seb_Current folio

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 3, 2015

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________________ to __________________________

Seaboard Corporation

(Exact name of registrant as specified in its charter)


Delaware	1-3390	04-2260388
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation)	File Number)	Identification No.)


9000 West 67th Street, Shawnee Mission, Kansas		66202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (913) 676-8800

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒	Accelerated Filer ☐
Non-Accelerated Filer ☐ (Do not check if a smaller reporting company)	Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ .

There were 1,170,550 shares of common stock, $1.00 par value per share, outstanding on October 30, 2015.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Thousands of dollars except share and per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
	2015		2014		2015		2014
Net sales:
Products (includes sales to affiliates of $240,544, $205,644, $664,714 and $580,661)	$	1,139,144	$	1,350,329	$	3,464,235	$	3,981,200
Service revenues		242,732		218,988		743,687		655,148
Other		28,897		53,324		83,095		160,520
Total net sales		1,410,773		1,622,641		4,291,017		4,796,868
Cost of sales and operating expenses:
Products		1,076,488		1,228,624		3,276,576		3,583,456
Services		223,002		198,276		666,318		595,265
Other		21,440		34,798		65,587		134,189
Total cost of sales and operating expenses		1,320,930		1,461,698		4,008,481		4,312,910
Gross income		89,843		160,943		282,536		483,958
Selling, general and administrative expenses		66,892		64,857		200,084		188,330
Operating income		22,951		96,086		82,452		295,628
Other income (expense):
Interest expense		(3,630)		(8,408)		(11,920)		(17,084)
Interest income		1,700		2,344		7,625		11,148
Interest income from affiliates		7,082		6,775		21,321		20,011
Income from affiliates		16,026		9,892		39,062		25,293
Other investment income (loss), net		(26,192)		(2,990)		(22,380)		370
Foreign currency gains (losses), net		(152)		(530)		1,623		(9,217)
Gain on sale of controlling interest in subsidiary		-		64,392		-		64,392
Miscellaneous, net		(4,667)		655		(5,577)		(1,598)
Total other income (loss), net		(9,833)		72,130		29,754		93,315
Earnings before income taxes		13,118		168,216		112,206		388,943
Income tax expense		(10,317)		(63,536)		(44,167)		(140,421)
Net earnings	$	2,801	$	104,680	$	68,039	$	248,522
Less: Net loss (income) attributable to noncontrolling interests		226		469		(459)		(576)
Net earnings attributable to Seaboard	$	3,027	$	105,149	$	67,580	$	247,946

Earnings per common share	$	2.59	$	89.83	$	57.73	$	209.91

Other comprehensive income (loss), net of income tax benefit of $730, $1,506, $1,554 and $11,894:
Foreign currency translation adjustment		(7,001)		(3,120)		(21,795)		(32,685)
Unrealized gain (loss) on investments		(342)		(105)		332		919
Unrealized gain on cash flow hedges		-		149		-		235
Unrecognized pension cost		938		320		3,165		960
Other comprehensive loss, net of tax	$	(6,405)	$	(2,756)	$	(18,298)	$	(30,571)
Comprehensive income (loss)		(3,604)		101,924		49,741		217,951
Less: Comprehensive loss (income) attributable to the noncontrolling interests		226		476		(528)		(568)
Comprehensive income (loss) attributable to Seaboard	$	(3,378)	$	102,400	$	49,213	$	217,383

Average number of shares outstanding		1,170,550		1,170,550		1,170,550		1,181,217

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Thousands of dollars except share and per share amounts)

(Unaudited)


	October 3,		December 31,
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	49,208	$	36,459
Short-term investments		689,443		490,566
Receivables, net of allowance		456,100		633,965
Inventories		694,249		736,302
Deferred income taxes		56,042		45,647
Other current assets		115,894		110,053
Total current assets		2,060,936		2,052,992
Net property, plant and equipment		842,113		846,757
Investments in and advances to affiliates		635,949		543,411
Notes receivable from affiliates		196,087		197,270
Other assets		69,148		51,328
Total Assets	$	3,804,233	$	3,691,758
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable to banks	$	104,465	$	75,524
Accounts payable		204,950		214,218
Deferred revenue		76,896		51,158
Other current liabilities		327,215		293,932
Total current liabilities		713,526		634,832
Deferred income taxes		71,920		95,538
Other liabilities and deferred credits		234,492		226,677
Total non-current liabilities		306,412		322,215
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,170,550 shares		1,171		1,171
Accumulated other comprehensive loss		(270,935)		(252,637)
Retained earnings		3,049,382		2,981,802
Total Seaboard stockholders’ equity		2,779,618		2,730,336
Noncontrolling interests		4,677		4,375
Total equity		2,784,295		2,734,711
Total Liabilities and Stockholders’ Equity	$	3,804,233	$	3,691,758

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Thousands of dollars)

(Unaudited)


	Nine Months Ended
	October 3,		September 27,
	2015		2014
Cash flows from operating activities:
Net earnings	$	68,039	$	248,522
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		68,742		69,322
Gain from sale of fixed assets		(500)		(1,631)
Gain from sale of power generating facility assets		-		(4,953)
Deferred income taxes		(32,535)		14,690
Pay-in-kind interest and accretion on notes receivable from affiliates		(13,074)		(11,511)
Income from affiliates		(39,062)		(25,293)
Dividends received from affiliates		35,610		1,823
Other investment income (loss), net		22,380		(370)
Gain on sale of controlling interest in a subsidiary		-		(64,392)
Other, net		2,179		(735)
Changes in assets and liabilities:
Receivables, net of allowance		176,705		89,718
Inventories		29,964		(74,971)
Other current assets		(8,681)		3,781
Current liabilities, exclusive of debt		40,352		22,016
Other, net		15,814		17,250
Net cash from operating activities		365,933		283,266
Cash flows from investing activities:
Purchase of short-term investments		(674,647)		(922,902)
Proceeds from the sale of short-term investments		434,343		842,294
Proceeds from the maturity of short-term investments		23,631		5,794
Capital expenditures		(95,992)		(94,665)
Proceeds from the sale of fixed assets		24,276		2,639
Proceeds from the sale of power generating facility assets		-		7,715
Investments in and advances to affiliates, net		(77,677)		(22,083)
Purchase of long-term investments		(25,690)		(2,333)
Proceeds from the sale of controlling interest in a subsidiary		-		72,500
Other, net		5,554		2,757
Net cash from investing activities		(386,202)		(108,284)
Cash flows from financing activities:
Notes payable to banks, net		32,968		(31,815)
Principal payments of long-term debt		-		(91,403)
Repurchase of common stock		-		(53,781)
Other, net		(226)		(48)
Net cash from financing activities		32,742		(177,047)
Effect of exchange rate change on cash		276		3,043
Net change in cash and cash equivalents		12,749		978
Cash and cash equivalents at beginning of year		36,459		55,055
Cash and cash equivalents at end of period	$	49,208	$	56,033

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Accounting Policies and Basis of Presentation

The Condensed Consolidated Financial Statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries (“Seaboard”). All significant intercompany balances and transactions have been eliminated in consolidation. Seaboard’s investments in non-consolidated affiliates are accounted for by the equity method. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of Seaboard for the year ended December 31, 2014 as filed in its Annual Report on Form 10-K. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Seaboard’s year-end is December 31.

The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations for interim periods are not necessarily indicative of results to be expected for a full year. As Seaboard conducts its commodity trading business with third parties, consolidated subsidiaries and non-consolidated affiliates on an interrelated basis, gross margin on non-consolidated affiliates cannot be clearly distinguished without making numerous assumptions primarily with respect to mark-to-market accounting for commodity derivatives.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles ("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 Condensed 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.

Supplemental Non-Cash Transactions

Seaboard has notes receivable from affiliates which accrue pay-in-kind interest income, primarily from one affiliate as discussed in Note 9. Seaboard recognized $4,309,000 and $13,074,000 of non-cash, pay-in-kind interest income and accretion of discount for the three and nine months ended October 3, 2015, respectively, and $3,976,000 and $11,511,000 for the three and nine months ended September 27, 2014, respectively, related to these notes receivable.

As more fully described in Note 9, as of September 27, 2014 Seaboard’s Pork segment sold to Triumph Foods LLC (“Triumph”) a 50% interest in its processed meats division, Daily’s Premium Meats, LLC (“Daily’s”). As a result, Seaboard deconsolidated Daily’s from its Condensed Consolidated Balance Sheet as of September 27, 2014. The following table summarizes the non-cash transactions resulting from this deconsolidation:


(Thousands of dollars)	September 27, 2014
Decrease in net working capital		$	19,349
Increase in investment in and advances to affiliates			(72,500)
Decrease in fixed assets			16,038
Decrease in goodwill			28,372
Decrease in other intangible assets, net (not subject to amortization)			17,000
Decrease in noncontrolling interest			(151)
Gain on sale of controlling interest in subsidiary			64,392
Net proceeds from sale of controlling interest in subsidiary		$	72,500

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 the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. Seaboard is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures. Seaboard will be required to adopt this guidance on January 1, 2018 and it is currently anticipated that Seaboard will apply this guidance using the cumulative effect transition method.

In July 2015, the FASB issued guidance to simplify the subsequent measurement of inventory; excluding inventory measured using last-in, first out 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 is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on net earnings.

Change in Accounting Method

During the second quarter of 2015, Seaboard invested an additional $10,000,000 in a business operating a 300 megawatt electricity generating facility in the Dominican Republic. This investment increased Seaboard's ownership interest to 29.9% from less than 20%. Seaboard's previous investment of $5,910,000 was accounted for using the cost method and as a result of this additional investment, Seaboard changed its accounting method to the equity method. This change in accounting requires Seaboard to present its prior period financial results to reflect the equity method of accounting from the date of the initial investment which resulted in a $12,691,000 adjustment to retained earnings and a corresponding increase to its investment as of January 1, 2014. The results for the three and nine months ended October 3, 2015 and September 27, 2014, which represents Seaboard's portion of the income (losses) incurred by the investee were not material. There is no tax impact to Seaboard on these amounts. See Note 9 for more information.

Note 2 – Investments

Seaboard’s short-term investments are treated as either available-for-sale securities or trading securities. All of Seaboard’s available-for-sale and trading securities are classified as current assets as they are readily available to support Seaboard’s current operating needs. Available-for-sale securities are recorded at their estimated fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive loss. Trading securities are recorded at their estimated fair value with unrealized gains and losses reflected in other investment income (loss), net. At October 3, 2015, money market funds included $970,000 denominated in British pounds and $147,000 denominated in Canadian dollars.

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 October 3, 2015 and December 31, 2014.


	October 3, 2015				December 31, 2014
	Amortized		Fair		Amortized		Fair
(Thousands of dollars)	Cost		Value		Cost		Value
Money market funds	$	100,648	$	100,648	$	142,432	$	142,432
Corporate bonds		-		-		11,000		11,015
U.S. Government agency securities		-		-		9,684		9,666
Other available-for-sale securities		-		-		3,933		3,983
Total available-for-sale short-term investments		100,648		100,648		167,049		167,096
Domestic equity securities		167,770		158,815		-		-
High yield debt securities		125,347		122,178		187,491		181,483
Domestic equity mutual funds		86,309		80,525		83,809		82,542
Domestic equity ETFs		78,925		77,443		31,307		32,651
Foreign equity securities		78,876		76,669		-		-
Money market funds held in trading accounts		40,152		40,152		21,401		21,401
Foreign equity mutual fund		20,000		19,831		-		-
Collateralized loan obligation		10,000		9,791		-		-
Other trading securities		4,651		3,391		6,173		5,393
Total trading short-term investments		612,030		588,795		330,181		323,470
Total short-term investments	$	712,678	$	689,443	$	497,230	$	490,566

Unrealized losses related to trading securities for the three and nine months ended October 3, 2015 were $22,377,000 and $20,902,000, respectively, and $3,774,000 and $3,149,000 for the three and nine months ended September 27, 2014, 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 in the Condensed Consolidated Balance Sheets. See Note 5 to the Condensed Consolidated Financial Statements for information on the types of trading securities held related to the deferred compensation plans.

Note 3 – Inventories

The following is a summary of inventories at October 3, 2015 and December 31, 2014:


	October 3,		December 31,
(Thousands of dollars)	2015		2014
At lower of LIFO cost or market:
Live hogs and materials	$	202,968	$	208,641
Fresh pork and materials		29,997		28,573
		232,965		237,214
LIFO adjustment		(31,847)		(36,560)
Total inventories at lower of LIFO cost or market		201,118		200,654
At lower of FIFO cost or market:
Grains, oilseeds and other commodities		296,827		320,066
Sugar produced and in process		49,306		48,863
Other		55,581		57,344
Total inventories at lower of FIFO cost or market		401,714		426,273
Grain, flour and feed at lower of weighted average cost or market		91,417		109,375
Total inventories	$	694,249	$	736,302

Note 4 – Income Taxes

Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material adjustments. Seaboard’s U.S. federal income tax years are closed through 2011. There have not been any material changes in unrecognized income tax benefits since December 31, 2014. Interest and penalties related to unrecognized tax benefits were not material for the nine months ended October 3, 2015.

Note 5 – Derivatives and Fair Value of Financial Instruments

U.S. 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). U.S. GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: 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: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following table shows assets and liabilities measured at fair value on a recurring basis as of October 3, 2015 and also the level within the fair value hierarchy used to measure each category of assets and liabilities. Seaboard uses the end of the reporting period to determine if there were any transfers between levels. There were no transfers between levels that occurred in the first nine months of 2015. The trading securities classified as other current assets below are assets held for Seaboard’s deferred compensation plans.


	Balance
	October 3,
(Thousands of dollars)	2015		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities short-term investments:
Money market funds	$	100,648	$	100,648	$	-	$	-
Trading securities – short term investments:
Domestic equity securities		158,815		158,815		-		-
High yield debt securities		122,178		-		122,178		-
Domestic equity mutual funds		80,525		80,525		-		-
Domestic equity ETFs		77,443		77,443		-		-
Foreign equity securities		76,669		76,669		-		-
Money market funds held in trading accounts		40,152		40,152		-		-
Foreign equity mutual fund		19,831		19,831		-		-
Collateralized loan obligation		9,791		-		9,791		-
Other trading securities		3,391		2,187		1,204		-
Trading securities – other current assets:
Domestic equity securities		34,044		34,044		-		-
Foreign equity securities		6,246		6,246		-		-
Fixed income mutual funds		3,366		3,366		-		-
Other		3,104		2,617		487		-
Derivatives
Commodities (1)		9,639		9,639		-		-
Foreign currencies		1,715		-		1,715		-
Total Assets	$	747,557	$	612,182	$	135,375	$	-
Liabilities:
Derivatives:
Commodities (1)	$	21,739	$	21,739	$	-	$	-
Interest rate swaps		8,714		-		8,714		-
Foreign currencies		1,417		-		1,417		-
Total Liabilities	$	31,870	$	21,739	$	10,131	$	-

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the Condensed Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts. As of October 3, 2015, the commodity derivatives had a margin account balance of $34,852,000 resulting in a net other current asset in the Condensed Consolidated Balance Sheet of $22,949,000 and a net other current liability of $197,000.

The following table shows assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and also the level within the fair value hierarchy used to measure each category of assets.


	Balance
	December 31,
(Thousands of dollars)	2014		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities – short-term investments:
Money market funds	$	142,432	$	142,432	$	-	$	-
Corporate bonds		11,015		-		11,015		-
U.S. Government agency securities		9,666		-		9,666		-
Other available-for-sale securities		3,983		-		3,983		-
Trading securities – short term investments:
High yield debt securities		181,483		-		181,483		-
Domestic equity mutual fund		82,542		82,542		-		-
Domestic equity ETF		32,651		32,651		-		-
Money market funds held in trading accounts		21,401		21,401		-		-
Other trading securities		5,393		2,614		2,779		-
Trading securities – other current assets:
Domestic equity securities		33,857		33,857		-		-
Foreign equity securities		6,532		6,532		-		-
Fixed income mutual funds		4,570		4,570		-		-
Other		2,676		2,405		271		-
Derivatives
Commodities (1)		6,136		6,136		-		-
Foreign currencies		1,675		-		1,675		-
Total Assets	$	546,012	$	335,140	$	210,872	$	-
Liabilities:
Derivatives:
Commodities (1)	$	1,779	$	1,779	$	-	$	-
Interest rate swaps		7,715		-		7,715		-
Foreign currencies		407		-		407		-
Total Liabilities	$	9,901	$	1,779	$	8,122	$	-

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the Condensed Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts. As of December 31, 2014, the commodity derivatives had a margin account balance of $4,314,000 resulting in a net other current asset in the Condensed Consolidated Balance Sheet of $9,267,000 and a net other current liability of $596,000.

Financial instruments consisting of cash and cash equivalents, net receivables, notes payable, and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments. The amortized cost and estimated fair values of investments at October 3, 2015 and December 31, 2014 are presented in Note 2.

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. Since the derivatives discussed below are not accounted for as hedges, fluctuations in the related commodity prices, currency exchange rates and interest rates could have a material impact on earnings in any given period. 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, 2014.

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. At October 3, 2015, Seaboard had open net derivative

The following table provides the amount of gain or (loss) recognized in income for each type of derivative and where it was recognized in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended October 3, 2015 and September 27, 2014.


		Three Months Ended				Nine Months Ended
		October 3,		September 27,		October 3,		September 27,
(Thousands of dollars)		2015		2014		2015		2014
Commodities	Cost of sales	$	(15,945)	$	(296)	$	(18,007)	$	3,082
Foreign currencies	Cost of sales		3,820		1,957		5,241		4,770
Foreign currencies	Foreign currency		352		3,145		1,954		2,725
Interest rate	Miscellaneous, net		(4,994)		91		(6,117)		(3,804)

The following table provides the fair value of each type of derivative held as of October 3, 2015 and December 31, 2014 and where each derivative is included in the Condensed Consolidated Balance Sheets.


		Asset Derivatives					Liability Derivatives
		October 3,		December 31,			October 3,		December 31,
(Thousands of dollars)		2015		2014			2015		2014
Commodities(1)	Other current assets	$	9,639	$	6,136	Other current liabilities	$	21,739	$	1,779
Foreign currencies	Other current assets		1,715		1,675	Other current liabilities		1,417		407
Interest rate	Other current assets		-		-	Other current liabilities		8,714		7,715

⁽¹⁾

Seaboard’s commodity derivative assets and liabilities are presented in the Condensed Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts. As of October 3, 2015 and December 31, 2014, the commodity derivatives had a margin account balance of $34,852,000 and $4,314,000, respectively, resulting in a net other current asset in the Condensed Consolidated Balance Sheets of $22,949,000 and $9,267,000, respectively and a net other current liability of $197,000 and $596,000, respectively.

Note 6 – Employee Benefits

Seaboard maintains two defined benefit pension plans for its domestic salaried and clerical employees. At this time, no contributions are expected to be made to these plans for the remainder of 2015. Seaboard also sponsors non-qualified, unfunded supplemental executive plans, and has certain individual, non-qualified, unfunded supplemental retirement agreements for certain retired employees. Management has no plans to provide funding for these supplemental plans in advance of when the benefits are paid.

The net periodic benefit cost for all of these plans was as follows:


	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
(Thousands of dollars)	2015		2014		2015		2014
Components of net periodic benefit cost:
Service cost	$	2,500	$	1,924	$	7,442	$	5,784
Interest cost		2,592		2,404		7,729		7,225
Expected return on plan assets		(2,179)		(2,173)		(6,467)