Item 1. Business
(a) General Development of Business
Seaboard Corporation, a Delaware corporation, the successor corporation to a company first incorporated in 1928, and subsidiaries ("Registrant" or "Company"), is a diversified international agribusiness and transportation company which is primarily engaged in domestic pork production and processing, and cargo shipping. Overseas, the Company is primarily engaged in commodity merchandising, flour and feed milling, produce farming, sugar production, and electric power generation. See Item 1(c) (1) (ii) below for a discussion of developments in specific segments.
(b) Financial Information about Industry Segments
The information required by Item 1 relating to Industry Segments is hereby incorporated by reference to Note 12 of Registrant's Consolidated Financial Statements appearing on pages 40 through 42 of the Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this Report.
(c) Narrative Description of Business
(1) Business Done and Intended to be Done by the Registrant
(i) Principal Products and Services
Registrant produces hogs and processes pork in the United States and sells fresh pork to further processors, foodservice and retail, primarily in the western half of the United States and foreign markets. Hogs produced at Company owned or leased facilities as well as third-party hogs are processed at the Company's processing plant.
Registrant operates an ocean liner service for containerized cargo primarily between Florida and ports in the Caribbean Basin and Central and South America.
Registrant sources and trades commodities, such as bulk grains and oilseeds, for its subsidiaries, affiliates and third parties primarily in Africa, the Caribbean, Central and South America, the Eastern Mediterranean and Europe. Registrant operates its own bulk carriers primarily in the Atlantic Basin to conduct a portion of its commodity trading activities. Registrant, by itself or through non-controlled subsidiaries, operates flour and feed mills in Africa, the Caribbean and South America.
Registrant operates a power generating facility in the Dominican Republic, produces and refines sugarcane and produces and processes citrus in Argentina, and produces wine in Bulgaria.
Registrant, by itself or through non-controlled affiliates, produces and processes produce and shrimp in Central and South America, primarily for export to the U.S. and Europe. Registrant also brokers fruits, vegetables and shrimp for independent growers. The majority of these products are transported using the Registrant's shipping line and distribution facility in Miami, Florida. The Registrant, through non-controlled affiliates, produces salmon and processes seafood in Maine.
The information required by Item 1 with respect to the amount or percentage of total revenue contributed by any class of similar products or services which account for 10% or more of consolidated revenue in any of the last three fiscal years is hereby incorporated by reference to Note 12 of Registrant's Consolidated Financial Statements appearing on pages 40 through 42 of the Registrant's Annual Report to Stockholders furnished to the Commission pursuant to rule 14a-3(b) and attached as Exhibit 13 to this report.
(ii) Status of Product or Segment
In December 1999, the Registrant agreed to sell its domestic poultry operations. The sale was completed on January 3, 2000.
Registrant continues to expand its pork segment by further investing in pork production and processing facilities. The Registrant is currently making arrangements to increase annual production to approximately three and one-half million hogs per year. In late February 2000, Registrant signed an agreement to acquire approximately 22,000 additional sows effective late March or early April 2000. The Registrant plans to construct a second vertically integrated pork operation capable of processing over four million hogs annually although the timing has not been finalized.
The Registrant's Argentine subsidiary continues to make improvements to existing facilities and expand the sugarcane fields.
In January 2000, the Registrant signed a construction contract to build a 71.2 megawatt barge-mounted power plant to be located in the Dominican Republic and anticipates supplying power in the fourth quarter of 2000.
(iii) Sources and Availability of Raw Materials
None of Registrant's businesses utilize material amounts of raw materials that are dependent on purchases from one supplier or a small group of dominant suppliers.
(iv) Patents, Trademarks, Licenses, Franchises and Concessions
The following names of the Registrant's businesses are registered trademarks: Seaboard, Seaboard Farms and Seaboard Marine.
Patents, trademarks, franchises, licenses and concessions are not material to any of Registrant's other segments.
(v) Seasonal Business
Profits from processed pork are generally higher in the fall months. Produce operations are seasonal, depending on the crop being grown. Generally, crops which are exported to the United States are only in production from November through May. Sugar prices in Argentina are generally lower during the typical sugar cane harvest period between June and November. The Registrant's other segments are not seasonally dependent to any material extent.
(vi) Practices Relating to Working Capital Items
There are no unusual industry practices or practices of Registrant relating to working capital items.
(vii) Depending on a Single Customer or Few Customers
Registrant does not have sales to any one customer equal to 10% or more of Registrant's consolidated revenues. All of the sales of the power segment are to the state-owned electric company of the Dominican Republic. No other segments have sales to a few customers which, if lost, would have a material adverse effect on any such segment or on Registrant taken as a whole.
(viii) Backlog
Backlog is not material to Registrant's businesses.
(ix) Government Contracts
No material portion of Registrant's business involves government contracts.
(x) Competitive Conditions
Competition in Registrant's pork segment comes from a variety of national and regional producers and is based primarily on product performance, customer service and price. In the October 1999 issue of Successful Farming, an industry trade publication, the Registrant was ranked in the top five pork producers in the United States based on sows in production.
Registrant's ocean liner service for containerized cargoes faces competition based on price and customer service. A new U.S. shipping law, The Ocean Reform Act of 1998, went into effect in May 1999 and permits shipping companies to enter into unregulated confidential rate agreements with shippers. Management is not able to predict the impact of this new law, if any, on the Registrant. Registrant believes it is among the top five ranking ocean liner services for containerized cargoes in the Caribbean Basin based on cargo volume.
Registrant's sugar business faces significant competition for sugar sales in the local Argentine market. Sugar prices in Argentina are higher than world markets due to current Argentine government price protection policies. The entire Argentine sugar industry is experiencing financial difficulties with Tabacal and certain large competitors incurring operating losses in part because Argentine sugar prices are below historical levels.
Registrant's Bulgarian wine production business faces increasing competition for quality grapes from local grape suppliers.
(xi) Research and Development Activities
Registrant does not engage in material research and development activities.
(xii) Environmental Compliance
Registrant believes that it is in substantial compliance with applicable Federal, state and local provisions relating to environmental protection, and no significant capital expenditures are contemplated in this area.
(xiii) Number of Persons Employed by Registrant
As of December 31, 1999, Registrant, excluding non- controlled, non-consolidated foreign subsidiaries, had 9,763 employees, of whom 4,246 were employed in the United States. These totals exclude 5,690 employees of the Poultry division which was sold on January 3, 2000, and presented as a discontinued operation in the Company's 1999 financial statements.
(d) Financial Information about Foreign and Domestic Operations and Export Sales
The financial information required by Item 1 relating to export sales is hereby incorporated by reference to Note 12 of Registrant's Consolidated Financial Statements appearing on pages 40 through 42 of Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this report. Registrant did not have a material amount of sales or transfers between geographic areas for the periods reported on herein.
Registrant considers its relations with the governments of the countries in which its foreign subsidiaries are located to be satisfactory, but these foreign operations are subject to the normal risks of doing business abroad, including expropriation, confiscation, war, insurrection, civil strife and revolution, currency inconvertibility and devaluation, and currency exchange controls. To minimize these risks, Registrant has insured certain investments in and loans to its affiliate shrimp farm in Ecuador, its winery in Bulgaria and its affiliate flour mills, in Democratic Republic of Congo, Ecuador, Haiti, Lesotho, Mozambique and Zambia, to the extent deemed appropriate against certain of these risks with the Overseas Private Investment Corporation, an agency of the United States Government. In addition, the Company has purchased commercial insurance to cover certain forms of political risk if physical damage is done to its own and affiliate facilities abroad.
Item 2.
Item 2. Properties
(1) Pork
The Registrant owns a hog processing plant in Oklahoma with a double shift capacity in excess of four million hogs per year. Hog production facilities currently consist of a combination of owned and leased farrowing, nursery and finishing units to support 160,000 sows. Registrant owns three feed mills which have a combined capacity to produce 850,000 tons of feed annually to support the hog production. These facilities are located in Oklahoma, Texas, Kansas and Colorado.
(2) Marine
Registrant leases a 135,000 square foot warehouse and more than 90 acres of port terminal land and facilities in Florida which are used in its containerized cargo operations. In addition, Registrant timecharters, under short-term agreements, between sixteen and twenty containerized ocean cargo vessels with deadweights ranging from 2,600 to 17,565 metric-tons. Registrant also bareboat charters, under long-term lease agreements, three containerized ocean cargo vessels with deadweights ranging from 12,169 to 12,648 metric tons.
(3) Commodity Trading and Milling
The Registrant owns in whole or in part ten flour mills with capacity to produce over 5,000 metric tons of flour per day. In addition, Registrant has feed mill capacity of 75 metric tons per hour to produce formula animal feed. The flour mills, located in Angola, Democratic Republic of Congo, Ecuador, Guyana, Haiti, Lesotho, Mozambique, Nigeria, Sierra Leone and Zambia, and the feed mills located in Ecuador, Lesotho, Nigeria and Zambia are owned; in Lesotho, Nigeria and Sierra Leone the land the mills are located on is leased under long-term agreements. The Registrant owns seven 9,000 metric-ton deadweight dry bulk carriers.
(4) Sugar and Citrus
Registrant has a controlling interest in an Argentine company which owns approximately 33,000 acres of planted sugarcane and approximately 2,700 acres of planted citrus. In addition, this company owns a sugar mill with a capacity to process approximately 165,000 metric tons of sugar per year.
(5) Power
Registrant owns a floating power generating facility, capable of producing 40 megawatts of power, located in Santo Domingo, Dominican Republic.
(6) Wine
Registrant owns a controlling interest in a Bulgarian winery with a capacity to produce approximately 41 million liters of wine per year. Related facilities are located on approximately 330 acres of owned land.
(7) Other
Registrant leases 1,900 acres in Honduras and 1,000 acres in Arizona for growing produce. Registrant also leases 40,000 square feet of refrigerated space and 70,000 square feet of dry space in the Port of Miami for warehousing produce products.
Registrant, by itself or through non-controlled affiliates, operates approximately 3,100 acres of shrimp ponds in Honduras and Ecuador. Approximately 1,600 acres are leased and the rest are owned.
Registrant owns a non-controlling interest in a company in Maine capable of producing over 11 million pounds of salmon per year. Registrant owns a non-controlling interest in a company in Maine with a 20,000 square feet facility for processing seafood and related products.
Management believes that the Registrant's present facilities are generally adequate and suitable for its current purposes. In general, facilities are fully utilized; however, seasonal fluctuations in inventories and production may occur as a reaction to market demands for certain products. Certain foreign flour mills may operate at less than full capacity due to unavailability of foreign exchange to pay for imported raw materials.
Poultry facilities sold in January 2000 consisted of four fully integrated processing facilities and two further processing facilities located in Georgia, Tennessee and Kentucky. Each processing facility contained a hatchery, feed mill and processing plant.
Item 3.
Item 3. Legal Proceedings
The Company is subject to legal proceedings related to the normal conduct of its business, including as a defendant in a maritime arbitration claim and third-party hog supplier claim more fully described in Note 11 of the consolidated financial statements. In the opinion of management, none of these actions are expected to result in a final judgement having a materially adverse effect on the consolidated financial statements of the Company.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the last quarter of the fiscal year covered by this report to a vote of security holders.
Executive Officers of Registrant
The following table lists the executive officers and certain significant employees of Registrant. Generally, each executive officer is elected at the Annual Meeting of the Board of Directors following the Annual Meeting of Stockholders and holds his office until the next such annual meeting or until his successor is duly chosen and qualified. There are no arrangements or understandings pursuant to which any executive officer was elected.
Name (Age) Positions and Offices with Registrant and Affiliates
H. Harry Bresky (74) President of Registrant; President and Treasurer of Seaboard Flour Corporation (SFC)
Joe E. Rodrigues (63) Executive Vice President and Treasurer
Rick J. Hoffman (45) Vice President
Steven J. Bresky (46) Vice President
Robert L. Steer (40) Vice President - Chief Financial Officer
Douglas W. Schult (43) Vice President - Human Resources
James L. Gutsch (46) Vice President - Engineering
David M. Becker (38) General Counsel and Assistant Secretary
Mr. H. Harry Bresky has served as President of Registrant since 1967 and as President of SFC since 1987, and as Treasurer of SFC since 1973. Mr. Bresky is the father of Steven J. Bresky.
Mr. Rodrigues has served as Executive Vice President and Treasurer of Registrant since December 1986.
Mr. Hoffman has served as Vice President of Registrant since April 1989.
Mr. Steven J. Bresky has served as Vice President of Registrant since April 1989.
Mr. Steer has served as Vice President - Chief Financial Officer of Registrant since April 1998 and previously as Vice President - Finance of Registrant since April 1996. He has been employed with the Registrant since 1984.
Mr. Schult has served as Vice President - Human Resources of Registrant since April 1996. He has been employed with the Registrant since February 1995 and by M.G. Waldbaum from January 1993 to January 1995.
Mr. Gutsch has served as Vice President - Engineering of Registrant since December 1998. He has been employed with the Registrant since 1984.
Mr. Becker has served as General Counsel and Assistant Secretary of Registrant since April 1998 and previously Assistant Secretary of Registrant since May 1994.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information required by Item 5 is hereby incorporated by reference to "Stock Listing" and "Quarterly Financial Data" appearing on pages 44 and 15, respectively, of Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this Report.
Item 6.
Item 6. Selected Financial Data
The information required by Item 6 is hereby incorporated by reference to the "Summary of Selected Financial Data" appearing on page 14 of Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 of this Report.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by Item 7 is hereby incorporated by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 16 through 23 of Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this Report.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A is hereby incorporated by reference to the material under the captions "Financial Instruments" and "Commodity Instruments" within Note 1 of the Registrant's Consolidated Financial Statements appearing on page 33, and to the material under the caption "Derivative Information" within "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing on pages 22 through 23 of the Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this Report.
Item 8.
Item 8. Financial Statements and Supplementary Data
The information required by Item 8 is hereby incorporated by reference to Registrant's "Quarterly Financial Data," "Independent Auditors' Report," "Consolidated Statements of Earnings," "Consolidated Balance Sheets," "Consolidated Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows" and "Notes to Consolidated Financial Statements" appearing on pages 15 and 24 through 43 of Registrant's Annual Report to Stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this Report.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10.
Item 10. Directors and Executive Officers of Registrant
Refer to "Executive Officers of Registrant" in Part I.
Information required by this item relating to directors of Registrant has been omitted since Registrant filed a definitive proxy statement within 120 days after December 31, 1999, the close of its fiscal year. The information required by this item relating to directors is incorporated by reference to "Item 1" appearing on pages 3 and 4 of the 2000 Proxy statement. The information required by this item relating to late filings of reports required under Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to the last paragraph on page 2 of the Registrant's 2000 Proxy Statement.
Item 11.
Item 11. Executive Compensation
This item has been omitted since Registrant filed a definitive proxy statement within 120 days after December 31, 1999, the close of its fiscal year. The information required by this item is incorporated by reference to "Executive Compensation and Other Information," "Retirement Plans" and "Compensation Committee Interlocks and Insider Participation" appearing on pages 5 through 8 and 10 of the 2000 Proxy Statement.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This item has been omitted since Registrant filed a definitive proxy statement within 120 days after December 31, 1999, the close of its fiscal year. The information required by this item is incorporated by reference to "Principal Stockholders" appearing on page 2 and "Election of Directors" on pages 3 and 4 of the 2000 Proxy Statement.
Item 13.
Item 13. Certain Relationships and Related Transactions
This item has been omitted since Registrant filed a definitive proxy statement within 120 days after December 31, 1999, the close of its fiscal year. The information required by this item is incorporated by reference to "Compensation Committee Interlocks and Insider Participation" appearing on page 10 of the 2000 Proxy Statement.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Consolidated financial statements. See Index to Consolidated Financial Statements on page.
2. Consolidated financial statement schedules. See Index to Consolidated Financial Statements on page.
3. Exhibits.
2.1 - Asset Purchase Agreement by and between Seaboard Corporation and ConAgra, Inc., dated December 6, 1999. Incorporated by reference to Exhibit 2.1 of Registrant's Form 8-K, dated January 3, 2000.
2.2 - Addendum to Asset Purchase Agreement dated December 30, 1999. Incorporated by reference to Exhibit 2.2 of Registrant's Form 8-K, dated January 3, 2000.
3.1 - Registrant's Certificate of Incorporation, as amended, incorporated by reference to Exhibit 3.1 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
3.2 - Registrant's By-laws, as amended. Incorporated by reference to Exhibit 2.1 of Registrant's Form 10-Q for the quarter ended March 31, 1999.
4.1 - Note Purchase Agreement dated December 1, 1993 between the Registrant and various purchasers as listed in the exhibit. The Annexes and Exhibits to the Note Purchase Agreement have been omitted from the filing, but will be provided supplementally upon request of the Commission. Incorporated by reference to Exhibit 4.1 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
4.2 Seaboard Corporation 6.49% Senior Note Due December 1, 2005 issued pursuant to the Note Purchase Agreement described above. Incorporated by reference to Exhibit 4.2 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
4.3 Note Purchase Agreement dated June 1, 1995 between the registrant and various purchasers as listed in the exhibit. The Annexes and Exhibits to the Note Purchase Agreement have been omitted from the filing, but will be provided supplementally upon request of the Commission. Incorporated by reference to Exhibit 4.3 of Registrant's Form 10-Q for the quarter ended September 9, 1995.
4.4 Seaboard Corporation 7.88% Senior Note Due June 1, 2007 issued pursuant to the Note Purchase Agreement described above. Incorporated by reference to Exhibit 4.4 of Registrant's Form 10-Q for the quarter ended September 9, 1995.
4.5 - Seaboard Corporation Note Agreement dated as of December 1, 1993 ($100,000,000 Senior Notes due December 1, 2005). First Amendment to Note Agreement. Incorporated by reference to Exhibit 4.7 of Registrant's Form 10-Q for the quarter ended March 23, 1996.
4.6 - Seaboard Corporation Note Agreement dates as of June 1, 1995 ($125,000,000 Senior Notes due June 1, 2007). First Amendment to Note Agreement. Incorporated by reference to Exhibit 4.8 of Registrant's Form 10-Q for the quarter ended March 23, 1996.
* 10.1 Registrant's Executive Retirement Plan dated January 1, 1997. The addenda have been omitted from the filing, but will be provided supplementary upon request of the Commission. Incorporated by reference to Exhibit 10.1 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
* 10.2 Registrant's Amended and Restated Supplemental Executive Retirement Plan. Incorporated by reference to Exhibit 10.2 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
* 10.3 Registrant's Supplemental Executive Retirement Plan for H. Harry Bresky dated March 21, 1995. Incorporated by reference to Exhibit 10.3 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995.
* 10.4 Employment Agreement for Joe E. Rodrigues dated July 9, 1986 and amended August 10, 1990. Incorporated by reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995.
* 10.5 Registrant's Executive Deferred Compensation Plan dated January 1, 1999. Incorporated by reference to Exhibit 10.1 of Registrant's Form 10-Q for the quarter ended March 31, 1999.
13 - Sections of Annual Report to security holders incorporated by reference herein.
18 - Letter regarding change in accounting principles.
21 - List of subsidiaries.
27 - Financial Data Schedule (included in electronic copy only).
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
On January 18, 2000 the Registrant filed a report on Form 8- K, dated January 3, 2000, disclosing the sale of its poultry businesses. This sale is further described in Note 13 to the Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SEABOARD CORPORATION
By /s/H. Harry Bresky By /s/Robert L. Steer H. Harry Bresky, President Robert L. Steer, Vice President - Chief (principal executive officer) Financial Officer (principal financial and accounting officer)
Date: March 10, 2000 Date: March 10, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.
By /s/H. Harry Bresky By /s/J.E. Rodrigues H. Harry Bresky, Director J.E. Rodrigues, Director
Date: March 10, 2000 Date: March 10, 2000
By /s/David A. Adamsen By /s/Thomas J. Shields David A. Adamsen, Director Thomas J. Shields, Director
Date: March 10, 2000 Date: March 10, 2000
SEABOARD CORPORATION AND SUBSIDIARIES
Consolidated Financial Statements and Schedule (Form 10-K) Securities and Exchange Commission For the year ended December 31, 1999
(With Independent Auditors' Report Thereon)
SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Financial Statements
Stockholders' Annual Report Page
Independent Auditors' Report 24
Consolidated Statements of Earnings for the years ended December 31, 1999, December 31, 1998 and December 31, 1997 25
Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998 26
Consolidated Statements of Changes in Equity for the years ended December 31, 1999, December 31, 1998 and December 31, 1997 28
Consolidated Statements of Cash Flows for the years ended December 31, 1999, December 31, 1998 and December 31, 1997 29
Notes to Consolidated Financial Statements 30
The foregoing are incorporated by reference.
The individual financial statements of the nonconsolidated foreign affiliates which would be required if each such foreign affiliate were a Registrant are omitted, because (a) the Registrant's and its other subsidiaries' investments in and advances to such foreign affiliates do not exceed 20% of the total assets as shown by the most recent consolidated balance sheet; (b) the Registrant's and its other subsidiaries' proportionate share of the total assets (after intercompany eliminations) of such foreign affiliates do not exceed 20% of the total assets as shown by the most recent consolidated balance sheet; and (c) the Registrant's and its other subsidiaries' equity in the earnings before income taxes and extraordinary items of the foreign affiliates does not exceed 20% of such income of the Registrant and consolidated subsidiaries compared to the average income for the last five fiscal years.
Combined condensed financial information as to assets, liabilities and results of operations have been presented for nonconsolidated foreign affiliates in Note 5 of "Notes to the Consolidated Financial Statements."
(Continued) SEABOARD CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Schedule
Page
II - Valuation and Qualifying Accounts for the years ended December 31, 1999, 1998 and 1997
All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related consolidated notes.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders Seaboard Corporation:
Under date of February 28, 2000, we reported on the consolidated balance sheets of Seaboard Corporation and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings, changes in equity and cash flows for each of the years in the three-year period ended December 31, 1999, as contained in the December 31, 1999 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended December 31, 1999. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
As discussed in Note 4 to the consolidated financial statements, the Company changed its method of accounting for certain inventories from the first-in, first-out method to the last-in, first-out method in 1999.
KPMG LLP
Kansas City, Missouri February 28, 2000