SEABOARD CORP /DE/ [SEB] Filings

10-Q 1 seb-20240629x10q.htm SEABOARD CORPORATION 10-Q DATED JUNE 29, 2024

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 June 29, 2024

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

For the transition period from _____________________________________ to ____________________________________

Commission File Number: 1-3390

Seaboard Corporation

(Exact name of registrant as specified in its charter)


Delaware		04-2260388
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

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

(913) 676-8928

(Registrant’s telephone number, including area code)

Not Applicable

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $1.00 Par Value	SEB	NYSE American

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

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


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

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

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

There were 971,055 shares of common stock, $1.00 par value per share, outstanding on July 23, 2024.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended				Six Months Ended
	June 29,		July 1,		June 29,		July 1,
(Millions of dollars except share and per share amounts)	2024		2023		2024		2023
Net sales:
Products (includes sales to affiliates of $312, $290, $614 and $548)	$	1,802	$	1,957	$	3,594	$	3,941
Services (includes sales to affiliates of $12, $6, $19 and $12)		348		373		698		836
Other		59		63		108		115
Total net sales		2,209		2,393		4,400		4,892
Cost of sales and operating expenses:
Products		1,751		1,982		3,520		4,076
Services		289		275		586		606
Other		40		40		78		80
Total cost of sales and operating expenses		2,080		2,297		4,184		4,762
Gross income		129		96		216		130
Selling, general and administrative expenses		99		100		206		197
Operating income (loss)		30		(4)		10		(67)
Other income (expense):
Interest expense		(17)		(20)		(29)		(32)
Interest income (includes $0, $1, $1 and $3 from affiliates)		17		14		36		27
Income from affiliates		23		25		42		51
Other investment income, net		5		23		23		50
Foreign currency gains (losses), net		(11)		7		(12)		3
Miscellaneous, net		(1)		3		(1)		3
Total other income, net		16		52		59		102
Earnings before income taxes		46		48		69		35
Income tax benefit		15		4		14		1
Net earnings	$	61	$	52	$	83	$	36
Less: Net earnings attributable to noncontrolling interests		—		—		—		—
Net earnings attributable to Seaboard	$	61	$	52	$	83	$	36

Earnings per common share	$	62.82	$	44.80	$	85.47	$	31.01
Average number of shares outstanding		971,055		1,160,779		971,055		1,160,779

Other comprehensive income (loss), net of income tax expense:
Foreign currency translation adjustment		—		1		(2)		13
Unrecognized pension cost		—		2		2		4
Other comprehensive income, net of tax	$	—	$	3	$	—	$	17
Comprehensive income		61		55		83		53
Less: Comprehensive income attributable to noncontrolling interests		—		—		—		—
Comprehensive income attributable to Seaboard	$	61	$	55	$	83	$	53

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	June 29,		December 31,
(Millions of dollars except share and per share amounts)	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	79	$	56
Short-term investments		1,072		973
Receivables:
Trade		547		500
Due from affiliates		120		127
Other (includes $5 and $0 due from affiliates)		186		152
Total receivables		853		779
Allowance for credit losses		(30)		(30)
Receivables, net		823		749
Inventories		1,399		1,462
Other current assets		129		123
Total current assets		3,502		3,363
Property, plant and equipment, net of accumulated depreciation of $2,044 and $1,956		2,470		2,410
Operating lease right-of-use assets, net		390		394
Investments in and advances to affiliates		721		731
Goodwill		161		160
Deferred tax assets		227		199
Other non-current assets		227		309
Total assets	$	7,698	$	7,566
Liabilities and Stockholders’ Equity
Current liabilities:
Lines of credit	$	471	$	255
Accounts payable (includes $32 and $1 due to affiliates)		359		400
Deferred revenue (includes $20 and $28 due to affiliates)		52		66
Operating lease liabilities		128		117
Other current liabilities		417		497
Total current liabilities		1,427		1,335
Long-term debt, less current maturities		992		997
Long-term operating lease liabilities		288		304
Other non-current liabilities		278		296
Total liabilities		2,985		2,932
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 971,055 shares in 2024 and 2023		1		1
Accumulated other comprehensive loss		(410)		(410)
Retained earnings		5,104		5,025
Total Seaboard stockholders’ equity		4,695		4,616
Noncontrolling interests		18		18
Total equity		4,713		4,634
Total liabilities and stockholders’ equity	$	7,698	$	7,566

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


			Accumulated
			Other
	Common		Comprehensive		Retained		Noncontrolling
(Millions of dollars)	Stock		Loss		Earnings		Interests		Total
Balances, December 31, 2022	$	1	$	(422)	$	5,417	$	18	$	5,014
Comprehensive loss:
Net loss		—		—		(16)		—		(16)
Other comprehensive income, net of tax		—		14		—		—		14
Dividends on common stock ($2.25/share)		—		—		(3)		—		(3)
Balances, April 1, 2023	$	1	$	(408)	$	5,398	$	18	$	5,009
Comprehensive income:
Net earnings		—		—		52		—		52
Other comprehensive income, net of tax		—		3		—		—		3
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, July 1, 2023	$	1	$	(405)	$	5,448	$	18	$	5,062

Balances, December 31, 2023	$	1	$	(410)	$	5,025	$	18	$	4,634
Comprehensive income:
Net earnings		—		—		22		—		22
Other comprehensive income, net of tax		—		—		—		—		—
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, March 30, 2024	$	1	$	(410)	$	5,045	$	18	$	4,654
Comprehensive income:
Net earnings		—		—		61		—		61
Other comprehensive income, net of tax		—		—		—		—		—
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, June 29, 2024	$	1	$	(410)	$	5,104	$	18	$	4,713

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended
	June 29,		July 1,
(Millions of dollars)	2024		2023
Cash flows from operating activities:
Net earnings	$	83	$	36
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		142		142
Deferred income taxes		(30)		(60)
Income from affiliates		(42)		(51)
Dividends received from affiliates		40		65
Other investment income, net		(23)		(50)
Other, net		5		17
Changes in assets and liabilities, net of acquisition:
Receivables, net of allowance for credit losses		(59)		109
Inventories		54		66
Other assets		(10)		(7)
Accounts payable		(77)		(79)
Other liabilities, exclusive of debt		(58)		16
Net cash from operating activities		25		204
Cash flows from investing activities:
Purchase of short-term investments		(712)		(627)
Proceeds from the sale of short-term investments		721		507
Proceeds from the maturity of short-term investments		11		47
Capital expenditures		(237)		(219)
Proceeds from the sale of property, plant and equipment		15		20
Acquisition of a business		(3)		—
Proceeds from the sale of non-consolidated affiliates		13		—
Other, net		(14)		(10)
Net cash from investing activities		(206)		(282)
Cash flows from financing activities:
Uncommitted lines of credit, net		111		(89)
Draws under committed lines of credit		736		757
Repayments of committed lines of credit		(630)		(681)
Proceeds from payable to affiliate		29		—
Principal payments of long-term debt		(5)		(4)
Finance lease payments		(28)		(29)
Dividends paid		(4)		(5)
Other, net		(1)		—
Net cash from financing activities		208		(51)
Effect of exchange rate changes on cash and cash equivalents		(4)		(2)
Net change in cash and cash equivalents		23		(131)
Cash and cash equivalents at beginning of year		56		199
Cash and cash equivalents at end of period	$	79	$	68

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of Seaboard Corporation and its subsidiaries (“Seaboard”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in Seaboard’s annual report on Form 10-K for the year ended December 31, 2023. The unaudited financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

Related-Party Transactions

Seaboard has investments in non-consolidated affiliates to further its business strategies and partner with other entities that have expertise in certain industries and countries. These investments are all accounted for using the equity method of accounting. As Seaboard conducts its agricultural commodity trading business with third parties, consolidated subsidiaries and non-consolidated affiliates on an interrelated basis, cost of sales on affiliate sales transactions cannot be distinguished without making numerous assumptions, primarily with respect to mark-to-market accounting for commodity derivatives. Purchases of raw materials or services from related parties included in cost of sales were $17 million and $18 million for the three months ended June 29, 2024 and July 1, 2023, respectively, and $32 million and $44 million for the six months ended June 29, 2024 and July 1, 2023, respectively. During the second quarter of 2024, the Commodity Trading and Milling (“CT&M”) segment received $29 million on behalf of an affiliate. The amount is included in accounts payable and is payable upon demand.

Supplemental Cash Flow Information

Non-cash activities for the six months ended June 29, 2024 and July 1, 2023, included capital expenditures of $11 million and $6 million, respectively, that were in accounts payable. The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of right-of-use (“ROU”) assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the condensed consolidated statements of cash flows.



	Six Months Ended
	June 29,		July 1,
(Millions of dollars)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	92	$	97
Operating cash flows from finance leases		2		3
Financing cash flows from finance leases		28		29
ROU assets obtained in exchange for new lease liabilities:
Operating leases	$	73	$	41
Finance leases		1		2

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill was related to foreign currency translation of $1 million within the CT&M segment. As of June 29, 2024, intangible assets, included in other non-current assets, were $22 million, which consists of the gross carrying amount of $79 million, net of accumulated amortization of $51 million and net of accumulated foreign currency translation of $6 million.

Recently Issued Accounting Standards and Disclosure Rules Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that requires incremental segment disclosures on an annual and interim basis related to significant segment expenses. Seaboard will adopt this guidance in the 10-K for the year ended December 31, 2024, and interim periods beginning on January 1, 2025. The

disclosure requirements must be applied retrospectively to all prior periods presented in the financial statements. Seaboard is currently evaluating the impact this guidance will have on its related disclosures.

In December 2023, the FASB issued guidance that requires additional detailed income tax disclosures related to standardization and disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction. Seaboard will adopt this guidance for the annual reporting period beginning on January 1, 2025. Seaboard is currently evaluating the impact this guidance will have on its disclosures.

In March 2024, the Securities and Exchange Commission (the “SEC”) adopted final rules to enhance and standardize climate-related disclosures in registration statements and annual reports on Form 10-K. The new rules will require climate-related disclosures related to governance, strategy, risk management, targets and goals and greenhouse gas emissions. Additionally, within the notes to the financial statements, the rules would require disclosure of financial statement effects of severe weather events and other natural conditions and other climate-related financial metrics as applicable. Certain elements of the new rules are currently scheduled to become effective for Seaboard’s annual reporting period beginning on January 1, 2025, with the remaining requirements to be phased-in effective for subsequent fiscal years beginning after December 31, 2025. On April 4, 2024, the SEC issued an order staying the effectiveness of the final rules pending completion of the judicial review of consolidated challenges to the rules by the Court of Appeals for the Eighth Circuit. Seaboard is currently evaluating the impact the rules will have on its disclosures.

Note 2 – Investments

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



	June 29,		December 31,
(Millions of dollars)	2024		2023
Domestic equity securities	$	211	$	143
Foreign equity securities		101		96
Domestic debt securities		616		593
Foreign debt securities		127		120
Money market funds held in trading accounts		11		17
Other trading securities		6		4
Total trading short-term investments	$	1,072	$	973

The unrealized gain related to trading securities still held at the end of the respective reporting period was $5 million and $18 million for the three- and six-month periods ended June 29, 2024, respectively, and $17 million and $48 million for the three- and six-month periods ended July 1, 2023, respectively.

Seaboard had $37 million and $18 million of short-term investments denominated in foreign currencies, primarily euros, as of June 29, 2024 and December 31, 2023, respectively.

As of June 29, 2024, Seaboard had long-term investments of $133 million in real estate and renewable energy facilities, classified in other non-current assets on the condensed consolidated balance sheet. As of December 31, 2023, Seaboard had long-term investments of $207 million which included an investment of $68 million in a business development company (“BDC”). The BDC completed an initial public offering (“IPO”) and became a publicly traded company on the NYSE during the first quarter of 2024. Seaboard’s securities in this BDC are subject to standard contractual sale restrictions associated with an IPO, and have phased expiration dates, with all restrictions expiring by February 2025. As of June 29, 2024, the BDC securities are included in short-term investments on the condensed consolidated balance sheet and in domestic equity securities in the table above. The reclassification of these securities from long-term investments to short-term investments was a non-cash activity on the condensed consolidated statement of cash flows.

Note 3 – Inventories

The following is a summary of inventories:



	June 29,		December 31,
(Millions of dollars)	2024		2023
At lower of FIFO cost and net realizable value (“NRV”):
Hogs and materials	$	488	$	527
Pork products and materials		64		61
Grains, oilseeds and other commodities		393		366
Biofuels and related credits		153		160
Other		109		124
Total inventories at lower of FIFO cost and NRV		1,207		1,238
Grain, flour and feed at lower of weighted average cost and NRV		192		224
Total inventories	$	1,399	$	1,462

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

Lines of Credit

As of June 29, 2024, the outstanding balances under committed and uncommitted lines of credit were $211 million and $260 million, respectively. Of the total outstanding balance as of June 29, 2024, $178 million was denominated in foreign currencies with $167 million denominated in the South African rand and the remaining in various other currencies. As of December 31, 2023, the outstanding balances under committed and uncommitted lines of credit were $105 million and $150 million, respectively. Of the total outstanding balance as of December 31, 2023, $70 million was denominated in foreign currencies, with $57 million denominated in the South African rand and the remaining in various other currencies. The weighted average interest rate for outstanding lines of credit was 7.48% and 7.34% as of June 29, 2024 and December 31, 2023, respectively.

Long-Term Debt

The following is a summary of long-term debt:



		June 29,		December 31,
(Millions of dollars)		2024		2023
Term Loan due 2033	$	968	$	973
Foreign subsidiary obligations		1		1
Other long-term debt		38		38
Total debt at face value		1,007		1,012
Current maturities and unamortized costs		(15)		(15)
Long-term debt, less current maturities and unamortized costs	$	992	$	997

The Term Loan due 2033 credit agreement provides for quarterly payments on the $975 million original principal balance, with the balance due on November 10, 2033. The interest rate was 7.04% and 7.08% as of June 29, 2024 and December 31, 2023, respectively. Seaboard was in compliance with all restrictive debt covenants relating to this agreement as of June 29, 2024.

Legal Proceedings

Seaboard is subject to various legal proceedings and claims that arise in the ordinary course of business and otherwise, including those matters described below.

Seaboard accrues liabilities for loss contingencies when it is deemed probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, Seaboard accrues the minimum amount in the range. For such matters where a loss is believed to be reasonably possible, but not probable, or the loss cannot be reasonably estimated, no accrual has been made.

In Seaboard’s opinion, it has made appropriate and adequate accruals for loss contingencies where necessary as of June 29, 2024. Substantially all of Seaboard’s contingencies are subject to uncertainties and, therefore, determining the

likelihood of a loss or the measurement of any loss can be complex. Consequently, Seaboard is unable to estimate the range of reasonably possible loss in excess of the amounts accrued. Seaboard’s assessments, which result from a complex series of judgments about future events and uncertainties, are based on estimates and assumptions deemed reasonable by management, including an expected probable loss associated with settling or otherwise resolving such contingencies. These estimates and assumptions may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might change such estimates and assumptions.

At the end of each reporting period, Seaboard reviews information with respect to its legal proceedings, claims and other related loss contingencies and updates its accruals, disclosures and estimates of reasonably possible loss or range of loss based on such reviews. Costs for defending claims are expensed as incurred. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.

Seaboard believes that it has meritorious defenses to the claims asserted in the matters described below, and it intends to defend them vigorously, but litigation is inherently unpredictable and there can be no assurances as to their outcomes. Seaboard does not currently believe that any of these matters will have a material adverse effect on its business or its consolidated financial position, results of operations or cash flows. However, Seaboard could incur judgments, enter into settlements or revise its expectations regarding the outcome of matters, which could have such a material adverse effect in the particular annual or quarterly period in which the amounts are accrued or paid.

Helms-Burton Act Litigation

On July 21, 2021, a lawsuit was filed by an individual, Odette Blanco de Fernandez (“Ms. de Fernandez”), and the heirs (“Inheritors”) and estates (“Estates”) of four of her siblings (Ms. de Fernandez, together with the Inheritors and the Estates being referred to as the “Plaintiffs”) against Seaboard Corporation in the U.S. District Court for the District of Delaware (the “Delaware District Court”), making claims under Title III of the Cuban Liberty and Solidarity Act of 1996, also known as the Helms-Burton Act (the “Act”). The same Plaintiffs filed a separate lawsuit against Seaboard Marine Ltd. (“Seaboard Marine”) on December 20, 2020, in the U.S. District Court for the Southern District of Florida (the “Florida District Court”). The complaints in each lawsuit seek unspecified damages (including treble damages) and pre-filing interest as provided in the Act; pre-judgment interest; attorneys’ fees, costs and expenses; and such other relief as is just and proper.

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

The Florida District Court in the Seaboard Marine case dismissed the claims of the Inheritors and the Estates because they did not acquire the ownership claims prior to March 1996, as required by the Act. The remaining plaintiff, Ms. de Fernandez, contends she owns 20% of the companies that were granted the concession and owned land in or around Mariel Bay, Cuba. On August 19, 2022, the Florida District Court granted Seaboard Marine’s Motion for Summary Judgment and entered a Final Judgment (the “Summary Judgment”) in favor of Seaboard Marine. On September 1, 2022, the Plaintiffs appealed the Summary Judgment to the United States Court of Appeals for the Eleventh Circuit (“Appeal”). Oral arguments with respect to the Appeal were held on January 24, 2024, and the court has not yet ruled.

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

Seaboard believes that it has meritorious defenses to the claims and intends to vigorously defend the litigation. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and if unfavorable, could result in a material liability.

Pork Price-Fixing Antitrust Litigation

On June 28, 2018, twelve indirect purchasers of pork products filed a class action complaint in the U.S. District Court for the District of Minnesota (the “Minnesota District Court”) against several pork processors, including Seaboard Foods LLC (“Seaboard Foods”) and Agri Stats, Inc., a company described in the complaint as a data sharing service. Additional class action complaints with similar claims on behalf of putative classes of direct and indirect purchasers were later filed in the Minnesota District Court, and additional actions by standalone plaintiffs (including the Commonwealth of Puerto Rico) were filed in or transferred to the Minnesota District Court. The consolidated actions are styled In re Pork Antitrust Litigation. The complaints allege, among other things, that beginning in January 2009, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork products in violation of U.S. antitrust laws by coordinating output and limiting production, allegedly facilitated by the exchange of non-public information about prices, capacity, sales volume and demand through Agri Stats, Inc. The complaints on behalf of the putative classes of indirect purchasers also assert claims under various state laws, including state antitrust laws, unfair competition laws, consumer protection statutes, and common law unjust enrichment. The relief sought in the respective complaints includes treble damages, injunctive relief, pre- and post-judgment interest, costs and attorneys’ fees. On October 16, 2020, the Minnesota District Court denied the defendants’ motions to dismiss the amended complaints. On March 3, 2023, the Minnesota District Court granted the Plaintiffs’ Motions to Certify the Classes with respect to all three classes.

Additional standalone “direct action” plaintiffs filed similar actions in federal courts throughout the country, several of which named Seaboard Corporation as a defendant. Those actions filed in courts other than the District of Minnesota have been conditionally transferred to Minnesota for pretrial proceedings pursuant to an order by the Judicial Panel on Multidistrict Litigation. The states of New Mexico and Alaska filed civil cases in state court against substantially the same defendants, including Seaboard Foods and Seaboard Corporation, based on substantially similar allegations. Except in the New Mexico action, all claims against Seaboard Corporation have been dismissed without prejudice.

On June 12, 2023, Seaboard Foods entered into a settlement agreement with the putative direct purchaser plaintiff class (the “DPP Class”). The settlement with the DPP Class does not cover the claims of (a) “direct action” plaintiffs (“DPPs”) that opted-out of Seaboard’s settlement with the DPP Class and are continuing direct actions; (b) other direct purchasers that opted-out of the settlement (“Other Opt-Outs”) and may in the future file actions against Seaboard; (c) the Commercial and Industrial Indirect Purchaser Class (the “CIIP Class”); or (d) the End User Consumer Indirect Purchaser Plaintiff Class (the “EUCP Class”). Subsequent to the settlement with the DPP Class, Seaboard settled with some of the DPPs and Other Opt-Outs. Seaboard continues to litigate against the DPPs it has not settled with, but Seaboard will consider additional reasonable settlements where they are available. On June 18, 2024, and June 20, 2024, Seaboard Foods entered into settlement agreements with the CIIP Class and the EUCP Class, respectively, subject to court approval. Seaboard believes that these settlements were in the best interests of Seaboard and its stakeholders in order to avoid the uncertainty, risk, expense and distraction of protracted litigation. Seaboard believes that it has meritorious defenses to the claims alleged in these matters and intends to vigorously defend any matters not resolved by settlement. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and if unfavorable, could result in a material liability.

Pork Compensation Antitrust Litigation

On November 11, 2022, three employees of pork or beef processing plants filed a class action complaint (the “Class Action”) in the U.S. District Court for the District of Colorado (the “Court”) individually and on behalf of all other employees at such plants (the “Class”), against several pork and beef processors and their subsidiaries and related companies, including Seaboard Foods. The complaint alleges, among other things, that beginning in January 2014, the defendants conspired in violation of antitrust laws to fix and depress the compensation paid to the Class by, among other things, participating in third-party compensation surveys and exchanging wage-related information through a third-party benchmarking service. The relief sought includes treble damages, injunctive relief, pre- and post-judgment interest, costs and attorneys’ fees.

On June 23, 2023, Seaboard Foods reached a settlement with the Class to settle the Class Action which was approved by the Court and paid during Seaboard’s first quarter of 2024.

Cereoil and Nolston Litigation

On March 20, 2018, the bankruptcy trustee (the “Trustee”) for Cereoil Uruguay S.A. (“Cereoil”) filed a suit in the Bankruptcy Court of First Instance in Uruguay naming as parties Seaboard Corporation and its subsidiaries, Seaboard Overseas Limited (“SOL”) and Seaboard Uruguay Holdings Ltd. (“Seaboard Uruguay”). Seaboard Corporation has a 45% indirect ownership of Cereoil. The suit (the “Clawback Action”) seeks an order requiring Seaboard Corporation, SOL and Seaboard Uruguay to reimburse Cereoil the amount of approximately $22 million (approximately $30 million with interest at the statutory rate) (the “Clawback Amount”), contending that deliveries of soybeans to SOL pursuant to purchase

agreements should be set aside as fraudulent conveyances. Seaboard believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. In the event of an adverse ruling, Seaboard and its two subsidiaries could be ordered to pay the Clawback Amount to Cereoil.

On April 27, 2018, the Trustee filed an additional suit in the Bankruptcy Court of First Instance in Uruguay that was served during the second quarter of 2018, naming as parties Seaboard Corporation, SOL, Seaboard Uruguay, all directors of Cereoil, including two individuals employed by Seaboard who served as directors at the behest of Seaboard, and the Chief Financial Officer of Cereoil, an employee of Seaboard who also served at the behest of Seaboard (collectively, the “Cereoil Defendants”). The Trustee contends that the Cereoil Defendants acted with willful misconduct to cause Cereoil’s insolvency, and thus should be ordered to pay all liabilities of Cereoil, net of assets. The bankruptcy filing listed the U.S. dollar equivalent of liabilities of approximately $50 million and assets of approximately $30 million. Based on the information received from the Trustee on the administration of the case and the liquidation of assets, as of June 29, 2024 the U.S. dollar equivalent of liabilities was estimated to be approximately $45 million, and the liquidation value of the remaining assets is negligible. Seaboard believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. In the event of an adverse ruling, Seaboard Corporation and the other Cereoil Defendants could be ordered to pay the liabilities of Cereoil, net of any amounts received from the liquidation of Cereoil’s assets, and could be ordered to pay an inflation adjustment, interest, the Trustee’s fees and other expenses. Any award in this case should be reduced by the amount of any award in the Clawback Action described above that is paid to Cereoil.

On September 30, 2021, HSBC Bank (Uruguay) SA (“HSBC”), a creditor in the Cereoil bankruptcy proceeding pending in Uruguay, filed a suit in the U.S. District Court for the District of Kansas (the “Kansas District Court”) against Seaboard Corporation alleging claims for breach of contract, promissory estoppel, breach of the duty of good faith and fair dealing, unjust enrichment, fraud, negligent misrepresentation and fraud by concealment based upon a comfort letter, alleged statements by Cereoil personnel (including the Chief Financial Officer serving at the behest of Seaboard), and the same grain transactions that the Trustee challenges as fraudulent conveyances in the Cereoil bankruptcy in Uruguay discussed above. HSBC seeks $10 million plus interest and other relief in excess of $3 million. In March 2022, Seaboard filed a motion to dismiss HSBC’s claims on various grounds. On September 23, 2022, the Kansas District Court dismissed six of HSBC’s seven claims. Three of those claims, for fraud, negligent misrepresentation and fraud by concealment, can be refiled by HSBC in Uruguay. The other three claims, for breach of contract, breach of the duty of good faith and fair dealing and unjust enrichment, were dismissed with prejudice and cannot be refiled unless HSBC successfully appeals the Kansas District Court order. The one claim not dismissed in this matter is for promissory estoppel. Seaboard believes that it has meritorious defenses to this claim and intends to vigorously defend it. In the event of an adverse ruling, Seaboard Corporation could be ordered to pay HSBC the amounts described above.

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 listed the U.S. dollar equivalent of liabilities of approximately $29 million and assets of approximately $15 million. Based on the administration of the case which resulted in duplicative claims made in the Cereoil case and the liquidation of assets, as of June 29, 2024, the U.S. dollar equivalent of liabilities was estimated to be approximately $1 million, and there are no remaining assets with any value. Seaboard believes that it has meritorious defenses to the claims alleged in this matter and intends to vigorously defend this matter. In the event of an adverse ruling, Seaboard Corporation and the other defendants could be ordered to pay the liabilities of Nolston, and could be ordered to pay an inflation adjustment, interest, the Trustee’s fees and other expenses.

Guarantees

Certain of Seaboard’s non-consolidated affiliates have debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of such debt in order to further Seaboard’s business objectives. As of June 29, 2024, guarantees outstanding were not material. Seaboard has not accrued a liability for any of the guarantees as the likelihood of loss is remote.

Note 5 – Derivatives and Fair Value of Financial Instruments

The following tables show assets and liabilities measured at fair value on a recurring basis and 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.



	June 29,
(Millions of dollars)	2024		Level 1		Level 2		Level 3
Assets:
Trading securities – short-term investments:
Domestic equity securities	$	211	$	211	$	—	$	—
Foreign equity securities		101		101		—		—
Domestic debt securities		616