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Item 1A. Risk Factors

Business and Operational Risks

● foreign currency exchange or retail price controls;

● hyperinflation;

● heightened customer credit and execution risk;

Accordingly, revenues, operating income and cash flows from international operations could fluctuate significantly from year to year. In addition, border restrictions and foreign government policies and regulations could restrict the purchase of various commodities, reducing Seaboard’s ability to access materials or ports, or limiting sales prices for products sold in local markets.

● impair the financial viability of Seaboard’s insurers.

Industry Risks

● food spoilage;

● food allergens;

● adverse weather and climate change risks;

● international, federal, state and local food processing regulations;

● the possible unavailability and/or expense of liability insurance;

● consumer product liability claims;

● product recall;

● product tampering; and

Pathogens that may cause food contamination are found generally in livestock and in the environment and therefore may be present in Seaboard’s products. These pathogens also can be introduced to Seaboard’s products as a result of improper handling by customers or consumers. Seaboard does not have control over handling procedures once products have been shipped for distribution. If one or more of these risks were to materialize, Seaboard’s brand reputation could be harmed, revenues could decrease, costs of doing business could increase, and Seaboard’s operating results could be adversely affected.

These fluctuating market conditions could have a significant impact on Seaboard’s sales, value of commodities held in inventory and operating income.

The geographic areas in which Seaboard operates have also experienced labor shortages resulting in higher labor costs. The inability to acquire and retain the services of such personnel, or increased costs associated with the acquisition and retention of such personnel, could have a material adverse effect on Seaboard’s operations.

● inclement weather;

● mechanical failures;

● grounding, fire, explosions and collisions;

● human error;

● war, piracy and terrorism; and

● port access and congestion.

Any of these hazards could result in death or injury to persons, loss of property, environmental damages, delays or rerouting. If one of Seaboard’s vessels were involved in an incident, the resulting negative public perception could have a material adverse effect on Seaboard’s business, financial condition and results of operations.

Legal and Regulatory Risks

Failure to comply with these laws and regulations and any future changes to them could result in significant consequences to Seaboard, including civil and criminal penalties, liability for damages, negative publicity and the inability to do business in certain locales. In addition, future changes in laws, regulations and standards may result in additional costs or a reduction in revenues.

Specific Pork Segment Risks

Specific Commodity Trading and Milling Segment Risks

Specific Marine Segment Risks

Specific Sugar and Alcohol Segment Risks

Specific Power Segment Risks

Specific Turkey Segment Risks

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Management believes that Seaboard’s present facilities are adequate and suitable for its current purposes. Seaboard’s principal properties by segment are described below:

(1) Pork - Seaboard’s Pork segment owns a pork processing plant in Oklahoma. It has a double-shift capacity to process approximately six million hogs annually and generally operates at capacity with additional weekend shifts depending on market conditions. Seaboard’s hog production operations can breed and raise approximately eight million hogs annually at facilities it primarily owns or at facilities owned and operated by third parties with whom it has grower contracts. This segment owns and operates eight centrally located feed mills, which have a combined capacity to produce approximately three million tons of formulated feed annually. These feed mills are used primarily to support existing hog production and have the capability of supporting additional hog production in the future. These facilities are located in Iowa, Oklahoma, Texas, Kansas and Colorado. The Pork segment owns biodiesel plants in Oklahoma and Missouri, with the capacity to produce 46 million gallons and 30 million gallons, respectively, of biodiesel annually, and a renewable diesel plant in Kansas with capacity to produce 85 million gallons of renewable diesel annually. The renewable diesel plant began operations in the third quarter of 2022 and it is expected operations will reach capacity later in 2023. The Pork segment uses a terminal facility in California with a maximum throughput capacity to store and distribute approximately 300 million gallons of fuel per year.

(2) Commodity Trading and Milling - Seaboard’s CT&M segment operates milling facilities at 13 locations in 9 countries and has 11 trading offices in 10 countries. The milling facilities located in Ecuador, Ghana, Guyana, Mozambique, Peru, Republic of Congo, and Zambia own the land and plants. There are additional milling facilities located in Ivory Coast, Republic of Congo, Senegal and Zambia where the land is leased under long-term agreements. These facilities produce approximately two million metric tons of wheat flour, maize meal, manufactured feed and oilseed crush commodities per year in addition to other related grain-based products. Certain foreign milling operations may operate at less than full capacity due to low demand, poor consumer purchasing power, excess milling capacity in their competitive environment or imported flour. Seaboard’s CT&M segment owns three 18,900 metric ton deadweight dry bulk vessels and charters between 26 to 55 bulk vessels with deadweights of up to 176,000 metric tons under short-term agreements.

(3) Marine - Seaboard’s Marine segment leases approximately 297,000 square feet of off-port warehouse space and 87 acres of port terminal land and facilities in Miami, Florida, which are used in its containerized cargo operations. Seaboard’s Marine segment also leases an approximate 77-acre cargo handling and marine terminal facility in Houston, Texas, which includes several warehouses totaling approximately 648,000 square feet for cargo storage. The Marine segment owns six ocean cargo vessels with deadweights of up to approximately 34,000 metric tons. Seaboard’s Marine segment has six new vessels under construction, with three vessels expected to be completed in 2024 and the other three vessels in 2025. Also, this segment charters 17 vessels under contracts with a remaining average term of 15 months with deadweights of up to approximately 34,700 metric tons. Seaboard’s Marine segment owns or leases dry, refrigerated and specialized containers and other related equipment.

(4) Sugar and Alcohol - Seaboard’s Sugar and Alcohol segment owns nearly 70,000 acres of cultivated land to grow sugarcane and a sugar mill with an annual capacity to crush approximately three million metric tons of sugar cane. The facility, including an alcohol distillery, has an annual production capacity of approximately 250,000 metric tons of sugar if maximizing sugar production, and approximately 33 million gallons of alcohol if maximizing alcohol production. Depending on the market conditions, this segment can produce more sugar and less alcohol, or vice versa. This capacity is sufficient to process all of the cane harvested by this segment and additional quantities purchased from third-party

farmers in the region. The sugarcane fields, processing mill, distillery and 51-megawatt cogeneration power plant are located in northern Argentina in the Salta Province. This area experiences seasonal rainfalls that may limit the harvest season, which then affects the duration of mill operations and quantities of sugar, alcohol and power produced.

(5) Power - Seaboard’s Power segment owns two power-generating barges that are secured on the Ozama River in Santo Domingo, Dominican Republic. EDM II and EDM III can generate approximately 108 megawatts and 148 megawatts, respectively, of electricity.

(6) Turkey - Seaboard’s Turkey segment has a total of three processing plants, three further processing plants and numerous company and third-party live production facilities and feed milling operations, located in North Carolina, Arkansas, Missouri and Kansas. These facilities produce approximately one billion pounds of turkey each year. Although capacity to meet core further processing demand is sufficient, Butterball uses third-party copacker arrangements to supplement portions of its portfolio where it either does not maintain competencies, or to meet demand beyond its internal production capacity.

Item 3. Legal Proceedings

The information required by this item is included in Note 8 to the consolidated financial statements.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Seaboard’s common stock is traded on the NYSE American under the symbol SEB. Seaboard had 3,347 stockholders of record of its common stock as of January 31, 2023.

Stock Performance Graph

The SEC requires a five-year comparison of Seaboard’s stock performance with that of an appropriate broad equity market index and similar industry index. Since there is no single industry index to compare stock performance, the companies comprising the Dow Jones U.S. Food Products and Dow Jones U.S. Marine Transportation Industry indices (the “Peer Group”) were chosen as the second comparison.

The following line graph shows a five-year comparison of cumulative total return for Seaboard Corporation, the NYSE American Index and the companies comprising the Peer Group, weighted by market capitalization for the five fiscal years commencing December 31, 2017 and ending December 31, 2022.

The comparison of cumulative total returns presented in the above graph was plotted using the following index values and common stock price values:

In each of the four quarters of 2022, 2021 and 2020, Seaboard declared and paid quarterly dividends of $2.25 per share of common stock. Seaboard’s Board of Directors intends that Seaboard will continue to pay quarterly dividends for the reasonably foreseeable future, with such future dividends and the amount of any such dividends being subject to the determination, declaration and discretion of Seaboard’s Board of Directors and dependent upon factors such as Seaboard’s financial condition, results of operations, and current and anticipated cash needs, including capital requirements. As

discussed in Note 7 to the consolidated financial statements, Seaboard’s ability to declare and pay dividends is subject to limitations imposed by debt agreements.

Seaboard has not established any equity compensation plans or individual agreements for its employees under which Seaboard common stock or options, rights or warrants with respect to Seaboard common stock, may be granted.

Item 6.Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, Seaboard’s consolidated financial statements and the accompanying notes in Item 8. Certain statements in this report contain forward-looking statements. See the introduction in Item 1 for more information on these forward-looking statements, including a discussion of the most significant factors that could cause actual results to differ materially from those in the forward-looking statements.

OVERVIEW

Sales and costs of Seaboard’s segments are significantly influenced by worldwide fluctuations in commodity prices and changes in foreign political and economic conditions. Accordingly, sales, operating income and cash flows can fluctuate significantly from year to year. As each segment operates in a distinct industry and a different geographic location, management evaluates their operations separately. Seaboard’s reporting segments are based on information used by Seaboard’s CEO to determine allocation of resources and assess performance, in his capacity as chief operating decision maker.

Pork Segment

The Pork segment primarily produces hogs to process and sells pork products throughout the U.S. and to foreign markets. Sales prices are directly affected by both domestic and worldwide supply and demand for pork products and other proteins. Feed accounts for the largest input cost in raising hogs and is materially affected by price changes for corn and soybean meal. Market prices for hogs purchased from third parties for processing at the plant also represent a major cost factor. This segment’s profitability is susceptible to commodity price fluctuations and its operating income and cash flows can materially fluctuate from year to year, significantly affecting Seaboard’s consolidated operating income and cash flows. This segment is Seaboard’s most capital-intensive segment, representing approximately 61% of Seaboard’s total fixed assets and approximately 50% of total inventories as of December 31, 2022. With the plant generally operating near capacity, Seaboard is continually looking for ways to enhance the plant’s operational efficiency, while also looking to increase margins by introducing new, higher margin value-added products. This segment also produces biodiesel and renewable diesel and related credits for sale to third parties. Sales prices are affected by the supply and demand of diesel and environmental credit initiatives.

CT&M Segment

The CT&M segment provides integrated agricultural commodity trading, processing and logistics services. The majority of its sales are derived from sourcing agricultural commodities from multiple origins which are delivered to third-party and affiliate customers in various international locations. This segment’s sales are also significantly affected by fluctuating prices of various commodities, such as wheat, corn and soybean meal. Exports from various countries can exacerbate volatile market conditions thatmay have a significant impact on this segment’s sales and operating income. Profit margins are sometimes protected through commodity derivatives and other risk management practices. The execution of these purchase and delivery transactions have long cycles of completion, which may extend for several months with a high degree of price volatility. As a result, these factors can significantly affect sales volumes, operating income, working capital and related cash flows from period to period. This segment represents approximately 44% of Seaboard’s total inventories as of December 31, 2022. Consolidated subsidiaries and non-consolidated affiliates operate the grain processing facilities in foreign countries that are, in most cases, lesser developed and can be significantly impacted by changes in local crop production, political instability and local government policies, as well as fluctuations in economic and industry conditions and foreign currency exchange rates. This segment has invested in several entities in recent years and continues to seek opportunities to expand its business.

Marine Segment

The Marine segment provides cargo shipping services in the U.S., the Caribbean and Central and South America. Fluctuations in economic conditions and political instability in the regions or countries in which this segment operates may affect trade volumes and operating profits. In addition, freight rates can fluctuate depending on regional supply and demand for shipping services. Since this segment time-charters ocean cargo vessels, it is affected by fluctuations in charter

hire rates as well as fuel costs. This segment continues to explore ways to increase volumes on existing routes while seeking opportunities to broaden its route structure in the regions it serves.

Sugar and Alcohol Segment

The Sugar and Alcohol segment produces and processes sugar and alcohol in Argentina, primarily to be marketed locally. This segment’s sales and operating income are significantly affected by local sugar and alcohol prices, and domestic sugar production levels and government regulations affect these local prices. The currency exchange rate can have an impact on reported U.S. dollar sales, operating income and cash flows.

Power Segment

The Power segment is an independent power producer in the Dominican Republic. Spot market rates are impacted by fuel prices and the various producers supplying power to the grid. While fuel is this segment’s largest cost component and is subject to price fluctuations, higher fuel costs generally have been passed on to customers.

Turkey Segment

The Turkey segment, accounted for using the equity method, produces turkeys to process and sells turkey products. Sales prices are directly affected by both domestic and worldwide supply and demand for turkey products and other proteins. Feed accounts for the largest input cost in raising turkeys and is materially affected by price changes for corn and soybean meal. As a result, commodity price fluctuations can significantly affect profitability and cash flows.

LIQUIDITY AND CAPITAL RESOURCES

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 in both the short-term and long-term.

Summary of Sources and Uses of Cash

Seaboard’s principal funding source is cash from operating activities and its principal cash requirements primarily include operating expenses and capital expenditures. As of December 31, 2022, Seaboard had cash and short-term investments of nearly $1.3 billion and additional total working capital of $1.2 billion. The following table presents a summary of Seaboard’s available borrowing capacity under lines of credit.

Total amount

(Millions of dollars) available

Short-term uncommitted and committed lines $ 1,125

Amounts drawn against lines (457)

Available borrowing capacity as of December 31, 2022 $ 668

As of December 31, 2022, $183 million of the $1.3 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. During the fourth quarter of 2022, Seaboard reversed its indefinite reinvestment assertion in connection with certain previously-taxed undistributed earnings of its Seaboard Marine subsidiary due to the tax effectiveness of repatriating. As a result, Seaboard recorded a deferred tax liability of $13 million for federal and state incremental tax costs associated with the future potential repatriation of Seaboard Marine’s previously-taxed foreign undistributed earnings. For all other foreign subsidiaries, Seaboard intends to continue permanently reinvesting their funds outside the U.S. as they continue to demonstrate no need to repatriate them to fund Seaboard’s U.S. operations for the foreseeable future. Seaboard has not recorded deferred taxes for state or foreign withholding taxes that would result upon repatriation of these funds to the U.S. Determination of the tax that might be paid on unremitted earnings if eventually remitted is not practical due to the complexity of the multi-jurisdictional tax environment in which Seaboard operates.

Cash and short-term investments as of December 31, 2022 decreased $206 million from December 31, 2021. The decrease was primarily the result of $474 million for capital expenditures, $117 million for purchases of long-term investments, $58 million for the acquisition of a business, debt payments of $105 million, unrealized losses on short-term investments of $150 million due to capital market volatility, partially offset by higher net cash from operations of $680 million. Cash from operating activities increased $588 million, primarily due to higher cash earnings and less working capital investment, primarily related to inventories due to trade timing.

Capital Expenditures, Acquisitions and Other Investing Activities

During 2022, Seaboard invested $474 million in property, plant and equipment, of which $315 million was in the Pork segment and $136 million was in the Marine segment. The Pork segment expenditures were primarily to fund biogas recovery projects, normal replacement of breeding herd and other investments. At certain hog farms, the Pork segment is constructing biogas recovery facilities to capture methane from its hog lagoons and inject it as renewable natural gas into the local pipeline infrastructure. The Marine segment expenditures primarily related to the purchase of two used vessels and installment payments on vessels under construction.

The total budget for 2023 capital expenditures is approximately $750 million, with $475 million planned in the Pork segment and $200 million in the Marine segment. The Pork segment’s budget primarily includes further investment in hog production assets, completion of certain biogas recovery projects, normal replacement of breeding herd and other investments. The Marine segment’s budget primarily includes continued installment payments on vessels under construction. During the third quarter of 2022, Seaboard’s Marine segment executed contracts to build three additional dual-fueled vessels that are estimated to cost $62 million each for a total cash outlay of approximately $186 million. The contracts executed in 2021 for the three initial vessels were estimated to cost $60 million each for a total cash outlay of approximately $180 million. The payments for all six vessels under construction are made in accordance with milestones achieved throughout construction. The three initial vessels are expected to be complete in 2024 and the three additional vessels are expected to be complete in 2025. As of December 31, 2022, long-term capital expenditure cash requirements included approximately $150 million in 2024 and $100 million in 2025 for these vessels under construction. Management anticipates paying for capital expenditures from a combination of available cash, the use of available short-term investments and Seaboard’s available borrowing capacity.

Seaboard acquired businesses in 2022, 2021 and 2020, and intends to continue to look for opportunities to further grow and diversify its operations, but there are no definitive plans for additional acquisitions at this time. Management intends to utilize existing liquidity, available borrowing capacity and other financing alternatives to fund these opportunities. 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. Seaboard may also fund capital calls and issue borrowings for its equity method investments based on specific facts and circumstances.

From time to time, proceeds from the sale of short-term investments may be used to fund capital expenditure purchases or working capital needs. Included in the $2 billion of gross cash flows related to both the sale and purchase of short-term investments in the consolidated statement of cash flows for the year ended December 31, 2021 was asset reallocation intended to reduce equity exposure. Seaboard continues to make long-term investments, with $117 million, $98 million and $47 million invested during the years ended December 31, 2022, 2021 and 2020, respectively.As of December 31, 2022, Seaboard is committed to invest approximately $15 million in certain long-term investments in 2023, primarily real-estate related.

Financing Activities

Seaboard believes it has adequate available borrowings to meet short-term and long-term operating needs. During 2022, there was a high volume of draws and repayments activity under lines of credit compared to prior years with the draws used to fund working capital and greater investments in capital expenditures. Seaboard had long-term debt of $710 million as of December 31, 2022, which includes a term loan due 2028 of $670 million. Current maturities on long-term debt were $7 million as of December 31, 2022, with expected annual interest payments of approximately $41 million based on interest rates as of year-end. During 2021, Seaboard repaid foreign subsidiary debt related to a 2018 acquisition of $46 million upon its maturity. See Note 7 to the consolidated financial statements for further discussion of debt.

Future Contractual Obligations

Other than those obligations discussed above, future obligations mostly include normal operating expenses. For operating and finance leases, Seaboard had a current undiscounted obligation of $236 million and a long-term undiscounted obligation of $550 million as of December 31, 2022 per Note 5 to the consolidated financial statements. The majority of Seaboard’s purchase commitments for materials or supplies are related to hog, grain, feedstock and fuel procurement contracts with a current obligation of approximately $1.6 billion and a long-term obligation of approximately $1.1 billion as of December 31, 2022, per Note 8 to the consolidated financial statements. Also, Seaboard is subject to obligations under its existing defined benefit pension plans. As of December 31, 2022, the unfunded status of all plans was $94 million. Anticipated employer payments related to the unfunded nonqualified executive plans in 2023 are $36 million. For additional information about Seaboard’s pension plans, see Note 9 to the consolidated financial statements.

RESULTS OF OPERATIONS

Net sales for the years ended December 31, 2022, 2021 and 2020 were $11.2 billion, $9.2 billion and $7.1 billion, respectively. The increase for 2022 compared to 2021 primarily reflected higher sales prices of commodities sold in the CT&M segment, higher freight rates in the Marine segment, the commencement of operations of a second barge in the Power segment, and higher biodiesel sales, partially offset by lower volumes of pork products and market hogs sold in the Pork segment. The increase for 2021 compared to 2020 primarily reflected higher prices of commodities sold in the CT&M segment, higher prices for pork products, market hogs and biodiesel sold in the Pork segment and higher cargo volumes and rates in the Marine segment.

Operating income for the years ended December 31, 2022, 2021 and 2020 was $657 million, $458 million and $245 million, respectively. The increase for 2022 compared to 2021 primarily reflected higher voyage revenue in the Marine segment, higher margins on certain commodities in the CT&M segment and more power generation in the Power segment, partially offset by lower margins on pork product, market hog and biodiesel sales in the Pork segment. The increase for 2021 compared to 2020 primarily reflected higher voyage revenue in the Marine segment, increased margins on pork product and market hog sales in the Pork segment, and higher commodity prices, partially offset by derivative commodity contract losses and other operational costs in the CT&M segment.

Pork Segment

Operating income (loss) $ (96) $ 227 $ 131

Income (loss) from affiliates $ 24 $ 3 $ (9)

Net sales for the Pork segment increased $124 million for the year ended December 31, 2022 compared to 2021. The increase was primarily the result of higher biodiesel prices and increased sales of biofuel credits, and to a lesser extent, higher volumes of biodiesel sold and higher prices of pork products sold, largely offset by a decrease in volumes of pork products sold and lower volumes and prices of market hogs sold.

Operating income for the Pork segment decreased $323 million for the year ended December 31, 2022 compared to 2021. The decrease was primarily due to lower margins on pork product and market hog sales due to higher costs of hogs, including inventory adjustments, and higher feed and plant processing costs, biodiesel-related mark-to-market derivative contract losses, higher feedstock costs for biofuel operations and higher start-up costs for renewable diesel operations. During 2022, the Pork segment recorded lower of cost or market inventory valuation adjustments associated with a combination of factors, including the decline in quoted market hog prices and higher grain costs during the period. The renewable diesel plant in Hugoton, Kansas, began operations during the third quarter of 2022. Management is unable to predict market prices for pork products or biodiesel or the costs of feed or third-party hogs for future periods. Based on current conditions, management anticipates this segment will not be profitable in 2023.

Income from affiliates increased $21 million for the year ended December 31, 2022 compared to 2021 primarily due to improved operations at STF.

Net sales for the Pork segment increased $540 million for the year ended December 31, 2021 compared to 2020. The increase was primarily the result of higher prices of pork products sold, and to a lesser extent, higher prices and volumes of market hogs and higher biodiesel prices, partially offset by lower volumes of pork products sold.

Operating income for the Pork segment increased $96 million for the year ended December 31, 2021 compared to 2020. The increase was primarily due to higher margins on pork product sales and market hogs due to higher sales prices, partially offset by higher hog costs related to feed and higher selling, general and administrative expenses.

Income from affiliates increased $12 million for the year ended December 31, 2021 compared to 2020 due to improved results at both STF and Daily’s primarily related to the commodity markets and return of sales volumes post COVID-19 disruptions.

CT&M Segment

Operating income as reported $ 151 $ 61 $ 118

Marked-to-market adjustments (7) 7 (15)

Income (loss) from affiliates $ 21 $ 18 $ (2)

Net sales for the CT&M segment increased $1.1 billion for the year ended December 31, 2022 compared to 2021. The increase primarily reflected higher sales prices of commodities, and to a lesser extent, higher volumes to third-party customers, partially offset by lower volumes to affiliates due to timing of shipments.

Operating income for the CT&M segment increased $90 million for the year ended December 31, 2022 compared to 2021. The increase primarily reflected higher margins on certain commodities, costs associated with operational changes recorded in 2021 not repeated in the current year, and derivative contract gains of $7 million related to the change in mark-to-market adjustments compared to losses of $7 million in 2021. Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates and the volatility in the commodity markets, management is unable to predict sales and operating results for this segment for future periods. However, management anticipates positive operating income for this segment in 2023, excluding the effects of marking to market derivative contracts.

Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have been lower by $7 million and $15 million in 2022 and 2020, respectively, and higher by $7 million in 2021. 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 fair 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 marked-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time and therefore, these marked-to-market adjustments could reverse in fiscal 2023. Management believes eliminating these marked-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.

Net sales for the CT&M segment increased $1.2 billion for the year ended December 31, 2021 compared to 2020. The increase primarily reflected higher sales prices of most commodities, and to a lesser extent, higher volumes to third-party customers, partially offset by lower volumes to affiliates due to timing of shipments.

Operating income for the CT&M segment decreased $57 million for the year ended December 31, 2021 compared to 2020. The decrease primarily reflected derivative contract losses of $22 million related to the change in mark-to-market adjustments, $18 million of goodwill and property, plant and equipment impairment charges related to plans to dispose of immaterial businesses, and higher selling, general and administrative expenses.

Income from affiliates increased $20 million for year ended December 31, 2021 compared to 2020 primarily due to improved results from several of this segment’s affiliates related to a return of sales volumes post COVID-19 disruptions.

Marine Segment

Operating income $ 591 $ 197 $ 21

Net sales for the Marine segment increased $647 million for the year ended December 31, 2022 compared to 2021. The increase was primarily the result of higher freight rates, partially offset by lower cargo volumes.

Operating income for the Marine segment increased $394 million for the year ended December 31, 2022 compared to 2021. The increase was primarily the result of higher voyage revenue, partially offset by higher voyage-related costs, including charter-hire costs, fuel costs and other operational costs primarily due to increased prices. Management cannot predict changes in fuel costs or other voyage costs, cargo volumes or freight rates for future periods; however, management anticipates this segment will be profitable in 2023.

Net sales for the Marine segment increased $391 million for the year ended December 31, 2021 compared to 2020. The increase was primarily the result of an increase in average freight rates due to strong demand and the global shortage of vessels, and higher cargo volumes. In 2020, cargo volumes were lower due to many of Seaboard Marine’s customers temporarily shutting down due to government orders associated with the COVID-19 pandemic and the recovery of operations taking time.

Operating income for the Marine segment increased $176 million for the year ended December 31, 2021 compared to 2020. The increase was primarily the result of higher voyage revenue, partially offset by higher fuel costs due to the increase in both price and consumption, higher charter-hire costs due to increased rates, and higher terminal and intermodal trucking costs related to the increase in cargo volumes.

Sugar and Alcohol Segment

Operating income $ 11 $ 2 $ 2

Net sales for the Sugar and Alcohol segment increased $6 million for the year ended December 31, 2022 compared to 2021. The increase primarily reflected higher prices of sugar and alcohol sold, partially offset by lower volumes of alcohol, sugar and energy sold as a result of low inventory levels from recent harvests. Sugar and alcohol sales are denominated in Argentine pesos, and an increase in local sales prices may be offset by exchange rate changes in the Argentine peso against the U.S. dollar.

Operating income for the Sugar and Alcohol segment increased $9 million for the year ended December 31, 2022 compared to 2021. The increase primarily reflected higher margins on sugar and alcohol sales, partially offset by lower volumes sold. Management cannot predict local sugar and alcohol prices or the volatility in the currency exchange rate for future periods. Based on these conditions, management cannot predict if this segment will be profitable in 2023.

Net sales for the Sugar and Alcohol segment increased $17 million for the year ended December 31, 2021 compared to 2020. The increase primarily reflected higher prices and volumes of alcohol sold related to strong demand post the COVID-19 pandemic lockdown, partially offset by lower sugar sales.

Operating income for the Sugar and Alcohol segment remained the same for the year ended December 31, 2021 compared to 2020. Higher margins on alcohol sales were primarily offset by lower sugar sales and higher sugar production costs.

Power Segment

Operating income (loss) $ 14 $ (9) $ 3

Net sales for the Power segment increased $98 million for the year ended December 31, 2022 compared to 2021. The increase primarily reflected more power generation with EDM III also in operation, and to a lesser extent, higher spot market rates as a result of higher fuel prices. During the second quarter of 2022, EDM III was placed in service with capacity to generate 148 megawatts of electricity.

Operating income for the Power segment increased $23 million for the year ended December 31, 2022 compared to 2021, primarily due to higher revenues, partially offset by higher fuel and other operational costs. Management cannot predict fuel costs or the extent that spot market rates will fluctuate compared to fuel costs or other power producers for future periods; however, management anticipates this segment will be profitable in 2023. While EDM II remains in operation in the Dominican Republic, Seaboard continues to explore strategic alternatives for this barge, including a sale or relocation.

Net sales for the Power segment decreased $4 million for the year ended December 31, 2021 compared to 2020. The decrease primarily reflected lower production related to the installation of EDM III, temporary fuel constraints and more power generation from lower variable-cost producers, offset by an increase in spot market rates as a result of higher fuel prices. Typically, lower cost power plants are dispatched before those with higher costs.

Operating income for the Power segment decreased $12 million for the year ended December 31, 2021 compared to 2020 primarily due to lower revenues and higher operational costs related to increased fuel, maintenance and labor costs associated with the installation of EDM III.

Turkey Segment

Income (loss) from affiliate $ 103 $ (20) $ (10)

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball. The increase in income from affiliate for 2022 compared to 2021 was primarily the result of higher selling prices, partially offset by lower volumes of turkey products sold and higher feed and plant production costs. The decrease in income from affiliate for 2021 compared to 2020 was primarily the result of lower sales volumes and higher live and plant production costs due to increased feed and labor prices, partially offset by higher sales due to increased prices. Management is unable to predict market prices for turkey products or the cost of feed for future periods; however, management anticipates this segment will be profitable in 2023.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2022 increased $13 million compared to 2021. The increase was primarily the result of higher consulting, travel and other office expenses, partially offset by lower costs associated with Seaboard’s deferred compensation program. Higher personnel costs related to wages and other benefits were offset with lower pension settlements. SG&A expenses for the year ended December 31, 2021 increased $31 million compared to 2020. The increase was primarily the result of higher personnel costs including annual raises and bonuses associated with improved financial performance, more consulting fees associated with legal and other advisory matters, an increase in travel costs as vaccinations became available and bad debt expense. The deferred compensation program costs are offset by the effect of the mark-to-market on investments recoded in other investment income (loss), net.

Interest Expense

Interest expense totaled $40 million, $13 million and $19 million for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in interest expense for 2022 compared to 2021 primarily related to higher interest rates on outstanding debt and mark-to-market gains on interest rate swap agreements in the prior year. The decrease in interest expense for 2021 compared to 2020 primarily related to mark-to-market fluctuations on interest rate swap agreements and lower interest rates on outstanding debt, partially offset by less capitalized interest related to capital expenditure investments. During the third quarter of 2021, Seaboard terminated all of its interest rate swap agreements.

Interest Income

Interest income totaled $32 million, $22 million and $22 million for the years ended December 31, 2022, 2021 and 2020, respectively. Interest income primarily includes interest earned on debt securities.

Other Investment Income (Loss), Net

Other investment income (loss), net totaled ($239) million, $133 million and $84 million for the years ended December 31, 2022, 2021 and 2020, respectively. The decrease in other investment income for 2022 compared to 2021 primarily reflected mark-to-market losses on short-term investments and a $46 million charge recorded during 2022 related to a long-term solar energy investment discussed further in Note 12 to the consolidated financial statements. The charge on this long-term investment is offset with the benefit of the investment tax credits recorded in income tax benefit (expense). The increase in other investment income for 2021 compared to 2020 primarily reflected realized gains on short-term investments, partially offset by mark-to-market losses.

Foreign Currency Gains (Losses), Net

Foreign currency gains (losses), net totaled $5 million, $16 million and ($31) million for the years ended December 31, 2022, 2021 and 2020, respectively. The decrease in foreign currency gains for 2022 compared to 2021 primarily reflected fluctuations in the euro, among fluctuations of other currency exchange rates in several foreign countries. The increase in foreign currency gains for 2021 compared to 2020 primarily reflected gains in the euro, Zambian kwacha and South African rand, among fluctuations of other currency exchange rates in several foreign countries.

Income Tax Expense

The 2022 effective tax rate was lower than the 2021 effective tax rate primarily due to an increase in federal investment tax credits available in 2022 and a change in mix of foreign and domestic earnings, with foreign earnings generally taxed at lower rates. The 2021 effective tax rate was higher than the 2020 effective tax rate primarily due to increased earnings which decreased the proportional effect of tax credits available to offset the associated income tax. See Note 12 to the consolidated financial statements for further information on Seaboard’s income taxes.

CRITICAL ACCOUNTING ESTIMATES

The preparation of Seaboard’s consolidated financial statements requires Seaboard to make estimates, judgments, and assumptions. See Note 1 to the consolidated financial statements for a discussion of significant accounting policies.Management has identified the accounting estimates believed to be the most important to the portrayal of Seaboard’s financial condition and results of operations, and those that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of inherently uncertain matters. Management has reviewed these critical accounting estimates with the Audit Committee of the Board of Directors.

Accrued Pension Liability – The measurement of Seaboard’s pension liability and related expense is dependent on a variety of assumptions and estimates regarding future events. These assumptions include discount rates, assumed rate of return on plan assets, compensation increases, mortality rates and retirement rates. The discount rate and return on plan assets are important elements of liability and expense measurement and are reviewed on an annual basis. The effect of decreasing both the discount rate and assumed rate of return on plan assets by 50 basis points would be an increase in pension expense of approximately $1 million per year. The effects of actual results differing from the assumptions (i.e. gains or losses) are primarily accumulated in accrued pension liability and amortized over future periods if it exceeds the 10% corridor and, therefore, could affect Seaboard’s recognized pension expense in such future periods, as permitted under GAAP. See Note 9 to the consolidated financial statements for discussion of the pension rates and assumptions.

Income Taxes – Income taxes are determined by management based on current tax regulations in the various worldwide taxing jurisdictions in which Seaboard conducts its business. In various situations, accruals have been made for estimates of the tax effects for certain transactions, business structures, the estimated reversal of timing differences and future projected profitability of Seaboard’s various business units based on management’s interpretation of existing facts, circumstances and tax regulations. Should new evidence come to management’s attention that could alter previous conclusions, if tax laws change or if taxing authorities disagree with the positions taken by Seaboard, the change in estimate could result in a material adverse or favorable impact on the financial statements. An increase in the future U.S. federal income tax rate of 5% would decrease tax expense on the reversal of timing differences by approximately $3 million as a one-time adjustment, which would be fully reflected in the period of enactment.

Item 7A. 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 derivatives are used to manage these overall market risks; however, Seaboard does not perform the extensive record-keeping required to account for derivative transactions as hedges. Since these derivatives are not accounted for as hedges, fluctuations in the related prices could have a material impact on earnings in any given year. From time to time, Seaboard also enters into speculative derivative transactions related to its market risks.

Commodity price changes affect the cost of necessary raw materials and other inventories, finished product sales and firm sales commitments. Seaboard uses various grain, hog, oilseed and other commodity futures and options purchase contracts to manage certain risks of increasing prices of raw materials and firm sales commitments or anticipated sales contracts. Short sales contracts are used to offset the open purchase derivatives when the related commodity inventory is purchased in advance of the derivative maturity, effectively offsetting the initial futures or option purchase contract.

The political and economic conditions of the countries in which Seaboard does business, along with fluctuations in the value of the U.S. dollar, cause volatility in currency exchange rates, which exposes Seaboard to fluctuating foreign currency gains and losses that cannot be predicted. Since changes in foreign currency exchange rates affect the cash paid or received on foreign currency-denominated receivables and payables, Seaboard manages certain of these risks through the use of foreign currency exchange agreements.

The following table presents the sensitivity of the fair value of Seaboard’s derivatives to a hypothetical 10% change in market prices and foreign exchange rates as of December 31, 2022 and 2021. The fair value is calculated for each item by valuing each net position at quoted market prices as of the applicable date.

Grains and oilseeds $ 9 $ 4

Vegetable oils 1 1

Energy-related resources — 4

Foreign currencies 22 18

Equity price risk is the risk that Seaboard may incur losses due to adverse changes in the market prices of the equity securities it holds in its short-term investment portfolio. Market prices for equity securities are subject to fluctuation and may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments and general market conditions. As of December 31, 2022 and 2021, the fair value of Seaboard’s marketable equity securities was approximately $602 million and $665 million, respectively, and a hypothetical 10% change in market prices would impact the income statement by $60 million and $67 million, respectively.

As changes in interest rates affect the cash required to service variable-rate debt, Seaboard may use interest rate exchange agreements to manage risks of increasing interest rates. At December 31, 2022, Seaboard had variable-rate debt outstanding of $670 million with an interest rate of 6.01%. A hypothetical 10% change in interest rates effective at December 31, 2022, would have a minimal impact on interest expense. Long-term debt sensitive to changes in interest rates as of December 31, 2021 totaled $678 million with an interest rate of 1.73%

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Seaboard Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Seaboard Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sufficiency of audit evidence over net sales

As described in Note 13 to the consolidated financial statements, the Company earned $11.2 billion of net sales in 2022. Net sales were primarily generated by the Company’s Pork, Commodity, Trading and Milling, Marine, Sugar and Alcohol, and Power operations, which were dispersed over numerous countries. We identified the evaluation of the sufficiency of audit evidence over net sales as a critical audit matter. Evaluating the sufficiency of audit evidence obtained required auditor judgment due to the geographical dispersion of net sales. Furthermore, given the disaggregation of local management and language differences between locations, our audit team consisted of auditors located in multiple countries around the world. The following are the primary procedures we performed to address this critical audit matter. We evaluated the nature and amounts of the Company’s net sales at its various locations and applied auditor judgement to determine the locations at which procedures were to be performed. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s net sales process, including controls related to the recognition of global net sales amounts. We tested samples of individual net sales transactions by comparing the amounts recognized by the Company to relevant underlying documentation such as purchase orders, contractual arrangements, and delivery documents, as applicable. In addition, we evaluated the sufficiency of audit evidence obtained over net sales by assessing the results of procedures performed, including the appropriateness of the nature and extent of audit effort.

We have served as the Company’s auditor since 1959.

Kansas City, Missouri

February 14, 2023

SEABOARD CORPORATION

Consolidated Statements of Comprehensive Income

Years ended December 31,

(Millions of dollars except share and per share amounts) 2022 2021 2020

Net sales:

Cost of sales and operating expenses:

Total cost of sales and operating expenses 10,213 8,411 6,552

Selling, general and administrative expenses 373 360 329

Other income (expense):

Interest expense (40) (13) (19)

Interest income 32 22 22

Income (loss) from affiliates 152 7 (18)

Other investment income (loss), net (239) 133 84

Foreign currency gains (losses), net 5 16 (31)

Miscellaneous, net 12 13 3

Total other income, net (78) 178 41

Earnings before income taxes 579 636 286

Income tax benefit (expense) 3 (65) (3)

Less: Net earnings attributable to noncontrolling interests (2) (1) —

Net earnings attributable to Seaboard $ 580 $ 570 $ 283

Foreign currency translation adjustment (33) 8 (7)

Unrecognized pension cost 43 31 (23)

Other comprehensive income (loss), net of tax $ 10 $ 39 $ (30)

Comprehensive income attributable to Seaboard $ 590 $ 609 $ 252

See accompanying notes to consolidated financial statements.

SEABOARD CORPORATION

Consolidated Balance Sheets

December 31,

(Millions of dollars except share and per share amounts) 2022 2021

Assets

Current assets:

Cash and cash equivalents $ 199 $ 75

Other current assets 139 131

Property, plant and equipment, net 2,246 1,892

Operating lease right of use assets, net 445 496

Investments in and advances to affiliates 753 651

Other intangible assets, net 31 45

Other non-current assets 256 209

Liabilities and Stockholders’ Equity

Current liabilities:

Lines of credit $ 457 $ 516

Accrued compensation and benefits 158 143

Deferred revenue 70 108

Operating lease liabilities 156 171

Accrued voyage costs 61 60

Other current liabilities 198 150

Total current liabilities 1,529 1,552

Long-term debt, less current maturities 702 708

Long-term operating lease liabilities 318 360

Accrued pension liability 71 131

Deferred income taxes — 99

Other non-current liabilities 268 219

Commitments and contingent liabilities

Stockholders’ equity:

Accumulated other comprehensive loss (422) (432)

Total Seaboard stockholders’ equity 4,996 4,416

Noncontrolling interests 18 18

Total liabilities and equity $ 7,902 $ 7,503

See accompanying notes to consolidated financial statements.

SEABOARD CORPORATION

Consolidated Statements of Changes in Equity

Accumulated

Other

Common Comprehensive Retained Noncontrolling

Comprehensive income:

Net earnings — — 283 — 283

Other comprehensive income (loss), net of tax — (31) — 1 (30)

Repurchase of common stock — — (13) — (13)

Dividends on common stock, $9.00/share — — (10) — (10)

Comprehensive income:

Net earnings — — 570 1 571

Other comprehensive income, net of tax — 39 — — 39

Acquisition of noncontrolling interests — — — 6 6

Dividends on common stock, $9.00/share — — (10) — (10)

Comprehensive income:

Net earnings — — 580 2 582

Other comprehensive income, net of tax — 10 — — 10

Distributions to noncontrolling interests — — — (2) (2)

Dividends on common stock, $9.00/share — — (10) — (10)

See accompanying notes to consolidated financial statements.

SEABOARD CORPORATION

Consolidated Statements of Cash Flows

Years ended December 31,

Cash flows from operating activities:

Depreciation and amortization 235 178 172

Deferred income taxes (112) (12) 11

Loss (income) from affiliates (152) (7) 18

Dividends received from affiliates 40 44 20

Other investment loss (income), net 239 (133) (84)

Receivables, net of allowance (188) (228) 104

Other assets (7) (20) (10)

Accounts payable 26 117 (99)

Other liabilities, exclusive of debt (6) 1 (3)

Net cash from operating activities 676 92 291

Cash flows from investing activities:

Purchase of short-term investments (567) (2,031) (739)

Proceeds from sale of short-term investments 717 2,202 791

Proceeds from maturity of short-term investments 15 26 47

Capital expenditures (474) (460) (259)

Proceeds from sale of property, plant and equipment 29 39 4

Purchase of long-term investments (117) (98) (47)

Proceeds from sale of non-consolidated affiliates 13 — —

Acquisition of businesses (58) (7) (27)

Proceeds from the sale of subsidiaries, net of cash sold 17 — —

Notes receivable issued to affiliates (13) — —

Principal payments received on third-party notes receivable 5 21 —

Other, net (4) 6 (32)

Net cash from investing activities (437) (302) (262)

Cash flows from financing activities:

Uncommitted lines of credit, net (27) 135 (18)

Draws under committed lines of credit 1,215 672 290

Repayments of committed lines of credit (1,241) (515) (290)

Proceeds from long-term debt 1 — 37

Principal payments of long-term debt (8) (55) (69)

Finance lease payments (44) (14) (7)

Repurchase of common stock — — (13)

Dividends paid (10) (10) (10)

Other, net (2) — (2)

Net cash from financing activities (116) 213 (82)

Effect of exchange rate changes on cash and cash equivalents 1 (4) 4

Net change in cash and cash equivalents 124 (1) (49)

Cash and cash equivalents at beginning of year 75 76 125

Cash and cash equivalents at end of year $ 199 $ 75 $ 76

See accompanying notes to consolidated financial statements.

Note 1− Summary of Significant Accounting Policies

Operations of Seaboard Corporation and its Subsidiaries

Seaboard Corporation and its subsidiaries (collectively, “Seaboard”) together comprise a diversified group of companies that operate worldwide in agricultural and ocean transport businesses. Seaboard is primarily engaged in hog production and pork processing in the United States (“U.S.”); commodity trading and grain processing in Africa and South America; cargo shipping services in the U.S., Caribbean and Central and South America; sugar and alcohol production in Argentina; and electric power generation in the Dominican Republic. Seaboard also has an equity method investment in Butterball, LLC (“Butterball”), a producer and processor of turkey products. Seaboard’s outstanding common stock is closely held, with approximately 77% collectively owned by Seaboard Flour LLC and SFC Preferred, LLC.

Principles of Consolidation

The consolidated financial statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Financial information from certain foreign subsidiaries is reported on a one- to three-month lag, depending on the specific entity.

Investments in Affiliates

Investments in non-consolidated affiliates, where Seaboard has significant influence but does not have a controlling interest, are accounted for by the equity method. Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for its proportionate share of earnings or losses and dividends, including consideration of basis differences resulting from the difference between the initial carrying amount of the investment and the underlying equity in net assets. Seaboard reviews its investments in affiliates for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. For the Commodity Trading and Milling (“CT&M”) segment, investments in affiliates are primarily in foreign countries, which are less developed than the U.S., and therefore, expose Seaboard to greater financial risks. At certain times when there are ongoing losses, local economies are depressed, commodity-based markets are less stable or foreign governments cause challenging business conditions, the fair value of the equity method investments is evaluated by management. As the fair value of these investments is not readily determinable, management uses other methods to determine fair value such as estimated future cash flows, including assumptions on growth rates and consideration of other local business conditions as applicable.

Use of Estimates

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) which 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Transactions and Translation

Seaboard has operations in several foreign countries, and the currencies of the countries fluctuate in relation to the U.S. dollar, resulting in foreign currency gains and losses. Certain CT&M segment subsidiaries located in Guyana, Ivory Coast, Senegal, South Africa and Zambia use local currency as their functional currency. Assets and liabilities of these subsidiaries are translated to U.S. dollars at year-end exchange rates, and income and expenses are translated at average rates. Translation gains and losses are recorded as components of other comprehensive income (loss). Also, certain non-consolidated affiliates, primarily in the CT&M segment use local currency as their functional currency.

Seaboard applies highly inflationary accounting for countries whose cumulative inflation rate for a three-year period meets or exceeds 100%. Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into Seaboard’s reporting currency (U.S. dollars) and exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in net income, rather than accumulated other comprehensive income (loss) on the balance sheet, until the economy is no longer considered highly inflationary. Certain non-monetary assets and liabilities are recorded at the applicable historical exchange rates. Seaboard applies highly inflationary accounting for the Sugar and Alcohol segment, which operates in Argentina.

Cash and Cash Equivalents

Cash equivalents include all demand deposits, overnight investments and other highly liquid investments with original maturities of three months or less.

Supplemental Cash Flow Information

The amounts paid for interest and income taxes are as follows:

Years ended December 31,

Interest, net of interest capitalized $ 35 $ 10 $ 16

Income taxes, net of refunds 101 104 55

Non-cash activities related to capital expenditures of $15 million, $5 million and $7 million that were included in accounts payable as of December 31, 2022, 2021 and 2020, respectively.

Short-term Investments

Short-term investments are categorized as trading securities and carried at fair value. Changes in the fair value of short-term investments are recorded as unrealized gains and losses included in other investment income (loss), net in the consolidated statements of comprehensive income, with any purchases and sales recorded on a settlement date basis.

Accounts Receivable

The following table presents the components of Seaboard’s receivables as of December 31, 2022 and 2021:

December 31,

Receivables:

Due from affiliates 195 128

Total receivables 954 793

Allowance for credit losses (31) (31)

Net receivables $ 923 $ 762

Accounts receivable are recorded at the invoiced amount and generally do not bear interest.

The allowance for credit losses is Seaboard’s best estimate of the amount of probable credit losses using the current expected credit loss model. This model estimates the lifetime of expected credit loss based on historical experience, current conditions and reasonable supportable forecasts. Changes in estimates, developing trends and other new information can have a material effect on future evaluations. As of December 31, 2022 and 2021, Seaboard had gross foreign receivables of approximately $659 million and $578 million, respectively, which generally represent more of a collection risk than the domestic receivables, although as of December 31, 2022 no individual material amounts were deemed to have a heightened risk of collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The activity within the allowance for credit losses was as follows:

Balance at Transition Balance at

Allowance for Credit Losses:

Year Ended December 31, 2022 $ 31 — 7 (7) $ 31

Year Ended December 31, 2021 $ 28 — 5 (2) $ 31

Year Ended December 31, 2020 $ 28 3 — (3) $ 28

(a) Adjustment made upon adoption of new guidance to retained earnings.

(b) Provision amounts are charged to selling, general and administrative expenses.

Notes Receivable

Notes receivable are included in other receivables, if current, and other non-current assets, if long-term. Seaboard’s non-current notes receivable balances, net of reserves, were $40 million and $30 million as of December 31, 2022 and 2021, respectively. Seaboard monitors the credit quality of notes receivable, using the current expected credit loss model.

The activity within the allowance for non-current notes receivable was as follows:

Balance at Balance at

Allowance for Notes Receivable:

Inventories

Grain, flour and feed inventories at the CT&M segment’s foreign milling operations are valued at the lower of weighted average cost and net realizable value (“NRV”). All other inventories are valued at the lower of first-in, first-out (“FIFO”) cost and NRV. In determining NRV, management makes assumptions regarding estimated sales prices, estimated costs to complete and estimated disposal costs. Changes in future market prices or facts and circumstances could result in a material write down in the value of inventory or decreased future margins on the sale of inventory.

Property, Plant and Equipment

Property, plant and equipment are carried at cost and, except for land, depreciated using the straight-line method over an estimated useful life, ranging from 3 to 30 years. Property, plant and equipment under finance leases are stated at the present value of minimum lease payments and subsequently amortized using the straight-line method over the earlier of the end of its useful life or the end of the lease term. Routine and planned major maintenance, repairs and minor renewals are expensed as incurred, while major renewals and improvements are capitalized. Property, plant and equipment and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. Impairment is recognized if the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Right of Use Assets and Lease Liabilities

Right of Use (“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 the lease commencement date. For leases that do not have readily determinable implicit discount rates, Seaboard adjusts its incremental borrowing rate by the local risk-free interest rate on its Term Loan due 2028 with a credit risk premium corresponding to Seaboard’s unreported credit rating. Then Seaboard determines discount rates based on term, country and currency where the leased asset is located. Seaboard accounts for lease and non-lease maintenance components as a single lease component for all classes of underlying assets. Seaboard does not recognize ROU assets and lease liabilities for short-term leases with terms greater than 1 month, but less than 12 months.

Goodwill and Other Intangible Assets

Goodwill is assessed annually for impairment by each reporting unit at the quarter-end closest to the anniversary date of the initial acquisition, or more frequently if events or changes in circumstances indicate that impairment is likely. Seaboard first assesses qualitative factors to determine whether it is more likely than not the fair value of any reporting unit is less than its carrying amount. If qualitative factors indicate more likely than not that an impairment is possible, Seaboard performs a quantitative impairment test using discounted cash flow analysis by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. No impairments were recorded during 2022 based on qualitative assessment and certain immaterial reporting units recorded a total of $4 million of impairment charges during 2021.

The changes in the carrying amount of goodwill were as follows:

Pork CT&M

(Millions of dollars) Segment Segment Total

Impairment — (4) (4)

Foreign currency translation — (13) (13)

Acquisition 4 — 4

Separable intangible assets with finite lives are amortized over their estimated useful lives and evaluated for impairment similar to property, plant and equipment discussed above. The gross carrying amount and accumulated amortization for finite-lived intangible were as follows:

Customer Trade Customer Trade

Amortization of intangible assets was $8 million, $9 million and $8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Using the exchange rates in effect at year-end, estimated amortization of intangible assets as of December 31, 2022 is $8 million each year for the next three years and $7 million in year four.

Accrued Self-Insurance

Seaboard is self-insured for certain levels of workers’ compensation, health care coverage, property damage, vehicle, product recall and general liability. Liabilities associated with some of these risks is estimated based on actuarially-determined amounts and accrued in part by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Changes in estimates to previously recorded reserves are reflected in current operating results.

Asset Retirement Obligation

Seaboard records a long-lived asset and a related liability for the asset retirement obligation costs associated with the closure of all hog lagoons. Based on detailed assessments and appraisals obtained to estimate the future asset retirement obligation costs, Seaboard recorded the present value of the projected costs in other non-current liabilities in the consolidated balance sheets. The retirement asset is depreciated over the economic life of the related asset. The following table shows the changes in the asset retirement obligation:

Years ended December 31,

Beginning balance $ 29 $ 27

Accretion expense 2 1

Liability for additional lagoons 1 1

Ending balance $ 32 $ 29

Pension Plans

Seaboard records annual income and expense amounts relating to its pension plans based on calculations which include various actuarial assumptions, including discount rates, mortality, assumed rates of return, compensation increases, and turnover rates. Seaboard reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of modifications on the value of plan obligations and assets is recognized immediately within other comprehensive income (loss) and amortized into operating earnings over future periods. The measurement date for all plans is December 31st. Any overfunded status is recognized as an asset and any underfunded status is recognized as a liability. The service cost component of net periodic benefit cost is recorded in either cost of sales or selling, general and administrative expenses depending upon the employee, and the other components of net periodic benefit cost are recorded in miscellaneous, net in the consolidated statements of comprehensive income. Settlements are recognized when lump sum payments on a cumulative basis exceed the service cost plus interest cost for the respective plan.

Revenue Recognition

Almost all of Seaboard’s contracts with its customers are less than one year. Seaboard recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to receive in exchange for those goods or services. The majority of Seaboard’s revenue arrangements consist of a single performance obligation as the promise to transfer the individual product or service is not separately identifiable from other promises in the contracts, including shipping and handling and customary storage, and, therefore, not distinct. Revenue from goods and services transferred to customers at a single point in time account for approximately 85% of Seaboard’s net sales. Substantially all of the sales in Seaboard’s Marine segment are recognized ratably over the transit time for each voyage, as the performance obligation to its customers is satisfied.

Seaboard’s transaction prices are mostly fixed, but occasionally include minimal variable consideration for early payment, volume and other similar discounts, which are highly probable based on the history with the respective customers. Taxes assessed by a governmental authority that are collected by Seaboard from a customer are excluded from sales. Seaboard recognizes a financing component only on obligations that extend longer than one year.

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. Deferred revenue balances are reduced when revenue is recognized. The majority of the deferred revenue balance as of year-end is recognized as revenue during the following quarter.

Research and Development

Seaboard conducts research and development activities to develop new products and to improve existing products and processes. Seaboard incurred research and development expenses of $210 million, $191 million and $134 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Income Taxes

Effects of changes in tax laws, including retroactive changes, are recognized in the financial statements in the period that the changes are enacted. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Seaboard accounts for the global intangible low-taxed income (“GILTI”) provision and the base-erosion and anti-abuse tax (“BEAT”) provision taxes in the period incurred. For quarters, Seaboard computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income or loss and adjusts the provision for discrete tax items recorded in the period.

Earnings Per Common Share

Earnings per common share are based upon the weighted-average shares outstanding during the period. Basic and diluted earnings per share are the same for all periods presented.

Accounting Standards Recently Adopted

On January 1, 2020, Seaboard adopted guidance requiring the use of a new current expected credit loss model to determine the allowance for credit losses for receivables, among other financial instruments. This model estimates the lifetime of expected credit loss 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.

Note 2 − Investments

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

December 31,

(Millions of dollars) 2022 2021

Domestic equity securities $ 433 $ 472

Domestic debt securities 399 542

Foreign equity securities 169 193

Foreign debt securities 66 133

Money market funds held in trading accounts 12 59

Other trading securities 7 17

Total trading short-term investments $ 1,086 $ 1,416

The unrealized gains (losses) related to trading securities still held at the end of the respective reporting period was ($129) million, $12 million and $74 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

Seaboard had long-term investments of $185 million and $156 million as of December 31, 2022 and 2021, respectively, classified in other non-current assets on the consolidated balance sheets. These investments are in a business development company (“BDC”), real estate and renewable-energy facilities. The BDC investment is included in the fair value hierarchy table in Note 10 and the other investments are primarily accounted for under the equity method of accounting with any gains (losses) recorded in other investment income (loss).

Note 3 − Inventories

The following table is a summary of inventories:

December 31,

At lower of FIFO cost and NRV:

Hogs and materials $ 538 $ 489

Pork products and materials 75 64

Grains, oilseeds and other commodities 475 634

Biofuels and related credits 221 147

Total inventories at lower of FIFO cost and NRV 1,413 1,426

Total inventories $ 1,670 $ 1,663

Seaboard Corp /de/ SEB US Equity

SEB · 10-K · period ended 2022-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6.Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Seaboard Corp /de/ SEB US Equity☆

SEB · 10-K · period ended 2022-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6.Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Seaboard Corp /de/ SEB US Equity