CT&M segments enter into contracts to time-charter vessels for
use in operations. The Pork segment has contract grower agreements in place with farmers to raise a portion of
Seaboard’s hogs to support its operations. The Pork segment has also entered into grain and feed ingredient purchase
contracts to support the segment’s live hog operations, and has contracted for the purchase of additional hogs from third
parties. The CT&M segment enters into commodity purchase contracts, primarily to support sales commitments. See
Note 10 to the consolidated financial statements for further discussion on Seaboard’s contractual obligations and for a
more detailed listing of other purchase commitments.
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 because they do not represent contractual obligations.
RESULTS OF OPERATIONS
Net sales for the years ended December 31, 2016, 2015 and 2014 were $5,379 million, $5,594 million and $6,473
million, respectively. The decrease for 2016 compared to 2015 primarily reflected lower commodity prices and the mix
of products sold for the CT&M segment, lower volumes of sugar sold in the Sugar segment, and lower cargo rates in the
Marine segment, partially offset by higher sales volume of market hogs from 2016 acquisitions of live operations and
higher biodiesel volumes from the acquisition of a second biodiesel plant in the Pork segment. The decrease for 2015
compared to 2014 primarily reflected lower prices for pork products sold and the deconsolidation of Daily’s in the Pork
2016 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
segment, lower sales prices for almost all commodities sold and lower sales volume of corn for the CT&M segment, and
lower spot market rates and sales volume for the Power segment. The decreases were partially offset by higher cargo
volumes for the Marine segment.
Operating income for the years ended December 31, 2016, 2015 and 2014 were $222 million, $126 million and $424
million, respectively. The increase for 2016 compared to 2015 primarily reflected lower feed costs for hogs internally
grown in the Pork segment and higher margins on commodity trades to third parties in the CT&M segment, partially
offset by higher production costs for sugar in the Sugar segment. The decrease for 2015 compared to 2014 primarily
reflected lower prices for pork products sold, lower margins on commodity trades to third parties, and higher production
costs for sugar and alcohol.
Pork Segment
(Millions of dollars)
Net sales
Operating income
Income from affiliates
2016
2015
2014
$ 1,443 $ 1,332 $ 1,717
349
$
4
$
116 $
11 $
175 $
11 $
Net sales for the Pork segment increased $111 million for the year ended December 31, 2016 compared to 2015. The
increase was primarily the result of higher sales volume of market hogs related to acquisitions as discussed in Note 9 to
the consolidated financial statements, higher prices for pork products sold and increased volume and sales prices for
biodiesel resulting from increased output from the Guymon plant and the acquisition of a second biodiesel plant in St.
Joseph, Missouri. The increase was partially offset by lower volume of pork products sold.
Operating income for the Pork segment increased $59 million for the year ended December 31, 2016 compared to 2015.
The increase was primarily the result of lower feed costs for hogs internally grown and improved overall margins from
higher meat prices. Management is unable to predict future market prices for pork products, the cost of feed or cost of
third-party hogs; however, management anticipates positive operating income for this segment in 2017. The Federal
blender’s credits have not been renewed for 2017.
Net sales for the Pork segment decreased $385 million for the year ended December 31, 2015 compared to 2014. The
decrease was primarily the result of lower prices for pork products sold and the deconsolidation of Daily’s. The decrease
was partially offset by an increase in related sales volume.
Operating income for the Pork segment decreased $233 million for the year ended December 31, 2015 compared to
2014. The decrease was primarily the result of lower prices for pork products and, to a lesser degree, the deconsolidation
of Daily’s. Partially offsetting the decrease was lower costs for third-party hogs and lower feed costs for hogs internally
grown. In December 2015, the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it blends was
reinstated for 2015 and 2016, retroactive to January 1, 2015. As a result, the 2015 Federal blender’s credit of $17 million
was recorded as revenues in the fourth quarter of 2015. See Note 13 to the consolidated financial statements for further
discussion of the Federal blender’s credit.
Income from affiliates for the Pork segment was primarily from Seaboard’s 50% ownership interest in Daily’s,
accounted for using the equity method. Seaboard’s first proportionate share of earnings for Daily’s was recognized in the
fourth quarter of 2014.
Commodity Trading and Milling Segment
(Millions of dollars)
Net sales
Operating income as reported
Mark-to-market adjustments
Operating income (loss) excluding mark-to-market adjustments
Loss from affiliates
2016
2015
2014
$ 2,778 $ 3,022 $ 3,499
54
$
(13)
41
(24)
38 $
—
38 $
(10) $
2 $
(5)
(3) $
(50) $
$
$
Net sales for the CT&M segment decreased $244 million for the year ended December 31, 2016 compared to 2015. The
decrease primarily reflected lower sales prices, resulting from lower commodity prices and the mix of products sold,
partially offset by higher volumes in corn and soybeans.
16 2016 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
Operating income for the CT&M segment increased $36 million for the year ended December 31, 2016, compared to
2015. The increase primarily reflected higher margins on commodity trades to third parties and affiliates and fluctuations
of $5 million of mark-to-market derivative contracts as discussed below. Excluding the effects of the mark-to-market
adjustments for derivatives contracts, operating income increased $41 million.
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 2017, 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
would have remained the same in 2016 and been lower by $5 million and $13 million in 2015 and 2014, respectively.
While management believes its commodity futures, 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 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 therefore, these mark-to-market
adjustments could reverse in fiscal 2017. Management believes eliminating these mark-to-market adjustments provides a
more reasonable presentation to compare and evaluate period-to-period financial results for this segment.
Loss from affiliates for the CT&M segment decreased by $40 million for the year ended December 31, 2016 compared
to 2015. The decrease primarily reflected lower operating and currency losses recorded against the investment and lower
reserves for notes receivable and advances from an affiliate in Brazil. Seaboard’s loss from this Brazilian affiliate totaled
$60 million in 2015 compared to $10 million in 2016. This Brazilian affiliate was consolidated in the fourth quarter of
2016. See Note 4 to the consolidated financial statements for further discussion of this affiliate. 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 CT&M segment decreased $477 million for the year ended December 31, 2015 compared to 2014. The
decrease primarily reflected lower sales prices for almost all commodities sold and, to a lesser extent, lower sales
volume primarily for corn.
Operating income for the CT&M segment decreased $52 million for the year ended December 31, 2015 compared to
2014. The decrease primarily reflected certain unfavorable market conditions, which resulted in lower margins on
commodity trades to third parties. The decrease also reflected an increase in bad debt expense primarily attributable to
trade receivables with an affiliate in Brazil (see Note 4 to the consolidated financial statements for further discussion)
and fluctuations of $8 million of mark-to-market derivative contracts. Excluding the effects of mark-to-market
adjustments for derivatives contracts, operating income decreased $44 million.
Loss from affiliates for the CT&M segment increased by $26 million for the year ended December 31, 2015 compared to
2014. The increase primarily reflected operating and currency losses recorded against the investment and reserves for
notes receivable and advances from an affiliate in Brazil totaling $60 million. Partially offsetting the increase was an $11
million write down in a Democratic Republic of Congo (“DRC”) bakery business investment recorded in 2014 as further
discussed in Note 4 to the consolidated financial statements and a decrease in losses in 2015 compared to 2014 in this
same business.
Marine Segment
(Millions of dollars)
Net sales
Operating income (loss)
Income from affiliate
2016
2015
2014
$
$
$
916 $
33 $
1 $
940 $
19 $
2 $
853
(3)
—
Net sales for the Marine segment decreased $24 million for the year ended December 31, 2016 compared to 2015. The
decrease was primarily the result of lower cargo rates in certain markets during 2016 compared to 2015, partially offset
by higher volumes.
2016 Annual Report 17
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Management’s Discussion & Anal ysis
Operating income for the Marine segment increased $14 million for the year ended December 31, 2016 compared to
2015. The increase was primarily the result of lower voyage costs, principally fuel costs, on a per unit shipped basis,
partially offset by lower cargo rates. Management cannot predict changes in future cargo volumes, cargo rates and fuel
costs, or to what extent changes in economic conditions in markets served will affect net sales or operating income
during 2017. However, management anticipates this segment will have positive operating income for 2017.
Net sales for the Marine segment increased $87 million for the year ended December 31, 2015 compared to 2014. The
increase was primarily the result of higher cargo volumes, partially offset by lower cargo rates in certain markets during
2015 compared to 2014.
Operating income for the Marine segment increased $22 million for the year ended December 31, 2015 compared to
2014. The increase was primarily the result of lower voyage costs, principally fuel costs, on a per unit shipped basis,
partially offset by lower cargo rates.
Sugar Segment
(Millions of dollars)
Net sales
Operating income (loss)
Income from affiliates
2016
2015
2014
$
$
$
147 $
(12) $
2 $
188 $
2 $
1 $
200
27
1
Net sales for the Sugar segment decreased $41 million for the year ended December 31, 2016 compared to 2015. The
decrease primarily reflected lower volumes and lower selling prices of sugar sold. During the third and fourth quarters of
2016, labor strikes and inclement weather negatively impacted volumes and resulted in a $12 million inventory charge to
cost of sales for fixed manufacturing costs associated with the revised production forecasts. Sugar and alcohol sales are
denominated in Argentine pesos, and an increase in local sales prices in terms of U.S. dollars was principally offset by
exchange rate changes as the Argentine peso continued to weaken against the U.S. dollar in 2016. Management cannot
predict local sugar and alcohol prices for 2017, but management anticipates that the Argentine peso will continue to be
weaker against the U.S. dollar, which should result in lower sale prices in terms of U.S. dollars in 2017.
Operating income for the Sugar segment decreased $14 million for the year ended December 31, 2016 compared to
2015. The decrease primarily reflected lower sales prices, lower volumes and the $12 million inventory charge. The
decrease in operating income was partially offset by reduced selling, general and administrative expenses from
decreased personnel-related costs. Based on recent market conditions, management currently cannot predict if this
segment will be profitable in 2017.
Net sales for the Sugar segment decreased $12 million for the year ended December 31, 2015 compared to 2014. The
decrease primarily reflected lower volumes for sugar sold. Sugar and alcohol sales are denominated in Argentine pesos,
and an increase in local sales prices in terms of U.S. dollars was principally offset by exchange rate changes as the
Argentine peso weakened against the U.S. dollar in 2015.
Operating income for the Sugar segment decreased $25 million for the year ended December 31, 2015 compared to
2014. The decrease primarily reflected higher production costs for sugar and alcohol. To a lesser extent, the decrease in
operating income was also the result of higher selling, general and administrative expenses principally from increased
personnel-related costs and lower volume of sugar sold. Also, operating income in 2014 included a $4 million gain
related to a final insurance settlement for property damage and business interruption claims related to prior years.
Power Segment
(Millions of dollars)
Net sales
Operating income
Income from affiliate
2014
2016 2015
79 $
7 $
4 $
$
$
$
97 $
7 $
3 $
189
19
2
Net sales for the Power segment decreased $18 million for the year ended December 31, 2016 compared to 2015. The
decrease primarily reflected lower spot market rates, which were attributable primarily to lower fuel costs, a component
of pricing.
18 2016 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
Operating income for the Power segment remained flat for the year ended December 31, 2016 compared to 2015
primarily due to the lower spot market rates being offset by lower fuel costs per kilowatt hour generated and other lower
production costs. 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 2017.
Net sales for the Power segment decreased $92 million for the year ended December 31, 2015 compared to 2014. The
decrease primarily reflected lower spot market rates and lower volumes. The lower spot market rates were attributable
primarily to lower fuel costs, a component of pricing. The lower volumes were a result of cancelling the short-term
leasing of a power generating facility on September 3, 2014 as discussed in Note 13 to the consolidated financial
statements.
Operating income for the Power segment decreased $12 million for the year ended December 31, 2015 compared to
2014. The decrease primarily reflected lower spot market rates and lower volumes, partially offset by lower fuel costs
per kilowatt hour generated and other lower production costs. Also, operating income in 2014 included a gain on sale of
assets of $5 million as discussed in Note 13 to the consolidated financial statements.
Turkey Segment
(Millions of dollars)
Income from affiliate
2016
2015 2014
54
73 $ 103 $
$
The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball. The
decrease in income from affiliate for 2016 compared to 2015 was primarily the result of lower volume and prices for
turkey products sold. Management is unable to predict future market prices for turkey products, the cost of feed or the
impact from avian influenza; however, management anticipates positive income for this segment in 2017.
The increase in income from affiliate for 2015 compared to 2014 was primarily the result of lower feed costs and higher
prices of turkey products sold.
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2016 increased by $5 million
over 2015 to $275 million. The increase was primarily the result of increased costs related to Seaboard’s deferred
compensation program, which were offset by the effect of the mark-to-market on investments recorded in other
investment income. As a percentage of revenues, SG&A was 5% for 2016 and 2015.
SG&A expenses for the year ended December 31, 2015 increased by $16 million over 2014 to $270 million. The
increase was primarily the result of bad debt expense in the CT&M segment and increased personnel-related costs in
most segments. As a percentage of revenues, SG&A was 5% for 2015 compared to 4% for 2014.
Interest Expense
Interest expense totaled $29 million, $18 million and $20 million for the years ended December 31, 2016, 2015 and
2014, respectively. The increase in 2016 compared to 2015 primarily related to long-term debt issued in December 2015.
The decrease in 2015 compared to 2014 primarily related to a $4 million charge in 2014 for early payment of debt as
discussed in Note 7 to the consolidated financial statements.
Interest Income
Interest income totaled $15 million, $40 million and $14 million for the years ended December 31, 2016, 2015 and 2014,
respectively. The decrease for 2016 compared to 2015 primarily reflected lower interest recognized on outstanding
customer receivable balances in the Power segment. In December 2015, the Power segment recognized $31 million of
interest income related to aged receivable balances. See Note 13 to the consolidated financial statements for further
discussion. The increase for 2015 compared to 2014 primarily reflected an increase in interest recognized on outstanding
customer receivable balances in the Power segment as discussed above.
Interest Income from Affiliates
Interest income from affiliates totaled $24 million, $29 million and $27 million for the years ended December 31, 2016,
2015 and 2014, respectively. The decrease for 2016 compared to 2015 primarily reflected the modification of the
Butterball note receivable. See Note 4 to consolidated financial statements for further discussion of the modification.
The increase for 2015 compared to 2014 primarily represented additional interest income from the Butterball note
receivable related to the pay-in-kind interest component.
2016 Annual Report 19
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
Other Investment Income (Loss), Net
Other investment income (loss), net totaled $69 million, $(5) million and $2 million for the years ended
December 31, 2016, 2015 and 2014, respectively. The increase for 2016 compared to 2015 primarily reflects higher
income on short-term investments related to mark-to-market fluctuation and dividends, partially offset by higher losses
associated with its investments in refined coal processing plants, of which a portion is offset by tax credits in income tax
expense. The fluctuation from 2015 to 2014 primarily reflects Seaboard’s losses associated with its investment in a
refined coal processing plant, of which a portion is offset by tax credits in income tax expense.
Foreign Currency Gains (Losses), Net
Foreign currency gains (losses), net totaled $2 million, $1 million and $(9) million for the years ended
December 31, 2016, 2015 and 2014, respectively. The increase in foreign currency gains, net in 2016 compared to 2015
primarily reflected gains in the South African rand, partially offset by losses in the Zambian kwacha, among fluctuations
of other currency exchange rates in several foreign countries. The decrease in foreign currency losses, net in 2015
compared to 2014 primarily reflected gains in the South African rand, partially offset during the year by fluctuations of
other currency exchange rates in several foreign countries. The political and economic conditions of the countries in
which Seaboard operates and does business, 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 that cannot be
predicted by Seaboard. Although Seaboard does not utilize hedge accounting, Seaboard does utilize foreign currency
exchange contracts to manage its risks and exposure to foreign currency fluctuations primarily related to the South
African rand. Management believes gains and losses on commodity transactions, including the mark-to-market effects,
of such foreign currency exchange contracts relate to the underlying commodity transactions and classifies such gains
and losses in cost of sales. All other gains and losses on foreign currency exchange contracts are included in foreign
currency gains (losses), net.
Gain on Sale of Controlling Interest in Subsidiary
During 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in Daily’s resulting in a pre-tax gain of $66
million. See Note 4 to the consolidated financial statements for further discussion.
Miscellaneous, Net
Miscellaneous, net totaled $0 million, $(2) million and $(5) million for the years ended December 31, 2016, 2015 and
2014, respectively. Miscellaneous, net primarily reflected mark-to-market fluctuations on interest rate exchange
agreements.
Income Tax Expense
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Tax Act”) was signed into
law. The 2015 Tax Act reinstated and made permanent certain expired corporate income tax provisions that impact
current and deferred taxes for financial reporting purposes. Certain reinstated provisions were extended for 2015 and
2016, while certain other provisions were extended beyond 2016. The effective tax rate for 2016 was lower than 2015
primarily due to a change in the mix of domestic and foreign earnings from the prior year. The effective tax rate for 2015
was lower than 2014 primarily due to a change in the mix of domestic and foreign earnings from the prior year.
OTHER FINANCIAL INFORMATION
Management does not believe its businesses have been materially adversely affected by inflation. See Note 1 to the
consolidated financial statements for a discussion of recently issued accounting standards.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in
the U.S. (“GAAP”) 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 that 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.
Allowance for Doubtful Accounts – Seaboard primarily uses a specific identification approach 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 affect on future evaluations. Furthermore, Seaboard’s
20 2016 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
total current receivables are heavily weighted toward foreign receivables ($312 million or 73% at December 31, 2016),
including foreign receivables due from affiliates ($98 million at December 31, 2016), 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. that can experience conditions causing sudden
changes to their ability to pay such receivables on a timely basis or in full. 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. For example, the CT&M segment reserved $16
million in 2016 on an affiliate note receivable with its bakery in the DRC. Also, the CT&M segment reserved $9 million
in 2015 on trade receivables with its affiliate in Brazil. See Note 4 to the consolidated financial statements for further
discussion of both examples. Bad debt expense for the years ended December 31, 2016, 2015 and 2014 was $15 million,
$13 million and $0 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 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 property, plant and equipment, 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 noncontrolling interest and are accounted for using the
equity method. In addition, for some of these investments, Seaboard also has notes receivable for loans it provided to
these businesses. For the CT&M segment, these investments are primarily in foreign countries, which are less developed
than the U.S., and therefore, expose Seaboard to 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 affiliates 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 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 affiliate’s business, the
2016 Annual Report 21
S E A B O A R D C O R P O R A T I O N
Management’s Discussion & Anal ysis
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. As discussed above, in 2016 Seaboard recorded a $16 million reserve on an
affiliate note receivable. In 2015, Seaboard recorded a $22 million reserve in loss from affiliates related to its investment
in a flour production business in Brazil that was consolidated in 2016, and in 2014 recorded an $11 million write down
in loss from affiliates related to its investment in a bakery located in the DRC. See Note 4 to the consolidated financial
statements for further discussion on the CT&M segment and its affiliates.
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 that 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, 2016, Seaboard had deferred tax
assets of $141 million, net of the valuation allowance of $58 million, and deferred tax liabilities of $218 million. For the
years ended December 31, 2016, 2015 and 2014, income tax expense included $43 million, $(9) million and $25 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 $3 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% corridor and, therefore, could affect Seaboard’s recognized pension expense in such future
periods, as permitted under GAAP. Accordingly, accumulated gains or losses in excess of the 10% 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. Because 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 (e.g., 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, 2016 and 2015, 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.
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 exchange
agreements. Because changes in interest rates affect the cash required to service variable-rate debt, Seaboard uses
interest rate exchange agreements to manage risks of increasing interest rates.
22 2016 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
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 million each. All three of these interest rate
exchange agreements are outstanding as of December 31, 2016, and 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 exchange agreements and interest rate exchange agreements to a hypothetical 10% change in
market prices, foreign exchange rates and interest rates as of December 31, 2016 and December 31, 2015. 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.
December 31, 2016 December 31, 2015
(Millions of dollars)
12
Grains and oilseeds
8 $
$
2
Hogs
1
—
Energy related resources
1
—
Vegetable oils
1
13
Foreign currencies
17
1
Interest rates
—
The table below provides information about Seaboard’s non-trading financial instruments sensitive to changes in interest
rates at December 31, 2016. For debt obligations, the table presents principal cash flows and related weighted average
interest rates by expected maturity dates. Long-term debt included foreign subsidiary obligations payable in Argentine
pesos of $16 million and $23 million at December 31, 2016 and 2015, respectively. Short-term instruments, including
short-term investments, non-trade receivables and current notes payable have carrying values that approximate market
value and are not included in this table due to their short-term nature.
(Millions of dollars)
Long-term debt:
Variable rate
Average interest rate
$
2017
2018
2019
2020
2021
Thereafter Total
17 $
7.07%
21 $
6.69%
33 $
42 $
5.35%
4.93%
38 $
2.53%
366 $
2.35%
517
3.09%
Non-trading financial instruments sensitive to changes in interest rates at December 31, 2015 consisted of variable rate
long-term debt totaling $523 million with an average interest rate of 3.16%.
2016 Annual Report 23
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 the Securities Exchange
Act of 1934 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”). Management’s assessment of the effectiveness of Seaboard’s
internal control over financial reporting as of December 31, 2016, excluded Belarina Alimentos S.A. (“Belarina”), which
was consolidated on October 28, 2016. Belarina’s total assets constituted approximately $44 million, or less than 1%, of
Seaboard’s consolidated assets at December 31, 2016. Due to financial information for this foreign affiliate being
reported on a three-month lag, no sales were included in Seaboard’s consolidated financial statements. 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, 2016.
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.
24 2016 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 the accompanying consolidated balance sheets of Seaboard Corporation and subsidiaries (the
“Company”) as of December 31, 2016 and 2015 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, 2016. 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, 2016 and 2015, and the results of their
operations and their cash flows for each of the years in the three-year period ended December 31, 2016, 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, 2016, 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 21, 2017 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Kansas City, Missouri
February 21, 2017
2016 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 Seaboard Corporation’s internal control over financial reporting as of December 31, 2016, 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, 2016, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2016 excluded Belarina Alimentos S.A. (“Belarina”), which was consolidated on October 28, 2016.
Belarina’s total assets constituted approximately $44 million, or less than 1%, of Seaboard’s consolidated assets at
December 31, 2016. Due to financial information for this foreign affiliate being reported on a three-month lag, no sales
were included in Seaboard’s consolidated financial statements. Our audit of internal control over financial reporting of
the Company also excluded an evaluation of the internal control over financial reporting of Belarina.
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, 2016 and 2015,
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, 2016, and our report dated February 21, 2017 expressed an unqualified
opinion on those consolidated financial statements.
Kansas City, Missouri
February 21, 2017
26 2016 Annual Report
S E A B O A R D C O R P O R A T I O N
Consolidated Statements of Comprehensive Income
(Millions of dollars except share and per share amounts)
Net sales:
Products (includes sales to affiliates of $993, $831 and $842)
Services revenues (includes sales to affiliates of $8, $4 and $4)
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 from affiliates
Other investment income (loss), 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
Years ended December 31,
2015
2016
2014
$
4,334 $
961
84
5,379
4,515 $
973
106
5,594
3,992
822
68
4,882
497
275
222
4,244
866
88
5,198
396
270
126
(29)
15
24
81
69
2
—
—
162
384
(70)
314 $
(2)
312 $
(18)
40
29
70
(5)
1
—
(2)
115
241
(69)
172 $
(1)
171 $
$
$
5,373
906
194
6,473
4,818
813
164
5,795
678
254
424
(20)
14
27
37
2
(9)
66
(5)
112
536
(168)
368
(1)
367
Earnings per common share
$
266.50 $
146.44 $
311.44
Other comprehensive income (loss), net of income tax benefit of $12, $0 and $27:
Foreign currency translation adjustment
Unrealized gain on investments
Unrecognized pension cost
Other comprehensive loss, net of tax
Comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Seaboard
(26)
1
(1)
(26) $
288
(2)
286 $
(34)
—
9
(25) $
147
(1)
146 $
(39)
1
(33)
(71)
297
(1)
296
$
$
Average number of shares outstanding
1,170,550
1,170,550
1,178,441
See accompanying notes to consolidated financial statements.
2016 Annual Report 27
S E A B O A R D C O R P O R A T I O N
Consolidated Balance Sheets
(Millions of dollars except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Receivables:
Trade
Due from affiliates
Notes receivable from affiliates
Other
Total receivables
Allowance for doubtful accounts
Net receivables
Inventories
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 non-current 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
Deferred revenue from affiliates
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:
December 31,
2016
2015
$
77 $
1,277
269
110
163
99
641
(14)
627
762
105
2,848
1,006
773
26
19
3
80
4,755 $
121 $
17
194
22
118
66
48
52
35
112
785
499
121
77
98
795
$
$
50
1,254
330
86
—
115
531
(21)
510
739
111
2,664
831
671
200
12
3
50
4,431
141
4
200
39
121
47
46
44
26
98
766
518
132
41
92
783
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding
1,170,550 shares
Accumulated other comprehensive loss
Retained earnings
Total Seaboard stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and stockholders’ equity
1
(304)
3,465
3,162
13
3,175
4,755 $
1
(278)
3,153
2,876
6
2,882
4,431
$
See accompanying notes to consolidated financial statements.
28 2016 Annual Report
S E A B O A R D C O R P O R A T I O N
Consolidated Statements of Cash Flows
(Millions 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 power generating facility assets
Deferred income taxes
Pay-in-kind interest and accretion on notes receivable from affiliates
Reserve on notes receivable from affiliate
Loss (income) from affiliates
Dividends received from affiliates
Other investment loss (income), net
Gain on sale of controlling interest in a subsidiary
Other, net
Changes in assets and liabilities, net of acquisitions:
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 sale of short-term investments
Proceeds from maturity of short-term investments
Capital expenditures
Proceeds from sale of fixed assets
Proceeds from sale of power generating facility assets
Acquisition of businesses
Investments in and advances to affiliates, net
Notes receivable issued to affiliates
Principal payments received on notes receivable from affiliates
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 long-term debt
Principal payments of long-term debt
Repurchase of common stock
Other, net
Net cash from financing activities
Effect of exchange rate changes on cash and cash equivalents
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,
2015
2016
2014
$
314 $
172 $
368
102
—
47
(3)
16
(81)
53
(69)
—
12
18
6
8
23
(19)
427
(691)
710
34
(158)
47
—
(219)
(71)
(13)
12
(31)
—
6
(374)
91
—
(10)
(17)
—
(70)
69
5
—
5
119
(35)
(3)
75
15
416
(1,320)
526
29
(139)
48
—
—
(119)
—
—
(28)
—
(1)
(1,004)
92
(5)
26
(16)
—
(37)
14
(2)
(66)
(3)
(7)
(81)
24
44
23
374
(1,097)
876
18
(121)
8
8
—
(31)
(1)
1
(3)
74
3
(265)
(25)
3
(5)
—
—
(27)
1
27
50
77 $
83
522
—
—
—
605
(3)
14
36
50 $
17
—
(91)
(53)
(2)
(129)
1
(19)
55
36
$
See accompanying notes to consolidated financial statements.
2016 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 Changes in Equity
Accumulated
Other
(Millions of dollars)
Balances, January 1, 2014
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Repurchase of common stock
Reduction to noncontrolling interests
Balances, December 31, 2014
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Balances, December 31, 2015
Comprehensive income:
Net earnings
Other comprehensive loss, net of tax
Additions to noncontrolling interests
Balances, December 31, 2016
Common Comprehensive Retained Noncontrolling
Stock
$
Earnings
(182) $ 2,668
Interests
Loss
1
$
$
Total
6 $ 2,493
1
1
(71)
367
(53)
(253)
2,982
171
3,153
312
(25)
(278)
(26)
$
1 $
(304) $ 3,465 $
1
(2)
5
1
6
368
(71)
(53)
(2)
2,735
172
(25)
2,882
2
314
(26)
5
13 $ 3,175
5
See accompanying notes to consolidated financial statements.
30 2016 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 1
Summary of Significant Accounting Policies
Operations of Seaboard Corporation and its Subsidiaries
Seaboard Corporation and its subsidiaries (“Seaboard”) are a diverse global agribusiness and transportation company. In
the United States (“U.S.”), 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 a turkey operation in the U.S. Seaboard Flour LLC and SFC Preferred
LLC, entities owned by the chief executive officer and his family, hold approximately 76% 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 intercompany balances and transactions have been eliminated in consolidation. Investments
in non-controlled affiliates where we have significant influence 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. 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 (loss), net on the consolidated statements of comprehensive income. 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 loss. 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 (“CT&M”) 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 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 that 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.
2016 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
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
noncontrolling interest of Seaboard Foods LLC (“Seaboard Foods”) in the Pork segment for a total of $12 million. Due
to acquisitions during 2016 in the Pork segment and CT&M segment, goodwill increased $6 million and $1 million,
respectively. Based on the annual assessment conducted by these reporting units during 2016, there were no impairment
charges recorded for the year ended December 31, 2016.
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 asset retirement obligation costs, Seaboard 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 2016 and 2015:
(Millions of dollars)
Beginning balance
Accretion expense
Ending balance
Years ended December 31,
2016
2015
$
$
18
1
19
$
$
17
1
18
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 on the number of
head processed by Triumph. Revenues for the CT&M segment 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 in the
Marine segment 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
32 2016 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
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 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.
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 cash paid for interest and income taxes:
(Millions of dollars)
Interest, net of interest capitalized
Income taxes, net of refunds
Years ended December 31,
2015
2016
2014
$
$
29
31
$
17
60
20
135
Supplemental Non-Cash Transactions
On October 28, 2016, Seaboard obtained control of Belarina Alimentos S.A., a flour production business in Brazil
(“Belarina”). No cash or other consideration was transferred to the other shareholder whose ownership was diluted
through revision of the shareholders agreement to restructure the affiliate debt and equity of Belarina. See Note 13 for
the purchase price allocation table and other details.
As more fully described in Note 4, on September 27, 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in
its processed meats division, Daily’s Premium Meats, LLC (“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:
(Millions of dollars)
Decrease in net working capital
Increase in investment in and advances to affiliates
Decrease in property, plant and equipment
Decrease in goodwill
Decrease in other intangible assets, net (not subject to amortization)
Gain on sale of controlling interest in subsidiary
Net proceeds from sale of controlling interest in subsidiary
$
$
21
(74)
16
28
17
66
74
Seaboard had notes receivable from affiliates that accrued pay-in-kind interest income, primarily from one affiliate. On
January 4, 2016, the interest on this note receivable was modified to eliminate future pay-in-kind interest as discussed in
Note 4 to the consolidated financial statements. Non-cash, pay-in-kind interest income and accretion of discount
recognized on these notes receivable for the years ended December 31, 2016, 2015 and 2014 was $3 million, $17 million
and $16 million, respectively.
Foreign Currency Transactions and Translation
Seaboard has operations in several foreign countries, and 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
2016 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
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, four consolidated subsidiaries (CT&M segment businesses in Brazil, Canada, Guyana and
Zambia) and eight non-controlled, non-consolidated affiliates (a Marine segment business in Jamaica and CT&M
segment businesses in Australia, Colombia, Kenya, Lesotho, South Africa, Turkey 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 expenses are translated at average rates. Translation gains and losses are recorded as components
of other comprehensive income (loss). For the consolidated subsidiaries and non-consolidated affiliates, 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 affects 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, 2016, none of the derivatives were designated and
accounted for as hedges, primarily as a result of the extensive record-keeping requirements. From time to time, 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 (“FASB”) issued guidance to develop a single, comprehensive
revenue recognition model for all contracts with customers. This guidance requires an entity to recognize revenues when
promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity
expects to be entitled for those goods and services. This guidance supersedes nearly all existing revenue recognition
guidance under GAAP. Seaboard will adopt this guidance on January 1, 2018, using the cumulative effect transition
method, where any cumulative effect of initially adopting the guidance is recognized at the date of adoption. Based on
management’s initial assessment, Seaboard believes the adoption of this guidance will not have a material impact on its
financial position or net earnings.
In July 2015, the FASB issued guidance to simplify the subsequent measurement of inventory, excluding inventory
measured using LIFO or the retail inventory method. Under the new standard, inventory should be at the lower of cost
and net realizable value. The new guidance is effective for interim and annual periods beginning after December 15,
2016, with early adoption permitted. Seaboard believes the adoption of this guidance will not have a material impact on
its financial position or net earnings.
In January 2016, the FASB issued guidance that requires entities to measure equity investments, other than those
accounted for using the equity method of accounting, at fair value and recognize any changes in fair value in net income
if a readily determinable fair value exists. For investments without readily determinable fair values, the cost method of
accounting is eliminated. An entity may elect to record these equity investments at cost, less impairment, and plus or
minus subsequent adjustments for observable price changes. The new guidance is effective for interim and annual
periods beginning after December 15, 2017. Seaboard believes the adoption of this guidance will not have a material
impact on its financial position or net earnings.
34 2016 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
In February 2016, the FASB issued guidance that a lessee should record a right-of-use (“ROU”) asset and a lease
liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance
or operating, with classification affecting the pattern of expense recognition in the income statement. The recognition,
measurement, and presentation of expenses and cash flows arising from a financing lease have not significantly changed
from the previous guidance. For operating leases, a lessee is required to: (1) recognize a ROU asset and a lease liability,
initially measured at the present value of the lease payments, in the balance sheet, (2) recognize a single lease cost,
calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis and (3) classify
all cash payments within operating activities in the statement of cash flows. Seaboard will adopt this guidance on
January 1, 2019. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period
presented using a modified retrospective approach, which includes a number of optional practical expedients that entities
may elect to apply. Seaboard is in the preliminary stages of its assessment of the effect the guidance will have on its
existing accounting policies and the consolidated financial statements, but expects there will be an increase in assets and
liabilities on the consolidated balance sheets at adoption due to the recording of ROU assets and corresponding lease
liabilities, which may be material. See Note 10 for information about Seaboard’s lease obligations.
Note 2
Investments
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 the end of each year:
(Millions of dollars)
Money market funds
Total available-for-sale short-term investments
Domestic equity securities
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries
Foreign equity securities
High yield securities
Collateralized loan obligations
Money market funds held in trading accounts
Other trading securities
Total trading short-term investments
Total short-term investments
$
Cost
December 31, 2016
Amortized Fair
Value
—
$
—
482
437
199
115
26
13
5
1,277
$ 1,277
—
—
444
437
198
114
25
13
5
1,236
1,236
$
December 31, 2015
Amortized Fair
Cost
81
81
475
452
120
108
10
22
1
1,188
1,269
Value
81
$
81
466
450
120
104
10
22
1
1,173
$ 1,254
$
$
Unrealized gains (losses) related to trading securities were $49 million, $(12) million and $(7) million for the years
ended December 31, 2016, 2015 and 2014, respectively. Seaboard had $91 million of equity securities denominated in
foreign currencies at December 31, 2016, with $35 million in euros, $20 million in Japanese yen, $16 million in the
British pound, $6 million in the Swiss franc and the remaining $14 million in various other currencies. Seaboard had $80
million of equity securities denominated in foreign currencies at December 31, 2015, with $25 million in euros, $20
million in Japanese yen, $15 million in the British pound, $7 million in the Swiss franc and the remaining $13 million in
various other currencies. Also, money market funds included $1 million and $3 million denominated in various foreign
currencies at December 31, 2016 and 2015, respectively.
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. See Note 9 for a discussion of assets held
in conjunction with investments related to Seaboard’s defined benefit pension plan.
Seaboard had $28 million and $20 million of cost method investments classified in other non-current assets on the
consolidated balance sheets as of December 31, 2016 and 2015, respectively. During 2015, Seaboard invested $18
million for a 12% noncontrolling interest in a grain trading and poultry business in Morocco.
2016 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 3
Inventories
The following table is a summary of inventories at the end of each year:
(Millions 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,
2016
2015
$
$
273 $
34
307
(21)
286
279
30
62
371
105
762 $
210
26
236
(28)
208
330
52
61
443
88
739
The use of the LIFO method increased 2016, 2015 and 2014 net earnings by $5 million ($3.92 per common share), $5
million ($4.39 per common share), and by $16 million ($13.29 per common share), respectively. If the FIFO method had
been used for certain inventories of the Pork segment, inventories would have been higher by $21 million and $28
million as of December 31, 2016 and 2015, respectively.
Note 4
Investments in and Advances to Affiliates and Notes Receivable from Affiliates
Seaboard has several investments in and advances to non-controlled, non-consolidated affiliates that are all accounted
for using the equity method of accounting. Financial information from certain foreign affiliates is reported on a one- to
three-month lag, depending on the specific entity.
The Turkey segment represents Seaboard’s 50% noncontrolling voting interest in Butterball, LLC (“Butterball”).
Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other
products. As of December 31, 2016, Butterball had intangible assets of $111 million for trade name and $74 million for
goodwill.
In connection with its initial investment in Butterball in December 2010, Seaboard provided Butterball with a $100
million 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. Also 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. In January 2016, the interest on the subordinated loan was modified to 10% per annum, payable in
cash semi-annually and the warrants were also modified, whereby Seaboard can exercise these warrants at any time after
December 31, 2018 or prior to December 31, 2025 after which time the warrants expire. 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 were exercised, unless Seaboard already owned 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 $11 million, classified as investments in and advances to affiliates on the
consolidated balance sheets, and the subordinated loan was allocated a discounted value of $89 million, classified as
notes receivable from affiliates on the consolidated balance sheets, of the total $100 million subordinated financing
discussed above. The discount on the subordinated loan is being accreted monthly in interest income from affiliates
36 2016 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
through the maturity date of December 6, 2017. At December 31, 2016 and 2015, the recorded balance of this note
receivable was $161 million and $158 million, respectively.
During 2011, Seaboard provided a term loan of $13 million to Butterball to pay off capital leases for certain fixed assets
that 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, 2016 and 2015, the balance of the term loan included in notes receivable from affiliates
was $8 million.
Butterball had operating income in 2016, 2015 and 2014 of $162 million, $231 million and $141 million, respectively,
and other condensed financial information for each of Seaboard’s years ended was as follows:
Turkey Segment
(Millions of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
$
$
$
$
$
2016
1,813 $
139 $
1,154 $
529 $
625 $
December 31,
2015
2014
1,902 $
195 $
1,087 $
541 $
546 $
1,833
104
1,021
547
474
The Pork segment has a 50% noncontrolling interest in Daily’s and Seaboard Triumph Foods, LLC (“STF”). Daily’s
produces and markets raw and pre-cooked bacon, ham and sausage and has three further processing plants located in Salt
Lake City, Utah, Missoula, Montana and St. Joseph, Missouri. STF is constructing a new pork processing facility in
Sioux City, Iowa, with construction expected to be completed by mid-2017. Seaboard and Triumph formed STF in May
2015 with equal ownership of 50%. Seaboard originally agreed to contribute up to $207 million in connection with the
development and operation of the facility, however, in the first quarter of 2016, third-party financing was obtained by
STF, and the subscription agreement was amended to require $150 million in contributions. Seaboard contributed $51
million and $26 million during 2016 and 2015, respectively, and the remaining amount of $73 million is expected to be
contributed in 2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the
facility. 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.
In September 2014, the Pork segment sold to Triumph a 50% interest in Daily’s for cash proceeds of $74 million
resulting in a gain on sale of controlling interest in subsidiary of $66 million ($40 million net of taxes, or $34.14 per
share) in 2014. 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). Based on the cash consideration received from 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 $33 million, which is included in the gain on sale above,
for a total fair value of $74 million. In addition, both Seaboard and Triumph contributed $2 million 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 million 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.
Daily’s and STF’s combined condensed financial information for each of Seaboard’s years ended was follows:
Pork Segment
(Millions of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
December 31,
2015
2016
2014
319 $
22 $
364 $
14 $
350 $
295 $
22 $
247 $
17 $
230 $
71
7
175
15
160
$
$
$
$
$
2016 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
The CT&M segment has noncontrolling interests in foreign businesses conducting flour, maize and feed milling, baking
operations, poultry production and processing, and agricultural commodity
trading businesses. As of
December 31, 2016, the location and percentage ownership of CT&M’s affiliates were as follows: Botswana (49%),
Democratic Republic of Congo (“DRC”) (50%), Gambia (50%), Kenya (35%-49%), Lesotho (50%), Nigeria (16.2%-
48.33%), South Africa (30%-50%), and Zambia (50%) in Africa, Colombia (40%-42%), Ecuador (25%-50%), Guyana
(50%), Peru (50%) and Uruguay (45%) in South America, Jamaica (50%) and Haiti (33.33%) in the Caribbean, Turkey
(25%) in Europe, Australia (25%), Canada (45%), and United States (34.36%). 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.
The CT&M segment has a 50% noncontrolling interest in a bakery located in the DRC, which has experienced
unfavorable local market conditions and operating challenges, including equipment problems, resulting in operating
losses and challenges in gaining market share. In 2014, Seaboard recorded a write down of $11 million in loss from
affiliate to reduce the remaining equity investment in this business to zero. There was no tax benefit from this
transaction. As part of its original investment, Seaboard has an interest bearing long-term note receivable from this
affiliate that had a principal and interest balance of approximately $35 million at December 31, 2015. The note
receivable is 50% guaranteed by the other shareholder in the entity. The note receivable was restructured during the
second quarter of 2016 to extend the maturity to June 2022 and change the bi-annual payments to monthly payments of
varying amounts beginning in the fourth quarter of 2016. During the second quarter of 2016, new bakery management
reevaluated its business plan and the production and profitability forecast due to the bakery’s failure to meet previous
cash flow forecasts and the failure of significant equipment updates to accomplish projected improvement in quality and
consistency of the bread. Based on the revised forecast, Seaboard reserved $11 million of this note receivable. During
the fourth quarter of 2016, the bakery failed to make its scheduled restructured debt payments and, as a result, the
business owners began discussions regarding various strategic alternatives. These alternatives include, but are not
limited to, restructuring the note to further extend the term and match payments to revised cash flow estimates, enforce
the guarantees from the other owner which may require legal action, sale of the bakery, or Seaboard obtaining control of
the bakery at which time the entity would become consolidated. As a result, Seaboard reserved an additional $5 million
in the fourth quarter of 2016 based on further revised cash flow scenarios. In aggregate for 2016, Seaboard reserved $16
million in bad debt expense within selling, general and administrative expenses in the consolidated statements of
comprehensive income. There was no tax benefit from the transactions. As of December 31, 2016, the recorded balance
of this note receivable and previous accrued interest was $19 million, 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, more of the recorded
value of the note receivable from affiliate could be deemed uncollectible in the future, which could result in a further
charge to earnings.
The CT&M segment had a 50% noncontrolling interest in Belarina, a flour production business in Brazil, which it
accounted for using the equity method of accounting prior to October 28, 2016, the date Seaboard obtained 98% of the
equity ownership and control of Belarina. Seaboard accounted for this transaction as a business combination achieved in
stages as discussed further in Note 12 to the consolidated financial statements. As an equity method affiliate, Seaboard
had contributed a total of $63 million in investments and advances and a $13 million long-term loan, including
investment and advances and pay-in-kind interest accretion totaling $14 million, $29 million and $5 million for the years
ended December 31, 2016, 2015 and 2014, respectively. Seaboard recorded total losses from affiliate, which included
reserves, of $10 million, $60 million and $8 million related to this investment in 2016, 2015 and 2014, respectively, and
currency translation adjustment gains (losses) included in other comprehensive income (loss) of $(4) million, $5 million
and $(1) million, respectively. Due to the extent of these losses, Seaboard had previously fully reserved all advances and
long-term receivable, and as such, Seaboard’s investment, advances and long-term note receivable were zero as of
December 31, 2015. Seaboard also had a gross trade receivable due from Belarina related to sales of grain and supplies
of $17 million as of December 31, 2015, net of a reserve of $9 million based on an analysis of collectability and working
capital. The net trade receivable balance was effectively settled as the entity is now consolidated.
During the first quarter of 2016, the CT&M segment provided a $12 million loan to a Peruvian affiliate. The Peruvian
affiliate repaid the loan in the third quarter of 2016. Interest was payable monthly and the principal due on August 31,
2017, with no prepayment penalty.
38 2016 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 fourth quarter of 2015, Seaboard contributed $13 million in cash, a small amount of other assets, certain
employees and rights to sell certain agricultural commodities that Seaboard had previously sold through its subsidiary,
PS International, LLC, for a 40% noncontrolling interest in a commodity trading business in Atlanta, Georgia. Also in
2015, Seaboard invested $10 million in an oilseed crushing business in the Republic of Turkey for a 25% noncontrolling
interest, $8 million in a flour milling business in Botswana for a 49% noncontrolling interest, and $10 million for a 45%
noncontrolling interest in a commodity trading and flour milling business in Uruguay.
At December 31, 2016, Seaboard’s carrying value of certain of CT&M segment’s investments in affiliates was more
than its share of the affiliates’ book value by $22 million. 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. Combined condensed financial information of all the CT&M segment’s
non-controlled, non-consolidated affiliates for their fiscal periods ended within each of Seaboard’s years ended was as
follows:
Commodity Trading and Milling Segment
(Millions of dollars)
Net sales
Net loss
Total assets
Total liabilities
Total equity
$
$
$
$
$
2016
2,871 $
(6) $
1,201 $
734 $
467 $
December 31,
2015
2014
2,321 $
(52) $
1,265 $
809 $
456 $
2,223
(20)
1,132
732
400
The Marine segment has a 21% noncontrolling interest in a cargo terminal business in Jamaica and a 36% noncontrolling
interest in a holding company that owns a controlling interest in two Haitian start-up projects. During the first quarter of
2016, Seaboard invested $7 million of cash and converted its $8 million note receivable to equity for its investment in
the holding company. The start-up projects consist of a marine terminal operation and a free trade zone development,
which includes a planned power plant. Seaboard’s first proportionate share of income (loss) from affiliates was
recognized in the second quarter of 2016. In September 2014, Seaboard invested $17 million in the Jamaican cargo
terminal business. Seaboard’s first proportionate share of income (loss) from affiliates was recognized in the first quarter
of 2015. Both investments are reported on a three-month lag. Their combined condensed financial information for each
of Seaboard’s years ended was as follows:
Marine Segment
(Millions of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
December 31,
2015
2016
2014
47 $
7 $
277 $
109 $
168 $
38 $
11 $
148 $
30 $
118 $
—
—
119
36
83
$
$
$
$
$
The Sugar segment has two noncontrolling interests in sugar-related businesses in Argentina (46% and 50%,
respectively). Their combined condensed financial information for each of Seaboard’s years ended was as follows:
Sugar Segment
(Millions of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
December 31,
2015
2014
2016
$
$
$
$
$
10 $
3 $
10 $
2 $
8 $
9 $
2 $
9 $
2 $
7 $
9
2
8
2
6
2016 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
The Power segment has a 29.9% noncontrolling interest in an electricity generating facility and two smaller energy
related businesses (45% and 50%, respectively), all in the Dominican Republic. During the second quarter of 2015,
Seaboard invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the
Dominican Republic that increased Seaboard's ownership interest to 29.9% from less than 20% and changed its method
of accounting from a cost method investment to an equity method investment. This change in accounting required
Seaboard to present its prior period financial results to reflect the equity method of accounting from the date of the initial
investment. See Note 13 for more information. Combined condensed financial information of these entities for each of
Seaboard’s years ended was as follows:
Power Segment
(Millions of dollars)
Net sales
Net income
Total assets
Total liabilities
Total equity
December 31,
2015
2014
2016
$
$
$
$
$
146 $
14 $
261 $
175 $
86 $
141 $
12 $
327 $
219 $
108 $
50
9
328
230
98
Note 5
Net Property, Plant and Equipment
The following table is a summary of property, plant and equipment at the end of each year:
(Millions 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
3 - 15 years $
30 years
3 - 20 years
3 - 18 years
5 years
$
December 31,
2016
2015
214 $
486
1,142
140
32
58
2,072
(1,066)
1,006 $
185
405
1,025
150
27
38
1,830
(999)
831
Seaboard’s capitalized interest on construction in progress projects was $4 million for the year ended December 31,
2016.
Note 6
Income Taxes
Income taxes attributable to continuing operations for the years ended December 31, 2016, 2015 and 2014 differed from
the amounts computed by applying the statutory U.S. Federal income tax rate of 35% to earnings before income taxes
excluding noncontrolling interests for the following reasons:
(Millions of dollars)
Computed “expected” tax expense excluding noncontrolling interests
Adjustments to tax expense attributable to:
Foreign tax differences
Tax-exempt income
State income taxes, net of federal benefit
Federal tax credits
Domestic manufacturing deduction
Other
Total income tax expense
40 2016 Annual Report
Years ended December 31,
2015
2014
2016
$
134 $
(14)
(15)
5
(31)
(5)
(4)
70 $
$
84 $
187
22
(11)
1
(16)
(8)
(3)
69 $
4
(9)
10
(12)
(11)
(1)
168
S E A B O A R D C O R P O R A T I O N
Notes to Consolidated Financial Statements
Certain of Seaboard's foreign operations are subject to no income tax or a tax rate that 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.
Earnings before income taxes consisted of the following:
(Millions of dollars)
United States
Foreign
Total earnings excluding noncontrolling interests
Less: Net income attributable to noncontrolling interests
Total earnings before income taxes
The components of total income taxes were as follows:
(Millions of dollars)
Current:
Federal
Foreign
State and local
Deferred:
Federal
Foreign
State and local
Income tax expense
Unrealized changes in other comprehensive income
Total income taxes
2016
$
Years ended December 31,
2015
2014
272 $
110
382
(2)
384 $
196 $
44
240
(1)
241 $
472
63
535
(1)
536
$
$
$
Years ended December 31,
2015
2014
2016
(1) $
21
7
36
4
3
70
(12)
58 $
52 $
20
6
(14)
8
(3)
69
—
69 $
111
20
12
20
1
4
168
(27)
141
As of December 31, 2016 and 2015, Seaboard had income taxes receivable of $48 million and $33 million, respectively,
primarily related to domestic tax jurisdictions, and had income taxes payable of $6 million and $4 million, respectively,
primarily related to foreign tax jurisdictions.
Components of the net deferred income tax liability at the end of each year were as follows:
(Millions 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
Net deferred income tax liability
December 31,
2016
2015
$
$
$
$
112 $
69
10
9
18
218 $
83 $
45
50
13
8
199
58
77 $
112
53
11
9
9
194
103
36
10
14
9
172
19
41
2016 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
Seaboard recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. For the
years ended December 31, 2016, 2015 and 2014, such interest and penalties were not material. The Company had
approximately $2 million and $4 million accrued for the payment of interest and penalties on uncertain tax positions at
December 31, 2016 and 2015, respectively.
As of December 31, 2016 and 2015, Seaboard had $13 million and $7 million, 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:
(Millions 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
2016
2015
$
$
7 $
6
—
2
(2)
13 $
7
1
(2)
1
—
7
Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material
adjustments. The IRS examination of Seaboard’s U.S. income tax return for 2013 began in 2016. With the exception of a
loss carryback to 2012, tax years prior to 2013 are generally no longer subject to U.S. tax assessment. In Seaboard’s
major non-U.S. jurisdictions, including Argentina and the Dominican Republic, tax years are typically subject to
examination for three to six years.
As of December 31, 2016, Seaboard had not provided for U.S. Federal income and foreign withholding taxes on $1,038
million of undistributed earnings from foreign operations, as Seaboard intends to reinvest such earnings indefinitely
outside of the U.S. 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.
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, 2016, Seaboard had foreign net operating loss carry-forwards of approximately $144 million, a portion
of which expire in varying amounts between 2017 and 2033, while others have indefinite expiration periods. As of the
result of its 2016 acquisition of Belarina, Seaboard recorded a deferred tax asset of $25 million and a $25 million
valuation allowance related to net operating losses with an indefinite expiration period. See Note 12 for further
discussion of the acquisition. At December 31, 2016, Seaboard had state tax credit carry-forwards of approximately $20
million, 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 tax credits. The balance of the low income housing investments recognized on the
consolidated balance sheets as of December 31, 2016 and 2015 was $8 million and $10 million, respectively. 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 as a
component of income tax expense. Seaboard also has invested in two limited liability companies that operate refined
coal processing plants that generate federal income tax credits based on production levels. Seaboard began investing in
the Oklahoma plant in February 2015 and the Nebraska plant in January 2016 for total contributions of $14 million and
$9 million during 2016 and 2015, respectively. Seaboard’s funding commitments vary depending on production. See
Note 10 for Seaboard’s estimate of its funding commitment for both plants. Additionally, Seaboard invested $10 million
during 2016 in two limited liability companies that operate solar energy production facilities that generate investment tax
credits. These other alternative investments are accounted for using the equity method of accounting.
On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Tax Act”) was signed into
law. The 2015 Tax Act reinstated and made permanent certain expired corporate income tax provisions that impact
current and deferred taxes for financial reporting purposes. The annual effects of the provisions in this law on current
42 2016 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
and deferred tax assets and liabilities for Seaboard were recorded in the fourth quarter of 2015. The impact was a tax
benefit of $13 million, or $10.92 per common share, primarily related to certain income tax credits. In addition to this
amount was a credit of $17 million, or $14.88 per common share, for the 2015 Federal blender’s credits (extended by the
2015 Tax Act through December 31, 2016) that was recognized as revenues in the fourth quarter of 2015. There was no
tax expense on these transactions. Since the 2015 Tax Act extended the provisions through December 31, 2016, revenue
was recognized ratably throughout 2016. The Federal blender’s credits have not been renewed for 2017.
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 this law on
current and deferred tax assets and liabilities for Seaboard were recorded in the fourth quarter of 2014. The impact was a
tax benefit of $11 million, or $9.68 per common share, primarily related to certain income tax credits. In addition to this
amount was a credit of $15 million for the Federal blender’s credits for 2014 that was recognized as revenues in the
fourth quarter of 2014. See Note 13 for further discussion of the Federal blender’s credit.
Note 7
Notes Payable and Long-Term Debt
Notes payable under uncommitted credit lines was $121 million and $141 million at December 31, 2016 and 2015,
respectively. All of the notes payable outstanding at December 31, 2016 related to foreign subsidiaries, with $74 million
denominated in South African rand, $26 million denominated in Argentine pesos, $14 million denominated in Brazilian
reais and $7 million denominated in Zambian kwacha. The weighted average interest rate for outstanding notes payable
was 14.88% and 11.74% at December 31, 2016 and 2015, respectively. As of December 31, 2016, Seaboard had
uncommitted lines of credit totaling $380 million, of which $330 million related to foreign subsidiaries. The notes
payable under the credit lines are unsecured and do not require compensating balances. Facility fees on these agreements
are not material.
In September 2016, Seaboard entered into a $100 million committed line of credit with Wells Fargo Bank, National
Association (“Wells Fargo”) that matures on September 29, 2017. Interest is computed at LIBOR plus 0.50%, and
Seaboard incurs an unused commitment fee of 0.09% per annum. This line of credit is secured by certain short-term
investments. The line of credit is subject to standard representations and covenants. There was no outstanding balance as
of December 31, 2016. At December 31, 2016, Seaboard’s borrowing capacity under its uncommitted and committed
lines of credit was reduced by $121 million drawn and $4 million of letters of credit.
The following table is a summary of long-term debt at the end of each year:
(Millions of dollars)
Term Loan due 2022
Foreign subsidiary obligations due 2018 through 2023
Total long-term debt at face value
$
Current maturities of long-term debt and unamortized discount
Long-term debt, less current maturities and unamortized discount
$
December 31,
2016
2015
497 $
20
517
(18)
499 $
500
23
523
(5)
518
Seaboard entered into a Term Loan Credit Agreement dated December 4, 2015 (“Credit Agreement”) with CoBank,
ACB, Farm Credit Services of America, PCA, and the lenders party thereto, pursuant to which Seaboard Foods obtained
a $500 million unsecured term loan (“Term Loan”). Seaboard received proceeds of $499 million, net of a $1 million
discount, which will be amortized to interest expense using the effective interest method. Seaboard has guaranteed all
obligations of Seaboard Foods under the Term Loan. The Term Loan provides for quarterly payments of the principal
balance pursuant to the amortization schedule included in the Credit Agreement, with the balance due on the maturity
date, December 4, 2022. The Term Loan bears interest at fluctuating rates based on various margins over a base rate
(defined as the highest of (a) the prime rate, (b) the federal funds effective rate plus 0.50% per annum, or (c) an adjusted
LIBOR rate for an interest period of one month on such day plus 1.00% per annum) or LIBOR, at the option of Seaboard
Foods. The interest rate was 2.40% and 1.90% at December 31, 2016 and 2015.
The Term Loan requires, among other terms, the maintenance of certain ratios involving a maximum debt to
capitalization ratio, which shall not exceed 50% at the end of any fiscal quarter, and minimum tangible net worth, as
defined, of not less than $2 billion plus 25% of cumulative consolidated net income beginning with the quarter ended
2016 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
December 31, 2016. The Term Loan also includes restrictions of certain subsidiaries to grant liens on assets, incur
indebtedness over 15% of consolidated tangible net worth, make certain acquisitions, investments and asset dispositions
in excess of specified amounts, and limits aggregate dividend payments to $25 million per year under certain
circumstances. Seaboard is in compliance with all restrictive debt covenants relating to these agreements as of
December 31, 2016.
Foreign subsidiary debt is primarily denominated in Argentine pesos, and all interest rates on such obligations are
variable. The weighted average interest rate was 22.39% and 30.23% at December 31, 2016 and 2015, respectively. All
of the foreign subsidiary debt is guaranteed by Seaboard, except $4 million is secured by property, plant and equipment.
The aggregate minimum principal payments required on long-term debt at December 31, 2016 are as follows: $17
million in 2017, $21 million in 2018, $33 million in 2019, $42 million in 2020, $38 million in 2021 and $366 million
thereafter.
In 2014, Seaboard made an optional prepayment of $86 million related to long-term debt with an original maturity of
2021. As a result, Seaboard paid a $4 million prepayment penalty fee that was charged to interest expense.
Note 8
Derivatives and Fair Value of Financial Instruments
GAAP discusses 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). Seaboard uses a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value into the following three broad levels:
Level 1: Quoted Prices in Active Markets for Identical Assets or Liabilities - Observable inputs such as unadjusted
quoted prices in active markets for identical assets or liabilities that Seaboard 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.
44 2016 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 following tables show assets and liabilities measured at fair value (derivatives exclude margin accounts) on a
recurring basis as of December 31, 2016 and 2015, respectively, and also the level within the fair value hierarchy used to
measure each category of assets and liabilities. Seaboard determines if there are any transfers between levels at the end
of a reporting period. There were no transfers between levels that occurred in 2016 and 2015. The trading securities
classified as other current assets below are assets held for Seaboard’s deferred compensation plans.
(Millions of dollars)
Assets:
Balance
December 31,
2016
Level 1 Level 2 Level 3
Trading securities – short-term investments:
Domestic equity securities
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries
Foreign equity securities
High yield securities
Collateralized loan obligations
Money market funds held in trading accounts
Other trading securities
$
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
Total Liabilities
$
$
$
482 $
437
199
115
26
13
5
482 $ — $
437
199
15
—
13
5
—
—
100
26
—
—
30
3
3
4
30
3
3
4
—
—
—
—
3
1
3
—
1,321 $ 1,194 $ 127 $
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1 $
4
4
9 $
1 $ — $
—
—
1 $
4
4
8 $
—
—
—
—
(1)
Seaboard’s commodity 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, 2016, the
commodity derivatives had a margin account balance of $10 million resulting in a net other current asset on the
consolidated balance sheet of $12 million.
2016 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
(Millions of dollars)
Assets:
Available-for-sale securities – short-term investments:
Money market funds
Trading securities – short-term investments:
Domestic equity securities
Domestic debt securities held in mutual funds/ETFs/U.S. Treasuries
Foreign equity securities
High yield securities
Money market funds held in trading accounts
Collateralized loan obligations
Other trading securities
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
Total Liabilities
Balance
December 31,
2015
Level 1 Level 2 Level 3
$
81 $
81 $ — $
—
466
450
120
104
22
10
1
31
5
4
3
466
450
120
—
22
—
—
31
5
4
2
—
—
—
104
—
10
1
—
—
—
1
4
8
4
—
1,309 $ 1,185 $ 124 $
—
8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18 $
6
24 $
18 $ — $
—
18 $
6
6 $
—
—
—
$
$
$
(1)
Seaboard’s commodity 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, 2015, the
commodity derivatives had a margin account balance of $29 million resulting in a net other current asset on the
consolidated balance sheet of $15 million.
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. As Seaboard’s long-
term debt is variable-rate, its carrying amount approximates fair value. If Seaboard’s long-term 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 short-term investments and long-term debt at December 31, 2016 and 2015,
are presented below:
December 31,
(Millions of dollars)
Short-term investments, available-for-sale
Short-term investments, trading securities
Long-term debt
2016
2015
Amortized Cost Fair Value Amortized Cost Fair Value
81
— $
$
1,173
522
1,277
516
1,188
522
1,236
516
81 $
— $
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.
46 2016 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
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, 2015. 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, 2016, Seaboard had open net derivative contracts to purchase 22 million bushels of grain, 14 million
pounds of hogs, and open net derivative contracts to sell 35 million pounds of soybean oil and 4 million gallons of
heating oil. At December 31, 2015, Seaboard had open net derivative contracts to purchase 25 million pounds of hogs,
22 million bushels of grain, 3 million pounds of sugar, and open net derivative contracts to sell 8 million pounds of
soybean oil. For the years ended December 31, 2016, 2015 and 2014, Seaboard recognized net realized and unrealized
gains (losses) of $21 million, $(45) million and $18 million, 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 currency exchange agreements that primarily
relate to an underlying commodity transaction are 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 currency exchange
agreements that are not related to an underlying commodity transaction are 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 foreign
currency exchange rates could have a material impact on earnings in any given year. At December 31, 2016 and 2015,
Seaboard had foreign currency exchange agreements to cover its firm sales and purchase commitments and related trade
receivables and payables, with notional amounts of $81 million and $94 million, respectively, primarily related to the
South African rand.
Interest Rate Exchange Agreements
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 the notional amounts of $25 million each.
During 2014 and 2015, Seaboard entered into four, approximately eight-year interest rate exchange agreements with
mandatory early termination dates, which coincided with the anticipated delivery dates in 2015 and 2016 of dry bulk
vessels to be leased. These interest rate exchange agreements involved 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. Seaboard paid a fixed rate and received a variable
rate of interest on the notional amounts. In 2015, two agreements were terminated and not renewed with the delivery of
two bulk vessels. As of December 31, 2015, two agreements remained, with an aggregate notional amount of $44
million. In the first quarter of 2016, these agreements were terminated and not renewed with the delivery of the final two
bulk vessels. Payments to unwind these agreements totaled $2 million.
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, 2016 and 2015, Seaboard had three and five agreements outstanding, respectively, with a total
notional value of $75 million and $119 million, respectively.
2016 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
The following table provides the amount of gain (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, 2016 and 2015:
(Millions of dollars)
Commodities
Foreign currencies
Foreign currencies
Interest rate
Cost of sales
Cost of sales
Foreign currency
Miscellaneous, net
$
2016
2015
21 $
(27)
1
(2)
(45)
16
2
(4)
The following table provides the fair value of each type of derivative held as of December 31, 2016 and 2015 and where
each derivative is included on the consolidated balance sheets:
(Millions of dollars)
Commodities(1)
Foreign currencies
Interest rate
Asset Derivatives
December 31, December 31,
2016
2015
Liability Derivatives
December 31, December 31,
2016
2015
Other current assets $
Other current assets
Other current assets
3 $
1
—
4 Other current liabilities $
8 Other current liabilities
— Other current liabilities
1 $
4
4
18
—
6
(1)
Seaboard’s commodity 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, 2016 and 2015, the
commodity derivatives had a margin account balance of $10 million and $29 million, respectively, resulting in a net
other current asset on the consolidated balance sheets of $12 million and $15 million, respectively.
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, 2016, Seaboard had $1 million of credit risk to two counterparties related to its foreign currency exchange
agreements and no credit risk related to its interest rate exchange agreements. Seaboard does not hold any collateral
related to these agreements.
Note 9
Employee Benefits
At December 31, 2016, Seaboard maintained two defined benefit pension plans (the “Plans”) for its domestic salaried
and clerical employees. Employees hired before January 1, 2014 were eligible to participate in the Plans after one year of
service upon attaining the age of 21. Benefits are generally based upon the number of years of service and a percentage
of final average pay. 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 2016, Seaboard completed future funding analyses
for the Plans and in September 2016 made a deductible contribution of $39 million for the 2015 plan year. Management
currently does not plan on making any contributions in 2017. Management did not make any contributions in 2015 and
2014. Seaboard has separate investment policies for each plan because one plan has more current retirees and therefore a
more conservative portfolio versus the other plan, which can assume greater risk as it will have a longer investment time
horizon. 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 for investment managers’ discretion, and is periodically reviewed by
management for adherence to policy and performance against benchmarks. Effective January 1, 2017, the assets and
liabilities of the Plans were merged, so that only one qualified defined benefit pension plan remains. The new investment
policy is a weighted average of the two previous policies.
48 2016 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
As described in Note 8 to the consolidated financial statements, Seaboard 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, 2016 and 2015, respectively, and also the level within
the fair value hierarchy used to measure each category of assets:
(Millions of dollars)
Assets:
Domestic equity securities
Foreign equity securities
Domestic fixed income mutual funds
Real estate mutual fund
Commodity mutual funds
Money market funds
Foreign fixed income mutual funds
Other
Total Assets
(Millions of dollars)
Assets:
Domestic equity securities
Foreign equity securities
Real estate mutual fund
Domestic fixed income mutual funds
Commodity mutual funds
Foreign fixed income mutual funds
Money market funds
Other
Total Assets
Balance
December 31,
2016
Level 1 Level 2 Level 3
$
76 $
35
17
8
4
4
2
5
76 $
35
17
8
4
4
2
—
$
151 $ 146 $
— $
—
—
—
—
—
—
5
5 $
—
—
—
—
—
—
—
—
—
Balance
December 31,
2015
Level 1 Level 2 Level 3
$
64 $
27
8
5
2
2
1
5
64 $
27
8
5
2
2
1
—
$
114 $ 109 $
— $
—
—
—
—
—
—
5
5 $
—
—
—
—
—
—
—
—
—
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.
Assumptions used in determining pension information for all of the above plans were:
Years ended December 31,
2015
2014
2016
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
2.90-4.65% 3.20-4.80% 3.15-4.40%
3.20-4.80% 2.70-4.40% 3.55-5.20%
6.75-7.00% 6.75-7.50% 7.00-8.00%
4.00%
4.00%
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.
2016 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
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:
(Millions of dollars)
Reconciliation of benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial losses (gains)
Benefits paid
Other
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
Fair value of plan assets at end of year
Funded status
December 31,
2016
Assets
exceed
accumulated
benefits
Accumulated
benefits
exceed
assets
Total
2015
Accumulated
benefits
exceed
assets
$
$
$
$
$
70 $
4
3
—
(4)
—
73 $
46 $
6
39
(4)
87 $
14 $
179 $ 249 $
5
8
6
(9)
—
189 $ 262 $
9
11
6
(13)
—
68 $ 114 $
4
1
(9)
64 $ 151 $
(125) $ (111) $
10
40
(13)
257
10
10
(18)
(8)
(2)
249
122
(4)
4
(8)
114
(135)
The net funded status of the Plans was $(15) million and $(50) million at December 31, 2016 and 2015, respectively.
The benefit obligation increased primarily due to a decrease in discount rates for all plans. The accumulated benefit
obligation for the Plans was $142 million and $143 million and for all the other plans was $84 million and $73 million at
December 31, 2016 and 2015, 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: $14 million, $15 million,
$14 million, $16 million, $13 million and $88 million, respectively.
The net periodic cost of benefits of these plans was as follows:
(Millions of dollars)
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization and other
Agreement termination gain
Net periodic benefit cost
Years ended December 31,
2016
2015
2014
$
$
9 $
11
(8)
5
—
17 $
10 $
10
(8)
5
(1)
16 $
8
10
(9)
2
—
11
The amounts not reflected in net periodic benefit cost and included in accumulated other comprehensive loss (“AOCL”)
before taxes at December 31, 2016 and 2015 were $72 million and $72 million, 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 2017 are $5 million.
Seaboard participates in a multi-employer pension fund, the United Food and Commercial Workers International Union-
Industry Pension Fund, which covers certain union employees under a collective bargaining agreement. This fund’s
employer identification number is 51-6055922, and this plan’s number is 001. For the plan year beginning July 1, 2016,
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 $1 million for each of the years ended December 31, 2016, 2015 and 2014, which
represents less than five percent of total contributions to this plan. The applicable portion of the total plan benefits and
50 2016 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
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 2016,
2015 and 2014, 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
million for each of the years ended December 31, 2016, 2015 and 2014. In addition, Seaboard maintains a defined
contribution plan covering most of its hourly, non-union employees. Contribution expense for these plans was $1 million
for each of the years ended December 31, 2016, 2015 and 2014.
Seaboard has a deferred compensation plan that allows certain employees to reduce their compensation in exchange for
values in various investments. Seaboard also has an Investment Option Plan that 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 $4 million, $0 million
and $3 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included in other liabilities at
December 31, 2016 and 2015 are $36 million and $38 million, 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, 2016 and 2015, $40 million and $43 million, respectively, were included in other current assets on the
consolidated balance sheets. Investment income related to the mark-to-market of these investments for 2016, 2015 and
2014 totaled $4 million, $0 million and $3 million, respectively.
Note 10
Commitments and Contingencies
On April 29, 2015, Seaboard received from the Department of Justice, Asset Forfeiture and Money Laundering Section
(“AFMLS”), a Grand Jury subpoena issued by the U.S. District Court for the District of Columbia (the “DC District
Court”) requesting records related to 37 specified foreign companies and five individuals. Seaboard has previously
produced documents responsive to Grand Jury subpoenas dated September 18, 2014 and October 17, 2014. The
subpoena issued September 18, 2014 requested records related to nine entities and one individual, and the subpoena
issued October 17, 2014 requested records with respect to eight additional entities and one additional individual. Two
additional subpoenas, each dated July 2, 2015, were received by Seaboard requesting records related to a certain
customer. The companies and individuals as to which the requested records relate to are not affiliated with Seaboard. On
June 6, 2016, a request was received for additional information relating to an affiliate of Seaboard as to which Seaboard
is in the process of responding. Seaboard has retained outside counsel and is cooperating with the government’s
investigation. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome or to
estimate the amount of potential loss, if any, resulting from the government’s inquiry.
On September 19, 2012, the U.S. 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 U.S. Attorney’s Office for the Western District of Oklahoma (“USAO”), which has been leading the investigation,
previously advised Seaboard that it intended to close its investigation and that no charges would be brought against
Seaboard. However, discussions continue with the USAO, ICE and the Oklahoma Attorney General’s office regarding
the matter, including the possibility of a settlement. No proceedings have been filed or brought as of the date of this
2016 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
report. It is not possible at this time to determine whether a settlement will be reached or whether Seaboard will incur
any material fines, penalties or liabilities in connection with this matter.
On February 16, 2016, Seaboard Foods received an information request from the U.S. Environmental Protection Agency
(“EPA”) seeking information under the Clean Air Act with regard to various ammonia releases at Seaboard Foods’ pork
processing plant in Guymon, Oklahoma. Seaboard has been cooperating with the EPA with regard to the investigation
and has responded to the request. It is not possible at this time to determine 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 resolution of these items is 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, 2016, 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, 2016 Seaboard had various non-cancelable purchase commitments and commitments under other
agreements, arrangements and operating leases, as described in the table below:
Years ended December 31,
(Millions of dollars)
Hog procurement contracts
Grain and feed ingredients
Grain purchase contracts for resale
Fuel supply contracts
Equipment purchases and facility improvements
Other purchase commitments
Total firm purchase commitments
Vessel, time and voyage-charters
Contract grower agreements
Other operating lease payments
Investment in affiliates
Total unrecognized non-cancelable commitments
2017 2018 2019 2020 2021 Thereafter
118
$ 103 $
—
122
—
310
—
49
—
21
—
33
118
638
46
47
9
29
176
31
—
91
349
44 $
—
—
—
—
—
44
26
16
27
16
$ 836 $ 154 $ 129 $ 121 $ 113 $
43 $
—
—
—
—
—
43
26
12
24
16
59 $
2
—
—
—
—
61
27
24
27
15
43 $
—
—
—
—
—
43
26
10
22
12
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, 2016. During 2016, 2015 and 2014, the
Pork segment paid $133 million, $171 million and $227 million, respectively, for live hogs purchased under committed
contracts.
The CT&M 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, 2016.
The Power segment has a natural gas supply contract for a significant portion of the fuel required for the operation of its
dual fuel power generating facility. The commitment for 2017 has both fixed and variable price components, and the
amount included in the table above is partially based on market prices as of December 31, 2016. The Marine segment
also has fuel purchase contracts.
The Marine and CT&M segments enter into contracts to charter vessels for use in their operations, which include short-
term time charters for a few months and long-term commitments ranging from one to eleven years. These segments’
charter hire expenses during 2016, 2015 and 2014 totaled $95 million, $99 million and $87 million, respectively.
52 2016 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
To support the operations of the Pork segment, Seaboard has contract grower 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 some older agreements, additional payments would be required if the grower achieves certain performance standards.
The contract grower obligations shown above do not reflect these incentive payments which, given current operating
performance, total approximately $1 million 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 2016, 2015 and 2014, Seaboard paid $26
million, $12 million and $13 million, respectively, under contract grower agreements.
Seaboard also leases various facilities and equipment under non-cancelable operating lease agreements including a
terminal operations agreement at PortMiami, which runs through 2028. Rental expense for operating leases for all
segments amounted to $43 million, $42 million and $35 million in 2016, 2015 and 2014, respectively.
Investment in affiliates includes obligations made to equity method investments of Seaboard. As discussed in Note 4,
Seaboard agreed to contribute up to $150 million to a 50% owned joint venture, STF, to develop and operate a pork
processing facility in Sioux City, Iowa. The original subscription agreement was modified in the first quarter of 2016. At
December 31, 2016, $73 million remained to be contributed in 2017. During the first quarter of 2017, STF announced
plans to expand the pork processing plant to be capable of processing an additional three million market hogs annually
by operating a second shift. The expansion is estimated to cost approximately $47 million, of which Seaboard could be
required to commit up to 50% of the amount. As part of the operations, Seaboard agreed to provide a portion of the hogs
to be processed at the facility. During 2016, the Pork segment acquired hog inventory and related assets that increased
Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at
the new plant. Additionally, Investments in affiliates includes expected funding commitments based on production levels
for two limited liability companies that operate refined coal processing plants that generate federal income tax credits.
Note 11
Stockholders’ Equity and Accumulated Other Comprehensive Loss
In October 2015, the Board of Directors extended through October 31, 2017 the share repurchase program initially
approved in November 2009, and increased the authorized amount of repurchases from the $51 million that remained
available to $100 million. As of December 31, 2016, $100 million remained available for repurchases under this
program. Seaboard did not repurchase any shares of common stock during 2016 and 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 million, 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 an aggregate cost of $49 million. In total for 2014, Seaboard used cash to repurchase 18,405 shares
of common stock at a total price of $53 million.
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. All stock repurchased will be made in compliance with
applicable legal requirements and funded by cash on hand. 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 of Directors’ stock repurchase authorization does not obligate
Seaboard to acquire a specific amount of common stock, and the stock repurchase program may be suspended at any
time at Seaboard’s discretion. Shares repurchased will be retired and resume the status of authorized and unissued
shares.
In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock. The increased
amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an annual
basis) represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per share per year). Seaboard
did not declare or pay a dividend in 2016, 2015 or 2014. On February 2, 2017, Seaboard declared a quarterly dividend of
$1.50 per share of common stock payable on February 23, 2017.
2016 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 components of accumulated other comprehensive loss, net of related taxes, for 2014, 2015 and 2016 are as follows:
(Millions of dollars)
Balance December 31, 2014
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
loss to net earnings
Other comprehensive income (loss), net of tax
Balance December 31, 2015
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income loss to net earnings
Other comprehensive income (loss), net of tax
Balance December 31, 2016
Cumulative
Foreign
Currency
Translation
Adjustment Investments
$
Unrealized
Gain
on
(194) $
(34)
1 $
—
Unrecognized
Pension
Cost
Total
(60) $ (253)
(29)
5
—
(34)
(228) $
(26)
—
(26)
(254) $
$
$
—
—
1 $
1
—
1
2 $
4 (1)
9
4
(25)
(51) $ (278)
(29)
(4)
3 (1)
(1)
3
(26)
(52) $ (304)
(1)
This primarily represents the amortization of actuarial losses that were included in net periodic pension cost and
recorded in operating 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, 2016, the Sugar segment had $84 million in net
assets denominated in Argentine pesos and $3 million in net liabilities denominated in U.S. dollars in Argentina. At
December 31, 2015, the Sugar segment had $96 million in net assets denominated in Argentine pesos and $1 million in
net assets denominated in U.S. dollars in Argentina. Seaboard accounts for its Sugar segment on a one-month lag basis.
Income taxes for cumulative foreign currency translation adjustments were recorded using a 35% effective tax rate,
except for $87 million and $82 million in 2016 and 2015, 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 million and $18 million in 2016 and 2015,
respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.
Note 12
Acquisitions
On September 1, 2016, Seaboard’s Pork segment acquired certain assets of Texas Farm, LLC for total cash consideration of
$59 million. Texas Farm, LLC was a hog growing operation with hog inventory, hog farms and a feed mill located in Texas.
The additional hog production allows Seaboard to expand and realign its hog production in other states to supply the Guymon,
Oklahoma, pork processing plant and the STF processing plant located in Sioux City, Iowa, scheduled to begin operations in
mid-2017. See Note 4 for further information on STF.
The purchase was recorded at fair value in Seaboard’s Pork segment, and the allocation of the purchase price was as follows.
Goodwill is primarily attributable to workforce and the benefits of acquiring an existing operation rather than incurring the
costs and time to begin a new hog operation.
(Millions of dollars)
Inventories
Property, plant and equipment
Goodwill
Accounts payable
16
42
3
(2)
59
Operating results have been included in Seaboard’s consolidated financial statements from the date of acquisition. Net sales of
$4 million and a $2 million net loss were recognized during 2016. Acquisition costs were less than $1 million.
Total consideration transferred
$
$
54 2016 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
On February 7, 2016, Seaboard’s Pork segment acquired hog inventory, a feed mill, truck washes and certain hog farms
in the Central U.S. from Christensen Farms & Feedlots, Inc. and Christensen Farms Midwest, LLC (“Christensen
Farms”) for total cash consideration of $148 million. Seaboard had previously agreed to provide a portion of the hogs to
be processed at the new pork processing facility being developed through STF.
The purchase was recorded at fair value in Seaboard’s Pork segment, and the allocation of the purchase price was as follows.
Intangible assets include customer relationships that have a weighted-average useful life of 1.6 years. Goodwill represents the
farms’ established processes, workforce and close proximity to the Sioux City, Iowa, processing plant.
(Millions of dollars)
Inventories
Property, plant and equipment
Intangible assets
Goodwill
Total consideration transferred
$
$
33
111
1
3
148
Operating results have been included in Seaboard’s consolidated financial statements from the date of acquisition. Net sales of
$119 million and a $5 million net loss were recognized during 2016. Acquisition costs were less than $1 million.
During the last half of 2016, Seaboard’s Pork segment acquired additional hog inventory and sow farms through three
additional acquisitions for total cash consideration of $12 million. The purchases were recorded at fair value, and $1
million and $11 million were allocated to inventories and property, plant and equipment, respectively. No material
intangible assets were identified, and acquisition costs were less than $1 million.
With these purchases, Seaboard increased its sow herd to meet the majority of its hog supply commitment for single shift
processing at the new STF plant. The following unaudited pro forma information presents the combined consolidated
financial results for Seaboard as if all five acquisitions had been completed at the beginning of January 1, 2015.
(UNAUDITED)
(Millions of dollars except per share amounts)
Net sales
Net earnings
Earnings per common share
Twelve months ended
December 31,
2016
2015
$
$
$
5,455 $
303 $
257.10 $
5,866
145
123.37
On October 28, 2016, Seaboard’s CT&M segment increased its ownership percentage from 50% to 98% to obtain
control of Belarina Alimentos S.A., a flour production business in Brazil (“Belarina”). No cash or other consideration
was transferred to the other shareholder whose ownership was diluted through revision of the shareholders agreement to
restructure the affiliate debt and equity of Belarina. Seaboard accounted for the transaction as a business combination
achieved in stages and included the financial results of Belarina in its consolidated financial statements since the date of
acquisition. See Note 4 for a discussion of the previous equity method of accounting for Belarina. As Belarina is
recorded on a three-month lag, there was no impact to Seaboard’s sales and net earnings from Belarina’s operations as a
result of the consolidation. Since no consideration was transferred to the other owner, Seaboard substituted the
acquisition-date fair value of its 50% pre-existing interest in Belarina and the acquisition-date fair value of its pre-
existing affiliate trade and note receivable for the acquisition-date fair value of the consideration transferred to measure
goodwill.
The following table summarizes the preliminary purchase price allocation resulting from this consolidation:
(Millions of dollars)
Accounts receivable
Inventories
Property, plant and equipment
Other assets
Goodwill
Third-party debt
Other liabilities
Total business valuation
Fair value of pre-existing interest
$
$
$
7
6
25
4
1
(14)
(11)
18
18
2016 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
The valuation of the noncontrolling interest was immaterial. Goodwill primarily represents the assembled workforce. Pro
forma results of operations are not presented as the effects of consolidation are not material to Seaboard’s results of
operations. Seaboard recorded a gain of $4 million in bad debt expense within selling, general and administrative
expenses on the consolidated statement of comprehensive income, related to recognizing the fair value of its pre-existing
affiliate receivables.
Note 13
Segment Information
Seaboard had six reportable segments through December 31, 2016: Pork, 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 U.S., and to Japan, Mexico, China and numerous
other foreign markets. This segment also produces biodiesel from pork fat and other animal fat or vegetable oil for sale
to third parties. Substantially all of Seaboard’s Pork segment’s hourly employees at its Guymon, Oklahoma, processing
plant are covered by a collective bargaining agreement. The CT&M segment is an integrated agricultural commodity
trading, 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 U.S., the Caribbean 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 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. Below are significant segment events that impact financial results for the periods
covered by this report.
During 2016, the Pork segment completed the acquisitions of five hog growing operations for total cash consideration of
$219 million. These hog operations’ results have been included in Seaboard’s consolidated financial statements from the
dates of acquisition. See Note 12 for further information on these acquisitions. The Pork segment’s biodiesel plants have
historically received Federal blender’s credits for the biodiesel they blend. The 2015 Tax Act signed into law in
December 2015, as discussed in Note 6, renewed the Federal blender’s credit, which had previously expired on
December 31, 2014, retroactively to January 1, 2015 with an expiration of December 31, 2016. As a result, in the fourth
quarter of 2015 the Pork segment recognized as revenue the 2015 Federal blender’s credits of $17 million. The 2014 Tax
Act signed into law in December 2014 as discussed in Note 6, renewed the Federal blender’s credit that had previously
expired on December 31, 2013 retroactively to January 1, 2014 with an expiration date of December 31, 2014. As a
result, in the fourth quarter of 2014 the Pork segment recognized as revenue the 2014 Federal blender’s credits of $15
million. The Federal blenders credits have not been renewed for 2017.
As more fully described in Note 4, on September 27, 2014 the Pork segment sold to Triumph a 50% interest in Daily’s.
As a result, Seaboard deconsolidated Daily’s from its consolidated balance sheet as of September 27, 2014. The Pork
segment’s remaining 50% investment in Daily’s is accounted for using the equity method of accounting.
On October 28, 2016, the CT&M segment obtained control of Belarina, its non-consolidated affiliate with a flour
production business in Brazil, and began including its financial results in its consolidated financial statements from the
date of acquisition. See Note 12 for further details of the consolidation. In 2016, the CT&M segment reserved $16
million related to a note receivable to an affiliate that operates in the DRC and in 2014 recorded an $11 million write
down in loss from affiliate from a decline in value considered other than temporary for this investment. The CT&M
segment historically derived a significant portion of its operating income from wheat sales to another non-consolidated
affiliate in the DRC. See Note 4 for further discussion of the write down and investments in affiliate in the DRC.
56 2016 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 2015, the Power segment recorded a receivable and interest income of $31 million for interest recognized on
certain outstanding customer receivable balances. This interest income related to amounts determined to be collectible as
of December 31, 2015, but previously had been considered uncollectable in prior years. This amount was fully collected
by Seaboard in early January 2016. Also in 2015, Seaboard invested an additional $10 million in a business operating a
300 megawatt electricity generating facility in the Dominican Republic and changed its method of accounting from a
cost method investment at Corporate to an equity method investment in the Power segment.
The Power segment had been operating a floating power generating facility (72 megawatts) in the Dominican Republic
under a short-term lease agreement. Seaboard ceased operation of the leased facility on September 3, 2014. In
conjunction with ceasing operations, Seaboard sold inventory related to these operations, resulting in a $5 million gain
from sale of assets in operating income related to these items in 2014.
The following tables set forth specific financial information about each segment as reviewed by Seaboard’s
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 CT&M and Turkey segments, are used as the
measures of evaluating segment performance because management does not consider interest, other investment income
(loss) and income tax expense on a segment basis.
Sales to External Customers:
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment/Consolidated Totals
Operating Income (Loss):
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
All Other
Segment Totals
Corporate
Consolidated Totals
Income (Loss) from Affiliates:
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Turkey
Segment/Consolidated Totals
Years ended December 31,
2014
2015
2016
$ 1,443 $ 1,332 $ 1,717
3,499
3,022
2,778
853
940
916
200
188
147
189
97
79
15
15
16
$ 5,379 $ 5,594 $ 6,473
Years ended December 31,
2014
2015
2016
$
$
175 $
38
33
(12)
7
2
243
(21)
222 $
116 $
2
19
2
7
2
148
(22)
126 $
349
54
(3)
27
19
1
447
(23)
424
$
$
Years ended December 31,
2015
2014
11
(50)
2
1
3
103
2016
11
$
(10)
1
2
4
73
81 $
4
(24)
—
1
2
54
37
70 $
$
2016 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:
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Segment Totals
Corporate
Consolidated Totals
Total Assets:
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Turkey
All Other
Segment Totals
Corporate
Consolidated Totals
Years ended December 31,
2014
2015
2016
$
56 $
6
26
6
8
102
—
102 $
44 $
5
26
8
8
91
—
91 $
46
5
25
8
8
92
—
92
$
December 31,
2015
2016
$ 1,157 $
989
314
166
196
493
6
3,321
1,434
858
988
296
202
271
448
6
3,069
1,362
$ 4,755 $ 4,431
Investments in and Advances to Affiliates:
December 31,
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Turkey
Segment/Consolidated Totals
Capital Expenditures:
(Millions of dollars)
Pork
Commodity Trading and Milling
Marine
Sugar
Power
Segment Totals
Corporate
Consolidated Totals
2016
$
2015
$
175
207
33
4
30
324
773 $
115
218
19
3
34
282
671
$
Years ended December 31,
2014
2015
2016
$
69 $
35
19
33
1
157
1
158 $
40 $
40
43
15
1
139
—
139 $
54
21
30
14
2
121
—
121
$
Administrative services provided by the corporate office are allocated to the individual segments and 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, and other miscellaneous items. Corporate operating losses represent certain
operating costs not specifically allocated to individual segments and include costs related to Seaboard’s deferred
58 2016 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
compensation programs, which are offset by the effect of the mark-to-market adjustments on these investments recorded
in other investment income (loss), net.
Geographic Information
Seaboard had sales in South Africa totaling $650 million, $646 million and $597 million for the years ended
December 31, 2016, 2015 and 2014, respectively, representing approximately 12%, 12% and 9% of total sales for each
respective year. No other 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:
(Millions of dollars)
Caribbean, Central and South America
Africa
United States
Pacific Basin and Far East
Canada/Mexico
Europe
All other
Totals
2015
Years ended December 31,
2014
2016
$ 1,990 $ 2,112 $ 2,414
1,706
1,397
425
348
98
85
$ 5,379 $ 5,594 $ 6,473
1,606
1,135
357
242
71
71
1,572
1,161
309
236
40
71
The following table provides a geographic summary of Seaboard’s long-lived assets according to their physical location
and primary port for the vessels:
(Millions of dollars)
United States
Dominican Republic
Argentina
All other
Totals
December 31,
2016
2015
$
$
713 $
122
67
106
1,008 $
553
128
69
83
833
Management believes its allowance for doubtful accounts is adequate and reduces receivables recorded to their expected
net realizable value. At December 31, 2016 and 2015, Seaboard had approximately $214 million and $275 million,
respectively, of foreign receivables, excluding receivables due from affiliates, which generally represent more of a
collection risk than the domestic receivables, although as of December 31, 2016 no individual material amounts were
deemed to have a heightened risk of collectability.
2016 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, Audit Committee Member and Incentive Compensation
Committee Member
Former Vice President – Wholesale Sales of
C&S Wholesale Grocers
Paul M. Squires
Director
Chief Operating Officer of Seaboard Flour LLC
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
Chief Executive Officers of Principal Seaboard Operations
Terry J. Holton
Pork
David M. Dannov
Commodity Trading and Milling
Edward A. Gonzalez
Marine
Douglas W. Baena
Director, Audit Committee Chair and Incentive Compensation
Committee Member
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
David H. Rankin
Senior Vice President, Taxation and Business Development
Michael D. Trollinger
Vice President, Corporate Controller and Chief Accounting
Officer
Ty A. Tywater
Vice President, Audit Services
Zachery J. Holden
Assistant Secretary
Catherine M. Verschelden
Assistant Secretary
Adriana N. Hoskins
Assistant Treasurer
Hugo D. Rossi
Sugar
Armando G. Rodriguez
Power
Stock Transfer Agent and Registrar of Stock
Availability of Form 10-K Report
Seaboard files its annual report on Form 10-K with the Securities
and Exchange Commission. Copies of the Form 10-K for fiscal 2016
are available without charge by writing Seaboard Corporation, 9000
West 67th Street, Merriam, Kansas 66202, Attention: Shareholder
Relations or via the Internet at https://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 as soon as reasonably
practicable after those reports are electronically filed with the
Securities and Exchange Commission.
Wells Fargo Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874
(800) 468-9716
www.shareowneronline.com
Independent Registered Public Accounting Firm
KPMG LLP
1000 Walnut Street, Suite 1100
Kansas City, Missouri 64106
Stock Listing
Seaboard’s common stock is traded on the NYSE MKT under
the symbol SEB. Seaboard had 2,391 shareholders of record of
its common stock as of January 31, 2017.
60 2016 Annual Report