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 1, 2022

OR

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

For the transition period from _____________________________________ to ____________________________________

Commission File Number: 1-3390

Seaboard Corporation

(Exact name of registrant as specified in its charter)

Delaware	04-2260388
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
9000 West 67th Street, Merriam, Kansas	66202
(Address of principal executive offices)	(Zip Code)

(913) 676-8928

(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:

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.

Large Accelerated Filer ⌧	Accelerated Filer ◻
Non-Accelerated Filer ◻	Smaller Reporting Company ☐
	Emerging Growth Company ☐

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 October 26, 2022.​

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
(Millions of dollars except share and per share amounts)	2022		2021		2022		2021
Net sales:
Products (affiliate sales of $332, $382, $1,132 and $1,067)	$	2,299	$	1,908	$	6,901	$	5,728
Services (affiliate sales of $5, $6, $15 and $15)		541		355		1,556		998
Other		55		13		120		39
Total net sales		2,895		2,276		8,577		6,765
Cost of sales and operating expenses:
Products		2,254		1,782		6,677		5,282
Services		351		282		1,032		812
Other		43		12		104		40
Total cost of sales and operating expenses		2,648		2,076		7,813		6,134
Gross income		247		200		764		631
Selling, general and administrative expenses		92		88		271		262
Operating income		155		112		493		369
Other income (expense):
Interest expense		(13)		(11)		(23)		(7)
Interest income		9		5		21		16
Income (loss) from affiliates		48		(1)		94		—
Other investment income (loss), net		(64)		(9)		(291)		108
Foreign currency gains, net		9		5		21		7
Miscellaneous, net		1		3		11		10
Total other income (expense), net		(10)		(8)		(167)		134
Earnings before income taxes		145		104		326		503
Income tax benefit (expense)		1		(10)		32		(54)
Net earnings	$	146	$	94	$	358	$	449
Less: Net earnings attributable to noncontrolling interests		—		—		(1)		—
Net earnings attributable to Seaboard	$	146	$	94	$	357	$	449
Earnings per common share	$	125.78	$	81.50	$	307.55	$	387.09
Average number of shares outstanding		1,160,779		1,160,779		1,160,779		1,160,779
Other comprehensive income (loss), net of income tax expense of $1, $1, $1 and $2:
Foreign currency translation adjustment		(15)		8		(18)		8
Unrecognized pension cost		3		1		4		6
Other comprehensive income (loss), net of tax	$	(12)	$	9	$	(14)	$	14
Comprehensive income		134		103		344		463
Less: Comprehensive income attributable to noncontrolling interests		—		—		(1)		—
Comprehensive income attributable to Seaboard	$	134	$	103	$	343	$	463

See accompanying notes to condensed consolidated financial statements.

2

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	October 1,		December 31,
(Millions of dollars except share and per share amounts)	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	70	$	75
Short-term investments		1,023		1,416
Receivables, net of allowance for credit losses of $32 and $31		884		762
Inventories		1,816		1,663
Other current assets		162		131
Total current assets		3,955		4,047
Property, plant and equipment, net		2,227		1,892
Operating lease right of use assets, net		403		496
Investments in and advances to affiliates		717		651
Goodwill		159		163
Other non-current assets		283		254
Total assets	$	7,744	$	7,503
Liabilities and Stockholders’ Equity
Current liabilities:
Lines of credit	$	490	$	516
Accounts payable		421		404
Deferred revenue		124		108
Operating lease liabilities		155		171
Other current liabilities		408		353
Total current liabilities		1,598		1,552
Long-term debt, less current maturities		703		708
Deferred income taxes		—		99
Long-term operating lease liabilities		279		360
Other non-current liabilities		393		350
Total non-current liabilities		1,375		1,517
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 2022 and 2021		1		1
Accumulated other comprehensive loss		(446)		(432)
Retained earnings		5,197		4,847
Total Seaboard stockholders’ equity		4,752		4,416
Noncontrolling interests		19		18
Total equity		4,771		4,434
Total liabilities and stockholders’ equity	$	7,744	$	7,503

See accompanying notes to condensed consolidated financial statements.

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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, 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
Comprehensive income:
Net earnings		—		—		94		—		94
Other comprehensive income, net of tax		—		9		—		—		9
Acquisition of noncontrolling interest		—		—		—		6		6
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, October 2, 2021	$	1	$	(457)	$	4,729	$	17	$	4,290
Balances, December 31, 2021	$	1	$	(432)	$	4,847	$	18	$	4,434
Comprehensive income (loss):
Net earnings		—		—		103		1		104
Other comprehensive loss, net of tax		—		(1)		—		—		(1)
Dividends on common stock ($2.25/share)		—		—		(3)		—		(3)
Balances, April 2, 2022	$	1	$	(433)	$	4,947	$	19	$	4,534
Comprehensive income (loss):
Net earnings		—		—		108		—		108
Other comprehensive loss, net of tax		—		(1)		—		—		(1)
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, July 2, 2022	$	1	$	(434)	$	5,053	$	19	$	4,639
Comprehensive income (loss):
Net earnings		—		—		146		—		146
Other comprehensive loss, net of tax		—		(12)		—		—		(12)
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, October 1, 2022	$	1	$	(446)	$	5,197	$	19	$	4,771

See accompanying notes to condensed consolidated financial statements

4

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	October 1,		October 2,
(Millions of dollars)	2022		2021
Cash flows from operating activities:
Net earnings	$	358	$	449
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		163		131
Deferred income taxes		(103)		(30)
Income from affiliates		(94)		—
Dividends received from affiliates		23		30
Other investment loss (income), net		291		(108)
Other, net		26		17
Changes in assets and liabilities, net of dispositions:
Receivables, net of allowance for credit losses		(144)		(123)
Inventories		(160)		(343)
Other assets		(30)		(17)
Accounts payable		13		96
Other liabilities, exclusive of debt		34		(6)
Net cash from operating activities		377		96
Cash flows from investing activities:
Purchase of short-term investments		(447)		(1,777)
Proceeds from the sale of short-term investments		604		1,818
Proceeds from the maturity of short-term investments		15		25
Capital expenditures		(367)		(324)
Proceeds from the sale of property, plant and equipment		22		30
Acquisition of business		(58)		(7)
Principal payments received on notes receivable		4		21
Purchase of long-term investments		(113)		(77)
Proceeds from the sale of subsidiaries, net of cash sold		15		—
Proceeds from the sale of non-consolidated affiliates		13		—
Other, net		(13)		10
Net cash from investing activities		(325)		(281)
Cash flows from financing activities:
Uncommitted lines of credit, net		(5)		142
Draws under committed lines of credit		1,076		443
Repayments of committed lines of credit		(1,090)		(342)
Principal payments of long-term debt		(7)		(53)
Payments on finance leases		(28)		(9)
Dividends paid		(7)		(7)
Other, net		1		(1)
Net cash from financing activities		(60)		173
Effect of exchange rate changes on cash and cash equivalents		3		(2)
Net change in cash and cash equivalents		(5)		(14)
Cash and cash equivalents at beginning of year		75		76
Cash and cash equivalents at end of period	$	70	$	62

See accompanying notes to condensed consolidated financial statements.

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SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation and Accounting Policies

The condensed consolidated financial statements are unaudited and include the accounts of Seaboard Corporation and its subsidiaries (“Seaboard”). Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S”) have been condensed or omitted pursuant to such rules and regulations of the U.S. Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Seaboard included in our annual report on Form 10-K for the year ended December 31, 2021. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and 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. Actual results could differ from those estimates.

The accompanying condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position as of October 1, 2022 and the results of operations and cash flows for the three and nine months then ended. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

Supplemental Cash Flow Information

Non-cash investing activities for the nine months ended October 1, 2022, included purchases of property, plant and equipment in accounts payable of $17 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.

	Nine Months Ended
	October 1,		October 2,
(Millions of dollars)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	145	$	117
Operating cash flows from finance leases		5		3
Financing cash flows from finance leases		28		9
ROU assets obtained in exchange for new lease liabilities:
Operating leases	$	34	$	153
Finance leases		113		49

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill was related to an acquisition in the Pork segment of $4 million and foreign currency exchange losses of $8 million within the Commodity Trading and Milling (“CT&M”) segment. See Note 8 for further discussion of the acquisition. As of October 1, 2022, other intangible assets, included in other non-current assets, were $35 million, net of accumulated amortization of $38 million.

Income Taxes

For quarters, 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.

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Note 2 – Investments

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

	October 1,		December 31,
(Millions of dollars)	2022		2021
Domestic equity securities	$	413	$	472
Domestic debt securities		352		542
Foreign equity securities		134		193
Foreign debt securities		91		133
Money market funds held in trading accounts		20		59
Other trading securities		13		17
Total trading short-term investments	$	1,023	$	1,416

The change in unrealized gains (losses) related to trading securities still held at the end of the respective reporting period was ($65) million and ($220) million for the three and nine months ended October 1, 2022, respectively, and ($9) million and $7 million for the three and nine months ended October 2, 2021, respectively.

Seaboard had $16 million and $46 million of short-term investments denominated in foreign currencies, primarily euros, as of October 1, 2022 and December 31, 2021, respectively.

Seaboard had long-term investments of $187 million and $156 million as of October 1, 2022 and December 31, 2021, respectively, classified in other non-current assets on the consolidated balance sheets. These investments are primarily in a business development company (“BDC”), real estate and renewable energy facilities. The BDC investment is included in the fair value hierarchy table in Note 6 and the other investments are primarily accounted for under the equity method of accounting with any gains/losses recorded in other investment income (loss). During the second quarter of 2022, Seaboard committed to invest $52 million in a solar renewable energy project in Guam and received $46 million of federal investment tax credits upon commercial operation of the project that impacted Seaboard’s effective tax rate as a discrete item. Seaboard accounts for this solar investment using the flow-through method and recognized the impact of the investment tax credits in the period earned on a gross basis, with the charge related to the reduction of the investment recorded in other investment income (loss) offset by the benefit of the credits recorded in income tax benefit (expense). Seaboard funded $10 million of this commitment during the second quarter of 2022 and funded the remaining commitment of $42 million in the third quarter of 2022.

Note 3 – Inventories

The following is a summary of inventories:

	October 1,		December 31,
(Millions of dollars)	2022		2021
At lower of FIFO cost and net realizable value (“NRV”):
Hogs and materials	$	515	$	489
Pork products and materials		72		64
Grains, oilseeds and other commodities		714		634
Biofuels and related credits		167		147
Other		95		92
Total inventories at lower of FIFO cost and NRV		1,563		1,426
Grain, flour and feed at lower of weighted average cost and NRV		253		237
Total inventories	$	1,816	$	1,663

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

Lines of Credit

As of October 1, 2022, the outstanding balances under committed and uncommitted lines of credit were $143 million and $347 million, respectively. Of the total outstanding balance as of October 1, 2022, $205 million was denominated in foreign currencies with $178 million denominated in the South African rand and the remaining in various other currencies. As of December 31, 2021, the outstanding balances under committed and uncommitted lines of credit were $157 million and $359 million, respectively. Of the total outstanding balance as of December 31, 2021, $218 million was denominated in foreign currencies, with $177 million denominated in the South African rand and the remaining in various other currencies. The weighted average interest rate for outstanding lines of credit was 6.19% and 2.71% as of October 1, 2022 and December 31, 2021, respectively.

As of both October 1, 2022 and December 31, 2021, Seaboard had a committed line of credit with borrowing capacity of $250 million. During the third quarter of 2022, Seaboard amended this committed line of credit agreement to extend the maturity date to December 31, 2022, and change the interest rate index from LIBOR to SOFR (Secured Overnight Financing Rate), as LIBOR will cease to exist after June 30, 2023.

Long-term Debt

Long-term debt includes borrowings under term loans and other contractual obligations, including notes payable. The interest rate on the Term Loan due 2028 was 4.74% and 1.73% as of October 1, 2022 and December 31, 2021, respectively.

The following is a summary of long-term debt:

		October 1,		December 31,
(Millions of dollars)		2022		2021
Term Loan due 2028	$	672	$	677
Foreign subsidiary obligations		1		1
Other long-term debt		38		39
Total debt at face value		711		717
Current maturities and unamortized discount and costs		(8)		(9)
Long-term debt, less current maturities and unamortized discount and costs	$	703	$	708

Seaboard was in compliance with all restrictive debt covenants relating to these agreements as of October 1, 2022.

Legal Proceedings

Helms-Burton Act Litigation

On July 21, 2021, a lawsuit was filed by an individual, Odette Blanco de Fernandez (“Ms. de Fernandez”), and the heirs (“Inheritors”) and estates (“Estates”) of four of her siblings (Ms. de Fernandez, together with the Inheritors and the Estates being referred to as the “Plaintiffs”) against Seaboard Corporation in the U.S. District Court for the District of Delaware (the “Delaware District Court”), making claims under Title III of the Cuban Liberty and Solidarity Act of 1996, also known as the Helms-Burton Act (the “Act”). The same Plaintiffs filed a separate lawsuit against Seaboard Marine Ltd. (“Seaboard Marine”) on December 20, 2020, in the U.S. District Court for the Southern District of Florida (the “Florida District Court”).

The Act provides that any person who knowingly and intentionally “traffics” in property which was confiscated by the Cuban government may be liable to any U.S. national who acquires an ownership interest in such property for money damages in an amount equal to the greater of the current fair market value of the property or the value of the property when confiscated, plus interest from the date of confiscation, reasonable attorneys’ fees and costs, and treble damages under certain circumstances. The complaint in each of the cases alleges that the Plaintiffs acquired ownership interests to a 70-year concession to develop port facilities at Mariel Bay, Cuba, and ownership of surrounding land, and that these and other property rights were confiscated by the Cuban government in 1960. The complaints further allege that Seaboard Corporation and Seaboard Marine knowingly and intentionally “trafficked” in the confiscated property within the meaning of the Act by carrying and/or directing cargo to the Port of Mariel.

The Florida District Court in the Seaboard Marine case dismissed the claims of the Inheritors and the Estates because they did not acquire the ownership claims prior to March 1996, as required by the Act. The remaining plaintiff, Ms. de Fernandez, contends she owns 20% of the companies that were granted the concession and owned land in or around Mariel Bay, Cuba. On August 19, 2022, the Florida District Court granted Seaboard Marine’s Motion for Summary

8

Judgement and entered a Final Judgment in favor of Seaboard Marine. On September 1, 2022, the Plaintiffs appealed the Final Judgment to the United States Court of Appeals for the Eleventh Circuit. The Plaintiffs’ appeal is pending.

As to the suit against Seaboard Corporation, on October 21, 2021, the Plaintiffs filed an amended complaint which principally added allegations that there were other callings made by Seaboard Marine at the Port of Mariel and that Seaboard Corporation engaged in a pattern of doing business with individuals and entities in contravention of U.S. foreign policy. Seaboard Corporation filed a Motion to Dismiss which is pending. On September 28, 2022, the Delaware District Court stayed this lawsuit against Seaboard Corporation until 30 days after the outcome of the appeal in the Seaboard Marine case.

The operative complaints in each lawsuit seek unspecified damages (including treble damages) and pre-filing interest as provided in the Act; pre-judgment interest; attorneys’ fees, costs and expenses; and such other relief as is just and proper. Seaboard Corporation and Seaboard Marine have meritorious defenses to the claims alleged in these matters and intend to vigorously defend these matters. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome resulting from either of these suits, or to reasonably estimate the amount of potential loss or range of potential loss, if any, resulting from the suits. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and if unfavorable, could result in a material liability.

Pork Antitrust Litigation

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 with 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 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 and 2022, additional standalone plaintiffs filed similar actions in other federal courts throughout the country, several of which name Seaboard Corporation as a defendant. These actions have been or are expected to be conditionally transferred to Minnesota for pretrial proceedings pursuant to an order by the Judicial Panel on Multidistrict Litigation. Also in 2021, the states of New Mexico and Alaska filed civil cases in state court against substantially the same defendants, including Seaboard Foods LLC and Seaboard Corporation, based on substantially similar allegations.

Seaboard believes that it has meritorious defenses to the claims alleged in these matters and intends to vigorously defend these matters. 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.

Cereoil and Nolston Litigation

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 Corporation and its subsidiaries, Seaboard Overseas Limited (“SOL”) and Seaboard Uruguay Holdings Ltd. (“Seaboard Uruguay”). Seaboard Corporation has a 45% indirect ownership of Cereoil. The suit seeks an order requiring Seaboard Corporation, 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 believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. 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 plus

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interest. Any award in this case would offset against any award in the additional case described below filed by the Trustee on April 27, 2018.

On April 27, 2018, the Trustee for Cereoil filed an additional suit in the Bankruptcy Court of First Instance in Uruguay that was served during the second quarter of 2018, naming as parties Seaboard Corporation, 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 believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. 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 Corporation 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.

On September 30, 2021, HSBC Bank (Uruguay) SA (“HSBC”), a creditor in the Cereoil bankruptcy proceeding pending in Uruguay, filed a suit in the U.S. District Court for the District of Kansas (the “Kansas District Court”) against Seaboard Corporation alleging claims for breach of contract, promissory estoppel, breach of the duty of good faith and fair dealing, unjust enrichment, fraud, negligent misrepresentation and fraud by concealment based upon a comfort letter, alleged statements by Cereoil personnel (including the Chief Financial Officer serving at the behest of Seaboard), and the same grain transactions that the Trustee challenges as fraudulent conveyances in the Cereoil bankruptcy in Uruguay discussed above. HSBC seeks $10 million plus interest and other relief in excess of $3.2 million. In March 2022, Seaboard filed a motion to dismiss HSBC’s claims on various grounds. On September 23, 2022, the Kansas District Court dismissed six of HSBC’s seven claims. Three of those claims, for fraud, negligent misrepresentation and fraud by concealment, can be re-filed by HSBC in Uruguay. The other three claims, for breach of contract, breach of the duty of good faith and fair dealing and unjust enrichment, were dismissed with prejudice and cannot be re-filed unless HSBC successfully appeals the District Court order. The one claim not dismissed in this matter is for promissory estoppel. Seaboard believes that it has meritorious defenses to this claim and intends to vigorously defend it. Due to the early stage of the proceeding, it is impossible to determine the probability of a favorable or unfavorable outcome resulting from this remaining claim.

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 believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. 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, asset sales and removal of duplicative claims, is estimated to be approximately $8 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.

General

Seaboard is subject to various administrative and judicial proceedings and other legal matters related to the normal conduct of its business. 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 October 1, 2022, guarantees outstanding were not material. Seaboard has not accrued a liability for any of the guarantees as the likelihood of loss is 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. Seaboard also sponsors non-qualified, unfunded supplemental executive plans.

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