UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 30, 1998
Seaboard Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-3390 04-2260388
(State or other jurisdiction of (Commission (I.R.S. Employer)
incorporation or organization) File Number) Indentification No.)
9000 W. 67th Street, Shawnee Mission, Kansas 66202
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (913) 676-8800
Not Applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets
Effective December 30, 1998, the Registrant completed the sale of its
Holsum Bakers business located at Toa Baja, Puerto Rico and its
Harinas de Puerto Rico flour milling operation located at Guanica,
Puerto Rico, to a management group led by the current President of
Holsum Bakers, Ramon Calderon. These assets were sold for
approximately $81 million (which includes an adjustment increasing the
purchase price by approximately $1 million pursuant to section
2(b)(iii) of the sale agreement) and the assumption of approximately
$12 million in liabilities. Approximately $35 million of cash and
short-term investments carried on the books of these companies were
excluded from the sale and retained by the registrant. The registrant
also retained approximately $2 million in net tax liabilities. The
proceeds consist of approximately $72 million in cash, an $8 million
interest bearing subordinated note receivable due in 2004, and a $1
million interest bearing note receivable from Ramon Calderon due in
2000. Consideration was determined by arms length negotiations.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information:
The following pro forma unaudited condensed consolidated financial
data of Seaboard Corporation (the Company) reflects the pro forma
impact on the Company's financial position and results of operations
of the sale of its Holsum Bakers and Harinas de Puerto Rico flour
milling businesses (the Sold Businesses). Pro forma condensed
consolidated statements of earnings are presented for the nine months
ended September 30, 1998 and the year ended December 31, 1997,
reflecting pro forma adjustments as if the sale was consummated at the
beginning of each of the periods presented. A pro forma condensed
consolidated balance sheet is presented as of September 30, 1998,
reflecting pro forma adjustments as if the sale was consummated on
that date. Certain management assumptions and adjustments are
described in the accompanying notes. The following pro forma
financial information is not necessarily indicative of the actual
financial position or results of operations that would have resulted
had the sale been consummated on the dates assumed, nor is it
necessarily indicative of future operating results.
SEABOARD CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Earnings
Nine months ended September 30, 1998
(Thousands of dollars except per share amounts)
(Unaudited)
Historical Pro Forma
September 30, Pro Forma September 30,
1998 Adjustments 1998
Net sales $1,340,086 $ (68,356) (1)$1,271,730
Cost of sales and operating expenses 1,180,994 (35,667) (1) 1,145,327
Gross income 159,092 (32,689) 126,403
Selling, general and
administrative expenses 106,068 (27,541) (1) 78,527
Operating income 53,024 (5,148) 47,876
Other income (expense):
Interest income 5,166 761 (2)
560 (3) 6,487
Interest expense (24,343) 2,298 (4) (22,045)
Loss from foreign affiliates (12,052) -- (12,052)
Miscellaneous 3,460 4 (1) 3,464
Total other income (expense), net (27,769) 3,623 (24,146)
Earnings before income taxes 25,255 (1,525) 23,730
Income tax expense 9,441 (2,208) (1)
1,114 (5) 8,347
Net earnings $ 15,814 $ (431) $ 15,383
Earnings per common share $ 10.63 $ (0.29) $ 10.34
Average number of shares outstanding 1,487,520 -- 1,487,520
SEABOARD CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Earnings
Year ended December 31, 1997
(Thousands of dollars except per share amounts)
(Unaudited)
Historical Pro Forma
December 31, Pro Forma December 31,
1997 Adjustments 1997
Net sales $1,780,333 $ (93,977) (1)$1,686,356
Cost of sales and operating expenses 1,561,265 (49,443) (1) 1,511,822
Gross income 219,068 (44,534) 174,534
Selling, general and
administrative expenses 141,993 (36,616) (1) 105,377
Operating income 77,075 (7,918) 69,157
Other income (expense):
Interest income 6,127 1,012 (2)
760 (3) 7,899
Interest expense (31,108) 2,890 (4) (28,218)
Loss from foreign affiliates (8,733) -- (8,733)
Miscellaneous 1,221 -- 1,221
Total other income
(expense), net (32,493) 4,662 (27,831)
Earnings before income taxes 44,582 (3,256) 41,326
Income tax expense 14,008 (2,579) (1)
1,423 (5) 12,852
Net earnings $ 30,574 $ (2,100) $ 28,474
Earnings per common share $ 20.55 $ (1.41) $ 19.14
Average number of shares outstanding 1,487,520 -- 1,487,520
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Condensed Consolidated Statements of Earnings
Nine months ended September 30, 1998 and
Year ended December 31, 1997
1. Adjustment eliminates from consolidated results the amounts
contributed by the Sold Businesses. Adjustments do not reflect the
net gain on the sale of the Sold Businesses of approximately $34
million, after tax on the gain of approximately $22 million.
2. Adjustment reflects pro forma interest income earned during the
period on $28.8 million in cash proceeds from the sale invested in
short-term investments, consistent with the actual application of
proceeds resulting after the closing of the transaction. Pro forma
interest income for each period was based on an average, non-taxable
interest rate of 3.5%.
3. Adjustment reflects pro forma interest income earned during the
period on the $9 million of notes receivable received as components of
total sales proceeds, based on interest rates of 8% on the $8 million
note and 12% on the $1 million note.
4. Adjustment reflects the pro forma reduction in interest expense
assuming $43.5 million in cash proceeds are used to reduce short-term
borrowings, consistent with the actual application of proceeds
resulting after the closing of the transaction. Calculations are
based on annual interest rates of 7.2% for the nine months ending
September 30, 1998 and 6.6% for the year ended December 31, 1997.
5. Adjustment reflects the pro forma tax effect of additional
interest income and reduced interest expense discussed in 2., 3. and
4. above at statutory tax rates. Note that the additional pro forma
interest income discussed in 2. above is nontaxable.
SEABOARD CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998
(Thousands of dollars)
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
Assets
Current assets:
Cash and cash equivalents $ 12,865 $ 1,107 (1) $ 13,972
Short-term investments 117,963 28,839 (2) 146,802
Receivables, net 177,921 (8,978) (1)
500 (3) 169,443
Inventories 196,807 (3,408) (1) 193,399
Deferred income taxes 11,117 -- 11,117
Prepaid expenses and deposits 18,980 (1,369) (1) 17,611
Total current assets 535,653 16,691 552,344
Investments in and advances to
foreign affiliates 122,410 -- 122,410
Net property, plant and equipment 470,656 (20,356) (1) 450,300
Other assets 17,182 (1,457) (1)
8,500 (3) 24,225
Total assets $1,145,901 $ 3,378 $1,149,279
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks $ 175,048 $ (43,500) (4) $ 131,548
Current maturities of
long-term debt 6,883 -- 6,883
Accounts payable 67,009 (2,929) (1) 64,080
Other current liabilities 113,293 (4,802) (1)
1,500 (5)
21,942 (6) 131,933
Total current liabilities 362,233 (27,789) 334,444
Long-term debt, less
current maturities 306,048 -- 306,048
Deferred income taxes 32,342 -- 32,342
Other liabilities 31,428 (3,153) (1) 28,275
Total non-current and
deferred liabilities 369,818 (3,153) 366,665
Stockholders' equity:
Common stock of $1 par value,
Authorized 4,000,000 shares;
issued 1,789,599 shares 1,790 -- 1,790
Less 302,079 shares
held in treasury (302) -- (302)
1,488 -- 1,488
Additional capital 13,214 -- 13,214
Accumulated other
comprehensive income 147 -- 147
Retained earnings 399,001 34,320 (7) 433,321
Total stockholders' equity 413,850 34,320 448,170
Total liabilities and
stockholders'equity $1,145,901 $ 3,378 $1,149,279
SEABOARD CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998
1. Adjustment eliminates amounts attributable to the Sold
Businesses, net of assets and liabilities to be retained and the
settlement of intercompany balances.
2. Adjustment reflects pro forma increase in short-term investments
funded by cash proceeds not used to pay down short-term borrowings,
consistent with actual application of cash proceeds after the closing
of the transaction.
3. Adjustment reflects pro forma increase of $9 million in notes
receivable representing a portion of the sale proceeds. $500,000 of
the notes receivable are classified as current, the remaining $8.5
million are classified as long term.
4. Adjustment reflects the pro forma paydown of short-term
borrowings with a portion of the cash proceeds received from the
buyer, consistent with actual application of cash proceeds after the
closing of the transaction.
5. Adjustment reflects pro forma estimated expenses and liabilities
associated with the sale.
6. Adjustment reflects the pro forma estimated tax liability due on
the gain from the sale based on statutory tax rates.
7. Adjustment reflects the pro forma estimated gain, net of tax,
realized on the sale.
(c) Exhibits:
2.1 Stock and Asset Purchase Agreement by and between HDPR
Acquisitions Corp., and CB Acquisitions Corp., as Buyers and
Seaboard Corporation, as Seller, dated as of November 9,
1998.
2.2 Asset Purchase Agreement by and between HDPR Acquisitions Corp.,
as Buyer, Harinas de Puerto Rico, Inc., as Seller and Seaboard
Corporation, dated as of November 9, 1998.
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.
DATE: January 13, 1999
Seaboard Corporation
by: /s/ Robert L. Steer
Robert L. Steer, Vice President-Chief
Financial Officer