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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 July 3, 2021

OR

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

For the transition period from _____________________________________ to ____________________________________

Commission File Number: 1-3390

Seaboard Corporation

(Exact name of registrant as specified in its charter)

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​

​

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Delaware

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04-2260388

(State or other jurisdiction of incorporation)

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(I.R.S. Employer Identification No.)

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​

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9000 West 67th Street, Merriam, Kansas

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66202

(Address of principal executive offices)

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(Zip Code)

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(913) 676-8800

(Registrant’s telephone number, including area code)

Not Applicable

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

Securities registered pursuant to Section 12(b) of the Act:

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​

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Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock $1.00 Par Value

SEB

NYSE American

​

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 every Interactive Data File required to be submitted 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 such files). Yes ⌧  No ◻

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

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Large Accelerated Filer ⌧

Accelerated Filer ◻

Non-Accelerated Filer ◻

Smaller Reporting Company ☐

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Emerging Growth Company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ◻

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 1,160,779 shares of common stock, $1.00 par value per share, outstanding on July 27, 2021.​

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

​

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

July 3,

​

June 27,

​

July 3,

​

June 27,

​

(Millions of dollars except share and per share amounts)

2021

    

2020

    

2021

    

2020

 

Net sales:

​

​

​

​

​

​

​

​

​

​

​

​

Products (affiliate sales of $392, $332, $685 and $591)

$

2,089

​

$

1,589

​

$

3,820

​

$

2,971

​

Services (affiliate sales of $4, $6, $9 and $12)

 

330

​

 

206

​

 

643

​

 

489

​

Other

 

11

​

 

13

​

 

26

​

 

31

​

Total net sales

 

2,430

​

 

1,808

​

 

4,489

​

 

3,491

​

Cost of sales and operating expenses:

​

​

​

​

​

​

​

​

​

​

​

​

Products

 

1,894

​

 

1,520

​

 

3,500

​

 

2,798

​

Services

 

269

​

 

185

​

 

530

​

 

441

​

Other

 

14

​

 

14

​

 

28

​

 

28

​

Total cost of sales and operating expenses

 

2,177

​

 

1,719

​

 

4,058

​

 

3,267

​

Gross income

 

253

​

 

89

​

 

431

​

 

224

​

Selling, general and administrative expenses

 

88

​

 

80

​

 

174

​

 

152

​

Operating income

 

165

​

 

9

​

 

257

​

 

72

​

Other income (expense):

​

​

​

​

​

​

​

​

​

​

​

​

Interest expense

 

(6)

​

 

(6)

​

 

4

​

 

(11)

​

Interest income

 

6

​

 

4

​

 

11

​

 

11

​

Income (loss) from affiliates

 

(5)

​

 

(17)

​

 

1

​

 

(21)

​

Other investment income (loss), net

 

46

​

 

128

​

 

117

​

 

(97)

​

Foreign currency gains (losses), net

 

(7)

​

 

(5)

​

 

2

​

 

(16)

​

Miscellaneous, net

 

1

​

 

1

​

 

7

​

 

2

​

Total other income (expense), net

 

35

​

 

105

​

 

142

​

 

(132)

​

Earnings (loss) before income taxes

 

200

​

 

114

​

 

399

​

 

(60)

​

Income tax expense

 

(24)

​

 

(141)

​

 

(44)

​

 

(70)

​

Net earnings (loss)

$

176

​

$

(27)

​

$

355

​

$

(130)

​

Less: Net loss attributable to noncontrolling interests

 

—

​

 

—

​

 

—

​

 

—

​

Net earnings (loss) attributable to Seaboard

$

176

​

$

(27)

​

$

355

​

$

(130)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Earnings (loss) per common share

$

151.56

​

$

(23.51)

​

$

305.59

​

$

(112.33)

​

Average number of shares outstanding

 

1,160,779

​

 

1,160,779

​

 

1,160,779

​

 

1,162,307

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other comprehensive income (loss), net of income tax expense of $1, $1, $1 and $1:

​

​

​

​

​

​

​

​

​

​

​

​

Foreign currency translation adjustment

 

(15)

​

 

(19)

​

 

—

​

 

(16)

​

Unrecognized pension cost

 

4

​

 

—

​

 

5

​

 

2

​

Other comprehensive income (loss), net of tax

$

(11)

​

$

(19)

​

$

5

​

$

(14)

​

Comprehensive income (loss)

 

165

​

 

(46)

​

 

360

​

 

(144)

​

Less: Comprehensive loss attributable to noncontrolling interests

 

—

​

 

—

​

 

—

​

 

—

​

Comprehensive income (loss) attributable to Seaboard

$

165

​

$

(46)

​

$

360

​

$

(144)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

See accompanying notes to condensed consolidated financial statements.

​

2

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

​

​

​

​

​

​

​

​

​

July 3,

​

December 31,

 

(Millions of dollars except share and per share amounts)

2021

    

2020

 

Assets

​

​

​

​

​

​

Current assets:

​

​

​

​

​

​

Cash and cash equivalents

$

92

​

$

76

​

Short-term investments

 

1,483

​

 

1,465

​

Receivables, net of allowance for credit losses of $30 and $28

 

642

​

 

532

​

Inventories

 

1,497

​

 

1,178

​

Other current assets

 

164

​

 

103

​

Total current assets

 

3,878

​

 

3,354

​

Property, plant and equipment, net

 

1,744

​

 

1,582

​

Operating lease right of use assets, net

​

416

​

​

390

​

Investments in and advances to affiliates

 

666

​

 

698

​

Goodwill

 

164

​

 

167

​

Other non-current assets

 

202

​

 

208

​

Total assets

$

7,070

​

$

6,399

​

Liabilities and Stockholders’ Equity

​

​

​

​

​

​

Current liabilities:

​

​

​

​

​

​

Lines of credit

$

474

​

$

222

​

Current maturities of long-term debt

 

9

​

 

55

​

Accounts payable

 

390

​

 

276

​

Deferred revenue

​

95

​

​

89

​

Operating lease liabilities

​

137

​

​

111

​

Other current liabilities

 

308

​

 

323

​

Total current liabilities

 

1,413

​

 

1,076

​

Long-term debt, less current maturities

 

711

​

 

707

​

Deferred income taxes

 

85

​

 

103

​

Long-term operating lease liabilities

​

315

​

​

318

​

Other liabilities

 

363

​

 

367

​

Total non-current liabilities

 

1,474

​

 

1,495

​

Commitments and contingent liabilities

​

​

​

​

​

​

Stockholders’ equity:

​

​

​

​

​

​

Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,160,779 shares in 2021 and 2020

 

1

​

 

1

​

Accumulated other comprehensive loss

 

(466)

​

 

(471)

​

Retained earnings

 

4,637

​

 

4,287

​

Total Seaboard stockholders’ equity

 

4,172

​

 

3,817

​

Noncontrolling interests

 

11

​

 

11

​

Total equity

 

4,183

​

 

3,828

​

Total liabilities and stockholders’ equity

$

7,070

​

$

6,399

​

​

​

See accompanying notes to condensed consolidated financial statements.

​

3

​

​

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other

​

​

​

​

​

​

​

​

​

​

​

​

Common

​

Comprehensive

​

Retained

​

Noncontrolling

​

​

​

​

(Millions of dollars)

​

Stock

​

Loss

​

Earnings

​

Interests

​

Total

​

Balances, December 31, 2019

​

$

1

​

$

(440)

​

$

4,030

​

$

10

​

$

3,601

​

Adoption of accounting guidance (see Note 1)

​

​

—

​

​

—

​

​

(3)

​

​

—

​

​

(3)

​

Comprehensive income (loss):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net loss

​

​

—

​

​

—

​

​

(103)

​

​

—

​

​

(103)

​

Other comprehensive income, net of tax

​

​

—

​

​

5

​

​

—

​

​

—

​

​

5

​

Repurchase of common stock

​

​

—

​

​

—

​

​

(13)

​

​

—

​

​

(13)

​

Dividends on common stock ($2.25/share)

​

​

—

​

​

—

​

​

(3)

​

​

—

​

​

(3)

​

Balances, March 28, 2020

​

$

1

​

$

(435)

​

$

3,908

​

$

10

​

$

3,484

​

Comprehensive loss:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net loss

​

​

—

​

​

—

​

​

(27)

​

​

—

​

​

(27)

​

Other comprehensive loss, net of tax

​

​

—

​

​

(19)

​

​

—

​

​

—

​

​

(19)

​

Dividends on common stock ($2.25/share)

​

​

—

​

​

—

​

​

(2)

​

​

—

​

​

(2)

​

Balances, June 27, 2020

​

$

1

​

$

(454)

​

$

3,879

​

$

10

​

$

3,436

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balances, December 31, 2020

​

$

1

​

$

(471)

​

$

4,287

​

$

11

​

$

3,828

​

Comprehensive income:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net earnings

​

​

—

​

​

—

​

​

179

​

​

—

​

​

179

​

Other comprehensive income, net of tax

​

​

—

​

​

16

​

​

—

​

​

—

​

​

16

​

Dividends on common stock ($2.25/share)

​

​

—

​

​

—

​

​

(3)

​

​

—

​

​

(3)

​

Balances, April 3, 2021

​

$

1

​

$

(455)

​

$

4,463

​

$

11

​

$

4,020

​

Comprehensive income (loss):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net earnings

​

​

—

​

​

—

​

​

176

​

​

—

​

​

176

​

Other comprehensive loss, net of tax

​

​

—

​

​

(11)

​

​

—

​

​

—

​

​

(11)

​

Dividends on common stock ($2.25/share)

​

​

—

​

​

—

​

​

(2)

​

​

—

​

​

(2)

​

Balances, July 3, 2021

​

$

1

​

$

(466)

​

$

4,637

​

$

11

​

$

4,183

​

​

See accompanying notes to condensed consolidated financial statements

​

​

​

​

​

4

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

​

​

​

​

​

​

​

​

​

Six Months Ended

 

​

July 3,

​

June 27,

​

(Millions of dollars)

2021

    

2020

 

Cash flows from operating activities:

​

​

​

​

​

​

Net earnings (loss)

$

355

​

$

(130)

​

Adjustments to reconcile net earnings (loss) to cash from operating activities:

​

​

​

​

​

​

Depreciation and amortization

 

87

​

 

72

​

Deferred income taxes

 

(26)

​

 

(46)

​

Loss (income) from affiliates

 

(1)

​

 

21

​

Dividends received from affiliates

 

30

​

 

7

​

Other investment loss (income), net

 

(117)

​

 

97

​

Other, net

 

4

​

 

22

​

Changes in assets and liabilities:

​

​

​

​

​

​

Receivables, net of allowance for credit losses

 

(109)

​

 

86

​

Inventories

 

(319)

​

 

22

​

Other assets

 

(51)

​

 

5

​

Accounts payable

​

86

​

​

(177)

​

Other liabilities, exclusive of debt

 

(7)

​

 

21

​

Net cash from operating activities

 

(68)

​

 

—

​

Cash flows from investing activities:

​

​

​

​

​

​

Purchase of short-term investments

 

(1,482)

​

 

(311)

​

Proceeds from the sale of short-term investments

 

1,569

​

 

464

​

Proceeds from the maturity of short-term investments

 

19

​

 

20

​

Capital expenditures

 

(223)

​

 

(108)

​

Proceeds from the sale of property, plant and equipment

 

14

​

 

2

​

Principal payments received on notes receivable

​

11

​

​

—

​

Purchase of long-term investments

 

(14)

​

 

(38)

​

Other, net

 

1

​

 

(6)

​

Net cash from investing activities

 

(105)

​

 

23

​

Cash flows from financing activities:

​

​

​

​

​

​

Uncommitted lines of credit, net

 

152

​

 

(22)

​

Draws under committed lines of credit

​

402

​

​

205

​

Repayments of committed lines of credit

​

(302)

​

​

(205)

​

Principal payments of long-term debt

 

(50)

​

 

(31)

​

Repurchase of common stock

 

—

​

 

(13)

​

Dividends paid

 

(5)

​

 

(5)

​

Other, net

 

(5)

​

 

3

​

Net cash from financing activities

 

192

​

 

(68)

​

Effect of exchange rate changes on cash and cash equivalents

 

(3)

​

 

(1)

​

Net change in cash and cash equivalents

 

16

​

 

(46)

​

Cash and cash equivalents at beginning of year

 

76

​

 

125

​

Cash and cash equivalents at end of period

$

92

​

$

79

​

​

​

See accompanying notes to condensed consolidated financial statements.

​

5

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

​

Note 1 – Basis of Presentation and Accounting Policies

The condensed consolidated financial statements include the accounts of Seaboard Corporation and its subsidiaries (“Seaboard”). These financial statements should be read in conjunction with the consolidated financial statements of Seaboard for the year ended December 31, 2020 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. Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year.

The unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Seaboard has consistently applied all accounting policies as disclosed in its latest annual report on Form 10-K to all periods presented in these condensed consolidated financial statements. During the fourth quarter of 2020, Seaboard elected to change its method of valuing its inventories from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The effects of the change in accounting principle from LIFO to FIFO were retrospectively applied and, as a result, certain financial statement line items in the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months ended June 27, 2020 were adjusted as necessary. For further information, refer to the annual report on Form 10-K for the year ended December 31, 2020.

Supplemental Cash Flow Information

Non-cash investing activities for the six months ended July 3, 2021, included purchases of property, plant and equipment in accounts payable of $28 million. The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of right of use (“ROU”) assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the condensed consolidated statements of cash flows.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Six months ended

​

​

​

​

July 3,

​

June 27,

​

(Millions of dollars)

​

​

2021

​

2020

​

Cash paid for amounts included in the measurement of lease liabilities:

​

​

​

​

​

​

​

​

Operating cash flows from operating leases

​

​

$

75

​

$

71

​

Operating cash flows from finance leases

​

​

​

2

​

​

2

​

Financing cash flows from finance leases

​

​

​

5

​

​

3

​

​

​

​

​

​

​

​

​

​

Operating ROU assets obtained in exchange for new operating lease liabilities

​

​

$

84

​

$

43

​

Finance ROU assets obtained in exchange for new finance lease liabilities

​

​

​

6

​

​

27

​

​

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill of $3 million as of July 3, 2021 compared to December 31, 2020 was due to foreign currency exchange differences and other adjustments within the Commodity Trading and Milling (“CT&M”) segment. As of July 3, 2021, other intangible assets, included in other non-current assets, were $50 million, net of accumulated amortization of $27 million.

Income Taxes

Seaboard computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income or loss and adjusts the provision for discrete tax items recorded in the period.

Accounting Standard Recently Adopted

On January 1, 2020, Seaboard adopted guidance which requires the use of a new current expected credit loss model in order to determine the allowance for credit losses with respect to receivables, among other financial instruments. This model estimates the lifetime of expected credit loss and replaces the existing incurred loss model. As a result of this adoption, Seaboard recorded a cumulative-effect adjustment of $3 million on January 1, 2020 that decreased retained earnings and increased the allowance for credit losses.

6

​

Note 2 – Investments

The following is a summary of the estimated fair value of short-term investments classified as trading securities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

July 3,

​

December 31,

 

(Millions of dollars)

    

2021

​

2020

 

Domestic debt securities

​

$

685

​

$

496

​

Domestic equity securities

​

​

456

​

​

702

​

Foreign equity securities

​

 

193

​

 

133

​

Foreign debt securities

​

​

117

​

​

68

​

Money market funds held in trading accounts

​

​

15

​

​

47

​

Other trading securities

​

​

17

​

​

19

​

Total trading short-term investments

​

$

1,483

​

$

1,465

​

​

The change in unrealized gains (losses) related to trading securities still held at the end of the respective reporting period was $9 million and $17 million for the three and six months ended July 3, 2021, respectively, and $113 million and $(97) million for the three and six months ended June 27, 2020, respectively.

Seaboard had $45 million and $29 million of short-term investments denominated in foreign currencies, primarily euros, as of July 3, 2021 and December 31, 2020, respectively.

Note 3 – Inventories

The following is a summary of inventories:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

July 3,

​

December 31,

 

(Millions of dollars)

    

2021

    

2020

​

At lower of FIFO cost and net realizable value (NRV):

​

​

​

​

​

​

​

Hogs and materials

​

$

467

​

$

437

​

Pork products and materials

​

 

46

​

 

46

​

Grains, oilseeds and other commodities

​

 

576

​

 

380

​

Biodiesel

​

​

122

​

​

72

​

Sugar produced and in process

​

 

37

​

 

24

​

Other

​

 

43

​

 

61

​

Total inventories at lower of FIFO cost and NRV

​

 

1,291

​

 

1,020

​

Grain, flour and feed at lower of weighted average cost and NRV

​

 

206

​

 

158

​

 Total inventories

​

$

1,497

​

$

1,178

​

​

​

​

Note 4 – Lines of Credit, Long-Term Debt, Commitments and Contingencies

Lines of Credit

The outstanding balances under uncommitted lines of credit were $374 million and $222 million as of July 3, 2021 and December 31, 2020, respectively. Of the outstanding balance at July 3, 2021, $236 million was denominated in foreign currencies with $203 million denominated in the South African rand, $24 million denominated in the Canadian dollar and the remaining in various other currencies. The weighted average interest rate for outstanding lines of credit was 2.81% and 3.89% as of July 3, 2021 and December 31, 2020, respectively.

During the second quarter of 2021, Seaboard amended a committed line of credit agreement to increase the borrowing capacity from $100 million to $250 million. This credit agreement is secured by certain short-term investments and matures on September 30, 2022. A $250 million committed line of credit matured in May 2021. There was $100 million outstanding under committed lines of credit as of July 3, 2021 and no balance outstanding as of December 31, 2020.

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7

Long-term Debt

The following is a summary of long-term debt:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

July 3,

​

December 31,

(Millions of dollars)

​

​

2021

​

2020

Term Loan due 2028

​

$

681

​

$

684

​

Foreign subsidiary obligations

​

​

1

​

​

49

​

Other long-term debt

​

​

39

​

​

30

​

Total debt at face value

​

​

721

​

​

763

​

Current maturities and unamortized discount and costs

​

​

(10)

​

​

(56)

​

Long-term debt, less current maturities and unamortized discount and costs

​

$

711

​

$

707

​

​

The interest rate on the Term Loan due 2028 was 1.73% and 1.77% as of July 3, 2021 and December 31, 2020, respectively. The weighted average interest rate on Seaboard’s foreign subsidiary obligations was 7.34% and 3.51% as of July 3, 2021 and December 31, 2020, respectively. Foreign subsidiary obligations as of December 31, 2020, included a $46 million euro-denominated note payable related to a 2018 acquisition that was repaid in January 2021.

In conjunction with the purchase of certain equipment during the second quarter of 2021, $9 million of secured, long-term debt was assumed. The loan agreement incurs a fixed interest rate of 5.60% and matures in August 2037.

Seaboard was in compliance with all restrictive debt covenants relating to these agreements as of July 3, 2021.

Legal Proceedings

On June 28, 2018, twelve indirect purchasers of pork products filed a class action complaint in the U.S. District Court for the District of Minnesota (the “District Court”) against several pork processors, including Seaboard Foods LLC and Agri Stats, Inc., a company described in the complaint as a data sharing service. The complaint also named Seaboard Corporation as a defendant. Additional class action complaints making similar claims on behalf of putative classes of direct and indirect purchasers were later filed in the District Court, and three additional actions by standalone plaintiffs (including the Commonwealth of Puerto Rico) were filed in or transferred to the District Court. The consolidated actions are styled In re Pork Antitrust Litigation. The operative complaints allege, among other things, that beginning in January 2009, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork products in violation of U.S. antitrust laws by coordinating their output and limiting production, allegedly facilitated by the exchange of non-public information about prices, capacity, sales volume and demand through Agri Stats, Inc. The complaints on behalf of the putative classes of indirect purchasers also assert claims under various state laws, including state antitrust laws, unfair competition laws, consumer protection statutes, and common law unjust enrichment. The relief sought in the respective complaints includes treble damages, injunctive relief, pre- and post-judgment interest, costs and attorneys’ fees. On October 16, 2020, the District Court denied defendants’ motions to dismiss the amended complaints, but the District Court later dismissed all claims against Seaboard Corporation without prejudice.

In 2021, several additional standalone plaintiffs filed similar actions in District Courts throughout the country. These actions have been conditionally transferred to Minnesota for pretrial proceedings pursuant to an order by the Judicial Panel on Multidistrict Litigation.

Seaboard intends to defend all of these cases vigorously. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome resulting from these suits, or to reasonably estimate the amount of potential loss or range of potential loss, if any, resulting from the suits.

On March 20, 2018, the bankruptcy trustee (the “Trustee”) for Cereoil Uruguay S.A. (“Cereoil”) filed a suit in the Bankruptcy Court of First Instance in Uruguay that was served during the second quarter of 2018 naming as parties Seaboard and Seaboard’s subsidiaries, Seaboard Overseas Limited (“SOL”) and Seaboard Uruguay Holdings Ltd. (“Seaboard Uruguay”). Seaboard has a 45% indirect ownership of Cereoil. The suit seeks an order requiring Seaboard, SOL and Seaboard Uruguay to reimburse Cereoil the amount of $22 million, contending that deliveries of soybeans to SOL pursuant to purchase agreements should be set aside as fraudulent conveyances. Seaboard intends to defend this case vigorously. It is impossible at this stage to determine the probability of a favorable or unfavorable outcome resulting from this suit. In the event of an adverse ruling, Seaboard and its two subsidiaries could be ordered to pay the amount of $22 million. Any award in this case would offset against any award in the additional case described below filed by the Trustee on April 27, 2018.

8

On April 27, 2018, the Trustee for Cereoil filed another suit in the Bankruptcy Court of First Instance in Uruguay that was served during the second quarter of 2018 naming as parties Seaboard, SOL, Seaboard Uruguay, all directors of Cereoil, including two individuals employed by Seaboard who served as directors at the behest of Seaboard, and the Chief Financial Officer of Cereoil, an employee of Seaboard who also served at the behest of Seaboard (collectively, the “Cereoil Defendants”). The Trustee contends that the Cereoil Defendants acted with willful misconduct to cause Cereoil’s insolvency, and thus should be ordered to pay all liabilities of Cereoil, net of assets. The bankruptcy filing lists total liabilities of $53 million and assets of $30 million. Seaboard intends to defend this case vigorously. It is impossible at this stage to determine the probability of a favorable or unfavorable outcome resulting from this suit. In the event of an adverse ruling, Seaboard and the other Cereoil Defendants could be ordered to pay the amount of the net indebtedness of Cereoil, which based on the bankruptcy schedules would total $23 million. It is possible that the net indebtedness could be higher than this amount if Cereoil’s liabilities are greater than $53 million and/or Cereoil’s assets are worth less than $30 million.

In addition, in the event of an adverse ruling, the Bankruptcy Court of First Instance could order payment of the Trustee’s professional fees, interest, and other expenses. Any award in this case would offset against any award in the case described above filed on March 20, 2018.

A creditor of Cereoil which has a claim in the bankruptcy proceeding pending in Uruguay has threatened to bring legal action in the U.S. against Seaboard alleging on various legal theories that Seaboard is responsible for indebtedness of approximately $10 million, plus accrued interest. Seaboard will vigorously defend this action should it be brought.

On May 15, 2018, the Trustee for Nolston S.A. (“Nolston”) filed a suit in the Bankruptcy Court of First Instance in Uruguay that was served during the second quarter of 2018 naming as parties Seaboard and the other Cereoil Defendants. Seaboard has a 45% indirect ownership of Nolston. The Trustee contends that the Cereoil Defendants acted with willful misconduct to cause Nolston’s insolvency, and thus should be ordered to pay all liabilities of Nolston, net of assets. The bankruptcy filing lists total liabilities of $29 million and assets of $15 million. Seaboard intends to defend this case vigorously. It is impossible at this stage to determine the probability of a favorable or unfavorable outcome resulting from this suit. In the event of an adverse ruling, Seaboard and the other Cereoil Defendants could be ordered to pay the amount of the net indebtedness of Nolston, which based on the bankruptcy schedules would total $14 million. It is possible that the net indebtedness could be higher than this amount if Nolston’s liabilities are greater than $29 million and/or Nolston’s assets are worth less than $15 million. In addition, in the event of an adverse ruling, the Bankruptcy Court of First Instance could order payment of the Trustee’s professional fees, interest, and other expenses.

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 condensed consolidated financial statements of Seaboard.

Guarantees

Certain of Seaboard’s non-consolidated affiliates have debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in order to further Seaboard’s business objectives. As of July 3, 2021, guarantees outstanding to affiliates and third parties were not material. Seaboard has not accrued a liability for any of the affiliate or third-party guarantees as management considers the likelihood of loss to be remote.

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Note 5 – Employee Benefits

Seaboard has qualified defined benefit pension plans for its domestic salaried and clerical employees that were hired before January 1, 2014. Effective January 1, 2021, Seaboard transferred assets and liabilities for employees of certain Seaboard subsidiaries into a successor plan. 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 any plans in advance of when the benefits are paid.

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9

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

​

July 3,

​

June 27,

​

July 3,

​

June 27,

 

(Millions of dollars)

    

2021

    

2020

    

2021

    

2020

 

Components of net periodic benefit cost:

​

​

​

​

​

​

​

​

​

​

​

​

​

Service cost

​

$

2

​

$

2

​

$

5

​

$

5

​

Interest cost

​

 

2

​

 

3

​

 

4

​

 

6

​

Expected return on plan assets

​

 

(3)

​

 

(3)

​

 

(6)

​

 

(6)

​

Amortization

​

 

3

​

 

3

​

 

5

​

 

4

​

Settlement loss recognized

​

​

3

​

​

—

​

​

3

​

​

2

​

Net periodic benefit cost

​

$

7

​

$

5

​

$

11

​

$

11

​

​

​

​

​

Note 6 – Derivatives and Fair Value of Financial Instruments

The following tables show assets and liabilities measured at fair value on a recurring basis as of July 3, 2021 and December 31, 2020, and also the level within the fair value hierarchy used to measure each category of assets and liabilities. The trading securities classified as other current assets below are assets held for Seaboard’s deferred compensation plans.

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Balance

    

​

​

    

​

​

    

​

​

 

​

​

July 3,

​

​

​

​

​

​

​

​

​

 

(Millions of dollars)

​

2021

​

Level 1

Level 2

Level 3

 

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

Trading securities – short-term investments:

​

​

​

​

​

​

​

​

​

​

​

​

​

Domestic debt securities

​

$

685

​

$

440

​

$

245

​

$

—

​

Domestic equity securities

​

 

456

​

 

456

​

 

—

​

 

—

​

Foreign equity securities

​

​

193

​

​

193

​

​

—

​

​

—

​

Foreign debt securities

​

​