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 March ~~30, 2019~~

28, 2020

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



~~incorporation)~~	~~File Number)~~	~~Identification No.)~~


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

(913) 676-8800

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)

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 ~~1,165,821~~1,160,779 shares of common stock, $1.00 par value per share, outstanding on April ~~24, 2019.~~20, 2020.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

March 30,

March 31,

(Millions of dollars except share and per share amounts)
2019

2018

Net sales:

Products (includes affiliate sales of $320 and $306)
$
1,245

$
1,291

Services (includes affiliate sales of $4 and $2)

269

264

Other

29

24

Total net sales

1,543

1,579

Cost of sales and operating expenses:

Products

1,230

1,145

Services

240

240

Other

23

22

Total cost of sales and operating expenses

1,493

1,407

Gross income

50

172

Selling, general and administrative expenses

84

75

Operating income (loss)

(34)

97

Other income (expense):

Interest expense

(6)

(8)

Interest income

7

3

Loss from affiliates

(18)

(6)

Other investment income (loss), net

113

(37)

Foreign currency gains, net

3

4

Miscellaneous, net

—

1

Total other income (loss), net

99

(43)

Earnings before income taxes

65

54

Income tax expense

(8)

(22)

Net earnings
$
57

$
32

Less: Net loss (income) attributable to noncontrolling interests

—

—

Net earnings attributable to Seaboard
$
57

$
32

Earnings per common share
$
48.79

$
26.75

Other comprehensive income (loss), net of income tax expense of $0:

Foreign currency translation adjustment

(2)

(10)

Unrecognized pension cost

3

1

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

$
(9)

Comprehensive income

58

23

Less: Comprehensive loss (income) attributable to noncontrolling interests

—

—

Comprehensive income attributable to Seaboard
$
58

$
23

Average number of shares outstanding

1,167,430

1,170,550


	Three Months Ended
	March 28,		March 30,
(Millions of dollars except share and per share amounts)	2020		2019
Net sales:
Products (includes affiliate sales of $259 and $320)	$	1,382	$	1,245
Services (includes affiliate sales of $6 and $4)		283		269
Other		18		29
Total net sales		1,683		1,543
Cost of sales and operating expenses:
Products		1,278		1,230
Services		256		240
Other		14		23
Total cost of sales and operating expenses		1,548		1,493
Gross income		135		50
Selling, general and administrative expenses		72		84
Operating income (loss)		63		(34)
Other income (expense):
Interest expense		(5)		(6)
Interest income		7		7
Loss from affiliates		(4)		(18)
Other investment income (loss), net		(225)		113
Foreign currency gains (losses), net		(11)		3
Miscellaneous, net		1		—
Total other income (loss), net		(237)		99
Earnings (loss) before income taxes		(174)		65
Income tax benefit (expense)		71		(8)
Net earnings (loss)	$	(103)	$	57
Less: Net loss (income) attributable to noncontrolling interests		—		—
Net earnings (loss) attributable to Seaboard	$	(103)	$	57

Earnings (loss) per common share	$	(88.43)	$	48.79
Average number of shares outstanding		1,163,888		1,167,430

Other comprehensive income (loss), net of income tax expense of $0 and $0:
Foreign currency translation adjustment		3		(2)
Unrecognized pension cost		2		3
Other comprehensive income, net of tax	$	5	$	1
Comprehensive income (loss)		(98)		58
Less: Comprehensive loss (income) attributable to noncontrolling interests		—		—
Comprehensive income (loss) attributable to Seaboard	$	(98)	$	58

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

March 30,

December 31,

(Millions of dollars except share and per share amounts)
2019

2018

Assets

Current assets:

Cash and cash equivalents
$
59

$
194

Short-term investments

1,488

1,336

Receivables, net

504

551

Inventories

988

815

Other current assets

143

131

Total current assets

3,182

3,027

Property, plant and equipment, net

1,232

1,160

Operating lease right of use assets, net

464

—

Investments in and advances to affiliates

789

804

Goodwill

166

167

Other non-current assets

143

149

Total assets
$
5,976

$
5,307

Liabilities and Stockholders’ Equity

Current liabilities:

Notes payable to banks
$
252

$
148

Current maturities of long-term debt

53

39

Accounts payable

297

238

Deferred revenue

46

39

Deferred revenue from affiliates

28

31

Operating lease liabilities

101

—

Other current liabilities

259

289

Total current liabilities

1,036

784

Long-term debt, less current maturities

735

739

Deferred income taxes

139

127

Long-term income tax liability

73

73

Long-term operating lease liabilities

403

—

Other liabilities

220

255

Total non-current liabilities

1,570

1,194

Commitments and contingent liabilities

Stockholders’ equity:

Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,165,821 shares in 2019 and 1,169,217 shares in 2018

1

1

Accumulated other comprehensive loss

(409)

(410)

Retained earnings

3,768

3,727

Total Seaboard stockholders’ equity

3,360

3,318

Noncontrolling interests

10

11

Total equity

3,370

3,329

Total liabilities and stockholders’ equity
$
5,976

$
5,307


	March 28,		December 31,
(Millions of dollars except share and per share amounts)	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	101	$	125
Short-term investments		1,125		1,434
Receivables, net		691		646
Inventories		1,122		1,022
Other current assets		115		123
Total current assets		3,154		3,350
Property, plant and equipment, net		1,463		1,431
Operating lease right of use assets, net		456		446
Investments in and advances to affiliates		731		735
Goodwill		164		164
Other non-current assets		187		159
Total assets	$	6,155	$	6,285
Liabilities and Stockholders’ Equity
Current liabilities:
Lines of credit	$	339	$	246
Current maturities of long-term debt		105		62
Accounts payable		336		368
Deferred revenue		57		48
Deferred revenue from affiliates		30		32
Operating lease liabilities		114		104
Other current liabilities		293		329
Total current liabilities		1,274		1,189
Long-term debt, less current maturities		686		730
Deferred income taxes		13		76
Long-term income tax liability		62		62
Long-term operating lease liabilities		379		379
Other liabilities		304		295
Total non-current liabilities		1,444		1,542
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 2020 and 1,164,848 shares in 2019		1		1
Accumulated other comprehensive loss		(435)		(440)
Retained earnings		3,861		3,983
Total Seaboard stockholders’ equity		3,427		3,544
Noncontrolling interests		10		10
Total equity		3,437		3,554
Total liabilities and stockholders’ equity	$	6,155	$	6,285

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended

March 30,

March 31,

(Millions of dollars)
2019

2018

Cash flows from operating activities:

Net earnings
$
57

$
32

Adjustments to reconcile net earnings to cash from operating activities:

Depreciation and amortization

34

32

Deferred income taxes

7

7

Loss from affiliates

18

6

Dividends received from affiliates

2

2

Other investment loss (income), net

(113)

37

Other, net

—

(1)

Changes in assets and liabilities, net of acquisitions:

Receivables, net of allowance

37

(88)

Inventories

(170)

2

Other current assets

(10)

42

Current liabilities, exclusive of debt

24

(67)

Other, net

7

4

Net cash from operating activities

(107)

8

Cash flows from investing activities:

Purchase of short-term investments

(577)

(254)

Proceeds from the sale of short-term investments

382

537

Proceeds from the maturity of short-term investments

153

9

Capital expenditures

(83)

(36)

Cash paid for acquisition of businesses

—

(270)

Investments in and advances to affiliates, net

—

(17)

Principal payments received on notes receivable from affiliates

—

4

Purchase of long-term investments

(6)

(3)

Other, net

4

1

Net cash from investing activities

(127)

(29)

Cash flows from financing activities:

Notes payable to banks, net

104

39

Proceeds from long-term debt

14

—

Principal payments of long-term debt

(2)

(32)

Repurchase of common stock

(13)

—

Dividends paid

(3)

(2)

Other, net

(1)

—

Net cash from financing activities

99

5

Effect of exchange rate changes on cash and cash equivalents

—

—

Net change in cash and cash equivalents

(135)

(16)

Cash and cash equivalents at beginning of year

194

116

Cash and cash equivalents at end of period
$
59

$
100


	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Cash flows from operating activities:
Net earnings (loss)	$	(103)	$	57
Adjustments to reconcile net earnings (loss) to cash from operating activities:
Depreciation and amortization		36		34
Deferred income taxes		(64)		7
Loss from affiliates		4		18
Dividends received from affiliates		5		2
Other investment loss (income), net		225		(113)
Other, net		5		—
Changes in assets and liabilities:
Receivables, net of allowance for credit losses		(48)		37
Inventories		(102)		(170)
Other assets		(1)		(5)
Other liabilities, exclusive of debt		(63)		26
Net cash from operating activities		(106)		(107)
Cash flows from investing activities:
Purchase of short-term investments		(200)		(577)
Proceeds from the sale of short-term investments		284		382
Proceeds from the maturity of short-term investments		17		153
Capital expenditures		(55)		(83)
Investments in and advances to affiliates, net		(5)		—
Purchase of long-term investments		(35)		(6)
Other, net		—		4
Net cash from investing activities		6		(127)
Cash flows from financing activities:
Lines of credit, net		96		104
Proceeds from long-term debt		4		14
Principal payments of long-term debt		(6)		(2)
Repurchase of common stock		(13)		(13)
Dividends paid		(3)		(3)
Other, net		(1)		(1)
Net cash from financing activities		77		99
Effect of exchange rate changes on cash and cash equivalents		(1)		—
Net change in cash and cash equivalents		(24)		(135)
Cash and cash equivalents at beginning of year		125		194
Cash and cash equivalents at end of period	$	101	$	59

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Stockholders’ Equity

(Unaudited)

Accumulated

Other

Common

Comprehensive

Retained

Noncontrolling

(Millions of dollars)

Stock

Loss

Earnings

Interests

Total

Balances, December 31, 2017

$
1

$
(354)

$
3,750

$
11

$
3,408

Adoption of accounting guidance

—

(7)

7

—

—

Addition to noncontrolling interests

—

—

—

4

4

Comprehensive income:

Net earnings

—

—

32

—

32

Other comprehensive loss, net of tax

—

(9)

—

—

(9)

Dividends on common stock ($1.50/share)

—

—

(2)

—

(2)

Balances, March 31, 2018

$
1

$
(370)

$
3,787

$
15

$
3,433

Balances, December 31, 2018

$
1

$
(410)

$
3,727

$
11

$
3,329

Reduction to noncontrolling interests

—

—

—

(1)

(1)

Comprehensive income:

Net earnings

—

—

57

—

57

Other comprehensive income, net of tax

—

1

—

—

1

Repurchase of common stock

—

—

(13)

—

(13)

Dividends on common stock ($2.25/share)

—

—

(3)

—

(3)

Balances, March 30, 2019

$
1

$
(409)

$
3,768

$
10

$
3,370


			Accumulated
			Other
	Common		Comprehensive		Retained		Noncontrolling
(Millions of dollars)	Stock		Loss		Earnings		Interests		Total
Balances, December 31, 2018	$	1	$	(410)	$	3,727	$	11	$	3,329
Reduction to noncontrolling interests		—		—		—		(1)		(1)
Comprehensive income:
Net earnings		—		—		57		—		57
Other comprehensive income, net of tax		—		1		—		—		1
Repurchase of common stock		—		—		(13)		—		(13)
Dividends on common stock ($2.25/share)		—		—		(3)		—		(3)
Balances, March 30, 2019	$	1	$	(409)	$	3,768	$	10	$	3,370

Balances, December 31, 2019	$	1	$	(440)	$	3,983	$	10	$	3,554
Adoption of accounting guidance (see Note 1)		—		—		(3)		—		(3)
Comprehensive 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)	$	3,861	$	10	$	3,437

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, ~~2018~~2019 as filed in its annual report on Form 10-K. ~~Seaboard��s~~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) that, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Except for new guidance adopted prospectively as discussed below, Seaboard has consistently applied all accounting policies as disclosed in the annual report on Form 10-K to all periods presented in these condensed consolidated financial statements. 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 United States (“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,~~credit losses on receivables, valuation of inventories, impairment of long-lived assets, intangibles and goodwill, potential write-down related to investments in and advances to affiliates and notes receivable from affiliates, income taxes, lease liabilities and right of use (“ROU”) assets and accrued pension liability. Actual results could differ from those estimates.

Supplemental Cash Flow Information

Non-cash investing ~~and financing~~ activities included purchases of property, plant and equipment in accounts payable of ~~$8 million~~$5 million.

The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the ~~impact upon adoption~~amortization of ~~the new leasing guidance further discussed below. During the three months ended March 30, 2019, $30 million of operating lease~~ ROU assets ~~were obtained~~and changes in ~~exchange for new operating lease liabilities. Cash paid for amounts included in the measurement of~~ operating lease liabilities in other liabilities, exclusive of debt in the condensed consolidated statements of cash flows.


	Three months ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	35	$	33
Operating cash flows from finance leases		1		—
Financing cash flows from finance leases		1		—

Operating right of use assets obtained in exchange for new operating lease liabilities	$	38	$	30
Finance right of use assets obtained in exchange for new finance lease liabilities		8		—

Leases

Seaboard’s operating lease assets and liabilities are reported separately in the condensed consolidated balance sheets. The classification of Seaboard’s finance leases in the condensed consolidated balance sheets was ~~$33 million, all included in net cash from operating activities.~~as follows:


		March 28,		December 31,
(Millions of dollars)		2020		2019
Finance lease right of use assets, net	Property, plant and equipment, net	$	57	$	50
Finance lease liabilities	Other current liabilities		6		5
Non-current finance lease liabilities	Other liabilities		46		40

Goodwill and Other Intangible Assets

The ~~change~~activity in the carrying amount of goodwill ~~of $1 million from year-end to March 30, 2019 was related to~~included foreign currency exchange differences of $1 million that were offset by an acquisition-related adjustment, all within the Commodity Trading and Milling (“CT&M”) segment. See Note 10 for further information on this acquisition-related adjustment. As of March ~~30, 2019,~~28, 2020, intangible assets, included in other non-current assets, were ~~$66~~$58 million, net of accumulated amortization of $8$10 million.

~~Recently Issued~~ Accounting Standard Adopted During 2020

On January 1, ~~2019,~~2020, Seaboard adopted ~~new~~ guidance which requires the ~~recognition~~use of ~~ROU assets~~a new current expected credit loss ("CECL") model in order to determine the allowance for credit losses with respect to accounts receivable and ~~lease liabilities for all leases with terms longer than 12 months.~~notes receivable, among other financial instruments. The CECL model estimates the lifetime of expected credit loss based on historical experience, current conditions and reasonable supportable forecasts 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.

Management believes that Seaboard’s receivables have low risk due to credit granting policies, relationships established with its customers and quick billing and collection cycles. The other receivables are primarily statutory with the U.S. government or other governments and management believes that these bear little to no risk. Management monitors the credit quality of these different receivable types by frequent customer discussions, following economic and industry trends and specific customer data.

Seaboard used the loss-rate method in developing its allowance for credit losses, which involved identifying pools of assets with similar risk characteristics, reviewing historical losses within the last five years and consideration for any reasonable supportable forecasts of economic indicators. Changes in estimates, developing trends and other new information can have a material effect on future evaluations. The activity within the allowance for credit losses on receivables was immaterial for the three months ended March 28, 2020.

Recently Issued Accounting Standard Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies the accounting for income taxes by removing certain exceptions to the general principles and improves consistent application of GAAP for other areas by clarifying and amending existing guidance. This guidance is effective for Seaboard on January 1, ~~2019,~~2021. Seaboard ~~recorded operating lease ROU assets~~is evaluating the effect of ~~$460 million, adjusted for the deferred rent liability balance at year-end, and lease liabilities of $498 million. The~~adopting this new accounting guidance but does not expect adoption ~~of the new guidance did not~~will have a material impact on ~~the condensed consolidated statement of comprehensive income~~its financial statements and the condensed consolidated statement of cash flows. The accounting for finance leases, formerly called capital leases, remained substantially unchanged. Seaboard adopted the new guidance using the effective date method and, therefore, prior period financials were not revised. Seaboard elected the package of practical expedients available upon transition, which permitted Seaboard to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. All of Seaboard’s equity method investments must adopt the new standard by December 31, 2020. See Note 4 for additional details on the impact of adopting this new accounting standard.disclosures.

Note 2 – Investments

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



	March 28,		December 31,
(Millions of dollars)	2020		2019
Domestic equity securities	$	473	$	706
Domestic debt securities		360		409
Foreign equity securities		147		189
Foreign debt securities		54		43
High yield securities		51		56
Money market funds held in trading accounts		23		12
Collateralized loan obligations		13		15
Other trading securities		4		4
Total trading short-term investments	$	1,125	$	1,434

March 30,

December 31,

(Millions of dollars)

2019

2018

Domestic equity securities

$
714

$
632

Domestic debt securities

396

268

Foreign equity securities

222

218

High yield securities

65

19

Foreign debt securities

40

16

Collateralized loan obligations

27

28

Money market funds held in trading accounts

10

146

Term deposits

9

9

Other trading securities

5

—

Total trading short-term investments

$
1,488

$
1,336

The change in unrealized gains (losses) related to trading securities still held at the end of the respective reporting period was ~~$104~~$(236) million and ~~$(22)~~$104 million for the three months ended March ~~30, 2019~~28, 2020 and March ~~31, 2018,~~30, 2019, respectively.

Seaboard had ~~$57~~$47 million of equity securities denominated in foreign currencies as of March ~~30, 2019,~~28, 2020, with ~~$27~~$23 million in euros, ~~$11~~$10 million in Japanese yen, $9$5 million in British pounds ~~$3 million in Swiss francs~~ and the remaining $7$9 million in various other currencies. As of December 31, ~~2018,~~2019, Seaboard had ~~$66~~$62 million of equity securities denominated in foreign currencies, with ~~$25~~$32 million in euros, ~~$20~~$12 million in Japanese yen, $9$8 million in British ~~pounds, $3 million in Swiss francs~~pound and the remaining $9$10 million in various other currencies. ~~Also, money market funds included less than $1~~Seaboard had $13 million ~~and $10 million~~of debt securities denominated in ~~various foreign currencies~~euros as of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, respectively. ~~Term deposits are denominated in the West African franc.~~

Note 3 – Inventories

The following is a summary of inventories:



	March 30,		December 31,


					March 28,		December 31,
(Millions of dollars)	2019		2018		2020		2019
At lower of LIFO cost or market:
Hogs and materials	$	374	$	361	$	394	$	387
Fresh pork and materials		41		36		48		46
LIFO adjustment		(58)		(58)		(63)		(64)
Total inventories at lower of LIFO cost or market		357		339		379		369
At lower of FIFO cost and net realizable value:
Grains, oilseeds and other commodities		361		229		425		353
Sugar produced and in process		26		17		26		17
Other		85		81		117		109
Total inventories at lower of FIFO cost and net realizable value		472		327		568		479
Grain, flour and feed at lower of weighted average cost and net realizable value		159		149		175		174
Total inventories	$	988	$	815	$	1,122	$	1,022

Note 4 – ~~Leases~~

~~Seaboard has operating leases primarily for land, buildings, machinery and equipment and vessels. Seaboard had no material finance leases as~~Lines of March 30, 2019. Seaboard’s Marine segment leases its PortMiami terminal, among other ports. The Pork segment has contract grower agreements in place with farmers to raise a portion of Seaboard’s hogs using the farmer’s buildings, land and equipment. The Marine and CT&M segments lease vessels for use in operations. Seaboard elected to account for lease and nonlease maintenance components as a single lease component for all classes of underlying assets. Seaboard’s nonlease components are primarily for services related to labor associated with caring for hogs in its contract grower agreements and crew services on vessel charter arrangements.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. As of March 30, 2019, the weighted average remaining lease term for Seaboard’s operating leases was approximately 7 years. Seaboard’s lease terms vary depending upon the class of asset and some leases include options to extend or terminate. Since Seaboard is not reasonably certain to exercise these renewal or termination options, the options are not considered in determining the lease term, and associated potential option payments or penalties are excluded from lease payments. Seaboard has elected not to recognize ROU assets and lease liabilities for short-term leases for all classes of underlying assets. Short-term leases are leases with terms greater than one month, but less than 12 months.

~~Maturities of operating lease liabilities as of March 30, 2019 were as follows:~~

(Millions of dollars)

Remainder of 2019

$
99

2020

110

2021

97

2022

72

2023

51

Thereafter

205

Total undiscounted lease payments

634

Less imputed interest

(130)

Total operating lease liability

$
504

Seaboard’s weighted average discount rate for operating leases was 6.76% as of March 30, 2019. There were estimates and judgments made in determining Seaboard’s multiple discount rates based on term, country and currency, including developing a secured credit rating and spreading market yield data across maturities and country risk-free rates.

Below is Seaboard’s commitments table as of December 31, 2018, that disclosed operating lease payments for the next five years and thereafter. Seaboard had no material capital leases as of December 31, 2018.

Years ended December 31,

(Millions of dollars)

2019

2020

2021

2022

2023

Thereafter

Ports

$
18

$
18

$
19

$
19

$
20

$
109

Vessel, time and voyage-charters

58

27

26

13

8

25

Contract grower agreements

47

41

37

27

18

61

Other operating lease payments

18

13

9

8

6

15

Total unrecognized non-cancelable commitments

$
141

$
99

$
91

$
67

$
52

$
210

~~The components of lease cost for the three months ended March 30, 2019, were as follows:~~

(Millions of dollars)

Operating lease cost

$
33

Variable lease cost

3

Short-term lease cost

10

Total lease cost

$
46

Operating lease cost is recognized on a straight-line basis over the lease term. Variable lease payments associated with the Company’s leases are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments on leased assets are primarily for payments in excess of minimums with regards to throughput of containers at PortMiami. Short-term leases are primarily for containers and vessels at Seaboard’s Marine segment. Rental expense for leases with terms of a month or less are excluded from the total lease cost above.

~~Note 5 – Notes Payable,~~Credit, Long-term Debt, Commitments and Contingencies

~~Notes Payable~~Lines of Credit

~~Notes payable~~The outstanding balance under uncommitted and committed lines of credit ~~lines~~ was ~~$192~~$269 million and $70 million, respectively, as of March ~~30, 2019, of which $153~~28, 2020. Of the outstanding balance, $89 million was ~~related to~~denominated in foreign ~~subsidiaries,~~currencies with ~~$109~~$54 million denominated in the South African rand, ~~$21~~$23 million denominated in the Canadian dollar, ~~$19~~$6 million denominated in ~~Zambian kwacha~~the Argentine peso and $4$6 million denominated in the Brazilian real. The outstanding balance under uncommitted and committed lines of credit was $246 million and $0 million, respectively, as of December 31, 2019.

The weighted average interest rate for outstanding ~~notes payable~~lines of credit was ~~6.22%~~3.22% and ~~7.76%~~5.79% as of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, respectively. The ~~notes payable under the~~ uncommitted lines of credit ~~lines~~ are unsecured and do not require compensating ~~balances. Also, Seaboard has a~~balances, but the $100 million committed credit line is secured by ~~certain~~ short-term investments with $60 million outstanding as of March 30, 2019. Seaboard’s borrowing capacity under its uncommitted and committed lines was reduced by the outstanding balances and letters of credit totaling $18 million as of March 30, 2019.investments.

Long-term Debt

Long-term ~~Debt~~

debt includes borrowings under term loans and other contractual obligations for payment, including notes payable. The following is a summary of long-term debt:

March 30,

December 31,
(Millions of dollars)

2019

2018
Term Loan due 2028

$
696

$
698

Foreign subsidiary obligations due 2019 through 2023

93

81

Total long-term debt at face value

789

779

Current maturities of long-term debt and unamortized discount and costs

(54)

(40)

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

$
735

$
739



		March 28,		December 31,
(Millions of dollars)		2020		2019
Term Loan due 2028	$	691	$	691
Foreign subsidiary obligations		101		102
Total long-term debt at face value		792		793
Current maturities of long-term debt and unamortized discount and costs		(106)		(63)
Long-term debt, less current maturities and unamortized discount and costs	$	686	$	730

The interest rate on the Term Loan due 2028 was ~~4.12%~~3.23% and ~~4.15%~~3.42% as of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, respectively. The weighted average interest rate on Seaboard’s foreign subsidiary obligations was ~~3.97%~~3.47% and ~~3.80%~~3.50% as of March ~~30, 2019~~28, 2020 and December 31, 2018, respectively. Seaboard was in compliance with all restrictive debt covenants

relating to these agreements as of March ~~30, 2019.~~28, 2020. The increase in current maturities of long-term debt is due to the 2018 acquisition seller-financed note payable with a balance of $44 million as of March 28, 2020 maturing on January 5, 2021.

~~Contingencies~~Legal Proceedings

On June 28, 2018, Wanda Duryea and ~~eleven~~11 other indirect purchasers of pork products, acting on behalf of themselves and a putative class of 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. Subsequent to the filing of this initial complaint, additional class action complaints making similar claims on behalf of putative classes of direct and indirect purchasers were filed in the ~~U.S.~~ District ~~Court~~Court. The complaints were amended and consolidated for pre-trial purposes, into 3 consolidated putative class actions brought on behalf of (a) direct purchasers, (b) consumer indirect purchasers and (c) commercial and institutional indirect purchasers. The amended complaints named Seaboard Corporation as an additional defendant. The consolidated actions are styled In re Pork Antitrust Litigation. Subsequent to the original filings, two additional actions making similar claims, including one by the Commonwealth of Puerto Rico, were brought in or transferred to the District ~~of Minnesota.~~Court. The complaints ~~allege,~~alleged, 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 ~~include~~included causes of action under various state laws, including state antitrust laws, unfair competition laws, consumer protection statutes and state common law claims for unjust enrichment. The complaints also ~~allege~~alleged that the defendants concealed this conduct from the plaintiffs and the members of the putative classes. The relief sought in the respective complaints includes treble damages, injunctive relief, pre- and post-judgment interest, costs

and attorneys’ fees on behalf of the putative classes. On August 8, 2019, the District Court granted defendants’ motion to dismiss the class action cases while giving the plaintiffs leave to amend. The ~~complaints were amended and consolidated,~~classes and the ~~cases are now organized into three consolidated putative class actions brought on behalf of (a) direct purchasers, (b)~~other two plaintiffs filed amended complaints in November and December 2019. In addition to amending the original claims, the consumer indirect purchasers ~~and (c) commercial and institutional indirect purchasers. The~~have asserted a new claim alleging that the exchange of information by defendants through Agri Stats Inc. unreasonably restrained trade. On January 15, 2020, the defendants, including Seaboard, moved to dismiss the amended ~~complaints named Seaboard Corporation as an additional defendant.~~ complaints. Seaboard intends to defend 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.

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 of approximately $10 million, plus accrued interest, has threatened to bring legal action in the U.S. against Seaboard alleging on various legal theories that Seaboard is responsible for this same indebtedness. 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.

On September 18, 2014, and subsequently in 2015 and 2016, Seaboard received a number of grand jury subpoenas and informal requests for information from the Department of Justice, Asset Forfeiture and Money Laundering Section (“AFMLS”), seeking records related to specified foreign companies and individuals. The companies and individuals as to which the requested records relate were not affiliated with Seaboard, although Seaboard has also received subpoenas and requests for additional information relating to an affiliate of Seaboard. During 2017, Seaboard received grand jury subpoenas requesting documents and information related to money transfers and bank accounts in the Democratic Republic of Congo (“DRC”) and other African countries and requests to interview certain Seaboard employees and to obtain testimony before a grand jury. Seaboard has retained outside counsel and is cooperating with the government’s investigation. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome or to estimate the amount of potential loss, if any, resulting from the government’s inquiry.

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 the non-consolidated affiliates and third-party contractors who perform services for Seaboard have bank debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in order to further Seaboard’s business objectives. Seaboard does not issue guarantees of third parties for compensation. As of March ~~30, 2019,~~28, 2020, 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. ~~See~~ ~~Notes Payable~~ ~~above for discussion of letters of credit.~~

Note 65 – Employee Benefits

Seaboard has a defined benefit pension plan for certain of its domestic salaried and clerical employees. At this time, no contributions are expected to be made to the plan in ~~2019.~~2020. 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.

Of the total net periodic benefit cost presented in the table below, the service cost component is recorded in either cost of sales or selling, general and administrative expenses depending upon the employee. The other components of net periodic benefit cost are recorded in miscellaneous, net in the condensed consolidated statements of comprehensive income.

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

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Components of net periodic benefit cost:

Service cost

$
2

$
3

Interest cost

3

3

Expected return on plan assets

(2)

(3)

Amortization and other

1

1

Net periodic benefit cost

$
4

$
4



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Components of net periodic benefit cost:
Service cost	$	3	$	2
Interest cost		3		3
Expected return on plan assets		(3)		(2)
Amortization and other		3		1
Net periodic benefit cost	$	6	$	4

1110

Note 76 – Derivatives and Fair Value of Financial Instruments

~~Seaboard uses a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad levels:~~

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

~~Level 2:~~ 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 tables shows assets and liabilities measured at fair value on a recurring basis as of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, 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.

Balance






March 30,

(Millions of dollars)

2019

Level 1
Level 2
Level 3

Assets:

Trading securities – short-term investments:

Domestic equity securities

$
714

$
714

$
—

$
—

Domestic debt securities

396

116

280

—

Foreign equity securities

222

222

—

—

High yield securities

65

10

55

—

Foreign debt securities

40

2

38

—

Collateralized loan obligations

27

—

27

—

Money market funds held in trading accounts

10

10

—

—

Term deposits

9

9

—

—

Other trading securities

5

5

—

—

Trading securities – other current assets:

Domestic equity securities

35

35

—

—

Money market fund held in trading accounts

2

2

—

—

Foreign equity securities

2

2

—

—

Fixed income securities

2

2

—

—

Other

1

1

—

—

Derivatives:

Commodities (1)

1

1

—

—

Foreign currencies

4

—

4

—

Total assets

$
1,535

$
1,131

$
404

$
—

Liabilities:

Contingent consideration

$
13

$
—

$
—

$
13

Derivatives:

Commodities (1)

29

29

—

—

Total liabilities

$
42

$
29

$
—

$
13

⁽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 March 30, 2019, the commodity derivatives had a margin account balance of $67 million resulting in a net other current asset in the condensed consolidated balance sheet of $39 million.



	Balance
	March 28,
(Millions of dollars)	2020		Level 1		Level 2		Level 3
Assets:
Trading securities – short-term investments:
Domestic equity securities	$	473	$	473	$	—	$	—
Domestic debt securities		360		117		243		—
Foreign equity securities		147		147		—		—
Foreign debt securities		54		—		54		—
High yield securities		51		9		42		—
Money market funds held in trading accounts		23		23		—		—
Collateralized loan obligations		13		—		13		—
Other trading securities		6		6		—		—
Trading securities – other current assets:
Domestic equity securities		33		33		—		—
Money market fund held in trading accounts		5		5		—		—
Foreign equity securities		2		2		—		—
Fixed income securities		3		2		1		—
Long-term equity investment		29		—		—		29
Derivatives:
Commodities		14		14		—		—
Foreign currencies		5		—		5		—
Total assets	$	1,218	$	831	$	358	$	29
Liabilities:
Trading securities – short-term investments:
Other trading securities	$	2	$	—	$	2	$	—
Contingent consideration		14		—		—		14
Derivatives:
Commodities		5		5		—		—
Foreign currencies		1		—		1		—
Total liabilities	$	22	$	5	$	3	$	14

1211



	Balance
	December 31,
(Millions of dollars)	2019		Level 1		Level 2		Level 3
Assets:
Trading securities – short-term investments:
Domestic equity securities	$	706	$	706	$	—	$	—
Domestic debt securities		409		117		292		—
Foreign equity securities		189		189		—		—
High yield securities		56		10		46		—
Foreign debt securities		43		—		43		—
Collateralized loan obligations		15		—		15		—
Money market funds held in trading accounts		12		12		—		—
Other trading securities		4		4		—		—
Trading securities – other current assets:
Domestic equity securities		40		40		—		—
Money market fund held in trading accounts		6		6		—		—
Foreign equity securities		3		3		—		—
Fixed income securities		2		2		—		—
Derivatives:
Commodities		6		6		—		—
Total assets	$	1,491	$	1,095	$	396	$	—
Liabilities:
Contingent consideration	$	13	$	—	$	—	$	13
Derivatives:
Commodities		4		4		—		—
Foreign currencies		3		—		3		—
Total liabilities	$	20	$	4	$	3	$	13

Balance






December 31,

(Millions of dollars)

2018

Level 1
Level 2
Level 3

Assets:

Trading securities – short-term investments:

Domestic equity securities

$
632

$
632

$
—

$
—

Domestic debt securities

268

215

53

—

Foreign equity securities

218

218

—

—

Money market funds held in trading accounts

146

146

—

—

Collateralized loan obligations

28

—

28

—

High yield securities

19

7

12

—

Foreign debt securities

16

2

14

—

Term deposits

9

9

—

—

Other trading securities

5

5

—

—

Trading securities – other current assets:

Domestic equity securities

32

32

—

—

Money market fund held in trading accounts

5

5

—

—

Foreign equity securities

3

3

—

—

Fixed income securities

3

3

—

—

Other

1

1

—

—

Derivatives:

Commodities (1)

6

4

2

—

Foreign currencies

2

—

2

—

Total assets

$
1,393

$
1,282

$
111

$
—

Liabilities:

Trading securities – short-term investments:

Other trading securities

$
5

$
—

$
5

$
—

Contingent consideration

13

—

—

13

Derivatives:

Commodities (1)

4

4

—

—

Total liabilities

$
22

$
4

$
5

$
13

⁽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, 2018, the commodity derivatives had a margin account balance of $15 million resulting in a net other current asset in the condensed consolidated balance sheet of $17 million.

Financial instruments consisting of cash and cash equivalents, net receivables, ~~notes payable~~lines of credit and accounts payable are carried at cost, which approximates fair value as a result of the short-term nature of the instruments. The fair value of short-term investments is measured using multiple levels. Domestic debt securities categorized as level 1 in the fair value hierarchy include debt securities held in mutual funds and ETFs. Domestic debt securities categorized as level 2 include corporate bonds, mortgage-backed securities, asset-backed securities and U.S. Treasuries. Foreign debt securities categorized as level 1 in the fair value hierarchy include debt securities held in mutual funds and ETFs with a country of origin concentration outside the U.S. Foreign debt securities categorized as level 2 include foreign government or government related securities and asset-backed securities with a country of origin concentration outside the U.S. High yield securities categorized as level 1 in the fair value hierarchy include high yield securities held in mutual funds and ETFs, and level 2 includes corporate bonds and bank loans.

During the first quarter of 2020, Seaboard invested $30 million in a financial services company that primarily lends to and invests in debt securities of privately held companies. This long-term investment is classified in “Other non-current assets” and is valued at net asset value (“NAV”), adjusted for specific liquidity factors, resulting in level 3 classification.

The fair value of long-term debt is estimated by comparing interest rates for debt with similar terms and maturities. As Seaboard’s long-term debt is mostly variable-rate, the carrying amount approximates fair value. If Seaboard’s long-term debt was measured at fair value in its condensed consolidated balance sheets, it would have been classified as level 2 in the fair value hierarchy. The fair value of Seaboard’s contingent consideration related to a 2018 acquisition was classified as a level 3 in the fair value hierarchy since the calculation is dependent upon projected company specific inputs using a Monte Carlo simulation. Seaboard ~~will remeasure~~remeasures the estimated fair value of the contingent consideration liability until settled with adjustments included in net earnings (loss). The increase in the liability for the first quarter of 2020 was related to ~~a 2018 acquisition until settled.~~lower interest rates at the measurement date.

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. As the derivatives discussed below are not accounted for as hedges, fluctuations in the related commodity prices, foreign currency exchange rates and equity prices could have a material impact on earnings in any given period. The nature of Seaboard’s market risk exposure has not changed materially since December 31, ~~2018.~~2019.

Commodity Instruments

Seaboard uses various derivative futures and options to manage its risk of price fluctuations for raw materials and other inventories, finished product sales and firm sales commitments. As of March ~~30,~~28, 2020, Seaboard had open net derivative contracts to purchase 20 million pounds of soybean oil and 16 million bushels of grain. As of December 31, 2019, Seaboard had open net derivative contracts to purchase 3717 million bushels of grain and open net derivative contracts to sell ~~343 million pounds of hogs, 60~~132 million pounds of soybean oil and 3 million gallons of heating oil. As of December 31, 2018, Seaboard had open net derivative contracts to purchase 33 million bushels of grain and 8 million pounds of soybean oil and open net derivative contracts to sell 26 million pounds of hogs and 712 million gallons of heating oil. Commodity derivatives are recorded at fair value with any changes in fair value being marked-to-market as a component of cost of sales in the condensed consolidated statements of comprehensive income.

Foreign Currency Exchange Agreements

Seaboard enters into foreign currency exchange agreements to manage the foreign currency exchange rate risk with respect to certain transactions denominated in foreign currencies. Foreign currency exchange agreements that are primarily related to an underlying commodity transaction are recorded at fair value with changes in value marked-to-market as a component of cost of sales in the condensed consolidated statements of comprehensive income. Foreign currency exchange agreements that are not related to an underlying commodity transaction are recorded at fair value with changes in value marked-to-market as a component of foreign currency gains (losses), net in the condensed consolidated statements of comprehensive income. As of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, Seaboard had foreign currency exchange agreements to cover a portion of its firm sales and purchase commitments and related trade receivables and payables with net notional amounts of ~~$80~~$27 million and ~~$82~~$78 million, respectively, primarily related to the South African rand, Canadian dollar and euro. From time to time Seaboard is subject to counterparty credit risk related to its foreign currency exchange agreements should the counterparties fail to perform according to the terms of the contracts. As of March ~~30, 2019,~~28, 2020, Seaboard had a maximum aggregate amount of loss due to credit risk of $4$5 million with ~~four~~5 counterparties related to foreign currency exchange agreements. Seaboard does not hold any collateral related to these agreements.

Equity Futures Contracts

Seaboard enters into equity futures contracts to manage the equity price risk with respect to certain short-term investments. Equity futures contracts are recorded at fair value with changes in value marked-to-market as a component of other investment income (loss) in the condensed consolidated statements of comprehensive income. The notional amounts of these equity future contracts were $2$20 million and ~~$97~~$0 million as of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, respectively.

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:

Three Months Ended

March 30,

March 31,

(Millions of dollars)



2019

2018

Commodities

Cost of sales

$
(32)

$
9

Foreign currencies

Cost of sales

3

(6)

Equity

Other investment income (loss), net

(3)

(10)



		Three Months Ended
		March 28,		March 30,
(Millions of dollars)		2020		2019
Commodities	Cost of sales	$	21	$	(32)
Foreign currencies	Cost of sales		12		3
Foreign currencies	Foreign currency gains, net		1		—
Equity	Other investment income (loss), net		28		(3)

The following table provides the fair value of each type of derivative held and where each derivative is included in the condensed consolidated balance sheets:



		Asset Derivatives					Liability Derivatives
		March 30,		December 31,			March 30,		December 31,


												Asset Derivatives					Liability Derivatives
												March 28,		December 31,			March 28,		December 31,
(Millions of dollars)		2019		2018			2019		2018			2020		2019			2020		2019
Commodities (1)	Other current assets	$	1	$	6	Other current liabilities	$	29	$	4	Other current assets	$	14	$	6	Other current liabilities	$	5	$	4
Foreign currencies	Other current assets		4		2	Other current liabilities		—		—	Other current assets		5		—	Other current liabilities		1		3
Equity (1)	Short-term investments		—		—	Short-term investments		—		5	Short-term investments		—		—	Short-term investments		2		—

(1)

⁽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 March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, the commodity derivatives had a margin account balance of ~~$67 million and $15~~$13 million, respectively, resulting in a net other current asset in the condensed consolidated balance sheets of ~~$39~~$22 million and ~~$17~~$15 million, respectively. Seaboard’s equity derivatives are also presented on a net basis, including netting the derivatives within short-term investments.

Note 87 – Stockholders’ Equity and Accumulated Other Comprehensive Loss

In October ~~2017,~~2019, the Board of Directors extended through October 31, ~~2019 the~~2020 Seaboard’s share repurchase ~~program initially established in November 2009.~~program. Under this share repurchase program, Seaboard is authorized to repurchase its common stock from time to time in open market or privately negotiated purchases, which may be above or below the traded market price. During the period that the share repurchase program remains in effect, from time to time, Seaboard may enter into a 10b5-1 plan authorizing a third party to make such purchases on behalf of Seaboard. All stock repurchased will be made in compliance with applicable legal requirements and funded by cash on hand. The timing of the repurchases and the number of shares repurchased at any given time will depend upon market conditions, compliance with ~~Securities and Exchange Commission~~SEC regulations, and other factors. The Board of Directors’ stock repurchase authorization does not obligate Seaboard to acquire a specific amount of common stock, and the stock repurchase program may be suspended at any time at Seaboard’s discretion. As of March ~~30, 2019, $82~~28, 2020, $65 million remained available for repurchase under this program. Seaboard repurchased ~~3,396~~4,069 shares of common stock at a total price of $13 million during the three months ended March ~~30, 2019.~~28, 2020.

The changes in the components of other comprehensive loss, net of related taxes, are as follows:

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Foreign currency translation adjustment

$
(2)

$
(10)

Unrecognized pension cost

3

1

Other comprehensive loss, net of tax

$
1

$
(9)



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Foreign currency translation adjustment	$	3	$	(2)
Unrecognized pension cost ^(a)		2		3
Other comprehensive loss, net of tax	$	5	$	1

(a)

Primarily represents amounts reclassified from accumulated other comprehensive loss to net periodic pension cost representing the amortization of actuarial losses (gains) and other adjustments.

The components of accumulated other comprehensive loss, net of related taxes, ~~are~~were as follows:

March 30,

December 31,

(Millions of dollars)

2019

2018

Cumulative foreign currency translation adjustment

$
(351)

$
(349)

Unrecognized pension cost

(58)

(61)

Total accumulated other comprehensive loss

$
(409)

$
(410)



	March 28,		December 31,
(Millions of dollars)	2020		2019
Cumulative foreign currency translation adjustment	$	(366)	$	(369)
Cumulative unrecognized pension cost		(69)		(71)
Total accumulated other comprehensive loss	$	(435)	$	(440)

The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange fluctuation on the net assets of the Sugar and Alcohol segment. However, effective in the third quarter of 2018, the Sugar and Alcohol segment’s functional currency changed from the Argentine peso to the U.S. dollar due to highly inflationary accounting. For the three months ended March 30, 2019, less than $1 million of income taxes for foreign currency translation was recorded because substantially all of the cumulative foreign currency translation adjustment related to foreign subsidiaries for which no tax benefit was recorded.

As of March 30, 2019 and March 31, 2018, income taxes for the cumulative unrecognized pension cost were recorded using a 26% effective tax rate except for unrecognized pension cost of $21 million related to employees at certain subsidiaries for which no tax benefit was recorded.

Note 98 – Revenue Recognition

Seaboard has multiple segments with diverse revenue streams. The following ~~table presents~~tables present Seaboard’s sales disaggregated by revenue source and segment:



		Three Months Ended March 28, 2020
(Millions of dollars)		Pork		Commodity Trading & Milling		Marine		Sugar and Alcohol		Power		All Other		Consolidated Totals
Major Products/Services Lines:
Products	$	405	$	910	$	—	$	21	$	—	$	6	$	1,342
Transportation		2		—		269		—		—		—		271
Energy		40		—		—		1		17		—		58
Other		8		4		—		—		—		—		12
Segment/Consolidated Totals	$	455	$	914	$	269	$	22	$	17	$	6	$	1,683

Three Months Ended March 30, 2019

(Millions of dollars)

Pork

Commodity Trading & Milling

Marine

Sugar and Alcohol

Power

All Other

Consolidated Totals

Major Products/Services Lines:

Products

$
357

$
826

$
—

$
25

$
—

$
3

$
1,211

Transportation

4

—

254

—

—

—

258

Energy

34

—

—

—

29

—

63

Other

8

3

—

—

—

—

11

Segment/Consolidated Totals

$
403

$
829

$
254

$
25

$
29

$
3

$
1,543



		Three Months Ended March 31, 2018


																Three Months Ended March 30, 2019
(Millions of dollars)		Pork		Commodity Trading & Milling		Marine		Sugar and Alcohol		Power		All Other		Consolidated Totals		Pork		Commodity Trading & Milling		Marine		Sugar and Alcohol		Power		All Other		Consolidated Totals
Major Products/Services Lines:
Products	$	361	$	781	$	—	$	50	$	—	$	4	$	1,196	$	357	$	826	$	—	$	25	$	—	$	3	$	1,211
Transportation		4		—		249		—		—		—		253		4		—		254		—		—		—		258
Energy		93		—		—		1		23		—		117		34		—		—		—		29		—		63
Other		8		5		—		—		—		—		13		8		3		—		—		—		—		11
Segment/Consolidated Totals	$	466	$	786	$	249	$	51	$	23	$	4	$	1,579	$	403	$	829	$	254	$	25	$	29	$	3	$	1,543

Revenue from goods and services transferred to customers at a single point in time ~~accounted~~account for approximately 85% of Seaboard’s net ~~sales for the three months ended March 30, 2019 and March 31, 2018.~~sales. Substantially all of the sales in Seaboard’s Marine segment are recognized ratably over the transit time for each voyage as Seaboard believes this is a faithful depiction of the performance obligation to its customers. ~~Almost all of~~ Seaboard’s contracts with its customers are short-term, defined as less than one year. As of March 30, 2019, Seaboard had $11 million of remaining performance obligations that extend beyond one year, of which 43% is expected to be recognized as net sales in 2019 and the remaining balance in 2020.

Deferred revenue represents cash payments received in advance of Seaboard’s performance or revenue billed that is unearned. The CT&M segment requires certain customers to pay in advance or upon delivery to avoid collection risk. The Marine segment’s deferred revenue balance primarily relates to the unearned portion of billed revenue when a ship is on

the water and has not arrived at the designated port. ~~The Pork segment has a marketing agreement with Triumph Foods, LLC, of which certain fees paid at commencement are recognized over the term of the agreement.~~ Deferred revenue balances are reduced when revenue is recognized. ~~Deferred~~The deferred revenue balance as of December 31, 2019 was fully recognized as revenue ~~for the three months ended March 30, 2019 was $135 million.~~

~~Note 10 – Income Taxes~~

~~Seaboard’s projected annual income tax rate for~~during the first quarter of 2020.

Note 9 – 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. Future changes in the forecasted annual income (loss) projections, including changes due to the impacts of the coronavirus disease 2019 ~~includes $1 million of anticipated~~(“COVID-19”) pandemic, could result in significant adjustments to quarterly income tax expense ~~associated with the global intangible low-taxed income (“GILTI”) provision and no anticipated tax expense associated with the base-erosion and anti-abuse tax (“BEAT”) provision.~~(benefit) in future periods.

Note 1110 – Segment Information

Seaboard has ~~six~~6 reportable segments: Pork, CT&M, Marine, Sugar and Alcohol, Power and Turkey, each offering a specific product or service. For details on the respective product or services, refer to Note 1415 to the consolidated financial statements included in Seaboard’s annual report for the year ended December 31, ~~2018.~~2019. Below are segment updates from year-end.

In February 2019, the Pork segment entered into an asset purchase agreement to buy an idle ethanol plant in Hugoton, Kansas for approximately $40 million. Seaboard accounted for this transaction as an asset acquisition as no workforce or substantive processes were acquired. The purchase price was allocated to property, plant and equipment based on a relative fair value basis.

~~The Power segment is currently constructing a new floating power barge for use in the Dominican Republic that is anticipated to begin operations in~~During the first quarter of ~~2021. The total project is expected~~2020, the CT&M segment finalized the purchase price allocation related to ~~exceed $160 million. Seaboard’s Power segment continues to explore strategic alternatives, including~~ the ~~possible sale or relocation~~October 2019 acquisition of ContiLatin del Peru S.A. resulting in the ~~existing power barge.~~recording of $1 million of intangible assets and no goodwill.

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC (“Butterball”). As of March ~~30, 2019~~28, 2020 and December 31, ~~2018,~~2019, Butterball had total assets of ~~$1,127~~$1,119 million and ~~$1,072~~$1,038 million, respectively. Butterball’s summarized income statement information was as follows:



	Three Months Ended
		March 28,		March 30,
(Millions of dollars)		2020		2019
Net sales	$	318	$	303
Operating loss	$	(7)	$	(19)
Net loss	$	(13)	$	(21)

Three Months Ended

March 30,

March 31,
(Millions of dollars)

2019

2018
Net sales

$
303

$
321

Operating income (loss)

$
(19)

$
2

Net income (loss)

$
(21)

$
2

The following tables set forth specific financial information about each segment as reviewed by Seaboard’s management. Operating income for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income, along with income or loss from affiliates for the Pork, CT&M and Turkey segments, is used as the measure of evaluating segment performance because management does not consider interest, other investment income (loss) and income tax expense on a segment basis.

Sales to External Customers:

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Pork

$
403

$
466

Commodity Trading and Milling

829

786

Marine

254

249

Sugar and Alcohol

25

51

Power

29

23

All Other

3

4

Segment/Consolidated Totals

$
1,543

$
1,579



Sales to External Customers:	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Pork	$	455	$	403
Commodity Trading and Milling		914		829
Marine		269		254
Sugar and Alcohol		22		25
Power		17		29
All Other		6		3
Segment/Consolidated Totals	$	1,683	$	1,543



Operating Income (Loss):	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Pork	$	32	$	(34)
Commodity Trading and Milling		30		7
Marine		(6)		—
Sugar and Alcohol		(1)		(4)
Power		2		4
All Other		1		1
Segment Totals		58		(26)
Corporate		5		(8)
Consolidated Totals	$	63	$	(34)



Income (Loss) from Affiliates:	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Pork	$	1	$	(8)
Commodity Trading and Milling		1		—
Marine		1		1
Sugar and Alcohol		—		—
Power		—		—
Turkey		(7)		(11)
Segment/Consolidated Totals	$	(4)	$	(18)



Total Assets:	March 28,		December 31,
(Millions of dollars)	2020		2019
Pork	$	1,870	$	1,802
Commodity Trading and Milling		1,687		1,621
Marine		562		554
Sugar and Alcohol		138		139
Power		279		283
Turkey		268		275
All Other		9		10
Segment Totals		4,813		4,684
Corporate		1,342		1,601
Consolidated Totals	$	6,155	$	6,285

1716

Operating Income (Loss):

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Pork

$
(34)

$
92

Commodity Trading and Milling

7

11

Marine

—

(4)

Sugar and Alcohol

(4)

2

Power

4

—

All Other

1

—

Segment Totals

(26)

101

Corporate

(8)

(4)

Consolidated Totals

$
(34)

$
97



Income (Loss) from Affiliates:	Three Months Ended
	March 30,		March 31,


Investments in and Advances to Affiliates:					March 28,		December 31,
(Millions of dollars)	2019		2018		2020		2019
Pork	$	(8)	$	(7)	$	185	$	183
Commodity Trading and Milling		—		(2)		239		237
Marine		1		—		31		32
Sugar and Alcohol		—		—		5		5
Power		—		2		3		3
Turkey		(11)		1		268		275
Segment/Consolidated Totals	$	(18)	$	(6)	$	731	$	735

Total Assets:

March 30,

December 31,

(Millions of dollars)

2019

2018

Pork

$
1,576

$
1,304

Commodity Trading and Milling

1,577

1,423

Marine

548

345

Sugar and Alcohol

140

138

Power

219

203

Turkey

284

295

All Other

8

8

Segment Totals

4,352

3,716

Corporate

1,624

1,591

Consolidated Totals

$
5,976

$
5,307

Investments in and Advances to Affiliates:

March 30,

December 31,

(Millions of dollars)

2019

2018

Pork

$
183

$
192

Commodity Trading and Milling

256

255

Marine

31

28

Sugar and Alcohol

4

4

Power

31

30

Turkey

284

295

Segment/Consolidated Totals

$
789

$
804

Administrative services provided by the corporate office are allocated to the individual segments and represent corporate services rendered to and costs incurred for each specific segment, with no allocation to individual segments of general corporate management oversight costs. Corporate assets include cash and short-term investments, other current assets related to deferred compensation plans, ~~fixed assets,~~long-term investments and other miscellaneous items. Corporate operating ~~losses~~results represent certain operating costs not specifically allocated to individual segments and include costs related to Seaboard’s deferred compensation plans, which are offset by the effect of the mark-to-market adjustments on these investments recorded in other investment income (loss), net.

1817

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~LIQUIDITY AND CAPITAL RESOURCES~~SIGNIFICANT DEVELOPMENTS

~~Summary~~The extent to which the coronavirus disease 2019 (“COVID-19”) pandemic impacts the financial condition and results of ~~Sources and Uses of Cash~~

Cash and short-term investments as of March 30, 2019 increased $17 million to $1,547 million from December 31, 2018. Cash from operating activities decreased $115 million for the three months ended March 30, 2019 compared to the same period in 2018 primarily due to lower adjusted earnings for unrealized gains on short-term investments.

~~Capital Expenditures, Acquisitions and Other Investing Activities~~

~~During the three months ended March 30, 2019,~~ Seaboard Corporation and its subsidiaries (“Seaboard”) ~~invested $83 million in property, plant~~will depend on future developments which are uncertain and ~~equipment,~~cannot be predicted. All of Seaboard’s segments, which ~~$61 million was in~~provide food, transportation and power, are considered “essential businesses” and have been able to continue to operate. Seaboard is taking a variety of measures to ensure the ~~Pork segment, $6 million in the Commodity Trading~~availability and Milling (“CT&M”) segment, $7 million in the Marine segment, $8 million in the Power segment and the remaining amount in other segments. The Pork segment expenditures were primarily for the expansion of the Guymon pork processing plant and the purchase of an idle ethanol plant and allfunctioning of its ~~related assets in Hugoton, Kansas. The Power segment expenditures were primarily for its new power barge under construction. All other capital expenditures were primarily~~essential operations and to promote the safety and security of ~~a normal recurring nature such as replacements~~all employees.

LIQUIDITY AND CAPITAL RESOURCES

Summary of ~~machinery~~Sources and ~~equipment and general facility modernizations and upgrades.~~

~~For the remainder~~Uses of 2019, management has budgeted capital expenditures totaling $372 million. The Pork segment budgeted $143 million primarily for expansion of the Guymon pork processing plant and potential modifications to convert the recently purchased idle ethanol plant to a renewable diesel production facility. The CT&M segment budgeted $51 million primarily for milling assets. The Marine segment budgeted $47 million primarily for additional cargo carrying and handling equipment. The Sugar and Alcohol segment budgeted $30 million primarily for alcohol fermentation expansion. The Power segment budgeted $100 million for its new power barge. The balance of $1 million is planned to be spent in all other businesses primarily for normal upgrades to existing operations. Management anticipates paying for these capital expenditures from a combination of available cash, the use of available short-term investments and Seaboard’s available borrowing capacity.

Subsequent to March 30, 2019, Seaboard contributed $10 million to Seaboard Triumph Foods, LLC, a non-consolidated affiliate of the Pork segment, for working capital needs. Additional contributions may be necessary in the future.

~~Financing Activities and Debt~~Cash

As of March 30, 2019, Seaboard had short-term uncommitted lines of credit totaling $564 million and a committed line of credit totaling $100 million. There was $192 million and $60 million borrowed under the uncommitted lines of credit and committed line of credit, respectively, as of March 30, 2019. Seaboard’s borrowing capacity under its uncommitted lines was further reduced by letters of credit totaling $18 million.

~~As of March 30, 2019, Seaboard had an unsecured term loan, which matures in 2028, with a balance of $696 million and $93 million of foreign subsidiary debt, denominated in U.S. dollars and euros.~~

~~As of March 30, 2019,~~28, 2020, Seaboard had cash and short-term investments of ~~$1,547 million~~$1.2 billion and additional total net working capital of ~~$599~~$654 million. Accordingly, management believes Seaboard’s combination of internally generated cash, liquidity, capital resources and borrowing capabilities will be adequate for its existing operations and any currently known potential plans for expansion of existing ~~operations or business segments~~operations.

Cash and short-term investments as of March 28, 2020 decreased $333 million to $1.2 billion from December 31, 2019. The decrease was primarily the result of capital market volatility on short-term investments. Cash from operating activities increased $1 million for ~~2019. Management intends~~the three-month period of 2020 compared to ~~continue seeking opportunities~~the same period in 2019 primarily due to higher adjusted earnings for ~~expansion~~unrealized losses on short-term investments and lower inventory purchases, offset primarily by an increase in ~~the industries in which Seaboard operates, utilizing existing liquidity, available borrowing capacity~~receivables and ~~other financing alternatives.~~timing of payments on liabilities.

As of March ~~30, 2019, $126~~28, 2020, $153 million of the ~~$1,547 million~~$1.2 billion of cash and short-term investments were held by Seaboard’s foreign subsidiaries. Historically, Seaboard has considered substantially all foreign profits as being permanently invested in its foreign operations, including all cash and short-term investments held by foreign subsidiaries. Seaboard intends to continue permanently reinvesting the majority of these funds outside the U.S. as current plans do not demonstrate a need to repatriate them to fund Seaboard’s U.S. operations. For any planned repatriation to the U.S., Seaboard would record applicable deferred taxes for state or foreign withholding taxes.

Capital Expenditures and Other Investing Activities

During the three months ended March 28, 2020, Seaboard invested $55 million in property, plant and equipment, of which $43 million was in the Pork segment, $4 million in the Power segment and the remaining amount in other segments. The Pork segment expenditures were primarily for the expansion of the Guymon pork processing plant and the modifications to the idle ethanol plant in Hugoton, Kansas. The Power segment expenditures were for its power generating barge under construction. All other capital expenditures were primarily of a normal recurring nature such as replacements of machinery and equipment and general facility modernizations and upgrades.

For the remainder of 2020, management has budgeted capital expenditures totaling $241 million. The Pork segment budgeted $172 million primarily for modifications to convert the Hugoton, Kansas plant to a renewable diesel production facility, with operations expected to begin in 2022, and to complete the expansion of the pork processing plant. The CT&M segment budgeted $22 million primarily for milling assets and other improvements to existing facilities and related equipment. The Marine segment budgeted $25 million primarily for additional cargo carrying and handling equipment. The Sugar and Alcohol segment budgeted $6 million primarily for general plant improvements and production process updates. The Power segment budgeted $16 million for capital expenditures associated with the new power barge. Seaboard’s Power segment continues to explore strategic alternatives for the existing barge, including selling, relocating or operating in conjunction with the new barge at the current site. Additional costs could be incurred, depending upon the alternative selected. Management anticipates paying for these capital expenditures from a combination of available cash, the use of available short-term investments and Seaboard’s available borrowing capacity.

From time to time, Seaboard may fund capital calls and issue borrowings for its equity method investments based on the specific facts and circumstances. During the first quarter of 2020, Seaboard contributed $5 million to STF for working capital needs. Additional contributions may be necessary in the future.

Financing Activities and Debt

As of March 28, 2020, Seaboard had short-term uncommitted lines of credit totaling $587 million and a committed line of credit totaling $100 million. There was $269 million and $70 million borrowed under the uncommitted lines of credit and committed line of credit, respectively, as of March 28, 2020. Seaboard’s borrowing capacity under its uncommitted lines was further reduced by letters of credit totaling $3 million. As of March 28, 2020, Seaboard had an unsecured term loan,

1918

which matures in 2028, with a balance of $691 million and $100 million of foreign subsidiary debt, denominated in U.S. dollars and euros.

Management intends to continue seeking opportunities for expansion in the industries in which Seaboard operates, utilizing existing liquidity, available borrowing capacity and other financing alternatives. The terms and availability of such financing may be impacted by economic and financial market conditions, as well as Seaboard’s financial condition and results of operations at the time Seaboard seeks such financing, and there can be no assurances that Seaboard will be able to obtain such financing on terms that will be acceptable or advantageous.

RESULTS OF OPERATIONS

Net sales for the three-month period of ~~2019 decreased $36~~2020 increased $140 million over the same period in ~~2018.~~2019. The ~~decrease~~increase was primarily the result of ~~not receiving~~higher volumes of certain commodities in the CT&M segment and higher pork product sales and recognition of the federal blender’s credits on biodiesel production in the first quarter of ~~2019 as compared to 2018~~2020 in the Pork ~~segment~~. segment.

Operating income ~~decreased $131~~increased $97 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~decrease~~increase primarily reflected ~~not receiving~~higher margins on pork products sold, less derivative contract losses and the federal blender’s credits ~~and lower prices on pork products sold~~recognized in the Pork segment. and higher margins on third-party sales in the CT&M segment.

Other than capital market volatility on short-term investments, the effects of the COVID-19 pandemic were not significant on a consolidated or segment basis to Seaboard’s first quarter 2020 results.Subsequently, all segments have been directly or indirectly impacted by the COVID-19 pandemic which resulted in a change in the mix of products or services, including a significant decline in volume and prices for food service business due to restaurant closings, significant reduction in the market price for certain products sold to further processors, reduced demand for maritime shipping, lower fuel prices and capital market volatility.

Pressures on certain production and supply chains have been tightening and, in many countries, governments are prioritizing domestic markets over exports. Seaboard’s first quarter results of operations are not necessarily indicative of results to be expected for the remainder of 2020 or the full year. While Seaboard expects the effects of the pandemic to negatively impact its results of operations temporarily, the future extent is not known. The extent of the impact will depend on future developments, including actions taken to contain the pandemic.

Pork Segment



	Three Months Ended
	March 30,		March 31,


					Three Months Ended
					March 28,		March 30,
(Millions of dollars)	2019		2018		2020		2019
Net sales	$	403	$	466	$	455	$	403
Operating income (loss)	$	(34)	$	92	$	32	$	(34)
Loss from affiliates	$	(8)	$	(7)
Income (loss) from affiliates					$	1	$	(8)

Net sales for the Pork segment ~~decreased $63~~increased $52 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~decrease~~increase was primarily the result of ~~receiving no~~higher volumes and prices for pork products sold, the recognition of $14 million in federal blender’s credits for biodiesel production in the first quarter of 2020 and higher prices of market hogs, partially offset by lower volumes and prices of biodiesel. In December 2019, ~~compared to 2018 when~~ the ~~Pork segment received $42 million~~President of ~~revenue related to 2017 production. The federal blender’s credits have not been~~the U.S. signed into law the Further Consolidated Appropriations Act that extended ~~and there is no assurance that~~ the federal blender’s credits will be renewed or retroactively extended. In addition, revenue decreased in the first quarter of 2019 as a result of lower domestic and export pork prices partially offset by higher volume of market hogs sold.through 2022.

Operating income for the Pork segment ~~decreased $126~~increased $66 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~decrease~~increase was primarily due to ~~not receiving~~higher margins on pork product sales, revenue recognized associated with the federal blender’s credits ~~discussed above, mark-to-market~~for the first quarter of 2020 and no derivative contract losses ~~on strategic hog positions and lower prices on pork products sold.~~in the first quarter of 2020 that were incurred in the first quarter of 2019. Management is unable to predict future market prices for pork products, the cost of feed or third-party hogs or the ~~government’s intentions with~~prices of biodiesel. Based on market conditions and the ~~federal blenders’ credits; however,~~impacts of the COVID-19 pandemic, management ~~anticipates positive operating income for~~currently cannot predict if this segment will be profitable for the remainder of ~~2019.~~2020.

Income from affiliates increased $9 million for the three-month period of 2020 compared to the same period in 2019. The increase was primarily the result of STF’s operations becoming more established. STF’s operations began in September 2017 with the second shift commencing in October 2018.

The Pork segment is largely dependent on the continued operation of its Oklahoma pork processing plant and the STF plant. The closure, even temporarily, of these plants could have a material adverse effect on liquidity and financial

results as Seaboard may be unable to process hogs resulting in a significant number of excess hogs in its live production system unable to be processed into finished pork product due to idled plant capacity.

Commodity Trading and Milling Segment

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Net sales

$
829

$
786

Operating income as reported

$
7

$
11

Mark-to-market adjustments

3

(6)

Operating income excluding mark-to-market adjustments

$
10

$
5

Income (loss) from affiliates

$
—

$
(2)



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Net sales	$	914	$	829
Operating income as reported	$	30	$	7
Mark-to-market adjustments		(5)		3
Operating income excluding mark-to-market adjustments	$	25	$	10
Income from affiliates	$	1	$	—

Net sales for the CT&M segment increased ~~$43~~$85 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The increase primarily reflected higher ~~volume and sales prices~~volumes of certain commodities for third-party ~~sales,~~customers, including sales for a business acquired in ~~January 2018 with certain entities on a three-month lag,~~October 2019, and higher corn and soybean prices, partially offset by lower affiliate ~~sales volumes.~~volumes and lower wheat and other commodity prices.

Operating income for this segment ~~decreased $4~~increased $23 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~decrease~~increase primarily reflected ~~losses on mark-to-market derivative contracts and higher selling, general and administrative costs related to the business acquired, partially offset by~~ higher margins on third-party sales, ~~predominantly related to~~including the business ~~acquired.~~

acquired in October 2019. Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates, including impacts of the COVID-19 pandemic, and the volatility in the commodity markets, management is unable to predict ~~future sales and operating results for~~if this ~~segment. However, management anticipates positive operating income for this~~ segment will be profitable for the remainder of ~~2019, excluding the effects of marking to market derivative contracts.~~2020.

Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have been lower by $5 million and higher by $3 ~~million and lower by $6~~ million for the three-month period of 2020 and 2019, ~~and 2018,~~ respectively.

While management believes its commodity futures, options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked-to-market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time, and these mark-to-market adjustments could reverse in ~~2019.~~2020. Management believes eliminating these mark-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.

Marine Segment



	Three Months Ended
	March 30,		March 31,


					Three Months Ended
					March 28,		March 30,
(Millions of dollars)	2019		2018		2020		2019
Net sales	$	254	$	249	$	269	$	254
Operating income (loss)	$	—	$	(4)	$	(6)	$	—
Income from affiliates	$	1	$	—	$	1	$	1

Net sales for the Marine segment increased $5$15 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The increase was primarily the result of higher ~~cargo~~ rates inand volumes. In certain markets~~, partially offset by decreased~~ there was a change in cargo ~~volumes~~ ~~during 2019 compared to 2018.~~mix, with more reefer containers that generally have a higher rate.

Operating income for this segment ~~increased $4~~decreased $6 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~increase~~decrease was primarily the result of higher fuel costs associated with the new low-sulfur fuel regulatory requirement and increased ~~voyage revenue~~consumption due to larger vessels. Also, the segment experienced higher charter hire costs and ~~lower stevedoring and cargo~~increased terminal costs. related to higher container volumes. Management cannot predict changes in fuel costs or future cargo volumes and cargo ~~rates~~rates. Based on market conditions and ~~fuel costs, or to what extent changes in economic conditions in markets served will affect net sales or operating income during~~impacts of the ~~remainder of 2019. However,~~COVID-19 pandemic, management ~~anticipates~~currently cannot predict if this segment will ~~have positive operating income~~be profitable for the remainder of ~~2019.~~2020.

Sugar and Alcohol Segment

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Net sales

$
25

$
51

Operating income (loss)

$
(4)

$
2

Income from affiliates

$
—

$
—



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Net sales	$	22	$	25
Operating loss	$	(1)	$	(4)
Income from affiliates	$	—	$	—

Net sales for the Sugar and Alcohol segment decreased ~~$26~~$3 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The decrease primarily reflected lower volumes of sugar sold and lower prices of alcohol sold, partially offset by higher prices of sugar sold and higher volumes of alcohol sold. Sugar and alcohol sales are denominated in Argentine pesos, and an increase in local sales prices ~~was~~may be offset by exchange rate changes asin the Argentine peso ~~continued to weaken~~ against the U.S. dollar.

Operating loss for the Sugar and Alcohol segment decreased $3 million for the three-month period of 2020 compared to the same period in 2019. The decrease primarily reflected higher margins on sugar and lower selling, general and administrative expenses. Management cannot predict local sugar and alcohol prices or the volatility in the currency exchange rate.

Operating income for the Sugar and Alcohol segment decreased $6 million for the three-month period of 2019 compared to the same period in 2018. The decrease primarily reflected lower margins on alcohol and cogeneration, partially offset by lower selling, general and administrative expenses related to salaries and benefits. Argentina was determined by management to be a highly inflationary economy in the second quarter of 2018, and as a result, this segment’s functional currency is the U.S. dollar effective in the third quarter of 2018 until the economic environment stabilizes. Sugar costs for the first quarter of 2018 included $7 million in severance costs related to a restructuring of its workforce. Based on market conditions and impacts of the COVID-19 pandemic, management currently cannot predict if this segment will be profitable for the remainder of ~~2019.~~2020.

Power Segment

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Net sales

$
29

$
23

Operating income

$
4

$
—

Income from affiliates

$
—

$
2



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Net sales	$	17	$	29
Operating income	$	2	$	4
Income from affiliates	$	—	$	—

Net sales for the Power segment ~~increased $6~~decreased $12 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~increase primarily~~decrease reflected ~~higher~~lower spot market ~~rates.~~rates primarily due to lower fuel prices and lower production primarily due to weather.

Operating income for the Power segment ~~increased $4~~decreased $2 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The ~~increase~~decrease was due to ~~higher spot market rates,~~lower revenues, partially offset by ~~higher~~lower fuel ~~costs.~~costs and consumption and maintenance costs in the first quarter of 2019 with no comparable activity for 2020. Management cannot predict future fuel costs or the extent that spot market rates will fluctuate compared to fuel ~~costs. However,~~costs or other power producers. Based on market conditions and impacts of the COVID-19 pandemic, management ~~anticipates positive operating income for~~currently cannot predict if this segment will be profitable for the remainder of ~~2019.~~2020.

Turkey Segment

Three Months Ended

March 30,

March 31,

(Millions of dollars)

2019

2018

Income (loss) from affiliates

$
(11)

$
1



	Three Months Ended
	March 28,		March 30,
(Millions of dollars)	2020		2019
Loss from affiliates	$	(7)	$	(11)

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC. The decrease in ~~income~~loss from affiliates for the three-month period of ~~2019~~2020 compared to the same period in ~~2018~~2019 was primarily the result of higher ~~production and logistics costs and lower volumes of~~prices for turkey products ~~sold.~~sold due to a strong sales mix with more value-added products, partially offset by higher production costs. Management is unable to predict future market prices for turkey products or the cost of feed. Based on ~~recent~~ market conditions and impacts of the COVID-19 pandemic, management currently cannot predict if this segment will be profitable for the remainder of ~~2019.~~2020. The temporary closure of this segment’s primary further processing facility, for example due to COVID-19, could adversely affect the value of Seaboard’s investment in Butterball, LLC.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses ~~increased $9~~decreased $12 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018~~2019 primarily due to ~~costs related to Seaboard’s~~lower deferred compensation program ~~which~~costs due to capital market volatility. The deferred compensation program costs are offset by the effect of the mark-to-market on investments recorded in other investment income ~~and to a lesser extent, due to the 2018 acquisition of Mimran~~(loss). ~~As a percentage of total net sales, SG&A was 5% for the three-month period of 2019 and 2018.~~

Interest Expense

Interest expense decreased $2$1 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018~~2019 primarily due to lower interest rates on ~~less~~outstanding debt ~~outstanding in the Sugar and Alcohol segment~~ and more capitalized interest related to ongoing capital expenditure investments, partially offset by ~~more debt outstanding. On September 25, 2018, Seaboard refinanced its $500 million unsecured term loan~~increased interest expense related to an adjustment on the contingent liability associated with a ~~$700 million unsecured term loan.~~2018 acquisition.

~~Interest~~Other Investment Income (Loss), Net

~~Interest~~Other investment income, ~~increased $4~~net decreased $338 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018~~2019 primarily due to ~~increased~~unrealized mark-to-market fluctuations on short-term investments, partially offset by approximately $60 million of ~~debt securities and higher interest recognized~~realized gains on ~~customer receivables in the Power segment.~~ sales.

Foreign Currency Gains (Losses), Net

Other ~~Investment Income (Loss), Net~~

~~Other investment income,~~foreign currency gains, net ~~increased $150~~decreased $14 million for the three-month period of ~~2019~~2020 compared to the same period in ~~2018~~2019 primarily due to ~~unrealized gains on short-term investments due to mark-to-market~~losses in the South African rand, Zambian kwacha, Mexican peso and Colombian peso among fluctuations ~~partially offset by lower realized gains.~~of other currency exchange rates in several foreign countries.

Income Tax ~~Expense~~Benefit (Expense)

The effective tax rate for the three-month period of ~~2019~~2020 was ~~lower~~higher than the three-month period of ~~2018~~2019 primarily due to pre-tax loss in 2020 versus pre-tax income in 2019 and the ~~change~~associated impact from tax credits. Tax credits increase the income tax benefit in a pre-tax loss year resulting in a higher effective tax ~~classification of~~rate and decrease the income tax expense in a ~~wholly owned subsidiary from~~pre-tax income year resulting in a ~~partnership to a corporation in the first quarter of 2018 that was partially offset by~~lower effective tax ~~exempt income from the retroactive extension of the 2017 federal blender’s credits.~~rate.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Seaboard is exposed to various types of market risks in its day-to-day operations. Primary market risk exposures result from changing commodity prices, foreign currency exchange rates, interest rates and equity prices. Occasionally, Seaboard utilizes derivative instruments to manage these overall market risks. The nature of Seaboard’s market risk exposure related to these items has not changed materially since December 31, ~~2018.~~2019. See Note 76 to the condensed consolidated financial statements for further discussion.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures — Seaboard’s management evaluated, under the direction of the Chief Executive and Chief Financial Officers, the effectiveness of Seaboard’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act ~~Rule 13a-15(e)~~of 1934, as amended (the “Exchange Act”) as of March ~~30, 2019.~~28, 2020. Based upon and as of the date of that evaluation, Seaboard’s Chief Executive and Chief Financial Officers concluded that Seaboard’s disclosure controls and procedures were effective to ~~ensure~~provide reasonable assurance that information required to be disclosed in the reports it files and submits under the ~~Securities~~ Exchange Act ~~of 1934~~ is recorded, processed, summarized and reported as and when required. It should be noted that any system of disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any system of disclosure controls and procedures is based in part upon assumptions about the likelihood of future events. Due to these and other inherent limitations of any such system, there can be no assurance that any design will always succeed in achieving its stated goals under all potential future conditions.

Change in Internal Controls — ~~Except as set forth below, there~~ There have been no changes in Seaboard’s internal control over financial reporting required by Exchange Act Rule 13a-15(f) that occurred during the fiscal quarter ended March ~~30, 2019~~28, 2020 that has materially affected, or is reasonably likely to materially affect, Seaboard’s internal control over financial reporting. ~~Effective January 1, 2019, Seaboard implemented new internal controls to ensure it adequately adopted the new lease accounting standard.~~

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For information related to Seaboard’s legal proceedings, see Note 54 to the condensed consolidated financial statements.

Item 1A. Risk Factors

~~There~~Except for the update to the risk factors set forth below, there have been no material changes in the risk factors as previously disclosed in Seaboard’s annual report on Form ~~10‑K~~10-K for the year ended December 31, ~~2018.~~2019.

(a)(3) Deterioration of Economic Conditions Could Negatively Impact Seaboard’s Business. Seaboard’s business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, including LIBOR phase-out risks, availability of capital markets, consumer spending rates, energy availability and costs, impacts caused by pandemics and other public health emergencies, including the COVID-19 pandemic, and the effects of governmental initiatives to manage economic conditions. Any such changes could adversely affect the demand for and production of Seaboard’s meat products, grains, shipping services and other products, or the cost and availability of needed raw materials and packaging materials, thereby negatively affecting Seaboard’s financial results. For example, Seaboard is monitoring the impact of the COVID-19 pandemic, which has already caused a significant disruption to global financial markets and supply chains. The significance of the operational and financial impact to Seaboard will depend on how long and widespread this disruption proves to be. The extent to which the COVID-19 pandemic impacts Seaboard’s results will depend on future developments, which are uncertain and cannot be predicted, including new information which may emerge concerning the severity of the pandemic and the actions that are being taken to contain and treat it. If economic or market conditions in key global markets deteriorate, Seaboard may experience material adverse effects on its business, financial condition and results of operations. The current national and global economic conditions, could, among other things:

●

impair the financial condition of some of Seaboard’s customers and suppliers, thereby increasing customer bad debts or non-performance by customers and suppliers;

●

negatively impact global demand for protein and grain-based products, which could result in a reduction of revenues, operating income and cash flows;

●

decrease the value of Seaboard’s investments in equity and debt securities, including pension plan assets, causing losses that would adversely impact Seaboard’s net earnings; and

●

impair the financial viability of Seaboard’s insurers.

(b)(4) The Loss of This Segment’s Oklahoma Pork Processing Plant and the STF Plant Could Adversely Affect the Business.This segment is largely dependent on the continued operation of its Oklahoma pork processing plant and the STF plant. Seaboard provides approximately one-third of STF’s hogs for processing and also markets substantially all pork products produced. The closure, loss of, or damage to these plants for any reason, including pandemic, fire, tornado, earthquake, or the occurrence of adverse governmental action could adversely affect the business of this segment. The closure, even temporarily, of these plants could have a material adverse effect on Seaboard’s liquidity and financial results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information concerning any purchases made by or on behalf of Seaboard or any “affiliated purchaser” (as defined by applicable rules of the Securities and Exchange Commission) of shares of Seaboard’s common stock during the first quarter of the fiscal year covered by this report.

Issuer Purchases of Equity Securities

Issuer Purchases of Equity Securities

(Millions of dollars except number of shares

and per share amounts)

Approximate

Dollar Value

Of Shares

Total Number

that May

Of Shares

Yet Be

Purchased as Part

Purchased

Total Number

Of Publicly

Under the

of Shares

Average Price

Announced Plans

Plans or

Dollar Value

Of Shares

Total Number

that May

Of Shares

Yet Be

Purchased as Part

Purchased

Total Number

Of Publicly

Under the

of Shares

Average Price

Announced Plans

Plans or

Period

Purchased

Paid per Share

Or Programs

Programs

Purchased

Paid per Share

Or Programs

Programs

January 1, 2019 to January 31, 2019

1,388

3,689.59

1,388

February 1, 2019 to February 28, 2019

755

3,822.70

755

March 1, 2019 to March 30, 2019

1,253

3,923.65

1,253

January 1, 2020 to January 31, 2020

130

3,944.67

130

February 1, 2020 to February 29, 2020

820

3,886.41

820

March 1, 2020 to March 28, 2020

3,119

3,038.92

3,119

Total

3,396

4,069

All purchases during the quarter were made pursuant to Seaboard’s share repurchase ~~program, which was initially established by Seaboard’s Board of Directors in November 2009 and has been extended through October 31, 2019.~~program. All purchases were made through open market or privately negotiated purchases and all the repurchased shares have been retired. See Note 87 to the condensed consolidated financial statements for further discussion of the program.


Item 6.		Exhibits
~~Item 6.~~		~~Exhibits~~

Exhibit No.		Description


~~10.1~~		Amendment No. 2 to the Seaboard Corporation Non-Qualified Deferred Compensation Plan effective January 1, 2019 and dated January 2, 2019. Incorporated herein by reference to Exhibit 10.7 of Seaboard’s Form 10‑K for the fiscal year ended December 31, 2018.
~~10.2~~		Seaboard Corporation Post-2018 Non-Qualified Deferred Compensation Plan effective January 1, 2019 and dated December 28, 2018. Incorporated herein by reference to Exhibit 10.8 of Seaboard’s Form 10-K for the fiscal year ended December 31, 2018.

31.1		Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Forward-looking Statements

This Form 10-Q contains forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of ~~Seaboard Corporation and its subsidiaries (“Seaboard”).~~Seaboard. Forward-looking statements generally may be identified as statements that are not historical in nature and statements preceded by, followed by or that include the words “believes,” “expects,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “intends,” or similar expressions. In more specific terms, forward-looking statements, include without limitation: statements concerning projection of revenues, income or loss, adequate liquidity levels, capital expenditures, capital structure or other financial items, including the impact of mark-to-market accounting on operating income; statements regarding the plans and objectives of management for future operations; statements of future economic performance; statements regarding the intent, belief or current expectations of Seaboard and its management with respect to: (i) Seaboard’s ability to obtain adequate financing and liquidity; (ii) the price of feed stocks and other materials used by Seaboard; (iii) the sales price or market conditions for pork, agricultural commodities, sugar, alcohol, turkey and other products and services; (iv) the recorded tax effects under certain circumstances and changes in tax laws; (v) the volume of business and working capital requirements associated with the competitive trading environment for the CT&M segment; (vi) the charter hire rates and fuel prices for vessels; (vii) the fuel costs and related spot market prices for electricity in the Dominican Republic; (viii) the effect of the fluctuation in foreign currency exchange rates; (ix) the profitability or sales volume of any of Seaboard’s segments; (x) the anticipated costs and completion timetables for Seaboard’s scheduled capital improvements, acquisitions and dispositions; (xi) the productive capacity of facilities that are planned or under construction, and the timing of the commencement of operations at such facilities; (xii) the impact of pandemics or ~~(xii)~~other public health emergencies, such as the COVID-19 pandemic or (xiii) other trends affecting Seaboard’s financial condition or results of operations, and statements of the assumptions underlying or relating to any of the foregoing statements.

This list of forward-looking statements is not exclusive. Seaboard undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or ~~otherwise.~~otherwise, except as required by law. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to a variety of factors. The information contained in this report, including without limitation the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the information included under the caption “Risk Factors” in Seaboard’s latest annual report on Form 10-K, as supplemented in this Form 10-Q, identifies important factors that could cause such differences.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SEABOARD CORPORATION
		(Registrant)


	by:	/s/ Robert L. Steer
		Robert L. Steer, Executive Vice President,
		Chief Financial Officer
		(principal financial officer)

	Date: April ~~30, 2019~~27, 2020


	by:	/s/ Michael D. Trollinger
		Michael D. Trollinger, Vice President, Corporate Controller
		and Chief Accounting Officer
		(principal accounting officer)

	Date: April ~~30, 2019~~27, 2020


	March 30,		December 31,
(Millions of dollars except share and per share amounts)	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	59	$	194
Short-term investments		1,488		1,336
Receivables, net		504		551
Inventories		988		815
Other current assets		143		131
Total current assets		3,182		3,027
Property, plant and equipment, net		1,232		1,160
Operating lease right of use assets, net		464		—
Investments in and advances to affiliates		789		804
Goodwill		166		167
Other non-current assets		143		149
Total assets	$	5,976	$	5,307
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable to banks	$	252	$	148
Current maturities of long-term debt		53		39
Accounts payable		297		238
Deferred revenue		46		39
Deferred revenue from affiliates		28		31
Operating lease liabilities		101		—
Other current liabilities		259		289
Total current liabilities		1,036		784
Long-term debt, less current maturities		735		739
Deferred income taxes		139		127
Long-term income tax liability		73		73
Long-term operating lease liabilities		403		—
Other liabilities		220		255
Total non-current liabilities		1,570		1,194
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,165,821 shares in 2019 and 1,169,217 shares in 2018		1		1
Accumulated other comprehensive loss		(409)		(410)
Retained earnings		3,768		3,727
Total Seaboard stockholders’ equity		3,360		3,318
Noncontrolling interests		10		11
Total equity		3,370		3,329
Total liabilities and stockholders’ equity	$	5,976	$	5,307


			Accumulated
			Other
	Common		Comprehensive		Retained		Noncontrolling
(Millions of dollars)	Stock		Loss		Earnings		Interests		Total
Balances, December 31, 2017	$	1	$	(354)	$	3,750	$	11	$	3,408
Adoption of accounting guidance		—		(7)		7		—		—
Addition to noncontrolling interests		—		—		—		4		4
Comprehensive income:
Net earnings		—		—		32		—		32
Other comprehensive loss, net of tax		—		(9)		—		—		(9)
Dividends on common stock ($1.50/share)		—		—		(2)		—		(2)
Balances, March 31, 2018	$	1	$	(370)	$	3,787	$	15	$	3,433

Balances, December 31, 2018	$	1	$	(410)	$	3,727	$	11	$	3,329
Reduction to noncontrolling interests		—		—		—		(1)		(1)
Comprehensive income:
Net earnings		—		—		57		—		57
Other comprehensive income, net of tax		—		1		—		—		1
Repurchase of common stock		—		—		(13)		—		(13)
Dividends on common stock ($2.25/share)		—		—		(3)		—		(3)
Balances, March 30, 2019	$	1	$	(409)	$	3,768	$	10	$	3,370




(Millions of dollars)
Remainder of 2019	$	99
2020		110
2021		97
2022		72
2023		51
Thereafter		205
Total undiscounted lease payments		634
Less imputed interest		(130)
Total operating lease liability	$	504



	Years ended December 31,
(Millions of dollars)	2019		2020		2021		2022		2023		Thereafter
Ports	$	18	$	18	$	19	$	19	$	20	$	109
Vessel, time and voyage-charters		58		27		26		13		8		25
Contract grower agreements		47		41		37		27		18		61
Other operating lease payments		18		13		9		8		6		15
Total unrecognized non-cancelable commitments	$	141	$	99	$	91	$	67	$	52	$	210



(Millions of dollars)
Operating lease cost	$	33
Variable lease cost		3
Short-term lease cost		10
Total lease cost	$	46



Sales to External Customers:	Three Months Ended
	March 30,		March 31,
(Millions of dollars)	2019		2018
Pork	$	403	$	466
Commodity Trading and Milling		829		786
Marine		254		249
Sugar and Alcohol		25		51
Power		29		23
All Other		3		4
Segment/Consolidated Totals	$	1,543	$	1,579