SEABOARD CORP /DE/ (Form: 10-K, Received: 02/25/2016 17:22:21)

January 3,

December 28,

Unrecognized actuarial (loss)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

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

For the transition period from _______________ to ________________ ____

Commission file number: 1-3390

SEABOARD CORPORATION

(Exact name of registrant as specified in its charter)


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

9000 West 67th Street, Merriam , Kansas 66202

(Address of principal executive offices) (Zip Code)

(913) 676-8800

(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class

Common Stock $1.00 Par Value

Name of each exchange on which registered

NYSE MKT

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [ X ]

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X ]

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


Large accelerated filer [X ]	Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ ]

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

The aggregate market value of the 262,616 shares of Seaboard common stock held by nonaffiliates was approximately $925,986,642, based on the closing price of $3,526.01 per share on July 2, 2015, the end of Seaboard’s most recently co mpleted second fiscal quarter. As of January 29, 2016 , the number of shares of common stock outstanding was 1,170,550.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the indicated parts of this repo rt: (1) Seaboard Corporation’s annual report to s tockholders furnished to the Commission pursuant to Rule 14a-3(b) – Parts I and II; and (2) Seaboard Corporation’s definitive proxy statement , which will be filed no later than 120 days after December 31, 2015, pursuan t to Regulation 14A for the 2016 annual meeting of stockholders – Part III.

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Forward-l ooking Statements

s tatements that are not historical in nature; and

statements preceded by, followed by or that include the words “believes,” “expects,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “intends” or similar expressions.

In more specific terms, forward-looking statements include, without limitation:

statements concerning the projection of revenues, income or loss, capital expenditures, capital structure or other financial items;

statements regarding the plans and objectives of management for future operations;

statements of future economic performance;

statements regarding the intent, belief or current expectations of Seaboard and its management with respect to:

(i)

Seaboard’s ability to obtain adequate financing and liquidity;

(ii)

the price of feed stocks and other materials used by Seaboard;

(iii)

the sale price or market conditions for pork, grains, sugar, turkey and other products and services;

(iv)

the recorded tax effects under certain circumstances and changes in tax laws;

(v)

the volume of business and working capital requirements associated with the competitive trading environment for the Commodity Trading and Milling division ;

(vi)

the charter hire rates and fuel prices for vessels;

(vii)

the fuel costs and related spot market prices in the Dominican Republic;

(viii)

the effect of the fluctuation in foreign currency exchange rates;

(ix)

the profitability or sales volume of any of Seaboard’s divisions ;

(x)

the anticipated costs and completion timetable s for Seaboard’s scheduled capital improvements, a cquisitions and dispositions;

(xi)

the productive capacity of facilities that are planned or under construction, and the timing of the commencement of operations at such facilities;

(xii)

the increase in Seaboard's hog and other production capacity attributable to acquisitions;

(xiii)

Seaboard's ability to convert its Haiti port project loan to equity, including the satisfaction of the conditions for such conversion;

(xiv)

the amount of Seaboard's funding commitment for an Oklahoma refined coal processing plant, or

(xv)

other trends affecting Seaboard’s financial condition or results of operations, and statements of the assumptions underlying or relating to any of the foregoing statements .

This list of forward-looking statements is not exclusive. Seaboard undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, chang es in assumptions or otherwise. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to a variety of factors. The information contained in this Form 10-K and in other filings Seaboard makes with the Securities and Exchange Commission (the “Commission”) , including without limitation, the information under the items “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K, identifies important factors which could cause such differences.

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PART I

Item 1 . Business

(a)

General Development of Business

Originally founded in 1918, today Seaboard Corporation, a Delaware corporation organized in 1946, and its subsidiaries (“Seaboard”), is a diverse global agribusiness and transportation company. In the United States (“U.S.”), Seaboard is primarily engaged in pork production and processing and ocean transportation. Overseas, Seaboard is primarily engaged in commodity merchandising, grain processing, sugar production and electric power generation. Seaboard also has an interest in turkey operations in the U.S. See Item 1(c)(1)(ii) “Status of Product or Segment” below for a discussion of acquisitions, dispositions and other developments in specific divisions.

Seaboard Flour LLC and SFC Preferred LLC, Delaware limited liability companies, collectively own approximately 76% of the outstanding common stock of Seaboard. Mr. Steven J. Bresky, President and Chief Executive Officer of Seaboard, and other members of the Bresky family, including trusts created for their benefit, own the equity interests of Seaboard Flour LLC and SFC Preferred LLC.

(b)

Finan cial Information about Segments

The financial information relating to reportable segments required by this item is incorporated herein by reference to Note 12 to the Consolidated Financial Statements included in Seaboard’s annual report to stockholders furnished to the Commission pursuant to Rule 14a-3(b) and attached as Exhibit 13 to this annual report on Form 10-K (“Annual Report to Stockholders”).

(c)

Narrative Description of Business

(1)

Business Done and Intended to be Done by the Registrant

(i) Principal Products and Services

Pork Division – Seaboard, through its subsidiary Seaboard Foods LLC, engages in the business of hog production and pork processing in the U.S. Through these operations, Seaboard produces and sells fresh and frozen pork products to further processors, foodservice operators, grocery stores, distributors and retail outlets throughout the U.S. Internationally, Seaboard sells to these same types of customers in Japan, Mexico and numerous other foreign markets. Other further processing companies also purchase Seaboard’s fresh and frozen pork products in bulk and produce products, such as lunchmeat, ham, bacon, and sausage. Fresh pork, such as loins, tenderloins and ribs are sold to distributors and grocery stores. Seaboard sells some of its fresh products under the brand name Prairie Fresh®. Seaboard’s hog processing plant is located in Guymon, Oklahoma and generally operates at capacity. Seaboard also has a ham-boning and processing plant in Mexico. Seaboard earns fees, based primarily on the number of head processed, to market substantially all of the products produced by Triumph Foods, LLC (“Triumph”) at its pork processing plant located in St. Joseph, Missouri.

Seaboard’s hog production operations consist of the breeding and raising of over four million hogs annually primarily at facilities owned by Seaboard or at facilities owned and operated by third parties with whom Seaboard has grower contracts. The hog production operations are located in the Central U.S. As a part of the hog production operations, Seaboard produces specially formulated feed for the hogs at five owned feed mills. The remaining hogs processed are purchased from third-party hog producers, primarily pursuant to purchase contracts.

Seaboard produces biodiesel at a facility in Guymon, Oklahoma. The biodiesel is produced from pork fat from Seaboard’s Guymon pork processing plant and from animal fat supplied by non-Seaboard facilities. The biodiesel is sold to third parties. The facility can also produce biodiesel from vegetable oil. Seaboard is able to reduce or stop production when it is not economically feasible to produce based on input costs or the price of biodiesel.

Seaboard’s Pork Division has a 50% noncontrolling interest in Daily’s Premium Meats, LLC (“Daily’s”). Daily’s produces and markets raw and pre-cooked bacon, ham and sausage under the Daily’s® brand name primarily for

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the food service industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located in Salt Lake City, Utah and Missoula, Montana that generally operate at capacity. In the second quarter of 2015, Daily’s began construction on a third further processing plant located in St. Joseph, Missouri. Operations are expected to begin in mid-2016. Seaboard and Triumph each supply raw product to Daily’s.

On May 13, 2015, the Pork Division and Triumph agreed to jointly develop and operate a pork processing facility in Sioux City, Iowa. The facility is anticipated to begin operations in mid-2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Division and a newly formed limited liability partnership that will be consolidated with Seaboard acquired hog inventory and related assets that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant.

Commodity Trading and Milling Division – Seaboard’s Commodity Trading and Milling Division is an integrated agricultural commodity trading, processing and logistics company. This division markets wheat, corn, soybean meal and other commodities in bulk to third parties and affiliated companies. This division is principally managed under the name of Seaboard Overseas and Trading Group and conducts business primarily through its subsidiaries, Seaboard Overseas Limited with offices in Colombia, Ecuador, Isle of Man, Kenya, Singapore and South Africa, Seaboard Overseas Trading and Shipping (PTY) Ltd. located in South Africa, PS International, LLC located in Chapel Hill, North Carolina, and its non-consolidated affiliates, ContiLatin del Peru S.A. located in Lima, Peru, Interra International, LLC located in Atlanta, Georgia, Cereoil Uruguay S.A. located in Montevideo, Uruguay, and Plum Grove Pty Ltd located in Fremantle, Australia. This division also operates a grain and specialty crop storage and throughput facility through Fill-More Seeds, Inc. located in Fillmore, Canada, and an ocean transportation brokerage operation through Seaboard Bulk Services, Ltd. located in Athens, Greece. All of the commodities marketed by this division are purchased from growing regions worldwide, with primary destinations being Africa, Sou th America and the Caribbean. This division sources, transports and markets approximately nine million tons of agricultural commodities on an annual basis. Seaboard integrates the service of delivering commodities to its customers through the use of short-term chartered bulk vessels and its three owned bulk carriers.

This division also operates grain and feed milling and related businesses with 35 locations in 21 countries, which are primarily supplied by the trading locations discussed above. The grain processing businesses are operated through 5 consolidated and 19 non-consolidated affiliates in Africa, South America, the Caribbean, and Asia. These are primarily flour, feed and maize milling and oil crush businesses, which produce approximately four million metric tons of finished products per year. In addition, this division has a noncontrolling interest in a poultry business in Africa and a bakery business in the Democratic Republic of Congo. Most of the products produced by these operations are sold in the countries in which the products are produced or into adjacent countries.

Marine Division – Seaboard, through its subsidiary, Seaboard Marine Ltd., and various foreign affiliated companies and third party agents, provides cargo shipping services to 26 countries between the U.S., the Caribbean Basin, and Central and South America. Seaboard uses a network of offices and agents throughout the U.S., Canada, Latin America and the Caribbean Basin to book cargo to and from the U.S. and between the countries it serves. Through agreements with a network of connecting carriers, Seaboard can transport cargo to and from numerous U.S. locations by either truck or rail to and from one of its U.S. port locations, where it is staged for export via vessel or received as import cargo from abroad.

Seaboard’s primary marine operation is located in Miami, Florida and includes a terminal located at PortMiami and off-dock warehouses for cargo consolidation and temporary storage. Seaboard also operates a cargo terminal facility at the Port of Houston that includes an on-dock warehouse space for temporary storage of bagged grains, resins and other cargoes. Seaboard also makes scheduled vessel calls in Brooklyn, New York, New Orleans, Louisiana, Philadelphia, Pennsylvania, and 45 foreign ports. At December 31, 2015, Seaboard’s fleet consisted of approximately 22 chartered and 3 owned vessels, and dry, refrigerated and specialized containers and other related equipment.

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Sugar Division – Seaboard, through its subsidiaries, Ingenio y Refineria San Martin del Tabacal S.R.L. and Alconoa S.R.L., as well as other Argentine non-consolidated affiliates, grows sugarcane, which it uses to produce refined sugar and alcohol in Argentina. This division also purchases sugar in bulk from third parties mostly within Argentina for subsequent resale. The sugar products are mostly sold in Argentina, primarily to retailers, soft drink manufacturers, and food manufacturers, with some exports to the U.S. and other South American countries. Seaboard grows a large portion of the sugarcane on the nearly 70,000 acres of land it owns in northern Argentina. The cane is processed at an owned mill, one of the largest in Argentina, with a current processing capacity of approximately 250,000 metric tons of sugar and approximately 15 million gallons of alcohol per year. Also, this division owns a 51 megawatt cogeneration power plant that is fueled by using sugarcane by-products, natural gas and other biomass when available.

Power Division – Seaboard, through its subsidiary, Transcontinental Capital Corp. (Bermuda) Ltd., is an independent power producer generating electricity for the local power grid in the Dominican Republic. Seaboard operates one owned floating power generating facility with capacity to generate approximately 108 megawatts of electricity. The facility is secured on the Ozama River in Santo Domingo, Dominican Republic. This operation is exempt from U.S. regulations under the Public Utility Holding Company Act of 1938, as amended. Seaboard is not directly involved in the transmission or distribution of electricity. Seaboard primarily sells on the spot market accessed primarily by wholly government-owned distribution companies or partially government-owned generation companies. This division also has a 29.9% noncontrolling interest in a 300 megawatt electricity generating facility in the Dominican Republic.

Turkey Segment – Seaboard has a 50% noncontrolling voting interest in Butterball, LLC (“Butterball”). Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other products. Butterball has four processing plants, three further processing plants and numerous live production and feed milling operations located in North Carolina, Arkansas, Missouri, Illinois and Kansas. Butterball produces over one billion pounds of turkey each year. Butterball is a national supplier to retail and foodservice outlets, and also exports products to Mexico and numerous other foreign markets.

Other Businesses – Seaboard processes jalapeño peppers at its plant in Honduras, which are primarily shipped to and sold in the U.S.

The information required by this item 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 set forth in Note 12 to the Consolidated Financial Statements included in Seaboard’s Annual Report to Stockholders, which information is incorporated herein by reference.

(ii) Status of Product or Segment

On May 13, 2015, the Pork Division agreed to contribute up to $207 million through 2019 to jointly develop and operate a pork processing facility in Sioux City, Iowa with Triumph. The facility is anticipated to begin operations in mid-2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Division and a newly formed limited liability partnership that will be consolidated with Seaboard paid $148 million to acquire hog inventory and related assets in Iowa and Colorado that is expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.

In the second quarter of 2015, Daily’s began construction on a third further processing plant located in St. Joseph, Missouri. Operations are expected to begin in mid-2016. To date, construction funding has been provided by current operations.

The Commodity Trading and Milling Division took delivery of two dry bulk vessels built for a total cost of approximately $45 million during 2015. An additional vessel was delivered in January 2016 and the final vessel is expected to be delivered during the first half of 2016 for a total cost of approximately $45 million. Seaboard entered into sales-leaseback transactions for the vessels delivered and anticipates selling and leasing back the

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remaining vessel when completed, which would result in Seaboard receiving back the amounts spent to build the vessels.

Also the Commodity Trading and Milling Division made various investments in affiliates. During the second quarter of 2015, the Commodity Trading and Milling Division invested $10 million in an oilseed crushing business in the Republic of Turkey for a 25% noncontrolling interest, $8 million in a flour milling and pasta business in Botswana for a 49% noncontrolling interest and $10 million in a commodity trading and flour milling business in Uruguay for a 45% noncontrolling interest, all accounted for using the equity method. In addition, this division invested $18 million in a grain trading and poultry business in Morocco for a 12% noncontrolling interest, which is accounted for using the cost method. During the fourth quarter of 2015, Seaboard contributed $13 million in cash, a small amount of other assets, certain employees and rights to sell certain agricultural commodities that Seaboard had previously sold through its subsidiary, PS International, LLC, for a 40% noncontrolling interest in a commodity trading business in Atlanta, Georgia.

In April 2015, the Power Division invested $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic, increasing Seaboard’s ownership interest to 29.9%.

(iii) Sources and Availability of Raw Materials

None of Seaboard’s businesses utilize material amounts of raw materials that are dependent on purchases from one supplier or a small group of dominant suppliers. However, the Turkey Segment purchases a significant portion of its feed and grain used in the manufacturing of feed for its turkeys in North Carolina from Seaboard’s 50% partner in Butterball.

(iv) Patents, Trademarks, Licenses, Franchises and Concessions

Seaboard uses the registered trademark of Seaboard®.

The Pork Division uses registered trademarks relating to its products, including Seaboard Farms®, Prairie Fresh®, A Taste Like No Other®, St. Joe Pork®, High Plains Bioenergy®, Prairie Fresh Prime®, Seaboard Foods®, Cook in Bag®, 67 th Street™ and The Thrill Without The Grill®. The Pork Division’s non-consolidated affiliate, Daily’s Premium Meats, LLC, uses the trademarks Daily’s®, Daily’s Premium Meats Since 1893®, Buffet Brand® and Del Pueblo®. Seaboard considers the use of these trademarks important to the marketing and promotion of its pork products.

The Marine Division uses the trade name Seaboard Marine® and Seaboard Solutions® which are both registered trademarks. Seaboard believes there is significant recognition of these trademarks in the industry and by many of its customers.

Part of the sales within the Sugar Division are made under the Chango® brand in Argentina, where this division operates. Certain local sales prices are affected by government price control, primarily for one kilogram size bags, and sugar import duties imposed by the Argentine government, impacting local volume sold, as well as imported and exported volumes to and from international markets.

The Turkey Segment uses registered trademarks relating to its products, including Butterball® and Carolina Turkeys®. Seaboard considers the use of these trademarks important to marketing and promotion of its turkey products.

Patents, trademarks, franchises, licenses and concessions are not material to any of Seaboard’s other divisions.

(v) Seasonal Business

The Turkey business is seasonal only on the whole bird side with Thanksgiving and Christmas holidays driving the majority of those sales. Seaboard’s other divisions are not seasonally dependent to any material extent.

(vi) Practices Relating to Working Capital Items

There are no unusual industry practices or practices of Seaboard relating to working capital items.

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(vii) Depending on a Single Customer or Few Customers

Seaboard does not have sales to any one customer equal to 10% or more of consolidated revenues. Historically, the Commodity Trading and Milling Division derives a significant portion of its operating income from sales to a non-consolidated affiliate. The Sugar Division derives approximately 20% of its revenues from one customer. The Power Division sells power in the Dominican Republic on the spot market accessed primarily by three wholly government-owned companies. No other division has sales to a few customers which, if lost, would have a material adverse effect on any such division or on Seaboard taken as a whole.

(viii) Backlog

Backlog is not material to Seaboard’s businesses.

(ix) Government Contracts

No material portion of Seaboard’s business involves government contracts.

(x) Competitive Conditions

Competition in Seaboard’s Pork Division comes from a variety of national, international and regional producers and processors and is based primarily on product quality, customer service and price. According to Successful Farming and Informa Economics , trade publications, Seaboard was ranked number three in pork production (based on sows in production) and number four in processing (based on daily processing capacity) in the U.S. (including Triumph volume) in 2015.

Seaboard’s commodity trading business to third parties faces competition from numerous traders around the world in a very competitive environment with low margin percentages on most trades. Most of the grain processing and related businesses face competition from either imported products or other local producers in the same industries.

Seaboard’s ocean liner service for cargoes faces competition based on price, reliable sailing frequencies and customer service. Seaboard believes it is among the top five ranking ocean liner services for cargoes in the Caribbean Basin and Central America based on cargo volume.

Seaboard’s sugar business owns one of the largest sugar mills in Argentina and faces significant competition for sugar sales in the local Argentine market. Sugar prices in Argentina can fluctuate compared to world markets due to Argentine government price control and protection policies. High sugarcane production volumes in Argentina, in conjunction with low international sugar and alcohol prices, have increased competition in the domestic market.

Seaboard’s Power Division is located in the Dominican Republic. Power generated by this division is sold on the spot market or to contract customers at prices based on market conditions and cost-based rates.

Competition for the Turkey Segment comes from a variety of national and regional producers and processors and is based primarily on product quality, customer service and price. Butterball ranks as one of the nation’s top three turkey producers (based on live production).

(xi) Research and Development Activities

Seaboard and its Turkey Segment each conduct research and development activities focused on various aspects of their vertically integrated pork and turkey processing systems, including improving product quality, production processes, animal genetics, nutrition and health. Incremental costs incurred to perform these tests are expensed as incurred and are not material to operating results.

(xii) Environmental Compliance

Seaboard and its Turkey Segment are subject to numerous Federal, State and local provisions relating to the environment which require the expenditure of funds in the ordinary course of business. Seaboard and its Turkey

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Segment do not anticipate making expenditures for these purposes, that , in the aggregate would have a material or significant effect on Seaboard’s financial condition or results of operations.

(xiii) Number of Persons Employed by Registrant

As of December 31, 2015, Seaboard, excluding non-consolidated affiliates, had 10,772 employees, of whom 5,541 were employed in the U.S. Approximately 2,050 employees in Seaboard’s Pork Division were covered by collective bargaining agreements as of December 31, 2015. Seaboard considers its employee relations to be satisfactory.

(d)

Financial Information about Geographic Areas

In addition to the narrative disclosure provided below, the financial information relating to export sales required by this item is incorporated herein by reference to Note 12 to the Consolidated Financial Statements included in Seaboard’s Annual Report to Stockholders.

Seaboard considers its relations with the governments of the countries in which its foreign subsidiaries and affiliates are located to be satisfactory, but foreign operations in lesser-developed countries are subject to risks of doing business such as potential civil unrests and government instabilities, increasing the exposure to potential expropriation, confiscation, war, insurrection, civil strife and revolution, sales price controls, currency inconvertibility and devaluation, and currency exchange controls. To minimize certain of these risks, Seaboard has insured its investment in an affiliated flour mill in the Democratic Republic of Congo to the extent available and deemed appropriate against certain of these risks with the Overseas Private Investment Corporation, an agency of the U.S. Government. At the date of this report, Seaboard is not aware of any situations which could have a material effect on Seaboard’s business.

(e)

Available Information

Seaboard electronically files with the Commission annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) or 15(d) of the Exchange Act. The public may read and copy any materials filed with the Commission at their public reference room located at 100 F Street N.E., Washington, D.C. 20549. The public may obtain further information concerning the public reference room and any applicable copy charges, as well as the process of obtaining copies of filed documents by calling the Commission at 1-800-SEC-0330.

The Commission maintains an internet website that contains reports, proxy and information statements, and other information regarding electronic filers at www.sec.gov . Seaboard provides access to its most recent Form 10-K, 10-Q and 8-K reports, and any amendments to these reports, on its internet website, www.seaboardcorp.com , free of charge, as soon as reasonably practicable after those reports are electronically filed with the Commission.

Please note that any internet addresses provided in this report are for information purposes only and are not intended to be hyperlinks. Accordingly, no information provided at such Internet addresses is intended or deemed to be incorporated herein by reference.

Executive Officers of the Registrant

The following table lists the executive officers and certain significant employees of Seaboard. Generally, executive officers are elected at the annual meeting of the Board of Directors following the Annual Meeting of Stockholders and hold office

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until the next such annual meeting or until their respective successors are 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
Steven J. Bresky (62)		President and Chief Executive Officer
Robert L. Steer (56)		Executive Vice President, Chief Financial Officer
David M. Becker (54)		Senior Vice President, General Counsel and Secretary
David S. Oswalt (48)		Senior Vice President, Finance and Treasurer
James L. Gutsch (62)		Senior Vice President, Engineering
Ralph L. Moss (70)		Senior Vice President, Governmental Affairs
David H. Rankin (44)		Senior Vice President, Taxation and Business Development
Michael D. Trollinger (47)		Vice President, Corporate Controller and Chief Accounting Officer
Ty A. Tywater (46)		Vice President, Audit Services
Terry J. Holton (56)		President, Seaboard Foods LLC
David M. Dannov (54)		President, Seaboard Overseas and Trading Group
Edward A. Gonzalez (50)		President, Seaboard Marine Ltd.

Mr. Bresky has served as President and Chief Executive Officer of Seaboard since July 2006.

Mr. Steer has served as Executive Vice President, Chief Financial Officer of Seaboard since April 2011, and previously as Senior Vice President, Chief Financial Officer since December 2006.

Mr. Becker has served as Senior Vice President, General Counsel and Secretary of Seaboard since April 2011, and previously as Vice President, General Counsel and Secretary since December 2003.

Mr. Gutsch has served as Senior Vice President, Engineering of Seaboard since April 2011, and previously as Vice President, Engineering since December 1998.

Mr. Moss has served as Senior Vice President, Governmental Affairs of Seaboard since April 2011, and previously as Vice President, Governmental Affairs since December 2003.

Mr. Oswalt has served as Senior Vice President, Finance and Treasurer since April 2013, and previously as Senior Vice President, Taxation and Business Development of Seaboard from 2011 to 2013 and as Vice President, Taxation and Business Development from 2003 to 2011.

Mr. Rankin has served as Senior Vice President, Taxation and Business Development since April 2015 and previously as Vice President, Taxation and Business Development since April 2013 and Vice President of Seaboard from 2010 to 2013.

Mr. Trollinger has served as Vice President, Corporate Controller and Chief Accounting Office of Seaboard since March 2015. Prior to that, he served as Vice President Finance & Operational Reporting for Jack Cooper Enterprises, Inc. from 2011 to 2015.

Mr. Tywater has served as Vice President, Audit Services of Seaboard since November 2008.

Mr. Holton has served as President of Seaboard Foods LLC since December 2011 and previously as Senior Vice President, Sales and Marketing since September 1997.

Mr. Dannov has served as President of Seaboard Overseas and Trading Group since August 2006.

Mr. Gonzalez has served as President of Seaboard Marine Ltd. since January 2005.

Item 1A . Risk Factors

Seaboard has identified important risks and uncertainties that could affect the results of operations, financial condition or business and that could cause them to differ materially from Seaboard’s historical results of operations, financial condition or business, or those contemplated by forward-looking statements made herein or elsewhere, by, or on behalf of, Seaboard. Factors that could cause or contribute to such differences include those factors described below.

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(a)

General

(1)

Seaboard’s Operations are Subject to the General Risks of the Food Industry . The division s of the business that are in the food products manufacturing industry are subject to the risks posed by:

food spoilage or food contamination;

evolving consumer preferences and nutritional and health-related concerns;

federal, state, national, provincial and local food processing regulations;

consumer product liability claims;

product tampering; and

public perception of food production practices , including handling of production and live animals .

If one or more of these risks were to materialize, Seaboard’s revenues could decrease, costs of doing business could increase, and Seaboard’s operating results could be adversely affected.

(2)

International Operations Subject Seaboard to Risks That Could Have a Significant Impact on Seaboard’s Business . Seaboard is a diverse agribusiness and transportation company with global operations in several industries. Most of the sales and costs of Seaboard’s division s are significantly influenced by worldwide fluctuations in commodity prices or changes in foreign political and economic conditions. Accordingly, sales, operating income and cash flows can fluctuate significantly from year to year. In addition, Seaboard’s international activities pose risks not faced by companies that limit themselves to U.S. markets. These risks include:

changes in foreign currency exchange rates;

foreign currency exchange controls;

changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets;

hyperinflation;

heightened customer credit and execution risk;

tariffs, other trade protection measures and import or export licensing requirements;

potentially negative consequences from changes in tax laws;

different legal and regulatory structures and unexpected changes in legal and regulatory requirements;

negative perception within a foreign country of a U.S. company doing business in that foreign country;

compliance with U.S. laws and regulations for conducting international business such as Foreign Account Tax Compliance Act, Foreign Corrupt Practices Act and Office of For eign Assets Control regulations;

expropriation, civil unrest and government instabilities; and

inconsistent application or enforcement of local laws, including tax laws.

Seaboard cannot provide assurance that it will be successful in competing effectively in international markets.

(3)

Deterioration of Economic Conditions Could Negatively Impact Seaboard’s Business . Seaboard’s business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy availability and costs , and the effects of governmental initiatives to manage economic conditions. Any such changes could adversely affect the demand for our meat products, grains and shipping services, or the cost and availability of our needed raw materials and packaging materials, thereby negatively affecting our financial results. The current national and global economic conditions, could, among other things:

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

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

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

impair the financial viability of our insurers.

FORM 10-K

SEABOARD CORPORATION

(4)

Ocean Transportation Has Inherent Risks . Seaboard’s owned and chartered vessels along with related cargoes are at risk of being damaged or lost because of events such as:

bad weather;

mechanical failures;

grounding, fire, explosions and collisions;

human error; and

war, piracy and terrorism.

All of these hazards can 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 accident, the resulting media coverage could have a material adverse effect on Seaboard’s business, financial condition and results of operations.

(5)

Seaboard’s Common Stock is Thinly Traded and Subject to Daily Price Fluctuations . The common stock of Seaboard is closely held and thinly traded on a daily basis on the NYSE MKT . Seabo ard Flour LLC and SFC Preferred LLC, which are beneficially owned by Mr. Steven Bresky, President and Chief Executive Officer of Seaboard and other members of the Bresky family, hold approximately 76% of Seaboard outstanding common stock . Accordingly, the price of a share of common stock can fluctuate more significantly from day- to-day than that of a share of widely held stock that is actively traded on a daily basis.

(6)

Seaboard has Investments in Non-consolidated Affiliates that are Managed by Third-parties . Seaboard has several equity method investments in which it owns 50% or less, with various third- party investors owning the remaining shares. Due to the ownership structure of these affiliates, Seaboard does not have control in all the decision making of these companies and could be exposed to various business risks if the business partners’ business practices do not align with Seaboard’s best interests, which could adversely impact the non-operating results of the Seaboard .

(b)

Pork Division

(1)

Fluctuations in Commodity Pork Prices Could Adversely Affect Seaboard’s Results of Operations . Sales prices for Seaboard’s pork products are directly affected by both domestic and world-wide supply and demand for pork products and other proteins, all of which are determined by constantly changing market forces of supply and demand as well as other factors over which Seaboard has little or no control. Commodity pork prices demonstrate a cyclical nature over periods of years, reflecting changes in the supply of fresh pork and competing proteins on the market, especially beef and chicken. Seaboard’s results of operations could be adversely affected by fluctuations in pork commodity prices.

(2)

Increases in Costs of Seaboard’s Feed Components and Third-Party Hog Purchases Could Adversely Affect Seaboard’s Costs and Operating Margins . Feed costs are the most significant single component of the cost of raising hogs and can be materially affected by commodity price fluctuations for corn and soybean meal. The results of Seaboard’s Pork Division can be negatively affected by increased costs of Seaboard’s feed components. The continued operation of ethanol plants has elevated this risk as it has increased the competing demand for feed ingredients, primarily corn. Similarly, accounting for approximately 24% of Seaboard’s total hogs slaughtered, the cost of third-party hogs purchased fluctuates with market conditions and can have an impact on Seaboard’s total costs. The cost and supply of feed components and the third party hogs that Seaboard purchases are determined by constantly changing market forces of supply and demand, which are driven by matters over which Seaboard has no control, including weather, current and projected worldwide grain stocks and prices, grain export prices and supports and governmental agricultural policies. Seaboard attempts to manage certain of these risks through the use of financial instruments; however, this may also limit its ability to participate in gains from favorable commodity fluctuations. Unless wholesale pork prices correspondingly increase, increases in the prices of Seaboard’s feed components or in the cost of third-party hogs purchased would adversely affect Seaboard’s operating margins.

(3)

Seaboard May be Unable to Obtain Appropriate Personnel at Remote Locations . The remote locations of the pork processing plant and live hog operations, and a more restrictive national policy on immigration could negatively affect the availability and cost of labor. Seaboard is dependent on having sufficient properly trained operations personnel. Attracting and retaining qualified personnel is important to Seaboard’s success. The inability to acquire and retain the services of such personnel could have a material adverse effect on Seaboard’s operations.

(4)

The Loss of Seaboard’s Sole Hog Processing Facility Could Adversely Affect Seaboard’s Business . Seaboard’s Pork Division is largely dependent on the continued operation of a single hog processing facility. The loss of or

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SEABOARD CORPORATION

damage to this facility for any reason, including fire, tornado, governmental action or other reason, could adversely affect Seaboard and Seaboard’s pork business.

(5)

Environmental Regulation and Related Litigation Could Have a Material Adverse Effect on Seaboard . Seaboard’s operations and properties are subject to extensive and increasingly stringent laws and regulations pertaining to, among other things, odors, the discharge of materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. Failure to comply with these laws and regulations and any future changes to them may result in significant consequences to Seaboard, including civil and criminal penalties, liability for damages and negative publicity. Some requirements applicable to Seaboard may also be enforced by citizen groups. Seaboard has incurred, and will continue to incur, operating expenditures to comply with these laws and regulations.

(6)

Health Risk to Livestock Could Adversely Affect Production, the Supply of Raw Materials and Seaboard’s Business . Seaboard is subject to risks relating to its ability to maintain animal health and control diseases. The general health of the hogs and the reproductive performance of the sows can have an adverse impact on production and production costs, the supply of raw material to Seaboard’s pork processing operations and consumer confidence. If Seaboard’s hogs are affected by disease, Seaboard may be required to destroy infected livestock, which could adversely affect Seaboard’s production or ability to sell or export its products. Moreover, the herd health of third-party suppliers could adversely affect the supply and cost of hogs available for purchase by Seaboard. Adverse publicity concerning any disease or health concern could also cause customers to lose confidence in the safety and quality of Seaboard’s food products.

(7)

If Seaboard’s Pork Products Become Contaminated, Seaboard May be Subject to Product Liability Claims and Product Recalls . Pork products may be subject to contamination by disease producing organisms. These organisms are generally found in the environment and as a result, regardless of the manufacturing practices employed, there is a risk that they could be present in Seaboard’s processed pork products as a result of food processing. Once contaminated products have been shipped for distribution, illness and death may result if the organisms are not eliminated at the further processing, foodservice or consumer level. Even an inadvertent shipment of contaminated products is a violation of law and may lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on Seaboard’s business, reputation, prospects, results of operations and financial condition.

(8)

International Trade Barriers Could Adversely Affect Seaboard’s Pork Operations . This division realizes a significant portion of its revenues from international markets, particularly Japan and Mexico. International sales are subject to risks related to general economic conditions, imposition of tariffs, quotas, trade barriers and other restrictions, enforcement of remedies in foreign jurisdictions and compliance with applicable foreign laws, and other economic and political uncertainties. These and other risks could result in border closings or other international trade barriers having an adverse effect on Seaboard’s earnings.

(9)

The Operating Profit of the Biodiesel Production Facility Could Be Adversely Impacted by Various Factors . The profitability of Seaboard’s biodiesel plant could be adversely affected by various factors, including the market price of pork and other animal fat which is utilized to produce biodiesel, and the market price for biodiesel which is influenced by world oil prices and U.S. government mandates to use biofuels. Unfavorable changes in these prices over extended periods of time or adverse changes in U.S. government mandates to use biofuels, could adversely affect Seaboard’s results of operations and could result in the potential impairment of the recorded value of the property, plant and equipment related to this facility.

(10)

Difficulties Could Be Experienced in the Construction and Start- up of the New Pork Processing Facilit y . The Pork Division has a greed to contribute up to $207 million to jointly develop a new pork processing facility in Sioux City, Iowa. Significant operational delays, difficulty in hog procurement, or other difficulties encountered in the start-up of operations could have an adverse effect on results of operations.

(c)

Commodity Trading & Milling Division

(1)

This Division is Subject to Risks Associated with Foreign Operations . This division principally operates in Africa, South America, the Caribbean and Asia and, in most cases, in what are generally regarded to be lesser developed countries. Many of these foreign operations are subject to risks of doing business in lesser-developed countries which are subject to potential civil unrests and government instabilities, increasing the exposure to potential

FORM 10-K

SEABOARD CORPORATION

expropriation, confiscation, war, insurrection, civil strife and revolution, corruption, currency inconvertibility and devaluation, and currency exchange controls, in addition to the risks of overseas operations mentioned in clause (a)(2) above. In addition, foreign government policies and regulations could restrict the purchase of various grains, reducing or limiting Seaboard’s ability to access grains or to limit Seaboard’s sales price for grains sold in local markets.

(2)

Fluctuations in Commodity Grain Prices Could Adversely Affect the Business of this Division . This division’s sales are significantly affected by fluctuating worldwide prices for various commodities, such as wheat, corn, soybeans and, to a lesser degree, various other agricultural commodity products. These prices are determined by constantly changing market forces of supply and demand as well as other factors over which Seaboard has little or no control. European flour exports, including donated food aid, flour dumping practices and world-wide and local crop production can contribute to these fluctuating market conditions and can have a significant impact on the trading and milling businesses’ sales, value of commodities held in inventory and operating income. Seaboard’s results of operations could be adversely affected by fluctuations in commodity prices.

(3)

This Division Uses a Material Amount of Derivative Products to Manage Certain Market Risks . The commodity trading portion of the business enters into various commodity derivatives and foreign exchange derivatives to create what management believes is an economic hedge for commodity trades it executes or intends to execute with its customers. This portion of the business also enters into speculative derivative transactions related to its market risks. Failure to execute or improper execution of a derivative position or a firmly committed sale or purchase contract, a speculative transaction that closes without the desired result or exposure to counter party risk could have an adverse impact on the results of operations and liquidity.

(4)

This Division is Subject to Higher than Normal Risks for Attracting and Retaining Key Personnel . In the commodity trading environment, a loss of a key employee such as a commodity trader can have a negative impact resulting from the loss of revenues as personal customer relationships can be vital to obtaining and retaining business with various foreign customers. In the grain processing portion of this division, employing and retaining qualified expatriate personnel is a key element of success given the difficult living conditions, the unique operating environments and the reliance on a relatively small number of executives to manage each individual location.

(5)

This Division F aces Increasing Competition . This division is experiencing increasing competition in certain foreign markets by well capitalized originators and traders of commodities making sales directly to end-use customers. If various grain originators refuse to sell commodities to Seaboard for sale in these foreign markets, this could make it more challenging for Seaboard to purchase commodities for sale to its customers at competitive prices. Seaboard’s sales volume and sale prices for commodities to customers, as well as results of operations, could be adversely impacted by such increased competition.

(d)

Marine Division

(1)

The Demand for this Division’s Services Are Affected by International Trade and Fluctuating Freight Rates . This division provides cargo shipping services primarily from the U.S. to many different c ountries in the Caribbean Basin and Central and South America. In addition to the risks of overseas operations mentioned in (a)(2) above, fluctuations in economic conditions, unstable or hostile local political situations in the countries in which Seaboard operates, can affect import/export trade volumes and cargo freight rates and adversely affect Seaboard’s results of operations.

(2)

Chartered Ships Are Subject to Fluctuating Rates . Time-charter expenses are one of the division’s largest expenses. Certain ships are under charters longer than one year while others are less than one year. These costs can vary greatly due to a number of factors including the worldwide supply and demand for shipping. It is not possible to determine in advance whether a charter contract for more or less than one year will be favorable to Seaboard’s business. Accordingly, entering into long-term charter hire contracts during periods of decreasing charter hire costs, or short-term charter hire contracts during periods of increasing charter hire costs could have an adverse effect on Seaboard’s results of operations.

FORM 10-K

SEABOARD CORPORATION

(3)

Increased Fuel Prices May Adversely Affect the Division’s Business . Ship fuel expenses are one of the division’s largest expenses and vary greatly from year to year depending on fuel prices. While most trade lanes have a series of fuel surcharges in place that seek to adjust revenues with changes in fuel prices, such mechanisms do not act with precision in terms of timing and amount. When fuel prices increase rapidly or consistently, the surcharge mechanism may not adjust revenues enough to offset the increase in cost to Seaboard. Fuel surcharges are also an area of competition among carriers and market forces may preclude us from generating enough revenue from the fuel surcharges to offset any increase in costs, which may have a negative effect on Seaboard’s profitability. Also, but to a lesser extent, fuel price increases can impact inland transportation costs both in the U.S. and overseas.

(4)

Hurricanes May Disrupt Operations in the Caribbean Basin . Seaboard’s port operations throughout the Caribbean Basin can be subject to disruption due to hurricanes, especially at Seaboard’s major ports in Miami, Florida and Houston, Texas, which could have an adverse effect on Seaboard’s results of operations.

(5)

This Division is Subject to Complex Laws and Regulations that May Adversely Affect the Revenues, Cost, Manner or Feasibility of Doing Business . Federal, state and local laws and domestic and international regulations governing worker health and safety, environmental protection, port and terminal security, and the operation of vessels, including fuel regulations, significantly affect Seaboard’s operations, including rate discussions and other related arrangements. Many aspects of the marine industry, including rate agreements and vessel space sharing agreements, are subject to extensive governmental regulation by the Federal Maritime Commission, the U.S. Coast Guard, and U.S. Customs and Border Protection, and to regulation by private industry organizations. Compliance with applicable laws, regulations and standards may require installation of costly equipment or operational changes, while the failure to comply may result in administrative and civil penalties, criminal sanctions, the suspension or termination of Seaboard’s operations or detention of its vessels. In addition, future changes in laws, regulations and standards, including allowed freight rate discussions and other related arrangements, may result in additional costs or a reduction in revenues.

(6)

The Division’s Revenues and Cost Structure is Dependent on the Continuation of Cost Sharing Arrangements . The division has entered into vessel cost sharing arrangements with other service providers that are short term in nature. If they are unable to be renewed or renewed with unfavorable terms it could result in a negative impact to the business.

(e)

Sugar Division

(1)

The Success of this Division Depends on the Condition of the Argentinean Economy, Currency and Political Climate . This division operates a sugar mill, alcohol production and power generation facility in Argentina, locally growing a substantial portion of the sugarcane processed at the mill. Fluctuations in economic conditions or changes in the Argentine political climate can have an impact on the costs of operations, the sales prices of products and export opportunities and the exchange rate of the Argentine peso to the U.S. dollar. In this regard, local sales prices are affected by government price control and sugar import duties imposed by the Argentine government, impacting local volume sold, as well as imported and exported volumes to and from international markets. If import duties are changed, this could have a negative impact on Seaboard’s sale price of its products. In addition, the majority of the sales are within Argentina and the Argentine government attempts to control inflation through retail price controls on mass consumption products, including sugar, which could adversely impact the local sales price of its products and the results of operations for this division. A devaluation of the Argentine peso would have a negative impact on Seaboard’s financial position.

(2)

This Division is Subject to the Risks that Are Inherent in any Agricultural Business . Seaboard’s results of operations for this division may be adversely affected by numerous factors over which Seaboard has little or no control and that are inherent in any agricultural business, including reductions in the market prices for Seaboard’s products, adverse weather and growing conditions, pest and disease problems, and new government regulations regarding agriculture and the marketing of agricultural products. Of these risks, weather particularly can adversely affect the amount and quality of the sugarcane produced by Seaboard and Seaboard’s competitors located in other regions of Argentina.

FORM 10-K

SEABOARD CORPORATION

(3)

The Loss of this Division’s Sole Processing Facility Would Adversely Affect the Business . Seaboard’s Sugar Division is largely dependent on the continued operation of a single processing facility. The loss of or damage to this facility for any reason, including fire, tornado, earthquake, governmental action, labor unrest resulting in labor strikes or other reasons, would adversely affect the business of this division.

(4)

Labor Relation Challenges Could Adversely Affect Operations . This division is dependent on unionized labor at its single sugar mill in Argentina. The political and economic environment in Argentina makes normal labor relations very challenging. Contributing to the situation are the policies of Argentina’s government and the failure of the Argentine courts to enforce contractual obligations with unions and basic property rights. Interruptions in production as a result of labor unrest can adversely impact the quantity of sugarcane harvested and the amount of sugar, alcohol and power produced and can interfere with the distribution of products stored at the facility in the Salta Province.

(5)

The Operating Profit of the Alcohol Production Facility Could Be Adversely Impacted by Government Regulations . The profitability of Seaboard’s alcohol production facility could be adversely affected by Argentine government regulations related to the bio-ethanol market regarding production quotas and fuel blends. In addition, the entry of corn alcohol producers in Argentina has increased competition. Unfavorable changes in market prices over extended periods of time or adverse changes in the Argentine government’s regulations regarding bio-ethanol production quotas and fuel blends, could adversely affect Seaboard’s results of operations.

(6)

The Operating Profit of the Cogeneration Power Plant Could Be Adversely Impacted by Contract for the Sale of Energy . In 2013, the biomass cogeneration contract was ratified by the Argentine national energy regulator setting the sale price for energy produced and sold by Seaboard’s cogeneration power plant. The profitability of Seaboard’s cogeneration power plant could be adversely affected by the failure to enforce the terms of the contract, which could adversely affect Seaboard’s results of operations and could result in the potential impairment of the recorded value of the property, plant and equipment related to this facility.

(f)

Power Division

(1)

This Division is Subject to Risks of Doing Business in the Dominican Republic . In addition to significant currency fluctuations and the other risks of overseas operations mentioned in clause (a)(2) above, this division can experience difficulty in obtaining timely collections of trade receivables from the government owned distribution companies or other companies that must also collect from the government in order to make payments on their accounts. Currently, the Dominican Republic does not allow a free market to enable prices to rise with demand, which could limit Seaboard’s profitability in this business. The government has the ability to arbitrarily decide which power units will be able to operate, which can ultimately determine spot market prices for electricity generated and sold into the power grid and thus could have adverse effects on results of operations.

(2)

Fluctuations in Fuel Costs Could Adversely Affect Seaboard’s Operating Margins . Fuel is the largest cost component of this division’s business and, therefore, margins may be adversely affected by fluctuations in fuel prices if such fluctuations cannot be fully passed to customers through the spot market price mechanism.

(3)

Supply of Natural Gas is Limited in the Dominican Republic . Supply of natural gas in the Dominican Republic is limited to one primary supplier. Although the barge can run on other types of fuel, supply disruptions of natural gas could have a negative impact on this division’s operating income.

(4)

The Loss of the Division’s Sole Facility would Adversely Affect the Business . Seaboard’s Power Division is dependent on the continued operation of a single facility. The loss of or damage to this facility for any reason, including fire, tornado, earthquake, governmental actions or labor unrest resulting in labor strikes or other reasons would adversely affect the business of this division.

(g)

Turkey Segment

(1)

Fluctuations in Commodity Turkey Prices Could Adversely Affect the Results of Operations . Sales prices for turkey products are directly affected by both domestic and worldwide supply and demand for turkey products and other proteins which are determined by constantly changing market forces of supply and demand as well as other factors over which Butterball has little or no control. Butterball’s results of operations and the value of Seaboard’s investment in Butterball could be adversely affected by fluctuations in the turkey commodity prices.

(2)

Increases in Costs of Turkey’s Feed Components and Turkey Purchases Could Adversely Affect Costs and Operating Margins . Feed costs are the most significant single component of the cost of raising turkeys and can be

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SEABOARD CORPORATION

materially affected by commodity price fluctuations for corn, soybean meal, and other commodity grain inputs. Butterball’s results may be negatively affected by increased costs of the feed components. The continued operation of ethanol plants has elevated this risk as it has increased the competing demand for feed ingredients, primarily corn. Butterball attempts to manage some of these risks through the use of financial instruments; however this may also limit its ability to participate in gains from favorable commodity fluctuations. Unless wholesale turkey prices correspondingly increase, increases in the prices of Butterball’s feed components would adversely affect Butterball’s results of operations and the value of Seaboard’s investment in Butterball.

(3)

Adverse Operating Results Could Result in Need for Additional Investment . Butterball has third-party bank loan facilities separate from Seaboard, which are secured by substantially all of the assets of Butterball. Adverse operating results could cause Butterball to default on such loan facilities, which could result in a significant adverse impact on Butterball’s financial position, or result in Seaboard needing to increase Seaboard’s investment in Butterball.

(4)

Decreased Perception of Value in the Butterball’s Brand Could Adversely Affect Sales Quantity and Price of Butterball Products . Butterball is a premium brand name, built on a long history of offering a quality product that has been differentiated in the market. The value of the Butterball brand allows for sales of a higher unit price than other turkey products. In order to maintain this advantage, Butterball must continue to support the brand with successful marketing efforts. In addition, negative news reports for any reason in a variety of areas on the company or the turkey/poultry industry could negatively impact this brand perception and Butterball’s results of operations and the value of Seaboard’s investment in Butterball.

(5)

The Loss of Butterball’s Primary Further Processing Facility Could Adversely Affect Butterball’s Business. Although Butterball has four processing plants and three further processing plants, Butterball is disproportionately dependent on the continued operation of the processing plant in Mt. Olive, North Carolina that handles a significant volume of the production of further processed turkey products. The loss of or damage to this facility for any reason, including fire, tornado, governmental action or other reason, could adversely affect the results of operations for Butterball and the value of Seaboard’s investment in Butterball.

(6)

If Butterball’s Turkey Products Become Contaminated, the Company May be Subject to Product Liability Claims and Product Recalls . Turkey products may be subject to contamination by disease producing organisms. These organisms are generally found in the environment and as a result, there is a risk that they may contaminate products. Even an inadvertent shipment of contaminated products is a violation of law and may lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on the company’s business, reputation, and prospects. This could adversely affect the results of operations and financial condition of Butterball and the value of Seaboard’s investment in Butterball.

(7)

Health Risk to Poultry Could Adversely Affect Production, the Supply of Raw Materials and Butterball’s Business . Butterball is subject to risks relating to its ability to maintain animal health and control diseases, such as avian influenza. The general health of the turkeys and reproductive performance can have an adverse impact on production and production costs, the supply of raw material to Butterball’s processing operations and consumer confidence. If Butterball’s turkeys are affected by disease, Butterball may be required to destroy infected birds, which could adversely affect Butterball’s production or ability to sell or export its products. Adverse publicity concerning any disease or health concern could also cause customers to lose confidence in the safety and quality of Butterball food products, resulting in an adverse effect on Butterball’s results of operations and the value of Seaboard’s investment in Butterball.

(8)

Butterball May be Unable to Obtain Appropriate Personnel at Remote Locations . The remote locations of some of the turkey processing plants and live turkey operations, along with a more restrictive national policy on immigration, could negatively affect the availability and cost of labor. Butterball is dependent on having sufficient properly trained operations personnel. Attracting and retaining qualified personnel is important to Butterball’s success. The inability to acquire and retain the services of such personnel could have a material adverse effect on Butterball’s operations and the value of Seaboard’s investment in Butterball.

Item 1B . Unresolved Staff Comments

None

FORM 10-K

SEABOARD CORPORATION

Item 2 . Properties

As of December 31, 2015, Seaboard’s principal properties by Division are described below:

(1) Pork - Seaboard’s Pork Division owns a hog processing plant in Guymon , Oklahoma, which opened in 1995 . It has a daily double shift capacity to process approximately 20, 5 00 hogs and generally operates at capacity with additional weekend shifts depending on market conditions. Seaboard’s hog production operations consist of the breeding and raising of approximately four million hogs annually at facilities it primarily owns or at facilities owned and operated by third parties with whom it has grower contracts. This business owns and operates five centrally located feed mills , which have a combined capacity to produ ce approximately two million tons of formulated feed annually . These feed mills are used primarily to support Seaboard’s existing hog production, and have the capability of supporting additional hog production in the future. These facilities are located in Oklahoma, Texas, Kansas and Colorado . The Pork Division also operates a ham-boning and processing plant in Mexico that has the capacity to process 96 million pounds of ham annually.

The Pork Division owns a biodiesel plant in Guymon, Oklahoma with the capacity to produce 36 million gallons of biodiesel annually, which is currently produced from pork fat from Seaboard’s Guymon pork processing plant and from animal fat supplied by non-Seaboard facilities. The facility can also produce biodiesel from vegetable oil.

Seaboard’s Pork Division’s non-consolidated affiliate, Daily’s, owns two bacon further processing plants located in Salt Lake City, Utah and Missoula, Montana. These plants are utilized near capacity throughout the year, which is a combined daily smoking capacity of approximately 350,000 pounds of raw pork bellies. In the second quarter of 2015, Daily’s began construction on a third further processing plant located in St. Joseph, Missouri, which is expected to have daily capacity of 230,000 pounds of raw pork bellies . Operations are anticipated to begin in mid-2016 .

Also, t he Pork Division and Triumph formed another joint venture during 2015 to develop and operate a pork processi ng facility in Sioux City, Iowa, which is anticipated to begin operations in mid- 2017. The plant is expected to process about three million market hogs annually operating a single shift.

(2 ) Commodity Trading and Milling - Seaboard’s Commodity Trading and Milling Division owns, in whole or in part, grain-processing and related agribusiness operations in 19 countries which have the cap acity to mill approximately 10,3 00 metric tons of wheat and maize per day. In addition, Seaboard has feed mill capacity of approximately 175 metric tons per hour to produce formula animal feed. The grain-processing and related agribusiness operations located in Botswana, Brazil, Colombia, Democratic Republic of Congo, Ecuador, Gambia, Ghana, Guyana, Haiti, Jamaica, Kenya, Lesotho, Madagascar, Mozambique, Nigeria, Republic of Congo, South Africa, Turkey, Uganda, Uruguay, and Zambia own their facilities; and in Kenya, Lesotho, Mozambique, Nigeria, and Republic of Congo the land on which the facilities are located is leased under long-term agreements. 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. In addition, this division has an investment through non-consolidated affiliates in poultry businesses operating in parts of Eastern and Southern Africa. This division also has an investment through a non-consolidated affiliate in a bakery business in the Democratic Republic of Congo. Seaboard owns three 18,900 metric ton deadweight dry bulk carriers and charters between 29 and 52 bulk carriers with deadweights ranging from 5,000 to 76,000 metric tons under short-term agreements. The Commodity Trading and Milling Division took delivery of two dry bulk vessels built for a t otal cost of approximately $45 million during 2015. An additional vessel was delivered in January 2016 , and the final vessel is expected to be delivered during the first half of 2016 for a t otal cost of approximately $45 million. Seaboard entered into sales-leaseback transactions for the vessels delivered and anticipates selling and leasing back the remaining vessel when completed, which would result in Seaboard receiving back the amounts spent to build the vessels.

(3) Marine - Seaboard’s Marine Division leases approximately 267,000 square feet of off-port warehouse space and 95 acres of port terminal land and facilities in Miami, Florida, which are used in its containerized cargo operations. Seaboard also leases an approximately 62 acre cargo handling and terminal facility in Houston, Texas, which includes several on-dock warehouses totaling approximately 690,000 square feet for cargo storage. At December 31, 2015 , Seaboard owned three ocean cargo vessels with deadweights ranging from 7,700 to 11,000 metric tons. In addition, Seaboard chartered approximately 22 vessels under contracts that typically range from approximately six months to three years with

FORM 10-K

SEABOARD CORPORATION

deadweights ranging from approximately 8,000 to 33,900 metric tons but has also entered into some longer-term charter s up to ten years. Seaboard owns or leases dry, refrigerated and specialized containers and other related equipment.

(4) Sugar - Seaboard’s Argentine Sugar Division owns nearly 70,000 acres of planted sugarcane and a sugar mill with a current capacity to process approximately 250,000 metric tons of sugar and an alcohol distillery with a current capacity of approximately 15 million gallons of alcohol per year. This capacity is sufficient to process all of the cane harvested by this division and additional quantities purchased from third party farmers in the region. Depending on local market conditions, this business also purchases third-party sugar for resale. The sugarcane fields and processing mill are located in northern Argentina in the Salta Province, which experiences seasonal rainfalls that may limit the harvest season, which then affects the duration of mill operations and quantities of sugar and alcohol produced. The Sugar Division also owns a 51 megawatt cogeneration power plant that supplies electricity to the Argentine power grid under renewable energy contracts with an Argentine state owned company. The plant is powered by the burning of sugarcane by-products, natural gas and other biomass when available.

(5) Power - Seaboard’s Power Division owns one floating electric power generating facility (108 megawatts). The facility consists of a system of diesel engines mounted onto barge-type vessels located on the Ozama River in Santo Domingo, Dominican Republic. The owned facility is capable of using natural gas or heavy fuel oil. Seaboard operates as an independent power producer generating electricity for the local power grid. Seaboard is not directly involved in the transmission and distribution facilities that deliver the power to the end user.

(6) Turkey – Seaboard’s Turkey Segment has a total of four processing plants, three further processing plants and numerous company and third-party live production facilities and feed milling operations, all of which are located in North Carolina, Arkansas, Missouri, Illinois and Kansas. These plants produce over one billion pounds of turkey each year.

(7) Other - Seaboard owns a jalapeño pepper processing plant and warehouse in Honduras.

In addition to the information provided above, the information under the caption “Principal Locations” of Seaboard’s Annual Report to Stockholders is incorporated herein by reference.

Management believes that Seaboard’s present facilities are adequate and suitable for its current purposes.

Item 3. Legal Proceedings

The information required by this item is incorporated herein by reference to Note 10 to the Consolidated Financial Statements included in Seaboard’s Annual Report to Stockholders .

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

In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock. The amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an annual basis) represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per share per year). Therefore, Seaboard did not declare a dividend during the three years ended December 31, 2015, and does not currently intend to declare a dividend for 2016. As discussed in Note 7 to the Consolidated Financial Statements included in Seaboard’s Annual Report to Stockholders (which discussion is incorporated herein by reference), Seaboard’s ability to declare and pay dividends is subject to limitations imposed by debt agreements referred to there.

FORM 10-K

SEABOARD CORPORATION

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.

Seaboard prese ntly may repurchase up to $100 million market value of its common stock from time to time in open market or privately negotiated purchases under its share repurchase program. See Note 11 to the Consolidated Financial Statements included in Seaboard’s Annual Report to Stockholders for further discussion. There were no purchases made by or on behalf of Seaboard or any “affiliated purchaser” (as defined by applicable rules of the Commission) of shares of Seaboard’s common stock during the fourth quarter of the fiscal year covered by this report.

In addition to the information provided above, the information required by this item is incorporated herein by reference to the information under the captions of “ Stockholder Information - Stock Listing,” “Quarterly Financial Data ” and “Company Performance Graph” of Seaboard’s Annual Report to Stockholders .

Item 6 . Selected Financial Data

The information required by this item is incorporated herein by reference to the “Summary of Selected Financial Data” of Seaboard’s Annual Report to Stockholders .

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

The information required by this item is incorporated herein by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Seaboard’s Annual Report to Stockholders .

Item 7A . Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is incorporated herein by reference to the information under the caption “Derivative Information” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Derivative Instruments and Hedging Activities” within Note 1, and Note 8 of Seaboard’s Consolidated Financial Statements of Seaboard’s Annual Report to Stockholders.

Item 8 . Financial Statements and Supplementary Data

The information required by this item is incorporated herein by reference to the information under the captions “Quarterly Financial Data,” “Report of Independent Registered Public Accounting Firm,” “Consolidated Statements of Comprehensive Income,” “Consolidated Balance Sheets,” “Consolidated Statements of Cash Flows,” “Consolidated St atements of Changes in Equity” and “Notes to Consolidated Financial Statements” included in Seaboard’s Annual Report to Stockholders and attached as Exhibit 13 to this report .

Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures – As of December 31, 2015 , Seaboard’s management has evaluated, under the direction of our chief executive and chief financial officers, the effectiveness of Seaboard’s disclosure controls and procedures, as defined under the Securities Exchange Act of 1934 (the “Exchange Act”) rule 13a-15(e). Based upon and as of the date of that evaluation, Seaboard’s chief executive and chief financial officers concluded that Seaboard’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports it files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required. It should be noted that any system of disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design

FORM 10-K

SEABOARD CORPORATION

of any system of disclosure controls and procedures is based in part upon assumptions about the likelihood of future events. Due to these and other inherent limitations of any such system, there can be no assurance that any design will always succeed in achieving its stated goals under all potential future conditions.

Reports on Internal Control Over Financial Reporting – Management’s report on internal control over financial reporting and the attestation report of KPMG LLP, Seaboard’s independent registered public accounting firm, on Seaboard’s internal control over financial reporting, as defined in Exchange Act rule 13a-15(f), is incorporated herein by reference to all information under the captions “Management’s Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm,” respectively, of Seaboard’s Annual Report to Stockholders and attached as Exhibit 13 to this report.

Change in Internal Control Over Financial Reporting – There have been no change in Seaboard’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, Seaboard’s internal control over financial reporting.

Item 9B. Other Information

None.

FORM 10-K

SEABOARD CORPORATION

PART III

Item 10 . Directors, Executive Officers and Corporate Governance

The information about the executive officers of the Company is included under the caption “Executive Officers of the Registrant” in Item 1 of this annual r eport on Form 10-K .

Seaboard has a Code of Ethics Policy (the “Code”) for directors, officers (including our chief executive officer, chief financial officer, chief accounting officer, and persons performing similar functions) and employees. Seaboard has posted the Code on its internet website, www.seaboardcorp.com, and intends to disclose any future changes and waivers to the Code by posting such information on that website.

In addition to the information provided above, the information required by this item is incorporated herein by reference to the information under the captions “Item 1: Election of Directors,” “Board of Directors Information – Committees of the Board – Audit Committee,” “Board of Directors Information – Director Nominations” and “Section 16(a) Beneficial Ownership Reporting Compliance” of Seaboard’s definitive proxy statement for the 2016 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2015 (“Proxy Statement”).

Item 11 . Executive Compensation

The information required by this item is incorporated herein by reference to the information under the captions “Board of Directors Information – Compensation of Directors,” “Executive Compensation and Other Information,” “Employment Arrangements with Named Executive Officers,” “Benefit Plans,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report,” and “Compensation Discussion and Analysis” included in our Proxy Statement.

Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

In addition to the information provided above, the information required by this item is incorporated herein by reference to the information under the captions “Principal Stockholders” and “Share Ownership of Managem ent and Directors” included in our Proxy Statement.

Item 13 . Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herei n by reference to the information under the captions “Compensation Committee Interlocks and Insider Participation , ” “Board of Directors Information – Controlled Corporation” and “Board of Directors Information – Committees of the Board” included in our Proxy Statement .

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated herein by reference to the information under the captions “Item 2 : Selection of Independent Auditors” included in our Prox y Statemen t .

FORM 10-K

SEABOARD CORPORATION

PART IV

Item 15 . Exhibits, Financial Statement Schedules

(a) List the following documents filed as a part of the repor t:

1. Financial statements.

The consolidated financial statements and accompanying notes are incorporated herein by reference to the Annual Report to Stockholders filed as Exhibit 13 hereto.

2. Financial statement schedules.

Schedule II - Valuation and Qualifying Accounts

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.

3. Exhibits.



	Exhibit No.		Description

	3.1		Seaboard Corporation Restated Certificate of Incorporation. Incorporated herein by reference to Exhibit 3.1 of Seaboard’s Form 10-Q for the quarter ended April 4, 2009.

	3.2		Seaboard Corporation By-laws, as amended. Incorporated herein by reference to Exhibit 3.2 of Seaboard’s Form 10-K for fiscal year ended December 31, 2005.

	10.1 *		Seaboard Corporation Executive Deferred Compensation Plan as Amended and Restated Effective January 1, 2009 and dated December 22, 2008, amending and restating the Seaboard Corporation Executive Deferred Compensation Plan dated December 29, 2005. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 10-K for fiscal year ended December 31, 2008.

	10.2 *		Seaboard Corporation Executive Retirement Plan Trust dated November 5, 2004 between Seaboard Corporation and Robert L. Steer as trustee. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 10-Q for the quarter ended October 2, 2004.

	10.3 *		Seaboard Corporation Retiree Medical Benefit Plan as Amended and Restated Effective January 1, 2009 and dated December 22, 2008, amending and restating the Seaboard Corporation Retiree Medical Benefit Plan dated March 4, 2005. Incorporated herein by reference to Exhibit 10.6 of Seaboard’s Form 10-K for fiscal year ended December 31, 2008.

	10.4 *		First Amendment to the Seaboard Corporatio n Retiree Medical Benefit Plan E ffective March 25, 2015 and dated March 31, 2015. Incorporated herein by reference to Exhibit 10.1 of Seaboard’s Form 10-Q for the quarter ended April 4, 2015.

	10.5 *		Seaboard Corporation Non-Qualified Deferred Compensation Plan Effective January 1, 2009 and dated December 22, 2008, amending and restating the Seaboard Corporation Nonqualified Deferred Compensation Plan dated December 29, 2005. Incorporated herein by reference to Exhibit 10.12 of Seaboard’s Form 10-K for fiscal year ended December 31, 2008.

	10.6 *		Amendment No. 1 to the Seaboard Corporation Non-Qualified Deferred Compensation Plan Effective January 1, 2009 and dated December 17, 2009. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 10-K for fiscal year ended December 31, 2009.

	10.7 *		Seaboard Corporation 409A Executive Retirement Plan Amended and Restated Effective January 1, 2013 and dated December 21, 2012, amending and restating the Seaboard Corporation Executive Retirement Plan, Amendment and Restatement dated December 22, 2008. Incorporated by reference to Exhibit 10.14 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

FORM 10-K

SEABOARD CORPORATION

	10.8* +		First Amendment to the Seaboard Corporation 409A Executive Retirement Plan effective as of January 1, 2015 and dated January 14, 2016.

	10.9 *		Seaboard Corporation Cash Balance Executive Retirement Plan Amendment and Restatement Effective January 1, 2013 and dated December 21, 2012, amending and restating the Seaboard Corporation Cash Balance Executive Retirement Plan dated December 18, 2009. Incorporated by reference to Exhibit 10.15 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.10 *		Seaboard Marine Ltd. 401(k) Excess Plan Effective January 1, 2009 and dated December 18, 2009. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 10-K for fiscal year ended December 31, 2009.

	10.11 *		Seaboard Corporation Investment Option Plan dated December 18, 2000. Incorporated herein by reference to Exhibit 10.7 of Seaboard’s Form 10-K for fiscal year ended December 31, 2000.

	10.12 *		Seaboard Corporation Executive Officers’ Bonus Policy. Incorporated herein by reference to Exhibit 10.10 of Seaboard’s Form 10-K for fiscal year ended December 31, 2005.

	10.13 *		Employment Agreement between Seaboard Corporation and Steven J. Bresky dated December 21, 2012. Incorporated by reference to Exhibit 10.16 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.14 *		Employment Agreement between Seaboard Corporation and Robert L. Steer dated December 21, 2012. Incorporated by reference to Exhibit 10.17 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.15 *		Employment Agreement between Seaboard Foods LLC and Terry J. Holton, dated December 21, 2012. Incorporated by reference to Exhibit 10.18 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.16 *		Employment Agreement between Seaboard Overseas and Trading Group and David M. Dannov dated December 21, 2012. Incorporated by reference to Exhibit 10.19 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.17 *		Employment Agreement between Seaboard Marine Ltd. and Edward A. Gonzalez dated December 21, 2012. Incorporated by reference to Exhibit 10.20 to Seaboard’s Form 10-K for fiscal year ended December 31, 2012.

	10.18		Amended and Restated Terminal Agreement between Miami-Dade County and Seaboard Marine Ltd. for Marine Terminal Operations, dated May 30, 2008. Incorporated herein by reference to Exhibit 10.1 of Seaboard’s Form 8-K dated May 30, 2008.

	10.19		Amendment No. 1 to Amended and Restated Terminal Agreement between Miami-Dade County and Seaboard Marine, Ltd. for Marine Terminal Operations dated March 30, 2009. Incorporated herein by reference to Exhibit 10.1 of Seaboard’s Form 10-Q for the quarter ended June 29, 2013.

	10.20		Amendment No. 2 to Amended and Restated Terminal Agreement between Miami-Dade County and Seaboard Marine, Ltd. for Marine Terminal Operations dated July 31, 2013. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 10-Q for the quarter ended June 29, 2013.

	10.21		Marketing Agreement dated February 2, 2004 by and among Seaboard Corporation, Seaboard Farms, Inc., Triumph Foods, LLC, and for certain limited purposes only, the members of Triumph Foods, LLC. Incorporated herein by reference to Exhibit 10.2 of Seaboard’s Form 8-K dated February 3, 2004.

	10.2 2		Seaboard Triumph Foods, LLC Subscription Agreement dated May 13, 2015. Incorporated herein by reference to Exhibit 10.1 of Seaboard’s Form 8-K dated May 13, 2015.

FORM 10-K

SEABOARD CORPORATION

	10.2 3		Term Loan Credit Agreement dated December 4, 2015. Incorporated herein by reference to Exhibit 10.1 of Seaboard’s Form 8-K dated December 9, 2015.


	10.24 +		Asset Purchase Agreement by and among Christensen Farms & Feedlots, Inc., Christensen Farms Midwest, LLC, Seaboard Foods of Iowa, LLC, Seaboard Foods LLC and Woodford Creek Farms LLP dated January 26, 2016.

	10.25 +		First Amendment to the Asset Purchase Agreement dated February 6, 2016.

	13 +		Sections of 2015 Annual Report to Stockholders specifically incorporated herein by reference herein.

	21 +		List of subsidiaries.

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

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

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

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

	99.1 +		Audited statements of Butterball, LLC as of and for the years ended January 3, 2016, December 28, 2014 and December 29, 2013.

	101.INS +		XBRL Instance Document.

	101.SCH +		XBRL Taxonomy Extension Schema Document.

	101.CAL +		XBRL Taxonomy Extension Calculation Linkbase Document.

	101.DEF +		XBRL Taxonomy Extension Definition Linkbase Document.

	101.LAB +		XBRL Taxonomy Extension Label Linkbase Document.

	101.PRE +		XBRL Taxonomy Extension Presentation Linkbase Document.

* Management contract or compensatory plan or arrangement.

+ Filed electronically herewith.

(b) Exhibits.

See exhibits identified above under Item 15(a)(3)


Schedule II - Valuation and Qualifying Accounts		2 5
Schedule II – Report of Independent Registered Public Accounting Firm		2 6

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SEABOARD CORPORATION

		By	/s/ Steven J. Bresky
			Steven J. Bresky, Chairman of the Board,
			President and Chief Executive Officer

		Date:	February 25, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Name	Date	Title

/s/ Steven J. Bresky	February 25, 2016	Chairman of the Board, President,
Steven J. Bresky		Chief Executive Officer and
		Director (principal executive
		officer)


/s/ Robert L. Steer	February 25, 2016	Executive Vice President,
Robert L. Steer		Chief Financial Officer
		(principal financial officer)


/s/ Michael D. Trollinger	February 25, 2016	Vice President, Corporate
Michael D. Trollinger		Controller and Chief Accounting
		Officer (principal accounting
		officer)

/s/ David A. Adamsen	February 25, 2016	Director
David A. Adamsen

/s/ Douglas W. Baena	February 25, 2016	Director
Douglas W. Baena

/s/ Edward I. Shifman, Jr.	February 25, 2016	Director
Edward I. Shifman, Jr.

Schedule II

SEABOARD CORP O RATION AND SUBSIDIARIES

Valuation and Qualifying Accounts

(In Millions)


	Balance at				Balance at
	beginning of year		Provision (1)	Net deductions (2)	end of year
Allowance for Doubtful Accounts:
Year Ended December 31, 2015	$	12	13	(4)	$	21
Year Ended December 31, 2014	$	13	—	(1)	$	12
Year Ended December 31, 2013	$	12	3	(2)	$	13

(1) The allowance for doubtful accounts provision is charged to selling, general and administrative expenses.

(2) Includes write-offs net of recoveries and currency translation adjustments.


	Balance at		Charged (credit)	Balance at
	beginning of year		to expense	end of year
Allowance for Deferred Tax Assets:
Year Ended December 31, 2015	$	21	(2)	$	19
Year Ended December 31, 2014	$	18	3	$	21
Year Ended December 31, 2013	$	12	6	$	18


	Balance at		Credit	Balance at
	beginning of year		to expense	end of year
Reserve for LIFO Valuation:
Year Ended December 31, 2015	$	37	(9)	$	28
Year Ended December 31, 2014	$	62	(25)	$	37
Year Ended December 31, 2013	$	91	(29)	$	62

See accompanying report of independent registered public accounting firm.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Seaboard Corporation:

Under date of February 25, 2016, we reported on the consolidated balance sheets of Seaboard Corporation and subsidiaries (the Company) as of December 31, 2015 and 2014, and 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, 2015, as contained in the annual report on Form 10-K for the year 2015. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedu le noted as Schedule II under Item 15(a)(2). 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.


	/s/ KPMG LLP

Kansas City, Missouri
February 25, 2016

Exhibit 10.24

ASSET PURCHASE AGREEMENT

by and among

CHRISTENSEN FARMS & FEEDLOTS, INC.,

CHRISTENSEN FARMS MIDWEST, LLC,

SEABOARD FOODS OF IOWA, LLC,

SEABOARD FOODS LLC

and

WOODFORD CREEK FARMS LLP

Dated as of January 26, 2016


Table of Contents

ARTICLE 1 PURCHASE AND SALE		2
1.1	Purchase and Sale of Acquired Assets	2
1.2	Excluded Assets	6
1.3	Assumed Liabilities	7
1.4	Retained Liabilities	7
1.5	Total Consideration	9
1.6	Payment	9
1.7	Valuation, Sampling and Adjustment Procedures	10
1.8	1031 Exchange	12
1.9	Remittances, Erroneous Transfers	12
1.10	Post-Closing, Consents and Permit Transfers	13

ARTICLE 2 CLOSING, DELIVERIES AND OTHER ACTIONS		14

2.1	Time and Place of the Closing	14
2.2	Deliveries by Seller Parties	14
2.3	Deliveries by Buyer Parties	15

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES		16

3.1	Existence and Good Standing; Organization	16
3.2	Power	16
3.3	Authority, Validity, Effect and No Conflict	16
3.4	Consents	16
3.5	Subsidiaries	17
3.6	Property	17
3.7	Litigation	18
3.8	Compliance with Laws	19
3.9	Operation of the Business; Sufficiency of Assets	19
3.10	Absence of Changes	19
3.11	Labor Matters	19
3.12	Employee Plans	20
3.13	Environmental and Safety	21
3.14	Contracts	23
3.15	Permits	24
3.16	Intellectual Property	24
3.17	Insurance	25
3.18	Financial Statements	25
3.19	Taxes	25
3.20	Inventory	25
3.21	Records	26
3.22	Brokers	26
3.23	Solvency	26
3.24	No Further Representations	26

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES		26

4.1	Existence and Good Standing	26
4.2	Authority, Validity, Effect and No Conflict	26
4.3	Consents	26
4.4	Brokers	27



4.5	Financing	27
4.6	No Further Representations	27

ARTICLE 5 PRE-CLOSING COVENANTS		27

5.1	General	27
5.2	Conduct of the Business in Normal Course	27
5.3	Access to Information	27
5.4	Notice of Developments	28
5.5	Breeding Practices	28
5.6	No Solicitation of Other Bids; Exclusivity	28
5.7	Risk of Loss; Casualty Loss	29

ARTICLE 6 CONDITIONS TO OBLIGATION TO CLOSE		29

6.1	Conditions to Obligation of Buyer Parties	29
6.2	Conditions to Obligation of Seller Parties	30

ARTICLE 7 TERMINATION		31

7.1	Termination of Agreement	31
7.2	Effect of Termination	31

ARTICLE 8 ADDITIONAL AGREEMENTS		31

8.1	Non-Solicitation and Non-Disclosure	31
8.2	Further Assurances	32
8.3	Press Release and Announcements	32
8.4	Expenses	33
8.5	No Amendment of Employee Plans or Arrangements	33
8.6	Employee Matters	33
8.7	Operating Costs Proration	34
8.8	Davis County Nuisance Mediation	34
8.9	Survey Exceptions	35
8.10	Antitrust Cooperation	35

ARTICLE 9 TAX MATTERS		35

9.1	Total Consideration Allocation	35
9.2	Transfer Taxes	36
9.3	Cooperation on Tax Matters	36
9.4	Tax Clearance Certificates	36
9.5	Pre-Closing Tax Periods	36
9.6	Straddle Periods; Proration	36
9.7	Exception	38

ARTICLE 10 REMEDIES		38

10.1	General Indemnification Obligations	38
10.2	Scope of Indemnification	39
10.3	Notice and Third Party Claims	39
10.4	Survival	40
10.5	Tax Treatment	41
10.6	Damages	41
10.7	Indemnification in Case of Strict Liability or Indemnitee Negligence	41


10.8	Duty to Mitigate	41
10.9	Insurance and Tax Benefits	41
10.10	Indemnification Exclusive Remedy	41

ARTICLE 11 DEFINITIONS		42

11.1	Definitions	42

ARTICLE 12 MISCELLANEOUS		54

12.1	Assignment	54
12.2	Headings	54
12.3	Integration, Modification and Waiver	54
12.4	Construction	54
12.5	Severability	55
12.6	Notices	55
12.7	Governing Law	56
12.8	Jurisdiction and Venue; Prevailing Parties	56
12.9	Waiver of Jury Trial	56
12.10	Specific Performance	56
12.11	No Third Party Beneficiaries	56
12.12	Counterparts	57
12.13	Disclosure Schedules	57

LIST OF SCHEDULES

Schedule 1.1(a)(i)	Colorado CFF Sites
Schedule 1.1(a)(ii)	Feed Mill
Schedule 1.1(a)(iii)	Truck Washes
Schedule 1.1(a)(ix)	Iowa Rolling Stock
Schedule 1.1(a)(x)(1)	SFI Contracts
Schedule 1.1(a)(x)(2)	Contract Producer Sites
Schedule 1.1(a)(xi)	SFI Acquired Permits
Schedule 1.1(a)(xii)	SFI Tangible Personal Property
Schedule 1.1(b)(vii)	Colorado Rolling Stock
Schedule 1.1(b)(viii)	Colorado Tangible Personal Property
Schedule 1.1(b)(ix)	SF Acquired Contracts
Schedule 1.1(b)(x)	Colorado Effluent Easements
Schedule 1.1(b)(xi)	SF Acquired Permits
Schedule 1.1(c)(i)	Woodford CFF Sites
Schedule 1.1(c)(ii)	Bare Land Property
Schedule 1.1(c)(iii)	Woodford Acquired Contracts
Schedule 1.1(c)(iv)	Iowa Effluent Easements
Schedule 1.1(c)(v)	Woodford Acquired Permits
Schedule 1.1(c)(vi)	Iowa Tangible Personal Property
Schedule 1.2(m)	Excluded Assets
Schedule 3.4	Consents
Schedule 3.5	Subsidiaries
Schedule 3.6(b)(i)	Owned Real Property
Schedule 3.6(b)(ii)	Leased Real Property
Schedule 3.7	Litigation
Schedule 3.8	Compliance with Laws
Schedule 3.9	Operation of the Business
Schedule 3.10	Absence of Changes
Schedule 3.11	Labor Matters
Schedule 3.11(d)	Employees and Independent Contractors
Schedule 3.11(e)	Government Contracting
Schedule 3.12(a)	Employee Benefit Plans
Schedule 3.13	Environmental and Safety
Schedule 3.14	Other Material Contracts
Schedule 3.16(a)	Intellectual Property
Schedule 3.17	Insurance Policies
Schedule 3.19	Taxes
Schedule 11.1(a)	Permitted Liens

LIST OF EXHIBITS

Exhibit A	Pig Inventory Value Methodology
Exhibit B	Form of Bill of Sale
Exhibit C	Form of Assignment and Assumption Agreement
Exhibit D	Form of Transition Management Support and Services Agreement
Exhibit E	Form of Assignment of Easements
Exhibit F	Form of FIRPTA Certificates

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this " Agreement "), dated as of this 26th day of January, 2016, is by and among Seaboard Foods of Iowa, LLC, a Delaware limited liability company (" SFI "), Seaboard Foods LLC, an Oklahoma limited liability company (" SF "), Woodford Creek Farms LLP, an Iowa limited liability partnership (" Woodford " and, together with SFI and SF, " Buyer Parties " and each individually a " Buyer Party "), Christensen Farms & Feedlots, Inc., a Minnesota corporation (" CFFI "), and Christensen Farms Midwest, LLC, a Minnesota limited liability company (" CFM " and, together with CFFI, " Seller Parties " and each individually a " Seller Party "). Each Seller Party and Buyer Party is sometimes individually referred to as a " Party ," and they are sometimes collectively referred to as the " Parties ."

RECITALS

A. Seller Parties own and operate the following facilities (the " Facilities "):

(i) hog confinement facilities located in Iowa and Colorado (collectively, the " CFF Sites ") and more specifically identified and described on Schedule 1.1(a)(i) and Schedule 1.1(c)(i) , respectively;

(ii) a feed mill located in Iowa Falls, Iowa (the " Feed Mill ") and more specifically identified and described on Schedule 1.1(a)(ii) ; and

(iii) truck wash facilities (collectively, the " Truck Washes ") located in Alden and Bloomfield, Iowa and more specifically identified and described on Schedule 1.1(a)(iii) ;

B. Seller Parties have entered into contract grower agreements with the owners of contract finisher facilities located in Iowa (collectively, the " Contract Producer Sites ") and more specifically identified and described on Schedule 1.1(a)(x)(2) ;

C. Seller Parties are engaged in the business (the " Business ") of (i) breeding, producing, marketing, distributing and selling pigs at, or from, the CFF Sites and the Contract Producer Sites and (ii) operating the Feed Mill and Truck Washes;

D. Each Seller Party desires to sell to certain of Buyer Parties, as set forth herein, substantially all of its assets used by one or both of Seller Parties in the Business, and Buyer Parties desire to purchase from Seller Parties such assets and assume certain liabilities of Seller Parties, upon the terms and conditions set forth herein (the " Acquisitions ");

E. Buyer Parties and Seller Parties desire to make certain representations, warranties, covenants and agreements specified herein in connection with the Acquisitions and to prescribe certain conditions to the consummation of the Acquisitions; and

F. Capitalized terms used in this Agreement without definition have the respective meanings set forth in Article 11 .

AGREEMENT

In consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1
PURCHASE AND SALE

1.1 Purchase and Sale of Acquired Asset s . Subject to the terms and conditions of this Agreement, at the Closing:

(a) Acquired Assets Purchased by SFI . SFI shall purchase from Seller Parties, and Seller Parties shall sell, transfer, assign, convey and deliver to SFI, or cause to be sold, transferred, conveyed, assigned and delivered to SF, free and clear of all Indebtedness and Liens (other than Permitted Liens), all right, title and interest of Seller Parties in, to and under the assets, properties, goodwill and other rights of every nature, kind and description, tangible and intangible, whether or not carried on the books of Seller Parties, in each case, that relate primarily or exclusively to the Business or that are used by or are held for the benefit of either Seller Party related primarily or exclusively to the Business (in each case, other than the SF Acquired Assets, the Woodford Acquired Assets and the Excluded Assets) (collectively, the " SFI Acquired Assets "), including the following:

(i) the real property owned by Seller Parties and comprising the CFF Sites located in Colorado, as more specifically identified and described on Schedule 1.1(a)(i) (specifically excluding all Improvements located thereon), together with all easements (other than the Effluent Easements), rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to CFF Sites located in Colorado ;

(ii) the real property owned by Seller Parties and comprising the site of the Feed Mill, as more specifically identified and described on Schedule 1.1(a)(ii) , together with all Improvements located thereon and all easements, rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to Feed Mill ;

(iii) the real property owned by Seller Parties and comprising the sites of the Truck Washes, as more specifically identified and described on Schedule 1.1(a)(iii) , together with all Improvements located thereon and all easements, rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to the Truck Washes ;

(iv) all unweaned, suckling pigs owned by Seller Parties that are located at the CFF Sites located in Iowa at the Effective Time (collectively, the " Iowa Unweaned Pig Inventory ");

(v) all sows, boars, gilts and breeding stock owned by Seller Parties that are located at the CFF Sites located in Iowa at the Effective Time, including all bred sows, gestating sows, unbred sows, cull sows, unbred gilts and boars at the CFF Sites located in Iowa at the Effective Time (collectively, together with the Iowa Unweaned Pig Inventory, the " Iowa Breeding Stock " ), and all unborn piglets of the Iowa Breeding Stock;

(vi) all weaned pigs, feeder pigs and grow-finish pigs owned by Seller Parties that are located at the CFF Sites located in Iowa and the Contract Producer Sites at the Effective Time (collectively, " Iowa Grow-Finish Inventory " and, together with the Iowa Breeding Stock, the " Iowa Swine Inventory ");

(vii) all feed and feed ingredients owned by a Seller Party that are located at the CFF Sites located in Iowa, the Contract Producer Sites and the Feed Mill at the Effective Time (collectively, the " Iowa Feed Inventory ");

(viii) all inventories of animal health supplies and medications, including injectable and other treatments , liquid propane and farm supplies and materials (other than Feed Inventory) owned by a Seller Party that are located at the CFF Sites located in Iowa and the Contract Producer Sites at the Effective Time (collectively, the " Iowa Other Inventory ");

(ix) the vehicles, trucks, trailers and other rolling stock owned or leased by Seller Parties set forth on Schedule 1.1(a)(ix) that are located in Iowa (collectively, the " Iowa Rolling Stock ");

(x) all of Seller Parties' rights and incidents of interest in, to and under the Contracts set forth on Schedule 1.1(a)(x)(1) , including the contractor-producer Contracts related to the Contract Producer Sites identified and described on Schedule 1.1(a)(x)(2) and the lease Contracts related to the leased Iowa Rolling Stock (collectively, the " SFI Acquired Contracts ");

(xi) to the extent assignable or transferable by Seller Parties, all Permits issued primarily or exclusively in connection with the operation of the Business in Iowa, in each case, other than the Woodford Permits, or the ownership, possession, occupancy or use of the Feed Mill or Truck Washes located in Iowa, including the Permits identified in Schedule 1.1(a)(xi) , and all pending applications for any such Permits (collectively, the " SFI Acquired Permits ");

(xii) all fixed assets, equipment, machinery, inventory, fixtures, furniture, computers and Software on the computers necessary to operate such hardware at the Facilities, tools, spare parts, supplies and other tangible personal property owned or leased by a Seller Party, in each case, that is (A) located at the Feed Mill, (B) located at a Truck Wash, (C) located at the Bloomfield, Iowa office, or (D) identified in Schedule 1.1(a)(xii) (the " SFI Tangible Personal Property ");

(xiii) all claims, counterclaims, Actions, rights, recoveries, refunds, rights of offset or other rights related primarily or exclusively to the SFI Acquired Assets or to the Assumed Liabilities with respect to Iowa or the Business located in Iowa, whether choate or inchoate, known or unknown, contingent or noncontingent;

(xiv) the goodwill of Seller Parties related to the SFI Acquired Assets; and

(xv) all of Seller Parties' telephone numbers and facsimile numbers used primarily or exclusively in connection with the SFI Acquired Assets; and

(xvi) the Records, in each case, related to the SFI Acquired Assets or the Business in Iowa (other than Records with respect to the Woodford Acquired Assets).

(b) Acquired Assets Purchased by SF . SF shall purchase from Seller Parties, and Seller Parties shall sell, transfer, assign, convey and deliver to SF, or cause to be sold, transferred, conveyed, assigned and delivered to SF, free and clear of all Indebtedness and Liens (other than Permitted Liens), all right, title and interest of Seller Parties in, to and under the following assets,

properties and rights (in each case, other than the SFI Acquired Assets, the Woodford Acquired Assets and the Excluded Assets) (collectively, the " SF Acquired Assets "):

(i) all Improvements located on the real property owned by Seller Parties and comprising the CFF Sites located in Colorado;

(ii) all unweaned, suckling pigs owned by Seller Parties that are located at the CFF Sites located in Colorado at the Effective Time (collectively, the " Colorado Unweaned Pig Inventory " and, together with the Iowa Unweaned Pig Inventory, collectively, the " Unweaned Pig Inventory ");

(iii) all sows, boars, gilts and breeding stock owned by Seller Parties that are located at the CFF Sites located in Colorado at the Effective Time, including all bred sows, gestating sows, unbred sows, cull sows, unbred gilts and boars at the CFF Sites located in Colorado at the Effective Time (collectively, together with the Colorado Unweaned Pig Inventory, the " Colorado Breeding Stock " ), and all unborn piglets of the Colorado Breeding Stock;

(iv) all weaned pigs, feeder pigs and grow-finish pigs owned by Seller Parties that are located at the CFF Sites located in Colorado at the Effective Time (collectively, " Colorado Grow-Finish Inventory " and, together with the Colorado Breeding Stock, the " Colorado Swine Inventory ");

(v) all feed and feed ingredients owned by a Seller Party that are located at the CFF Sites located in Colorado at the Effective Time (collectively, the " Colorado Feed Inventory " and, together with the Iowa Feed Inventory, collectively, the " Feed Inventory ");

(vi) all inventories of animal health supplies and medications, including injectable and other treatments , liquid propane and farm supplies and materials (other than Feed Inventory) owned by a Seller Party that are located at the CFF Sites located in Colorado at the Effective Time (collectively, the " Colorado Other Inventory " and, together with the Iowa Other Inventory, collectively, the " Other Inventory ");

(vii) the vehicles, trucks, trailers and other rolling stock owned or leased by Seller Parties set forth on Schedule 1.1(b)(vii) that are located in Colorado (collectively, the " Colorado Rolling Stock " and, together with the Iowa Rolling Stock, collectively, the " Rolling Stock ");

(viii) all fixed assets, equipment, machinery, inventory, fixtures, furniture, computers and Software on the computers necessary to operate such hardware at the Facilities, tools, spare parts, supplies and other tangible personal property owned or leased by a Seller Party and not otherwise identified in Section 1.1(a) , in each case, that is (A) located at the Facilities in Colorado, (B) identified in Schedule 1.1(b)(viii) , or (C) used or held for use primarily or exclusively in connection with the Business located in Colorado (the " Colorado Tangible Personal Property ");

(ix) all of Seller Parties' rights and incidents of interest in, to and under the Contracts (in each case, other than the Colorado Effluent Easements) set forth on Schedule 1.1(b)(ix) , including effluent and manure spreading agreements and the lease Contracts related to the leased Colorado Rolling Stock (collectively, the " SF Acquired Contracts ");

(x) all of Seller Parties' rights and incidents of interest in, to and under the easements set forth on Schedule 1.1(b)(x) (collectively, the " Colorado Effluent Easements ");

(xi) to the extent assignable or transferable by Seller Parties, all Permits issued primarily or exclusively in connection with the operation of the Business in Colorado or the ownership, possession, occupancy or use of the Facilities located in Colorado, including the Permits identified in Schedule 1.1(b)(xi) , and all pending applications for any such Permits (collectively, the " SF Acquired Permits ");

(xii) all claims, counterclaims, Actions, rights, recoveries, refunds, rights of offset or other rights related primarily or exclusively to the SF Acquired Assets or to the Assumed Liabilities with respect to Colorado or the Business located in Colorado, whether choate or inchoate, known or unknown, contingent or noncontingent;

(xiii) the goodwill of Seller Parties related to the SF Acquired Assets, the Business in Colorado and the Business as a going concern in Colorado;

(xiv) all of Seller Parties' telephone numbers and facsimile numbers used primarily or exclusively in connection with the SF Acquired Assets; and

(xv) the Records, in each case, related to the SF Acquired Assets or the Business in Colorado.

(c) Acquired Assets Purchased by Woodford . Woodford shall purchase from Seller Parties, and Seller Parties shall sell, transfer, assign, convey and deliver to Woodford, or cause to be sold, transferred, conveyed, assigned and delivered to Woodford, free and clear of all Indebtedness and Liens (other than Permitted Liens), all right, title and interest of Seller Parties in, to and under the following assets, properties and rights (in each case, other than the SF Acquired Assets and the Excluded Assets) (collectively, the " Woodford Acquired Assets " and, together with the SF Acquired Assets, the " Acquired Assets "):

(i) the real property owned by Seller Parties and comprising the CFF Sites located in Iowa, as more specifically identified and described on Schedule 1.1(c)(i) , together with all Improvements located thereon and all easements (other than the Effluent Easements), rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to the CFF Sites located in Iowa;

(ii) three parcels of bare land identified and described on Schedule 1.1(c)(ii) (the " Bare Land Property "), together with all Improvements located thereon and all easements, rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to the Bare Land Property;

(iii) all of Seller Parties' rights and incidents of interest in, to and under the Contracts (in each case, other than the Iowa Effluent Easements) set forth on Schedule 1.1(c)(iii) , including effluent and manure spreading agreements (the " Woodford Acquired Contracts " and, together with the SFI Acquired Contracts and the SF Acquired Contracts, collectively, the " Acquired Contracts ");

(iv) all of Seller Parties' rights and incidents of interest in, to and under the easements set forth on Schedule 1.1(c)(iv) (collectively, the " Iowa Effluent Easements " and, together with the Colorado Effluent Easements, collectively, the " Effluent Easements ");

(v) to the extent assignable or transferable by Seller Parties, all Permits issued primarily or exclusively in connection with the ownership, operation, possession, occupancy or use of the CFF Sites located in Iowa, including the Permits identified in Schedule 1.1(c)(v) , and all pending applications for any such Permits (collectively, the " Woodford Acquired Permits " and, together with the SFI Acquired Permits and the SF Acquired Permits, the " Acquired Permits ") ;

(vi) all fixed assets, equipment, machinery, inventory, fixtures, furniture, computers and Software on the computers necessary to operate such hardware at the Facilities, tools, spare parts, supplies and other tangible personal property owned by a Seller Party and not otherwise identified in Section 1.1(a) or (b) , in each case, that is (A) located at the CFF Sites in Iowa, (B) identified in Schedule 1.1(c)(vi) , or (C) other than the Colorado Tangible Personal Property and the SFI Tangible Personal Property, used or held for use primarily or exclusively in connection with the Business and regardless of where located (collectively, the " Iowa Tangible Personal Property " and, together with the Feed Inventory, Other Inventory, Rolling Stock, SFI Tangible Personal Property and Colorado Tangible Personal Property, collectively, the " Tangible Personal Property ");

(vii) the goodwill of Seller Parties related to the Woodford Acquired Assets, the Business in Iowa and the Business as a going concern in Iowa;

(viii) all of Seller Parties' telephone numbers and facsimile numbers used primarily or exclusively in connection with the Woodford Acquired Assets; and

(ix) the Records, in each case, related to the Woodford Acquired Assets.

1.2 Excluded Asset s . Notwithstanding anything to the contrary in this Agreement, the following assets of Seller Parties (the " Excluded Assets ") are not part of the sale and purchase contemplated hereby, are excluded from the Acquired Assets and shall be retained by Seller Parties and remain the property of Seller Parties following the Closing:

(a) all assets and property of Seller Parties unrelated or not used by or in connection with the Business;

(b) all vehicles, tractors, trailers and other rolling stock other than the Rolling Stock;

(c) cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, and any evidence of indebtedness issued or guaranteed by any Governmental Authority;

(d) all notes, accounts receivable, trade credits or other receivables arising in connection with the Business prior to the Closing;

(e) all right, title and interest in and to any Intellectual Property (other than the Software included on the computers that are part of the Acquired Assets), including for the avoidance of doubt, all right, title and interest in and to the name "Christensen" or any trademark

or Internet domain name consisting of or containing the name "Christensen," any other trademarks or Internet domain names owned by Seller Parties;

(f) all Contracts, including the Packer Contracts, but excluding the Acquired Contracts and Effluent Easements (the " Excluded Contracts ");

(g) all rights to receive refunds, credits and credit carry forwards with respect to any Taxes, in each case, to the extent attributable to a Pre-Closing Tax Period, including interest thereon, whether or not the foregoing is derived from the operation of the Acquired Assets;

(h) the corporate books and records of Seller Parties relating to the organization, maintenance, existence and good standing of Seller Parties as legal entities;

(i) to the extent related solely to a Retained Liability, any rights of each Seller Party against third parties related to or arising out of ownership of the Acquired Assets or operation of the Business prior to the Closing;

(j) all rights of each Seller Party under this Agreement and the Ancillary Agreements;

(k) all Employee Plans and all rights in connection with, and with respect to the assets associated with, any Employee Plan;

(l) subject to the requirements of Section 8.7 , all rights of Seller Parties to any prepaid rentals, advance payments, deposits, advances and other prepaid items, including prepaid rent, purchase price and deposits with lessors, suppliers and utilities; and

(m) all Records other than the Records included in the Acquired Assets and those Records provided by Seller Parties in Seller Parties' electronic data room or located at the Facilities; and

(n) those assets of each Seller Party set forth on Schedule 1.2(n) .

1.3 Assumed Liabilities . Subject to the terms and conditions of this Agreement and the Ancillary Agreements, Buyer Parties agree, at the Closing, to assume the Liabilities of Seller Parties arising under the Acquired Contracts, Effluent Easements and Acquired Assets to the extent relating to each Buyer Parties' respective ownership, management, control, operation or conduct of the Business or the Acquired Assets after the Closing Date and based on events or circumstances first occurring after the Closing Date, excluding Liabilities to the extent attributable to any breach of, default under or failure to perform the Acquired Contracts and Effluent Easements initiated, occurring or existing on or prior to the Closing Date or any Seller Parties' ownership, management, control, operation or conduct of the Acquired Assets on or prior to the Closing Date (collectively, the " Assumed Liabilities ").

1.4 Retained Liabilities . Notwithstanding anything to the contrary in this Agreement, all Liabilities of each Seller Party, other than the Assumed Liabilities, are not part of the sale and purchase contemplated by this Agreement, shall be retained, paid, performed and discharged by Seller Parties and remain the sole responsibilities of Seller Parties following the Closing (the " Retained Liabilities "), including the following Liabilities:

(a) any Liability related to, or occurring or existing in connection with, or arising out of, the ownership or operation of the Business prior to the Closing;

(b) any Liability arising out of, in connection with or relating to any Indebtedness or Liens;

(c) any Liability arising from, in connection with or relating to (i) the breach of, default under or failure to perform any Contract, initiated, occurring or existing on or prior to the Closing Date or (ii) any Liability for payments or amounts due or other obligations that were required to be performed under any Contract, including the Acquired Contracts and Effluent Easements, on or prior to the Closing Date;

(d) any Liability arising from, in connection with or relating to any Excluded Asset;

(e) for a period of two years following the Closing Date, all Liabilities related to Environmental Laws or Environmental Conditions to the extent arising out of or relating to events or circumstances that occurred, existed or were initiated on or prior to the Closing Date, including those arising out of or otherwise related to (i) the ownership or operation of (A) the Owned Real Property or Leased Real Property (or any condition thereon) on or prior to the Closing Date or (B) the Business on or prior to the Closing Date, or (ii) the onsite or offsite transportation, storage, disposal, treatment or recycling of Hazardous Material generated by or taken onsite or offsite prior to and through the Closing Date, including, with respect to clauses (i) and (ii) , (1) the Release or continuing Release of any Hazardous Material, regardless of by whom and (2) any noncompliance with or Liability under Environmental Laws;

(f) all Liabilities related to Environmental Laws or Environmental Conditions arising out of or otherwise related to the Excluded Assets or any other Real Property formerly owned, operated, licensed or otherwise used by each Seller Party, including (i) the Release or continuing Release of any Hazardous Material, regardless of by whom and (ii) any noncompliance with or Liability under Environmental Laws;

(g) all Liabilities for (i) Taxes of each Seller Party and their Affiliates, (ii) Taxes related to or imposed on the Acquired Assets or the Business for any Pre-Closing Tax Period, as determined under this Agreement, (iii) payments under any Tax allocation, sharing or similar arrangement (oral or written) between either Seller Party and any other Person (other than Buyer Parties), (iv) the Transfer Taxes described in Section 9.2 and (v) an obligation, if any, imposed under any bulk sale or transfer or fraudulent transfer Law of any jurisdiction, under any de facto merger Law, successor liability Law or any other Law or any similar Law applicable to the transactions contemplated hereby;

(h) any Liability arising out of, in connection with or relating to any Employee Plan, and any Liability for severance payments;

(i) any Liability of a Seller Party to any Affiliate of a Seller Party, including intercompany accounts and notes payable, and any Liability arising from or related to any Excluded Asset;

(j) any Liability of a Seller Party under this Agreement, the Ancillary Agreements or any other Contract between a Seller Party and a Buyer Party;

(k) any payment obligation for products, other goods or services provided to a Seller Party on or prior to the Closing Date;

(l) any Liability arising as a result of any Action (including, for the avoidance of doubt, any open workers' compensation claims against any Seller Party) initiated at any time or any action or omission by a Seller Party or any Affiliate of a Seller Party;

(m) any Liability for Selling Expenses;

(n) all trade accounts payable of each Seller Party;

(o) any Liability for any infringement, violation, misuse or misappropriation of the Intellectual Property owned, held or used by any Person other than a Seller Party arising on or prior to the Closing Date;

(p) any Liability to any current or former stockholder, optionholder, member, equity holder or debt holder of each Seller Party; and

(q) any Liabilities arising from or relating to an assignment or exchange in connection with the last sentence of Section 12.1 .

1.5 Total Consideration .

(a) The aggregate cash consideration payable by SFI to the account of Seller Parties for the SFI Acquired Assets (including the Feed Mill and the Truck Washes) at the Closing (the " SFI Purchase Price ") shall be an amount equal to the sum of (i) $17,394,207, plus (iii) the value of the Iowa Swine Inventory, Iowa Feed Inventory, and Iowa Other Inventory at the Closing, as calculated, valued and sampled subject to and in accordance with Section 1.7 and Exhibit A .

(b) The aggregate cash consideration payable by SF to the account of Seller Parties for the SF Acquired Assets (the " SF Purchase Price ") shall be an amount equal to the sum of (i) $4,270,705, plus (ii) the value of the Colorado Swine Inventory, Colorado Feed Inventory, and Colorado Other Inventory at the Closing, as calculated, valued and sampled subject to and in accordance with Section 1.7 and Exhibit A .

(c) The cash consideration payable by Woodford to the account of Seller Parties for the Woodford Acquired Assets (the " Woodford Purchase Price ") shall be an amount equal to $75,761,875.

(d) The total consideration (" Total Consideration ") payable by Buyer Parties to or for the account of Seller Parties in consideration for the Acquisitions and other transactions contemplated hereunder shall be an amount equal to the sum of the SFI Purchase Price, SF Purchase Price and Woodford Purchase Price, in each case, as adjusted, as applicable.

1.6 Payment . If the Swine Inventory count is not required to be determined by the Parties in accordance with Section 1.7(a)(iv) , Buyer Parties shall pay the full Total Consideration at Closing, which shall be set forth in the Funds Flow Statement as mutually agreed to by Buyer Parties and Seller Parties. If the Swine Inventory count has not been determined by the Closing Date in accordance with Section 1.7 , the portion of the Total Consideration Buyer Parties shall pay at Closing shall be equal to the total Woodford Purchase Price, plus $17,394,207 from SFI, plus $4,270,705 from SF; plus the consideration for the Feed Inventory and Other Inventory, in each case, as calculated in accordance with Exhibit A and with respect to the Feed Inventory located at the Feed Mill, the Feed Mill Inventory Report; plus the consideration for all undisputed categories of Swine Inventory as calculated in accordance with Exhibit A and the February 6 th (or February 5 th , as the case may be) Swine Inventory Report; plus an amount equal to ninety-seven

percent (97%), using the value methodology set forth on Exhibit A , of the value of the February 6 th (or February 5 th , as the case may be) Swine Inventory Report for any disputed category of Swine Inventory (subject to adjustments after the Closing Date in accordance with Section 1.7 ). Said amount shall be distributed at the Closing shall be set forth on, and distributed in accordance with, the Funds Flow Statement as follows: (a) an amount equal to the outstanding Indebtedness of Seller Parties for any of the Acquired Assets to be satisfied and discharged as of the Closing, if any, shall be set forth on, and delivered in accordance with, the Funds Flow Statement; (b) an amount equal to the unpaid Selling Expenses as of the Closing, if any, shall be set forth on, and delivered in accordance with, the Funds Flow Statement; and (c) an amount (the " Net Closing Cash Payment ") equal to the difference of (i) the portion of the Total Consideration to be distributed at the Closing that remains after distribution of the amounts contemplated under (a) and (b) , minus (ii) any amounts determined by the Parties to be deducted from the Total Consideration for unpaid salary, wages, bonuses or benefits, if applicable, in accordance with Section 8.6(b) , which Net Closing Cash Payment shall be set forth on, and delivered to Seller Parties in accordance with, the Funds Flow Statement. Subject to Section 1.7 , any inventory count disputes shall be resolved, and payment of any remaining amount of the Total Consideration shall be made, no later than five days after the Closing Date.

1.7 Valuation, Sampling and Adjustment Procedures . The purchase price set forth in Section 1.5 above for the values of Swine Inventory and Feed Inventory categories of Acquired Assets shall be determined and adjusted, as applicable, based on counts and qualities of such Acquired Assets in accordance with this Section 1.7 and Exhibit A :

(a) Swine Inventory .

(i) Seller Parties have provided to Buyer Parties a true and correct detailed inventory report of the Swine Inventory, by site, as of the close of business on January 22, 2016. Seller Parties will provide to Buyer Parties a true and correct updated detailed inventory report of the Swine Inventory, by site, as of the close of business on January 29, 2016 (or such other date that is approximately eight days prior to Closing). Each inventory report delivered pursuant to this Section 1.7 (a " Swine Inventory Report ") will include separate counts for the Breeding Stock and Grow-Finish categories (consistent with the January 22, 2016 report).

(ii) Buyer Parties will select farm sites for inventory verification sampling counts that represent at least 10% of each category of the Swine Inventory reflected in the Swine Inventory Report. A list of such verification sites will be communicated by Buyer Parties to Seller Parties in advance of the date selected for inventory verification.

(iii) On January 30 and/or January 31, 2016, physical verification count teams, including representatives of each of Buyer Parties, Seller Parties, and either KPMG LLP or SF's internal audit division (each, a " Count Team ") will visit the sites selected by Buyer Parties in accordance with Section 1.7(a)(ii) and will determine via the process further described below whether the quantities of each category of the Swine Inventory at each such site (excluding sick, unhealthy, out of condition and/or dead animals) is within a three percent (3%) margin of error of the corresponding category of the Swine Inventory at such site reflected on the updated Swine Inventory Report. The Parties acknowledge that such determinations shall be made based on arriving at a total count made by reasonably experienced farm workers based on the number of pens, pen capacities and occupancy at such site. The Count Team representatives of KPMG LLP or SF's internal audit division will be present for observation purposes only to determine that the inventory counts are accurate in accordance with the terms hereof.

(A) If the quantities of any category of the Swine Inventory at a site (excluding sick, unhealthy, out of condition and/or dead animals) are determined by a Count Team to be within a three percent (3%) margin of error of the corresponding category of the Swine Inventory at such site reflected on the updated Swine Inventory Report, no further count with respect to such site will be needed prior to Closing.

(B) If the Count Team has a reasonable concern that the quantities of any category of the Swine Inventory at a site (excluding sick, unhealthy, out of condition and/or dead animals) are outside a three percent (3%) margin of error of the corresponding category of the Swine Inventory at such site reflected on the updated Swine Inventory Report, the Count Team will conduct a full, physical inventory count of such category of the Swine Inventory at such site. If it is determined from this full, physical inventory count that the quantities of such category of the Swine Inventory at such site (excluding sick, unhealthy, out of condition and/or dead animals) is less or more than the corresponding amount on the updated Swine Inventory Report, the amount of such shortfall or windfall is referred to herein as a " Shortfall Amount " or " Windfall Amount " for such category of Swine Inventory.

(iv) After the Count Teams have completed their work at the selected sites, (A) if the sum of the Shortfall Amounts and Windfall Amounts for the applicable category of Swine Inventory is greater than an amount equal to one-half (1/2) of one percent (0.5%) of the total count for such category of the Swine Inventory reflected on the updated Swine Inventory Report with respect to such selected sites, or (B) if the Shortfall Amount for the applicable category of Swine Inventory at any site is greater than an amount equal to three percent (3%) of the amount of such category of the Swine Inventory at such site as reflected on the updated Swine Inventory Report; then, in either such case, the Parties shall cooperate in good faith to arrive at a mutually acceptable process for determining the Swine Inventory for purposes of Closing. If the Parties cannot agree to a mutually acceptable process for determining the Swine Inventory, the Parties may conduct a full, physical count of all Swine Inventory in the disputed category or categories at all sites. I f there remain any disputed amounts with respect to the Swine Inventory at 12:01 p.m. Central Time on February 2, 2016 , the Parties will engage Steve Weiss of Nutriquest, LLC to mediate a resolution of any such remaining disputed amounts between the Parties. The Parties shall mediate and reach resolution within five days following Closing unless otherwise extended by mutual agreement of the Parties .

(v) If the Swine Inventory count is not required to be determined by the Parties in accordance with Section 1.7(a)(iv) , Seller Parties will deliver a true and correct Swine Inventory Report, generated from the same system and process used to generate the initial and updated Swine Inventory Reports, as of the close of business on February 6, 2016 (or on February 5, 2016 if agreed by the Parties), which will establish the Swine Inventory count for purposes of determining the value of the Colorado Swine Inventory and Iowa Swine Inventory included in the SF Purchase Price and SFI Purchase Price under Section 1.5 .

(vi) If applicable, within five days after the Closing Date, Buyer Parties may notify Seller Parties that, in the judgment of Buyer Parties, the actual Swine Inventory count as of the Closing Date with respect to either category of Swine Inventory at any site is more than five percent (5%) above or below the count with respect to such category of

Swine Inventory at such site used by the Parties for purposes of Closing. Thereupon, the Parties shall cooperate in good faith to arrive at a mutually agreeable resolution of the possible shortfall at that site or any other site, which may include a possible payment by Seller Parties to Buyer Parties or payment by Buyer Parties to Seller Parties in an amount corresponding to any such shortfall or windfall. If the Parties cannot arrive at a mutually agreeable resolution after five days following the beginning of discussions on the possible shortfall or windfall at that site or any other site, the Parties will engage Steve Weiss of Nutriquest, LLC to mediate a resolution of any such remaining disputed amounts. Within three Business Days following the final determination of any shortfall or windfall amount under this subsection, Seller Parties (or Buyer Parties, as the case may be) shall pay such shortfall amount to Buyer Parties (or to Seller Parties, as the case may be), and such shortfall or windfall amount shall be deemed a purchase price adjustment.

(b) Feed Inventory . Seller Parties will take a physical inventory of the Feed Inventory at the Feed Mill as of the close of business on February 5 or 6, 2016, whichever date is the last day that the Feed Mill is in operation prior to the Closing Date, and generate an inventory report (the " Feed Mill Inventory Report "). Buyer Parties shall be present during the physical inventory and generation of the Feed Mill Inventory Report to confirm their accuracy. The Feed Mill Inventory Report shall be used for purposes of determining the value of that portion of the Iowa Feed Inventory located at the Feed Mill included in the SFI Purchase Price under Section 1.5 .

1.8 1031 Exchange . The Acquisitions and the other transactions contemplated hereunder are intended to qualify as like kind exchanges and qualifying use within the meaning of Section 1031 of the Code and Seller Parties reserve the rights to assign their rights (but not their obligations) to a Qualified Intermediary as provided in Treas. Reg. 1.1031(k) – 1(g) on or before the Closing Date in accordance with Section 12.1 . Buyer Parties shall incur no cost or charges, nor assume any responsibility regarding any such exchange. Seller Parties shall indemnify Buyer Parties of and from any liability or claim arising therefrom; which indemnification shall not be subject to the limitations set forth at Article 10 .

1.9 Remittances, Erroneous Transfer s .

(a) After the Closing, if a Seller Party (or any of its Affiliates) receives any amount that is properly due and owing to a Buyer Party in accordance with the terms of this Agreement, Seller Party shall promptly remit, or shall cause to be remitted, such amount by check to Buyer Parties at the address set forth in Section 12.6 or by wire transfer into an account or accounts of a Buyer Party or any Person that Buyer Parties designate in writing. After the Closing, if a Buyer Party (or any of its Affiliates) receives any amount that is properly due and owing to a Seller Party in accordance with the terms of this Agreement, such Buyer Party promptly shall remit, or shall cause to be remitted, such amount by check to the address set forth in Section 12.6 or by wire transfer into an account or accounts designated in writing by Seller Parties.

(b) After the Closing, if the Parties determine that (i) a Seller Party (or any Affiliate of a Seller Party) has retained any assets that are Acquired Assets and should have been transferred to a Buyer Party hereunder, such Seller Party shall promptly transfer, or cause to be transferred, such assets to such Buyer Party, or (ii) a Buyer Party (or any of its Affiliates) has received title to any assets that should have been retained by a Seller Party hereunder, such Buyer Party shall transfer, or cause to be transferred, promptly such assets to such Seller Party.

1.10 Post-Closing, Consents and Permit Transfers .

(a) To the extent a Consent to assignment is not obtained or taken at or prior to the Closing with respect to any Acquired Contract, (i) each Seller Party shall use its reasonable efforts to obtain or take such Consent following the Closing for such Acquired Contract; (ii) each Seller Party shall use reasonable efforts to provide to the applicable Buyer Party the benefits of such Acquired Contract or Effluent Easement (including the right to enforce for the benefit of such Buyer Party any and all rights of Seller Parties or any Affiliate of a Seller Party against any third party thereunder) for the remaining term of such Acquired Contract and (iii) subject to the foregoing limitations, each Seller Party shall cooperate with Buyer Parties in any lawful and contractually permitted arrangements acceptable to Buyer Parties that are designed to provide to Buyer Parties such benefits and obligations of the Acquired Contract for its term remaining as of the Closing Date. In connection with any such arrangements related to an Acquired Contract, Buyer Parties and Seller Parties (A) shall each abide by the terms and conditions set forth in such Acquired Contract, (B) subject to any arrangement contemplated by this Section 1.10 , shall reimburse each other for payments made to or received from counterparties on behalf of each other pursuant to the terms of such Acquired Contract , (C) shall fully indemnify each other or their respective Affiliates for any Liabilities arising out of any failure by a Buyer Party or a Seller Party, as applicable, to abide by the terms and conditions of such Acquired Contract and (D) shall use reasonable efforts to ensure that Buyer Parties are put in the same economic position with respect to such Acquired Contract as if the relevant Consent had been obtained or taken as of the Closing. Notwithstanding the foregoing, in the event that any required Consent to the partial assignment of the Master Lease Agreement, dated July 26, 2012, and Equipment Schedule (Fixed) Schedule No. 8740349-029, dated August 8, 2014, is not obtained within 10 Business Days after the Closing Date, and with respect to any individual items of property subject to such Contracts which Seller Parties have not elected, in their sole discretion, to purchase prior to the Closing Date, Seller Parties shall purchase the remaining Leased Tangible Personal Property identified on Schedule 1.1(c)(vi) and Schedule 1.1(b)(viii) from the lessor, and Buyer Parties shall immediately thereafter purchase such property from Seller Parties for the lesser of cost or fair market value. Further, notwithstanding the foregoing, in the event that Seller Parties are unable to obtain a Consent to the assignment of Commercial Rental Agreement effective February 13, 2014, or Dwelling Unit Rental Agreement effective July 10, 2015, within thirty (30) days after Closing, said leases shall be deemed Excluded Assets, and neither Seller Parties nor Buyer Parties shall have any further obligation to assign or assume such Agreements. Once any such Consent is obtained or taken, such Acquired Contract shall be deemed assigned, transferred, conveyed and delivered in accordance with the Bill of Sale, and any executory Liabilities arising out of the performance of any obligation due thereunder to the extent such obligation arose after the date such Consent is obtained or taken shall be assumed in accordance with the Assignment and Assumption Agreement.

(b) Seller Parties make no representations or warranties as to the assignability or enforceability of the Effluent Easements. Upon Buyer Parties' request after Closing, Seller Parties shall take reasonable efforts to assist Buyer Parties in obtaining Consent to Seller Parties' assignment of particular Effluent Easements identified by Buyer Parties (but at no cost to any Seller Party).

(c) If there are any Permits held by a Seller Party or any Affiliate of a Seller Party necessary for the operations and conduct of the Business which have not been transferred to Buyer Parties as of the Closing because the transfer thereof is not permitted by Law or by the applicable Governmental Authority, or for any other reason, each Seller Party shall reasonably cooperate with Buyer Parties (but at no cost to any Seller Party) in securing such Permits for Buyer Parties. Buyer

Parties shall pay the cost of applying for any such Permits and the cost of obtaining the transfer of existing Permits and/or issuance of new Permits.

ARTICLE 2
CLOSING, DELIVERIES AND OTHER ACTIONS

2.1 Time and Place of the Closing . Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the " Closing ") shall be deemed to take place at the offices of Gislason & Hunter, LLP, 2700 Broadway, New Ulm, Minnesota, and, with respect to the real property comprising the Facilities at the offices of Title Resources, LLC, 2700 Broadway, New Ulm, Minnesota (the " Title Company ") at 10:00 a.m. Central time (a) on February 7, 2016, subject to the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself), (b) on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself), or (c) at such other time and place as agreed by the Parties, (the " Closing Date "). The Closing will be effective as of 12:01 a.m. Central time on the Closing Date (the " Effective Time "). Other than with respect to Real Property (regarding any recording and other requirements for closing at the Title Company) and to Tangible Personal Property subject to certificates of title that are included in the Acquired Assets, the Closing shall not be a physical Closing, but shall occur by delivery of facsimile signatures (including PDF signatures delivered via email) by all Persons on the Closing Date of each of the documents required to be delivered by such Party pursuant to the terms hereof, with the obligation to deliver original signatures or such documents by overnight delivery by the Parties or their respective legal representatives promptly as requested by the Parties. All acts, deliveries and confirmations comprising the Closing, regardless of chronological sequence, shall be deemed to occur contemporaneously and simultaneously on the Closing Date.

2.2 Deliveries by Seller Partie s . At the Closing, Seller Parties, as applicable, shall deliver, or cause to be delivered, to Buyer Parties the following items:

(a) (in escrow with the Title Company pending the Closing) with respect to the Owned Real Property, special warranty deeds subject only to Permitted Liens (collectively, the " Deeds "), dated the Closing Date and duly executed by each Seller Party, as applicable, together with any required Transfer Taxes or Tax notifications required under applicable Law;

(b) a bill of sale, substantially in the form of Exhibit B hereto (the " Bill of Sale "), dated the Closing Date and duly executed by Seller Parties;

(c) an assignment and assumption agreement, substantially in the form of Exhibit C hereto (the " Assignment and Assumption Agreement "), dated the Closing Date and duly executed by Seller Parties;

(d) appropriate instruments of transfer for the Rolling Stock and other Acquired Assets subject to certificates of title, in form reasonably acceptable to Buyer Parties, dated the Closing Date and duly executed and endorsed by Seller Parties;

(e) a Transition Management Support and Services Agreement between Seller Parties and SF, substantially in the form of Exhibit D hereto, regarding certain management services to be provided by Seller Parties following the Closing Date (the " TMSA "), dated the Closing Date and duly executed by Seller Parties;

(f) with respect to the Effluent Easements, a master assignment of easements substantially in the form of Exhibit E attached hereto (the " Assignment of Easements "), or such other document related to the assignment of the Effluent Easements reasonably requested by Buyer Parties, in each case, dated the Closing Date and duly executed by Seller Parties;

(g) a certificate attesting to the satisfaction of the conditions set forth in Sections 6.1(a) , (b) , and (d) in form and substance reasonably satisfactory to Buyer Parties, dated as of the Closing Date and duly executed by an authorized officer or manager, or other appropriate authorized officer or representative, of each Seller Party ;

(h) the FIRPTA Certificates, dated the Closing Date and duly executed by Seller Parties;

(i) payoff letters or Contracts, in form reasonably acceptable to Buyer Parties and the Title Company, (i) from each creditor with whom a Seller Party had any outstanding Indebtedness immediately prior to the Closing set forth on the Funds Flow Statement, (ii) from each creditor with whom a Seller Party had any outstanding Indebtedness (secured or collateralized by any Acquired Asset) immediately prior to the Closing, including all creditors set forth on the Funds Flow Statement, (iii) for all Selling Expenses that have not been paid as of immediately prior to the Closing, and (iv) from any Person releasing and terminating all Liens (other than Permitted Liens) in favor of any such Person on any of the Acquired Assets, in each case, executed by the applicable parties thereto;

(j) UCC-3 termination statements in recordable form with respect to any financing statements filed against any of the Acquired Assets, releasing and terminating all Liens (other than Permitted Liens) on any of the Acquired Assets, duly executed by the parties thereto;

(k) documentation, in form reasonably acceptable to Buyer Parties, evidencing receipt of all Consents set forth on Schedule 3.4 ;

(l) (in escrow with the Title Company pending the Closing) affidavits sufficient to cause the deletion of the standard exceptions to title in the title commitments relating to the Owned Real Property; and

(m) such other documents and instruments as Buyer Parties shall reasonably request to consummate the transactions contemplated hereby , including such other deeds, general conveyances, endorsements, bills of sale, assignments, and other good and sufficient instruments of sale, conveyance, assignment, transfer and delivery as Buyer Parties may reasonably request in order more effectively to vest in Buyer Parties all right, title and interest in and to the Acquired Assets, in each case, duly executed by Seller Parties.

2.3 Deliveries by Buyer Parties . At the Closing (or within one Business Day thereafter solely for purposes of Section 2.3(a) below), Buyer Parties shall deliver to Seller Parties (or such other Person, as applicable) the following items:

(a) the Net Closing Cash Payment;

(b) the Assignment and Assumption Agreement, duly executed by Buyer Parties;

(d) the Assignment of Easements, duly executed by Buyer Parties; and

(e) a certificate attesting to the satisfaction of the conditions set forth in Sections 6.2(a) and (b) in form and substance reasonably satisfactory to Seller Parties, dated as of the Closing Date and duly executed by an authorized officer or other appropriate authorized officer or representative of each Buyer Party.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

Seller Parties, jointly and severally, represent and warrant to Buyer Parties as of the date hereof and the Closing Date as follows:

3.1 Existence and Good Standing; Organization . CFFI is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota. CFM is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Minnesota. Each Seller Party is duly authorized, qualified or licensed to do business as a foreign corporation, company or enterprise in the States of Iowa and Colorado.

3.2 Power . Seller Parties have the requisite power and authority to (a) own, hold, operate, license and lease their properties and assets as and where currently owned, held, operated, licensed and leased and (b) carry on the Business as currently conducted.

3.3 Authority, Validity, Effect and No Conflict .

(a) Each Seller Party has all requisite authority and full legal capacity to enter into and perform its obligations under this Agreement and the Ancillary Agreements to which it is or is to be a party and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and at the Closing each Ancillary Agreement to which it is or is to be a party will be, duly executed and delivered by each Seller Party pursuant to all necessary authorization and is, or at Closing will be, the legal, valid and binding obligation of each Seller Party, enforceable against such Seller Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar Laws and principles of equity affecting creditors' rights and remedies generally (the " General Enforceability Exceptions ").

(b) Neither the execution of this Agreement or the Ancillary Agreements, nor the performance by each Seller Party of its respective obligations hereunder or thereunder shall (i) violate or conflict with its articles of incorporation or articles of organization, as applicable, or its bylaws or operating agreement, as applicable, in each case as amended to date and in full force and effect on the Closing Date or with any Law, Permit or Order, (ii) violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any Contract to which any Seller Party is a party or by which any of its assets or properties are bound or (iii) result in the creation or imposition of any Lien (other than a Permitted Lien) with respect to, or otherwise have a Material Adverse Effect upon, the Acquired Assets or any other assets used in or necessary to the conduct or operation of the Business.

3.4 Consents . Except as set forth on Schedule 3.4 and any pre-acquisition notification or Consent requirements under the HSR Act, no Consent is required in connection with the execution and delivery by any Seller Party of this Agreement or the Ancillary Agreements or the consummation of the

transactions contemplated hereby or thereby, including any Consents required under any of the Acquired Contracts.

3.5 Subsidiaries . Except as set forth on Schedule 3.5 , no Seller Party currently has, or has had, any Subsidiaries through which the Business is or has been conducted.

3.6 Property .

(a) Title . Seller Parties (i) are in lawful possession of and (ii)(A) have good, marketable and valid fee simple title to, (B) have good, valid and marketable title to, (C) have valid and enforceable leasehold interests in, or (D) have valid and enforceable licenses or rights to use, as the case may be, all of the Acquired Assets (real or personal, tangible or intangible or mixed, including any Real Property and Tangible Personal Property), and all of the Acquired Assets and all other assets and properties of either Seller Party are free and clear of any Liens, other than Permitted Liens.

(b) Real Property .

(i) Schedule 3.6(b)(i) sets forth all real property owned by Seller Parties and primarily or exclusively used in connection with the Business (collectively, the " Owned Real Property "). Except as set forth on Schedule 3.6(b)(i) , Seller Parties have not leased or granted to any Person the right to possess or use any portion of the Owned Real Property or granted any unrecorded options, rights of first offer or rights of first refusal to purchase any of the Owned Real Property.

(ii) Schedule 3.6(b)(ii) sets forth a true and complete description of all Real Property currently leased, licensed to or otherwise used or occupied (but not owned) by any Seller Party and primarily or exclusively used in connection with the Business (the Real Property required to be listed on Schedule 3.6(b)(ii) , collectively, the " Leased Real Property ") including, for each tract of Leased Real Property, the owner, the address, the annual fixed rental, the expiration of the term, any extension options and any security deposits. Except as set forth on Schedule 3.6(b)(ii) , no Seller Party leases any Real Property or any interest in any Real Property used primarily or exclusively in connection with the Business. All of the Leased Real Property is used or occupied by a Seller Party pursuant to a written or oral lease, License or occupancy Contract, (collectively with all amendments, extensions, renewals, guaranties and other agreements with respect thereto, the " Real Property Leases "). A true and correct copy of each written Real Property Lease and a true and correct written description of the terms of each oral Real Property Lease, in each case, with respect to the Leased Real Property required to be listed on Schedule 3.6(b)(ii) , has been delivered to Buyer Parties. Each Real Property Lease is valid, binding and enforceable in accordance with its terms and is in full force and effect, subject to the General Enforceability Exceptions. With respect to each Real Property Lease, except as set forth on Schedule 3.6(b)(ii) , (A) there are no existing defaults or facts or circumstances requiring a Seller Party to indemnify any other Person thereunder, (B) no event has occurred which (with notice, lapse of time or both) could reasonably be expected to constitute a breach or default by a Seller Party or, to the Knowledge of Seller Parties, any other party, to require a Seller Party to indemnify any other Person thereunder or to give Seller Parties or, to the Knowledge of Seller Parties, any other party the right to terminate, accelerate or modify any such Real Property Lease, (C) no Seller Party has subleased or assigned to any Person the right to possess or use any portion of the Leased Real Property or any interest in the Real Property Leases, and (D) the transactions contemplated by this

Agreement do not require the consent of any other party to such Real Property Lease, will not result in a breach or default under such Real Property Lease, and will not otherwise cause such Real Property Lease to cease to be valid, binding, enforceable and in full force and effect on identical terms following the Closing. Except as set forth on Schedule 3.6(b)(ii) , no Affiliate of a Seller Party is the owner or lessor of any Leased Real Property. Neither Seller Party has granted to any Person the right to use or occupy, and no third party is in possession of, the Leased Real Property or any portion thereof. Other than the Owned Real Property, the Leased Real Property comprises all of the Real Property used primarily or exclusively in the Business, and no Seller Party is a party to any Contract to purchase or lease any Real Property or interest therein other than as provided in the Real Property Leases.

(iii) There are no conditions on any parcel of the Real Property that (A) would be revealed by a current and accurate survey of such parcel of the Real Property, and (B) have or could have a material adverse effect on the Business or such parcel of the Real Property.

(c) Tangible Personal Property . Schedules 1.1(b)(viii) and 1.1(c)(vi) set forth a true and complete list, by category, of all material Tangible Personal Property, and also set forth a true and complete list of any other material tangible personal property that is leased by a Seller Party pursuant to a Contract, in each case, used primarily or exclusively in connection with the Business . Each Seller Party owns, or has a valid leasehold interest in, and is in possession of all of its respective Tangible Personal Property or such other tangible personal property listed on Schedules 1.1(b)(viii) and 1.1(c)(vi) .

(d) Absence of Violations and Claims . Seller Parties have not received any written notice that any of the Owned Real Property, the Leased Real Property, or the leasing (as applicable), occupancy or use of the Owned Real Property or the Leased Real Property or operation of the Business thereon, are in violation of any Laws or Permits, including the Americans with Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.) or building, zoning and other ordinances, codes, rules and regulations.

(e) Condition of Property and Assets . There are no material defects in or damage to, the Owned Real Property or Leased Real Property (or Improvements thereon) or the Tangible Personal Property. To the Knowledge of Seller Parties, the mechanical, electrical, plumbing and other systems serving the Owned Real Property and the Leased Real Property are, in all material respects, in good working condition (ordinary wear and tear and Seller Parties' normal maintenance and replacement schedule excepted). Except as set forth in the previous sentence, the Tangible Personal Property, the Owned Real Property, the Leased Real Property, the Improvements and the other tangible assets included in the Acquired Assets are, in all material respects, in good condition, good working order and in a state of good maintenance and repair relative to customary standards in the industries in which the Business is conducted (ordinary wear and tear excepted) .

3.7 Litigation . Except as set forth on Schedule 3.7 , as it relates to the Business or the Acquired Assets, no Seller Party is currently, or has been, (a) subject to any continuing or unsatisfied Order, or (b) a party to or, to the Knowledge of Seller Parties, threatened to be made a party to any Action. Except as set forth on Schedule 3.7 , there are no Actions pending or, to the Knowledge of Seller Parties, threatened or Orders outstanding against Seller Parties that call into question the validity of this Agreement, the Ancillary Agreements or any of the transactions contemplated hereby or thereby. Except as set forth on Schedule 3.7 , to the Knowledge of Seller Parties, no event has occurred or circumstances exist that could reasonably

be expected to give rise to or serve as a basis for the commencement of any Action of the type described in this Section 3.7 .

3.8 Compliance with Laws . Except as set forth on Schedule 3.8 :

(a) Each Seller Party is complying, and has complied at all times, in all material respects, with each applicable Law relating to the Acquired Assets, the Business or its operations.

(b) Without limiting the generality of the foregoing, as it relates to the Business or the Acquired Assets, no Seller Party nor any of a Seller Party ' s directors, officers, managers, members or employees nor, to the Knowledge of Seller Parties, any of a Seller Party ' s agents, brokers, representatives or consultants, acting on a Seller Party ' s behalf, has made, directly or indirectly, any unlawful contribution, gift, bribe, forgiveness of all or part of a debt, payoff, kickback or other unlawful payment or promise to or at the direction of any Government Official, customer or supplier in violation of any Law.

3.9 Operation of the Business; Sufficiency of Asset s . Except as set forth in detail on Schedule 3.9 , Seller Parties are the only entities through which the Business is or, for the past three years, has been conducted. Except for the Excluded Assets and as otherwise set forth on Schedule 3.9 , the Acquired Assets constitute all of the assets and properties (a) that are used primarily or exclusively in the Business and (b) that are necessary, adequate and sufficient to conduct and operate the Business in the Ordinary Course. The Real Property included in the Acquired Assets, subject to any Permitted Lien, together with easements and effluent spreading agreements included in the Acquired Contracts and the Effluent Easements, constitute sufficient land in order to spread effluent from the operations of the CFF Sites as required under applicable Laws. Seller Parties have the right to utilize water in accordance with valid water appropriation permits in such amounts as is necessary to operate the Business in the Ordinary Course.

3.10 Absence of Change s . Since November 13, 2015, the Business and operations of Seller Parties with respect to the Acquired Assets have been conducted in the Ordinary Course and there has not been any Material Adverse Effect in the operation of the Business or the performance or financial condition of either Seller Party related to the Business, except as set forth on Schedule 3.10 .

3.11 Labor Matters . Except as set forth on Schedule 3.11 :

(a) Neither Seller Party is a party to or bound by any collective bargaining agreement or similar Contract, related to the Business or the Business Employees, with any labor organization, or work rules or practices agreed to with any labor organization and, to the Knowledge of Seller Parties, no union or labor organization claims to represent any employees of either Seller Party. No Actions for unfair labor practices or violations of labor or employment Laws are pending or, to the Knowledge of Seller Parties, have been threatened, against either Seller Party related to the Business or the Business Employees. As it relates to the Business or the Business Employees, there are no grievances or arbitration proceedings against either Seller Party pending under any collective bargaining agreement or other labor Contract.

(b) To the Knowledge of Seller Parties, all current employees of either Seller Party related to the Business are legally authorized to work in the U.S.

(c) Neither Seller Party is delinquent in payments which are due and payable under any applicable Law to any employees of a Seller Party related to the Business for any wages, salaries, commissions, bonuses, vacation, sick leave, other paid time off, severance pay or other compensation for any services performed by them to the Closing Date.

(d) Schedule 3.11(d) sets forth a list, in tabular format, of all current employees and independent contractors (including sales representatives) of each Seller Party primarily working for or in connection with the Facilities and/or Contract Producer Sites and their respective titles, compensation and designation as either exempt or non-exempt from the overtime requirements of the FLSA. Seller Parties have provided to Buyer Parties on or prior to the Closing the rate of all regular and special compensation and commissions payable to each such Person in any and all capacities and any regular or special compensation or commissions that shall be payable to each such Person in any and all capacities as of the Closing Date other than the then current accrual of regular payroll compensation, and such information is true, correct and complete. To the Knowledge of Seller Parties, no employee, independent contractor or sales broker or representative of a Seller Party intends to terminate his or her employment relationship or engagement with such Seller Party with respect to the Business or the Acquired Assets.

(e) Except as set forth on Schedule 3.11(e) , as it relates to the Business, neither Seller Party is a government contractor subject to equal employment opportunity or affirmative action obligations under any Law or otherwise covered by any federal executive orders applicable to government contractors.

(f) As it relates to the Business and the Acquired Assets, each Seller Party (i) is, and has been at all times, in compliance, in all material respects, with all applicable Laws respecting labor, employment, immigration, fair employment practices, terms and conditions of employment, workers' compensation, occupational safety, plant closings, compensation and benefits, and wages and hours and (ii) has no direct or indirect Liability with respect to (A) to the Knowledge of Seller Parties, any misclassification of any individual as an independent contractor rather than as an employee of a Seller Party, (B) to the Knowledge of Seller Parties, with respect to any employee leased from another employer, or (C) any misclassification of any employee as exempt versus non-exempt under the FLSA.

3.12 Employee Plans .

(a) Schedule 3.12(a) sets forth a complete list, with respect to each Seller Party and as it relates to the Business or any Person set forth on Schedule 3.11(d) , of (i) all "employee benefit plans," as defined in Section 3(3) of ERISA; (ii) all other employee benefit arrangements, funds, programs, Contracts, plans and practices, including all severance pay, salary continuation, bonus, incentive, stock or other equity option, retirement, pension, change in control, fringe benefits, profit sharing or other compensation plans, including deferred compensation plans, contracts, programs, funds or arrangements of any kind; and (iii) all other employee benefits plans, contracts, programs, funds or arrangements (whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective or terminated) and any trust, escrow or similar Contract related thereto, whether or not funded, in respect of any present or former employees, managers, directors, officers, equity holders, consultants, or independent contractors of each Seller Party that are, or have been, sponsored, maintained, contributed to, or required to be contributed to by a Seller Party or any Affiliate of a Seller Party within the meaning of Section 414(b), (c), (m), or (o) of the Code (" ERISA Affiliate ") or with respect to which a Seller Party or any ERISA Affiliate has or may have any Liability, an " Employee Plan ," and collectively, " Employee Plans "). Neither Seller Party has Liability with respect to any plan, arrangement, Contract, program or practice of the type described in the preceding sentence other than the Employee Plans.

(b) True and complete copies have been delivered or made available to Buyer Parties of the current plan documents for each Employee Plan or, in the case of an unwritten Employee Plan, a written description thereof.

(c) Each Employee Plan has been maintained, operated, and administered in material compliance with its terms and any related documents or Contracts and in material compliance with all applicable Laws including all applicable requirements of ERISA and the Code.

(d) As it relates to the Business or the Business Employees, neither Seller Party nor any ERISA Affiliate currently has, or has had at any time, an obligation to contribute to (i) a "defined benefit plan" as defined in Section 3(35) of ERISA, (ii) a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, (iii) a "multiemployer plan" as defined in Section 3(37) of ERISA or Section 414(f) of the Code or (iv) a "multiple employer plan" within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code.

(e) No Employee Plan promises or provides retiree medical, health or life insurance or other retiree welfare benefits to any Person, except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (" COBRA "), or other applicable Law, and there has been no communication (whether oral or written) to any Person that would reasonably be expected to promise or guarantee any such retiree medical, health or life insurance or other retiree welfare benefits, except to the extent required by COBRA or other applicable Law.

(f) No Employee Plan is under audit or is the subject of an investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation, the Securities and Exchange Commission or any other Governmental Authority, nor is any such audit or investigation pending or, to the Knowledge of Seller Parties, threatened.

3.13 Environmental and Safety . Except as set forth on Schedule 3.13 , as it relates to Business or any of the Acquired Assets:

(a) Each Seller Party, its respective Business and related onsite and offsite operations, and the Owned Real Property or the Leased Real Property are each, and, to the Knowledge of Seller Parties, each have been at all times, in compliance, in all material respects, with all Environmental Laws and Permits. To the Knowledge of Seller Parties, there exist no Environmental Conditions that require reporting, cleanup, remediation or any other type of response action or that could be the basis for any material Liability of any kind, and no facts, circumstances or conditions currently exist that could adversely affect such continued compliance with Environmental Laws or require currently unbudgeted capital expenditures to achieve or maintain such continued compliance with Environmental Laws.

(b) Seller Parties, with respect to the Business, are in possession of, and in material compliance with, all Permits which are required to operate the Business pursuant to applicable Environmental Laws and in the capacity represented to Buyer Parties, and all of such Permits are valid and in good standing. Seller Parties have timely filed in the Ordinary Course applications for renewal of all such Permits to allow the Business to operate as of the Closing in the Ordinary Course.

(c) Except in the Ordinary Course and except as would not reasonably be expected to result in a Seller Party incurring material Liability under any Environmental Law, during Seller Parties' ownership and operation of the Facilities and, to the Knowledge of Seller Parties, prior to the ownership and operation of the Facilities, no Hazardous Materials have been used, generated, extracted, mined, beneficiated, manufactured, stored, treated, disposed of, spilled or in any other way Released (and no Release is threatened), on, under or about any of the Owned Real Property or the Leased Real Property, or transferred or transported to or from any of the Owned Real Property or the Leased Real Property, and no Hazardous Materials have been generated,

manufactured, stored, treated or disposed of, or in any other way Released (and no Release is threatened), on, under, about or, to the Knowledge of Seller Parties, from any property adjacent to any of the Owned Real Property or the Leased Real Property. All of Seller Parties' and their respective Affiliates', and, to the Knowledge of Seller Parties, each of their respective contractors', past disposal practices relating to Hazardous Materials and hog effluent have been accomplished in accordance with all applicable Laws.

(d) No claim has been made or, to the Knowledge of Seller Parties, threatened against a Seller Party, alleging, with respect to the Business, that a Seller Party may be in violation, in any material respect, of any Environmental Law or may have any material Liability under any Environmental Law.

(e) No facts, circumstances or conditions exist with respect to the Business or any Owned Real Property or Leased Real Property or any property to which a Seller Party arranged for the storage, Release or treatment of Hazardous Materials or the application of hog effluent that could reasonably be expected to result in the Business incurring material Liability under Environmental Laws.

(f) Each Seller Party is, and has been at all times, in compliance, in all material respects, with respect to the requirements for licensing, registration, labeling and the safe handling, use, storage, transportation and disposal of all products and inventory, including furnishing any required information, such as product literature, research studies, test data, and Material Safety Data Sheets or Safety Data Sheets, to all of its employees, customers, brokers and relevant Governmental Authorities.

(g) No Seller Party, in connection with the Business or the Owned Real Property or the Leased Real Property, has ever (i) entered into or been subject to any Consent or Order with respect to any Environmental Law or Environmental Condition, (ii) received notice under the citizen suit provisions of any Environmental Law, (iii) received any request for information, notice, demand letter, administrative inquiry or formal or informal complaint or claim with respect to any Environmental Condition, or (iv) been subject to or, to the Knowledge of Seller Parties, threatened with any Action with respect to any Environmental Law or any Environmental Condition.

(h) No employee or independent contractor of a Seller Party has suffered any injury or exposure to Hazardous Materials while working in connection with the Business or the Owned Real Property or the Leased Real Property that has resulted in a claim or has otherwise resulted in such Person being unable to perform his or her job duties.

(i) Seller Parties have made available to Buyer Parties copies of all documents, records and information in their possession or control concerning Environmental Conditions or generated pursuant to any Environmental Law as those may relate to the Business or the Acquired Assets.

(j) Other than the facilities and systems (and related lagoons, tanks and septic systems) used in the daily operation of the Business that are required for handling animal waste and hog effluent in the Ordinary Course and in material compliance with applicable Environmental Laws, there are no impoundments, treatment or disposal areas, or underground tanks, pits or sumps and related pipes, pumps and other facilities regardless of their use or purpose, whether active or, to the Knowledge of Seller Parties, abandoned, at the Owned Real Property or the Leased Real Property, and no Seller Party has any obligation under the Real Property Leases to investigate, identify, maintain, repair, clean, remediate, upgrade or remove any such facilities.

(k) To the Knowledge of Seller Parties, there is no asbestos nor any asbestos-containing materials used in, applied to or in any way incorporated in any building, structure or other form of improvement on the Owned Real Property or the Leased Real Property, and no Seller Party has any obligation under the Real Property Leases to investigate, identify, maintain, remediate or remove any asbestos-containing materials.

(l) There have been no warnings, notices of violation, nuisance claims or other events related to odors or air emissions that are not in compliance with applicable Environmental Laws.

(m) There are no subsurface Releases or sources of Hazardous Materials, including petroleum and chemical contamination, that could cause vapor intrusion into buildings on the Owned Real Property or the Leased Real Property or on adjoining off-site properties.

(n) No Seller Party has sold, used, installed, generated, or disposed any asbestos-containing materials, products or wastes.

(o) Neither the Owned Real Property nor the Leased Real Property is subject to environmental Liens or activity use limitations such as engineering controls or institutional controls which could restrict the future use of the Owned Real Property or the Leased Real Property.

3.14 Contracts .

(a) Other than the Acquired Contracts, the Effluent Easements, and the Packer Contracts, Schedule 3.14 sets forth all of the following Contracts primarily or exclusively used in or with respect to the Business to which a Seller Party is currently a party or to which any of the Acquired Assets are currently bound (any Contracts listed or required to be listed on Schedule 3.14 , together with the Acquired Contracts, the " Material Contracts "):

(i) governing the borrowing of money or the Guarantee or the repayment of Indebtedness of a Seller Party or granting of Liens on any property or asset of a Seller Party (including any such contract under which a Seller Party has incurred any Indebtedness);

(ii) relating to employment, consulting services, severance, termination or similar Contracts or containing change-in-control or similar payments;

(iii) granting to any Person a first refusal, first offer or similar preferential right to purchase or acquire any interest in, or right, asset or property of, a Seller Party;

(iv) involving a sales representative, agent, broker, franchise or advertising arrangement or otherwise relating to the provision of the services of the Business and involving aggregate consideration in excess of $50,000;

(v) involving obligations or any Liability whatsoever to make any payments by way of material royalties, fees or otherwise in excess of $50,000;

(vi) providing for the purchase, maintenance or acquisition, storage or handling, or the sale or furnishing or providing of, materials, supplies, merchandise, inventory, equipment or services under which there are continuing obligations for any party thereto and involving aggregate consideration in excess of $50,000;

(vii) providing for the purchase, acquisition, lease or license of any Tangible Personal Property and involving aggregate consideration in excess of $50,000;

(viii) that are not cancellable by a Seller Party without penalty upon notice of 30 days or less (A) pertaining to the lease of equipment or other personal property, (B) involving management services, consulting services, independent contractor agreements, support services or any other similar services, or (C) providing for a term of greater than 12 months;

(ix) that purport to be binding on any Affiliate of a Seller Party or a Buyer Party;

(x) that are Government Contracts or settlement agreements with a Governmental Authority;

(xi) that provide any customer with pricing, discounts or benefits that change based on the pricing, discounts or benefits offered to other customers or by other suppliers to such customer, including Contracts containing "most favored nation," "most favored customer" or similar provisions, or other provisions restricting the right to sell or license products or services in any manner, or that include rebates, refunds or volume discounts or similar provisions with respect to pricing; and

(xii) any other material Contract.

(b) Seller Parties have provided to Buyer Parties true and complete copies of each Material Contract (including each supplement, amendment or modification thereto), as amended to date. Each Material Contract is valid, binding and enforceable against all parties thereto in accordance with its terms, subject to the General Enforceability Exceptions. Except as otherwise set forth in Schedule 3.14 , with respect to the Material Contracts: (i) no Seller Party or, to the Knowledge of Seller Parties, any other party thereto is in default under or in violation thereof; (ii) no event has occurred which, with notice or lapse of time or both, would constitute such a default or violation thereunder by Seller Parties or, to the Knowledge of Seller Parties, any other party; and (iii) no Seller Party has released any of its rights thereunder. Except as otherwise set forth in Schedule 3.14 , no Seller Party has received any written notice from another party to a Material Contract indicating such party's intention to terminate, repudiate or disclaim such Material Contract.

3.15 Permits . Schedule 1.1(a)(xi ) contains a list of all material Permits which are required for the operation of the Business as presently conducted. Each Seller Party currently has all material Permits which are required for the operation of the Business as presently conducted. No Seller Party is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) in any material respect of any term, condition or provision of any Permit to which it is a party and, to the Knowledge of Seller Parties, there are no facts or circumstances which could form the basis for any such default or violation.

3.16 Intellectual Property .

(a) Excluding commercially available off-the-shelf, shrink wrap or click wrap Software used by a Seller Party, in each case, with an annual license fee of $5,000 or less, Schedule 3.16(a) sets forth an accurate and complete list of (i) all registered Intellectual Property that is primarily or exclusively used in or with respect to the Business, (ii) all unregistered Intellectual Property that is material to and that is primarily or exclusively used in or with respect to the Business, (iii) all Intellectual Property that is primarily or exclusively used in or with respect to the Business for which an application for registration is currently pending, and (iv) all Contracts to use

Intellectual Property that is owned, held or used by a Seller Party primarily or exclusively in or with respect to the Business.

(b) Each Seller Party has taken commercially reasonable precautions to keep confidential all Confidential Information and trade secrets owned, held or used by it.

3.17 Insurance . Schedule 3.1 7 sets forth a true and complete list and brief description of all policies of, and binders evidencing insurance owned or maintained by a Seller Party related to the Acquired Assets or the Business, or, in the case of the Owned Real Property, an Affiliate, as applicable. Such policies are in full force and effect, and no Seller Party or Affiliate, as applicable, is in default thereunder. No notice of cancellation or termination or non-renewal has been received with respect to any such policy. No Seller Party has been refused any insurance related to the Business, nor, to the Knowledge of Seller Parties, has coverage been limited by any insurance carrier to which a Seller Party has applied for insurance or with which a Seller Party has carried insurance.

3.18 Financial Statements .

(a) The financial data for the Business as of December 31, 2015, set forth in the electronic file with the file name "Due Diligence File 12 31 15 SBF xlsx Revised.xlsx" (the " Financials ") in Seller Parties' electronic data room are true and correct and present fairly the financial position of the Business.

(b) The Financials were derived from the books and records of Seller Parties.

3.19 Taxe s . Except as set forth on Schedule 3.19 :

(a) All Tax Returns required to be filed with any Taxing Authority by the appropriate Seller Party on or before the Closing Date with respect to the Business or any Acquired Asset (i) have been timely and properly filed and (ii) are true, correct and complete, in all material respects. All Taxes (whether or not shown as due and payable on any such Tax Return) with respect to the Business and the Acquired Assets have been timely paid or withheld and will be remitted to the appropriate Taxing Authority on or before the due date thereof.

(b) No deficiencies for Taxes or other assessments relating to Taxes have been claimed, threatened, proposed or assessed with respect to the Acquired Assets or the Business. There is no audit by a Taxing Authority or Action now pending or threatened in respect of any Tax levied against a Seller Party relating to the Acquired Assets or the Business.

(c) None of the Acquired Assets is subject to a "safe harbor lease" under Section 168(f)(8) of the Code or "tax exempt bond financed property" under Section 168(g)(5) of the Code.

(d) No Seller Party is or has ever been a party to any "listed transaction," as defined in Section 6707A(c)(2) of the Code and Treasury Regulation Section 1.6011-4(b)(2).

3.20 Inventor y . All Inventory included in the Acquired Assets is of a quality and quantity (according to Seller Parties' normal stocking practices) that is merchantable, useable and saleable, as applicable, in the Ordinary Couse, subject to the removal of obsolete or out of condition Inventory (such as feed and medication) in the Ordinary Course, and subject to culling of sick, unhealthy, out of condition and/or dead animals in the Ordinary Course.

3.21 Records . The Records included in the Acquired Assets are true, complete and correct in all material respects and Seller Parties have made available to Buyer Parties for examination the originals or true and correct copies of all documents and materials related to the Business, together with all other documents and materials reasonably requested by Buyer Parties in connection with the transactions contemplated by this Agreement.

3.22 Brokers . No Person has acted directly or indirectly as a broker, finder or financial advisor for any Seller Party or any of their Affiliates in connection with the negotiations relating to the transactions contemplated by this Agreement for which any Buyer Party or any of their respective Affiliates shall become obligated to pay a fee, commission or other compensation.

3.23 Solvenc y . Each Seller Party is Solvent and shall be Solvent upon consummation of the transactions contemplated hereby.

3.24 No Further Representations . Except for the representations and warranties contained in this Article 3 , Buyer Parties are accepting the Acquired Assets "as-is," "where is" and no Seller Party makes any other express or implied representations or warranties with respect to any Seller Party, and Seller Parties disclaim any other representations and warranties .

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES

Each Buyer Party hereby represents and warrants, severally but not jointly, to Seller Parties as of the date hereof and the Closing Date as follows:

4.1 Existence and Good Standin g . SFI is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware. SF is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Oklahoma. Woodford is a limited liability partnership duly formed, validly existing and in good standing under the laws of the State of Iowa.

4.2 Authority, Validity, Effect and No Conflic t .

(b) Each Buyer Party has all requisite authority and full legal capacity to enter into and perform its obligations under this Agreement and any Ancillary Agreement to which it is or is to be a party and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and at the Closing each Ancillary Agreements to which it is or is to be a party will be, duly executed and delivered by each Buyer Party pursuant to all necessary authorizations and is, or at Closing will be, the legal, valid and binding obligation of such Buyer Party, enforceable against such Buyer Party in accordance with their respective terms, subject to the General Enforceability Exceptions.

(c) Neither the execution of this Agreement or the Ancillary Agreements, nor the performance by each Buyer Party of its obligations hereunder or thereunder shall violate or conflict with such Buyer Party's organizational documents or any Law, Permit or Order or any Contract to which it is a party or by which it may be bound.

4.3 Consents . Except for any pre-acquisition notification or Consent requirements under the HSR Act, no Consent is required in connection with the execution and delivery by a Buyer Party of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.

4.4 Brokers . No Person has acted directly or indirectly as a broker, finder or financial advisor for any Buyer Party in connection with the negotiations relating to the transactions contemplated by this Agreement for which any Seller Party shall become obligated to pay a fee, commission or other compensation.

4.5 Financin g . Each Buyer Party has, and on the Closing Date will have, sufficient funds available to them (without the need to obtain any additional bank or other additional third party financing commitment) to pay the SFI Purchase Price, the SF Purchase Price and the Woodford Purchase Price, as applicable, to Seller Parties at the Closing.

4.6 No Further Representations . Except for the representations and warranties contained in this Article 4 , Buyer Parties make no other express or implied representations, and Buyer Parties disclaim any other representations and warranties .

ARTICLE 5
PRE-CLOSING COVENANTS

5.1 Genera l . Each of the Parties will, and will cause each of their Affiliates to, use commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective (at the earliest practicable date) the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Article 6 below).

5.2 Conduct of the Business in Normal Cours e . Each Seller Party covenants and agrees, from and after the date of this Agreement and until the Closing Date or the earlier termination of this Agreement pursuant to Section 7.1 , (a) to preserve Seller Parties' respective present business organization intact, (b) to keep available the services of the present officers, employees and agents of each of Seller Parties with respect to the Business, (c) except as explicitly required hereunder, to preserve present relationships and goodwill with material suppliers, customers, landlords, creditors, employees, agents and other Persons having business dealings with either Seller Party with respect to the Business, (d) generally to operate the Business in the Ordinary Course (including funding budgeted capital expenditures), (e) to maintain the books and records of each Seller Party with respect to the Business in accordance with good business practice and GAAP, (f) to maintain all of the Acquired Assets in the same condition as they exist on the date hereof, ordinary wear and tear excepted, and maintain all insurance policies in effect as of the date hereof, without modification, (g) not to grant any Liens on any Owned Real Property or agree to any amendments of any Real Property Leases, and (h) to maintain all material Permits and Contracts necessary for the conduct of the Business. Each Seller Party covenants and agrees that, except as otherwise expressly contemplated by this Agreement or as specifically consented to in writing by Buyer Parties, from and after the date of this Agreement and until the Closing Date or the earlier termination of this Agreement pursuant to Section 7.1 , no Seller Party shall undertake or permit any action that would (i) require disclosure under Schedule 3.10 , (ii) result in a breach of the representations and warranties contained in Section 3.10 or (iii) could reasonably be expected to have a Material Adverse Effect.

5.3 Access to Information . From the date of this Agreement until the Closing Date or the earlier termination of this Agreement pursuant to Section 7.1 , Seller Parties shall, and shall cause each of their respective Affiliates and respective representatives to, (a) afford Buyer Parties and their representatives, and any prospective lenders, and their respective representatives (collectively, the " Access Parties ") reasonable access during normal business hours to the Business' personnel, properties, inventories, facilities, offices, third-party grower-finishers, third-party sites, Contracts, books and records, Permits and other documents and data, and to conduct inspections and reinspections of the Real Property comprising a part of the Acquired Assets and Improvements thereon, including environmental and other testing and

review of such Real Property, (b) furnish Buyer Parties and the Access Parties with copies of all such Contracts, books and records, Permits and other existing documents and data as Buyer Parties may reasonably request, and (c) furnish Buyer Parties and the Access Parties with such additional financial, operating and other data and information as Buyer Parties may reasonably request. Buyer Parties will schedule such access in advance with CFFI by requesting access in writing no less than three Business Days prior to such requested access. During any such access, Buyer Parties will, and will cause each Access Party to, follow all biosecurity procedures reasonably requested by CFFI. Prior to the Closing, Seller Parties shall generally keep Buyer Parties informed as to all material matters involving the Business.

5.4 Notice of Developments . Seller Parties will give prompt written notice to Buyer Parties of any material adverse development causing a breach of any of its representations and warranties in Article 3 above.

5.5 Breeding Practice s . No Seller Party shall modify or change its current breeding practices with respect to the Breeding Stock, except as in the Ordinary Course. No Seller Party shall accelerate the sales of market hogs in connection with the Business or the Breeding Stock culls, or decelerate sales of the Swine Inventory.

5.6 No Solicitation of Other Bids; Exclusivity .

(a) From the date hereof through February 28, 2016, Seller Parties shall not, and shall not authorize or permit any of their respective Affiliates or any of its or their representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller Parties shall immediately cease and cause to be terminated, and shall cause their respective Affiliates and all of their representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. " Acquisition Proposal " means any inquiry, proposal or offer from any Person (other than Buyer Parties or any of their Affiliates) concerning the acquisition, sale, lease, exchange or other disposition of the Business or the Acquired Assets, other than sales of Inventory in the Ordinary Course.

(b) In addition to the other obligations under this Section 5.6 , Seller Parties shall promptly (and in any event within three Business Days after receipt thereof by Seller Parties or any of their representatives) advise Buyer Parties orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

(c) Seller Parties agree that the rights and remedies for noncompliance with this Section 5.6 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer Parties and that money damages would not provide an adequate remedy to Buyer Parties.

5.7 Risk of Loss; Casualty Los s .

(a) If, between the date of this Agreement and the Closing, any of the Owned Real Property, Improvements on any Real Property or Tangible Personal Property included in the Acquired Assets shall be destroyed or damaged in whole or in part by fire, earthquake, flood, or other casualty (a " Casualty Loss "), then, in addition to and without limitation of any right of Buyer Parties not to consummate the transactions contemplated by this Agreement pursuant to Section 6.1 , at the Closing, Seller Parties shall assign to Buyer Parties, and Buyer Parties shall have the right to make a claim for and to retain any casualty insurance proceeds received (net of any reasonable out-of-pocket expenses) under the casualty insurance policies in effect with respect to the subject Owned Real Property, Improvements or Tangible Personal Property on account of such Casualty Loss as shall be necessary to perform repairs to and/or to rebuild such Owned Real Property, Improvements or Tangible Personal Property to substantially the same condition as it existed prior to the occurrence of such Casualty Loss.

(b) If, between the date of this Agreement and the Closing, any condemnation proceeding is commenced with respect to any Real Property included in the Acquired Assets, in addition to and without limitation of any right of Buyer Parties not to consummate the transactions contemplated by this Agreement pursuant to Section 6.1 , Seller Parties shall assign to Buyer Parties at the Closing all of each Seller Party's right, title and interest in and to all awards made in respect of such condemnation and shall pay over to Buyer Parties all amounts theretofore received by any Seller Party (net of any reasonable out-of-pocket expenses) in connection with such condemnation.

ARTICLE 6
CONDITIONS TO OBLIGATION TO CLOSE

6.1 Conditions to Obligation of Buyer Parties . The obligation of Buyer Parties to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:

(a) Seller Parties shall have performed and complied in all material respects with all of their respective covenants hereunder through the Closing, except for those covenants that are qualified by materiality or with respect to a Material Adverse Effect, which shall be complied with in all respects;

(b) the representations and warranties set forth in Article 3 above shall be true and correct in all material respects at and as of the Closing Date, except for those representations that are qualified by materiality or with respect to Material Adverse Effect, which shall be true and correct in all respects;

(c) no Action shall be pending before any Governmental Authority or arbitral body wherein an unfavorable Order would prevent consummation of any of the transactions contemplated by this Agreement;

(d) Since November 13, 2015, there has been no event, occurrence, fact, condition or change (whether or not covered by insurance) that has had or could reasonably be expected to have a Material Adverse Effect;

(e) the deliverables set forth in Section 2.2 shall have been delivered to Buyer Parties;

(f) Buyer Parties shall have received the Title Company's commitment to issue an owner's title insurance policy with respect to each of the CFF Sites, the Feed Mill and the Truck Washes, insuring the applicable Buyer Party in such amounts and together with such endorsements, and otherwise in such form, as Buyer Parties shall require. Such title insurance policy shall insure fee simple title to each of the CFF Sites, the Feed Mill and the Truck Washes, free and clear of all Liens other than Permitted Liens. The cost of such title insurance policy shall be paid by Seller Parties at the Closing. The cost of any endorsements to the title insurance policy shall be paid by Buyer Parties;

(g) Buyer Parties have had the opportunity to complete and have reached a satisfactory conclusion, without limitation, in Buyer Parties' sole and absolute discretion, of any additional due diligence regarding Seller Parties and their assets and liabilities, past, current or pending Actions, Permit status, water rights, environmental compliance and any and all other aspects or matters of Buyer Parties' choice or request;

(h) Seller Parties, or their applicable Affiliates, have repaired the leaking fuel pump located at the Feed Mill such that such pump is in good condition and good working order, as determined in good faith by Buyer Parties; and

(i) If determined to be required by the Parties, any waiting periods or extensions thereof under the HSR Act with respect to the Acquisitions or other transactions contemplated hereunder shall have expired.

Buyer Parties may waive any condition specified in this Section 6.1 by providing written notice of such waiver to Seller Parties at or prior to the Closing.

6.2 Conditions to Obligation of Seller Parties . The obligation of Seller Parties to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions:

(a) Buyer Parties shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except for those covenants that are qualified by materiality or with respect to Material Adverse Effect, which shall be complied with in all respects;

(b) the representations and warranties set forth in Article 4 above shall be true and correct in all material respects at and as of the Closing Date, except for those representations that are qualified by materiality or with respect to Material Adverse Effect, which shall be true and correct in all respects;

(c) no Action shall be pending before any Governmental Authority or arbitral body wherein an unfavorable Order would prevent consummation of any of the transactions contemplated by this Agreement;

(d) the deliverables set forth in Section 2.3 shall have been delivered to Seller Parties or such other Person, as applicable; and

(e) If determined to be required by the Parties, any waiting periods or extensions thereof under the HSR Act with respect to the Acquisitions or other transactions contemplated hereunder shall have expired.

Seller Parties may waive any condition specified in this Section 6.2 providing written notice of such waiver to Buyer Parties at or prior to the Closing.

ARTICLE 7
TERMINATION

7.1 Termination of Agreement . Certain of the Parties may terminate this Agreement as provided below:

(a) Buyer Parties and Seller Parties may terminate this Agreement by mutual written consent at any time prior to the Closing;

(b) Buyer Parties may terminate this Agreement by giving written notice to Seller Parties at any time prior to the Closing (i) in the event any Seller Party has breached any representation, warranty, or covenant contained in this Agreement in any material respect, Buyer Parties have notified such Seller Party, as applicable, of the breach, and the breach has continued without cure for a period of 14 days after the notice of breach or (ii) if the Closing shall not have occurred on or before February 28, 2016, by reason of the failure of any condition precedent under Section 6.1 (unless the failure results primarily from a Buyer Party breaching any representation, warranty, or covenant contained in this Agreement); or

(c) Seller Parties may terminate this Agreement by giving written notice to Buyer Parties at any time prior to the Closing (i) in the event any Buyer Party has breached any representation, warranty, or covenant contained in this Agreement in any material respect, Seller Parties have notified Buyer Parties of the breach, and the breach has continued without cure for a period of 14 days after the notice of breach or (ii) if the Closing shall not have occurred on or before February 28, 2016, by reason of the failure of any condition precedent under Section 6.2 (unless the failure results primarily from Seller Parties breaching any representation, warranty, or covenant contained in this Agreement).

7.2 Effect of Termination . If any Party terminates this Agreement pursuant to Section 7.1 above, all rights and obligations of the Parties hereunder shall terminate without any Liability of any Party to the other Party (except for any Liability of the Party then in breach, which Liability shall be limited to: (a) with respect to a termination under Section 7.1(b) , the reasonable costs and expenses incurred by Buyer Parties in connection with the negotiation, diligence and efforts in connection with preparation for Closing hereunder and (b) with respect to a termination under Section 7.1(c) , the reasonable costs and expenses incurred by Seller Parties in connection with the negotiation and efforts in connection with preparation for Closing hereunder).

ARTICLE 8
ADDITIONAL AGREEMENTS

8.1 Non-Solicitation and Non-Disclosur e .

(a) Non-Solicitation . During the 12-month period after the Closing Date, each Seller Party and each Buyer Party shall not, and shall cause their respective Affiliates not to, directly or indirectly, at any time solicit or induce or attempt to solicit or induce any employee of Seller Parties, in the case of Buyer Parties and their Affiliates, or of Buyer Parties, in the case of Seller Parties and their Affiliates, to terminate such employee's employment, without obtaining written consent of Buyer Parties or Seller Parties, as the case may be, prior to such solicitation or inducement. Such

prohibition on solicitation shall not apply to general solicitations, including job postings on the Internet or in newspaper print advertisements.

(b) Non-Disclosure . Each Seller Party and each Buyer Party shall, and shall cause its Affiliates to, keep in strict confidence, and shall not, and shall cause its Affiliates not to, directly or indirectly, at any time, (i) disclose, divulge or make accessible to any Person any Confidential Information, without the prior written consent of the disclosing Party, or (ii) use any Confidential Information for such Seller Party's or such Buyer Party's own account, for the account of any other Person, or to the detriment of the disclosing Party or its Affiliates, without the prior written consent of the disclosing Party. From and after the Closing, upon request by a Party, each Party shall deliver to such requesting Party all tangible embodiments relating to the Confidential Information that such Party possesses or has under its control. Confidential Information shall include all terms of this Agreement or any Ancillary Agreement and the transactions contemplated hereby or thereby. Notwithstanding the foregoing provisions of this Section 8.1(b) , Seller Parties and Buyer Parties shall be entitled to disclose Confidential Information to their respective counsel and representatives who "need to know" such information in connection with the performance of their duties therefor, so long as such counsel and representatives comply with the limits on disclosure and use contained in this Section 8.1(b) . Seller Parties and Buyer Parties, as the case may be, will be liable for any breach of this Section 8.1(b) by their Affiliates, counsel or representatives. Notwithstanding the foregoing, following the Closing, no Buyer Party will have any obligations or responsibilities under this Section 8.1(b) with respect to the Confidential Information included in the Acquired Assets or related to the Business.

(c) Acknowledgment and Relief . Each Party acknowledges and agrees that the remedies at Law available for breach of any of any Party's obligations under this Section 8.1 would be inadequate; therefore, in addition to any other rights or remedies that the Parties may have at Law or in equity, the Parties shall be entitled to temporary and permanent injunctive relief, without the posting of any bond. If it shall be judicially determined that a Party has violated this Section 8.1 , then the applicable period described in this Section 8.1 shall automatically be extended by a period of time equal in length to the period during which such violation or violations occurred.

(d) Enforceability . If any of the covenants contained in this Section 8.1 are determined by any court of competent jurisdiction to be unenforceable for any reason whatsoever, then such covenant will not be deemed void, and the Parties agree that the scope of such covenant may be modified by the court and that such covenant will be deemed amended in accordance with such modification, it being specifically agreed by the Parties that it is their continuing desire for each covenant contained in this Section 8.1 to be enforced to the full extent of its terms but that, if a court finds the scope of any such covenant unenforceable, the court should redefine the scope of such covenant so as to comply with applicable Law.

8.2 Further Assurances . From and after the Closing, at the request of a Seller Party or a Buyer Party, each Seller Party or Buyer Party, as the case may be, shall execute and deliver to the requesting Party, or cause to be executed and delivered on behalf of a Party to such requesting Party, such instruments and other documents as the requesting Party may reasonably request in order to implement the transactions contemplated by this Agreement and the Ancillary Agreements, including all further materials, documents and instruments of conveyance, transfer or assignment to effect, record or verify the transfer to, and vesting in a Buyer Party, as applicable, of, each Seller Party's right, title and interest in and to the Acquired Assets, free and clear of all Indebtedness and Liens, in accordance with the terms of this Agreement.

8.3 Press Release and Announcements . Each Seller Party shall not, and shall cause its Affiliates, managers, directors, officers, employees, equity holders, former equity holders, agents or

representatives not to, issue any press release or other announcement, including any announcement to employees, customers, packers, grower-finishers, suppliers, lenders or others having dealings with a Seller Party or any of their Affiliates, relating to the subject matter of this Agreement or any Ancillary Agreement or the transactions contemplated hereby or thereby, absent the advance mutual agreement of the Parties as to any press release or announcement and the form thereof . Except as required by applicable securities Laws, each Buyer Party shall not, and shall cause its Affiliates, managers, directors, officers, employees, equity holders, former equity holders, agents or representatives not to, issue any press release or other announcement (other than any announcement to employees, customers, packers, grower-finishers, suppliers, lenders or others having dealings with a Buyer Party or any of their Affiliates) relating to the subject matter of this Agreement or any Ancillary Agreement or the transactions contemplated hereby or thereby, absent the advance mutual agreement of the Parties as to any press release or announcement and the form thereof .

8.4 Expenses . Except as otherwise provided in this Agreement with respect to Selling Expenses and Transfer Taxes, each of the Parties shall bear its respective expenses incurred or to be incurred in connection with the execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby.

8.5 No Amendment of Employee Plans or Arrangement s . No provision of this Agreement shall constitute an amendment to any employee benefit or compensation plan, policy agreement or arrangement of a Buyer Party, a Seller Party, or their respective Affiliates, or obligate a Buyer Party or a Seller Party to provide any compensation or benefits to any Business Employee for any period of time or in any way limit Buyer Parties' or Seller Parties' ability to change the compensation or benefits it offers to its employees, except as provided in the retention agreements between certain Business Employees and SF.

8.6 Employee Matter s .

(a) Subject to satisfaction of Buyer Parties' customary pre-employment/post-offer procedures and qualifications, including any applicable drug screening, background checks and employment authorization verification, Buyer Parties will offer to substantially all of the Business Employees employment with a Buyer Party or an Affiliate of a Buyer Party following the Closing on terms as Buyer Parties may determine but, in each case, with compensation rates for a period of 12 months following the Closing Date equal to or greater than the current compensation rate for such Business Employee, SF's standard package of employee benefits and with full credit for prior service to Seller Parties (but not any benefits accrued) for purposes of determining time-off, vacation, sick time and eligibility for Buyer Parties' 401(k) plan (including credit for any vesting) and, to the extent permitted under the applicable insurance policies, any sponsored insurance. At or prior to Closing, Buyer Parties shall identify to Seller Parties the Business Employees to whom Buyer Parties will offer employment (such offerees who accept employment, collectively, the " Continuing Employees "). Excepting those Liabilities arising from a Buyer Party's violation of applicable Law in connection with any offer of employment to the Business Employees, Seller Parties shall remain responsible for all Liabilities of any kind relating to Seller Parties' employment of any employees, except as hereinafter provided. Without limiting the generality of the foregoing sentence, Seller Parties shall (i) provide all notices required under applicable Law to its employees with respect to the transactions contemplated herein, and (ii) be and remain responsible for any required compliance with respect to the Business Employees under the Worker Adjustment, Retraining and Notification Act of 1988 (including the giving of any notice required thereunder), any state or local Laws regarding plant closing, layoffs or similar matters relating to periods prior to the Effective Time, and any notices or compliance required under COBRA or similar state or local Laws. The Parties agree that the liability for benefits accrued and claims incurred under any of the Employee Plans shall remain the responsibility of the Employee Plans and Seller Parties.

The Parties agree that Buyer Parties shall have no Liability under any of the Employee Plans, including, without limitation, benefits accrued or claims incurred under such plans or with respect to the administration of the Employee Plans. Seller Parties shall solely be responsible for the provision of COBRA continuation coverage under Section 4980B of the Code or other applicable Law to all employees who are not Continuing Employees, former employees or their beneficiaries entitled to such continuation coverage under any Employee Plan related to the Business.

(b) Seller Parties shall, as of the Effective Time, terminate the employment of all of the Continuing Employees. Except as specifically provided for herein, Seller Parties shall satisfy and remain solely responsible for all severance pay (if any), vacation pay, employee benefits and other legal obligations with respect to the Business Employees. The Parties will mutually agree prior to the Closing on any amounts to be deducted from the Total Consideration for any unpaid salary, wages or benefits amounts (which deducted amounts thereupon will be applied by SF to the satisfaction of such unpaid salary, wages or benefits amounts). Except as specifically provided in this Agreement, Buyer Parties shall have no Liability with respect to the Business Employees. Notwithstanding the foregoing, Buyer Parties shall pay to the Continuing Employees any January 2016 accrued but unpaid production bonuses no later than March 31, 2016, and upon such payment to the Continuing Employees, Seller Parties shall promptly reimburse Buyer Parties for the pre-Closing pro rata share of such payments. Any Continuing Employees who have accrued and unused time-off as of the Closing Date shall be entitled to take such time-off without pay from Buyer Parties or their Affiliates.

(c) All provisions contained in this Section 8.6 with respect to Business Employees are included for the sole benefit of Seller Parties and Buyer Parties, and nothing in this Agreement, whether express or implied, shall create any third party beneficiary, guarantees or other rights (i) in any other Person, including any Business Employees or former employees of Seller Parties or (ii) to continued employment with Buyer Parties or any of their Affiliates, or at certain compensation levels or with certain benefits.

8.7 Operating Costs Proration . After the Closing Date, all operating costs, including electricity, gas, water, telephone, trash removal, snow removal, landscaping, janitorial and maintenance and all other utilities and similar services (collectively, the " Operating Costs ") with respect to the Acquired Assets will be contracted for and paid by Buyer Parties. If there is any period after the Closing Date when such Operating Costs have not been transitioned to direct contracts with Buyer Parties, then Buyer Parties will reimburse the applicable Seller Party for the costs of such Operating Costs for such period after the Closing Date. All Operating Costs with respect to the Acquired Assets for any period of time occurring partially before and partially after the Closing Date will be prorated between Seller Parties and Buyer Parties.

8.8 Davis County Nuisance Mediation . The Parties acknowledge that Seller Parties have participated in a mediation with respect to a certain nuisance claim against Seller Parties, along with Parks, Cargill and Triumph, in connection with the proposed construction of three Parks' finishing barns in Davis County, Iowa, Mediation File #FNI/9.29.14 (Requesting Party – County Line Neighbors – Davis and Appanoose Counties) (the " Davis County Matter "). Following the Closing Date, Seller Parties will remain responsible for the control of, and for any and all Liabilities arising out of or attributable to the operation or ownership of Seller Parties' facilities prior to the Closing (including any Liabilities incurred by Buyer Parties), in connection with any future Action related to the Davis County Matter provided that such Action is filed prior to the second anniversary of the Closing Date. Buyer Parties shall be responsible for any Liabilities arising out of or attributable to Buyer Parties' ownership, management, control or operation of such facilities after the Closing Date (including any Liabilities incurred by Buyer Parties) only to the extent Buyer Parties take or fail to take any actions that directly result in aggravating or increasing Liabilities arising out of or attributable to the Davis County Matter.

8.9 Survey Exception s . If, at the Closing, any title commitments issued by the Title Company contain exceptions or endorsements that would be eliminated by conducting a survey, Seller Parties will, within two months after the Closing, obtain and provide to the Title Company a survey, survey certificate or other items sufficient to enable the Title Company to cause the removal of any such exceptions or endorsements in any of the title commitments issued by the Title Company, in each case, dating back to the Closing Date and shall delivery the updated title policy to Buyer Parties.

8.10 Antitrust Cooperation . If there is a disagreement between the Parties about antitrust strategy, the Buyer Parties' decision controls. Notwithstanding anything to the contrary in this Agreement, Buyer Parties have the sole right to control and direct antitrust strategy in connection with review of the Acquisitions by any Governmental Authority, or any Action by, or negotiations with, any antitrust authority or other Person relating to the Acquisitions and will take the lead in all meetings, discussions and communications with any Governmental Authority relating to obtaining antitrust approval for the Acquisitions. Buyer Parties and Seller Parties will use commercially reasonable efforts to:

(a) promptly and fully inform the other Parties of any written or oral communication received from or given to the Federal Trade Commission, the Antitrust Division of the Department of Justice or any other Governmental Authority or any Person relating to any inquiry, investigation or proceeding relating to the Acquisitions or any filing submitted to any Governmental Authority and promptly provide the other a copy of any written communication or filing received from or provided to any Governmental Authority or Person regarding the Acquisitions (subject to applicable Laws regarding privilege) as well as copies of any documents submitted in response to Item 4(c) or 4(d) of the HSR Form, provided that no privileged information or information that is deemed to be competitively sensitive is required to be shared;

(b) allow the other Parties to review in advance and to the extent practicable, consult with one another on and consider in good faith the views of the other with respect to any written communication or submission to any Governmental Authority relating to any inquiry, investigation or proceeding involving the Acquisitions; and

(c) agree not to participate in any material meeting or discussion with any Governmental Authority regarding any filing, inquiry or investigation relating to the Acquisitions unless, to the extent practicable, the participating Party consults with the other Parties in advance, and to the extent not prohibited by Law and permitted by the Governmental Authority, gives the other Parties, including outside counsel, reasonable notice and an opportunity to attend and participate.

ARTICLE 9
TAX MATTERS

9.1 Total Consideration Allocation . Within 45 days after the Closing Date, the Parties shall jointly prepare a statement (the " Allocation Statement ") allocating the Total Consideration (together with the amount of Assumed Liabilities treated as assumed by Buyer Parties for U.S. federal income tax purposes) among the Acquired Assets (the " Allocation "). The Parties shall make entirely consistent use of the Allocation for all Tax and financial reporting purposes, including for any Tax Returns and any forms or reports required to be filed pursuant to Section 1060 of the Code (including IRS Form 8594), or any comparable provision of applicable Law, and shall not take any position inconsistent therewith, in any Tax proceeding related to the determination of any Tax; provided , however , that nothing contained herein shall prevent Buyer Parties or Seller Parties from settling any proposed Tax deficiency or adjustment by any Governmental Authority based upon or arising out of this allocation, and neither of Buyer Parties nor Seller Parties shall be required to litigate before any court any proposed deficiency or adjustment by any

Governmental Authority challenging such allocation. Notwithstanding anything in this Agreement to the contrary, allocations under this Section 9.1 shall be made in accordance with applicable Law, including Section 1060 of the Code to the extent applicable.

9.2 Transfer Taxes . Except for any recording fees, for which Buyer Parties shall be liable, Seller Parties shall be jointly and severally liable for the payment of any transfer (including securities transfer), excise, franchise, property, documentary, sales, use, stamp, registration, filing, recording, value added and other such Taxes and fees (including any penalties, interest, and additions to Tax) imposed in connection with this Agreement, the Ancillary Agreements or any transaction contemplated hereby or thereby (" Transfer Taxes "). Seller Parties shall, upon request of Buyer Parties, use their commercially reasonable efforts to obtain any certificate or other document from any Person as may be necessary to mitigate, reduce or eliminate any Transfer Tax. Unless otherwise required by applicable Law, Seller Parties will timely pay when due all Transfer Taxes and will cause to be timely filed all necessary Tax Returns and other documentation with respect to all Transfer Taxes and fees. Seller Parties shall provide Buyer Parties with copies of all Tax Returns and other documentation for Transfer Taxes and evidence that all Transfer Taxes have been timely paid .

9.3 Cooperation on Tax Matters . Buyer Parties, on the one hand, and Seller Parties, on the other hand, shall, and shall cause their Affiliates to, cooperate fully, as and to the extent reasonably requested by any other Party, with regard to Tax matters, including in connection with the preparation, execution and filing of Tax Returns, the obtaining and filing of exemption certificates and other similar documentation, and any audit, examination, inquiry, claim for refund or Action with respect to Taxes (each a " Tax Proceeding "). A Party's cooperation shall include retaining records and information that are reasonably relevant to any such Tax Return or Tax Proceeding, providing any other Party with access to copies of such material upon request, and making employees available on a mutually convenient basis to provide explanation of any such material. Notwithstanding anything to the contrary herein, nothing in this Section 9.3 shall require Buyer Parties or any of their Affiliates to provide any Seller Party or any of their respective Affiliates with access to or copies of Tax Returns of Buyer Parties or their Affiliates. Buyer Parties and Seller Parties shall, upon request, use commercially reasonable efforts to obtain any certificate (including resale certificates) or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the transactions contemplated by this Agreement.

9.4 Tax Clearance Certificates . If Seller Parties have not delivered to Buyer Parties as of the Closing any Tax Clearance Certificate, Seller Parties shall deliver to Buyer Parties within 10 days after the Closing Date such Tax Clearance Certificate. Seller Parties shall notify the Taxing Authorities for the States of Iowa and Colorado of the transactions contemplated by this Agreement and the Ancillary Agreements in the form and manner required by such Taxing Authorities, if the failure to make such notifications or receive any available Tax Clearance Certificate could subject a Buyer Party to any Taxes of Seller Parties. If any Taxing Authority asserts that Tax is owed, Seller Parties shall promptly pay any and all such amounts and shall provide evidence reasonably satisfactory to Buyer Parties that such Liabilities have been paid in full or otherwise satisfied.

9.5 Pre-Closing Tax Periods . Except as otherwise provided in Section 9.6 for Straddle Period Taxes, Seller Parties shall be responsible for, and shall promptly pay when due, all Taxes (a) of each Seller Party and their Affiliates, (b) related to or imposed on the Acquired Assets or the Business for any Pre-Closing Tax Period or (c) required to be paid pursuant to any Tax sharing or allocation Contract.

9.6 Straddle Periods; Proration .

(a) In the Case of any Straddle Period:

(i) Taxes imposed with respect to Tangible Personal Property and Real Property included in the Acquired Assets (" Property Taxes ") of any Person for the pre-Closing portion of any Straddle Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the total number of days in the Straddle Period; and

(ii) Taxes of any Person (other than Property Taxes) for the pre-Closing portion of any Straddle Period shall be computed as if such Straddle Period ended as of the close of business on the day before the Closing Date.

(b) Property Taxes in respect of the Acquired Assets shall be prorated, allocated or adjusted between Buyer Parties and Seller Parties pursuant to a written statement (the " Proration Statement ") to be prepared by Buyer Parties and Seller Parties prior to the Closing. Any additional amounts owed by Buyer Parties or credits due to Buyer Parties in respect of prorated Taxes shall be reflected in such Proration Statement.

(c) Following Closing, all Property Taxes due with respect to the Acquired Assets or the operation of the Business, including any and all Property Taxes for the fiscal year in which the Closing Date occurs and which is due and payable in the following fiscal year, shall be remitted to the appropriate Taxing Authority by Buyer Parties. All Property Taxes assessed for the Straddle Period shall be attributed to pre-Closing and post-Closing periods in accordance with this Section 9.6 using 100% of the latest available rates, classifications, assessed values and assessments, as shown by the assessment records of Seller Parties on the Closing Date. If any Property Taxes assessed for the Straddle Period are based upon a partial assessment of the present property Improvements or a changed tax classification as of the Closing Date, the Property Taxes for the Straddle Period shall be attributed to pre-Closing and post-Closing periods based on the current millage rate, the assessed value, legislative Tax rollbacks and real estate Tax exemptions that will actually be applicable, as shown by the applicable assessor's records on the Closing Date. The portion of Property Taxes so attributed to Pre-Closing Tax Periods shall be borne by Seller Parties, and the balance of Property Taxes shall be borne by Buyer Parties. Seller Parties' proportionate share of any Property Taxes payable by Buyer Parties shall be credited to Buyer Parties, and Buyer Parties' proportionate share of any Property Taxes payable by Seller Parties shall be credited to Seller Parties , in the Proration Statement. This proration of Property Taxes shall not be subject to further adjustment after the Closing Date.

(d) With respect to Taxes described in this Section 9.6 , (i) Seller Parties shall timely file all Tax Returns due on or before the Closing Date with respect to such Taxes and timely pay (or cause to be timely paid) such Taxes due with respect to such Tax Returns and (ii) Buyer Parties shall prepare and timely file all Tax Returns due after the Closing Date with respect to such Taxes. If one Party remits to the appropriate Taxing Authority payment for Taxes, which are subject to proration under this Section 9.6 and such payment includes the other Party's share of such Taxes, such other Party shall promptly reimburse the remitting Party for its share of such Taxes (in accordance with the procedures set forth in Section 1.9 ) after the remitting Party has provided evidence to the other Party that such Taxes have been paid.

(e) Notwithstanding anything to the contrary in this Agreement, Seller Parties shall pay (i) all Property Taxes that are necessary to cause the Acquired Assets to be conveyed to Buyer Parties and (ii) any special assessment on any of the Acquired Assets that, if not paid, would become delinquent during the calendar year of the Closing, and all such prior installments. If any preliminary or deficiency assessment of Property Taxes could be discharged by payment, Seller

Parties shall establish an escrow account to the satisfaction of Buyer Parties with sufficient funds to pay such assessments, when payable, and any unused escrow funds shall be returned to Seller Parties.

9.7 Exception . Notwithstanding anything to the contrary in this Agreement and notwithstanding any right to information under Law (to the extent such right under Law can be waived), no Seller Party nor Buyer Party nor any of their Affiliates shall have the right at any time to examine the Tax Returns, Tax work papers, financial statements or information or books and records of Buyer Parties, Seller Parties (other than the Records included in the Acquired Assets), or any of their Affiliates for any purpose, except as required by Buyer Parties to prepare pro forma financial statements as required under applicable securities Laws. Seller Parties make no representation or warranty as to the accuracy or completeness of such additional information provided to Buyer Parties and shall have no Liability to Buyer Parties or any other party with respect thereto.

ARTICLE 1 0
REMEDIES

10.1 General Indemnification Obligations .

(a) Subject to the conditions and limitations contained in this Article 10 , Seller Parties shall, jointly and severally, indemnify, defend and hold harmless Buyer Parties, their Affiliates and each of their respective stockholders, partners, officers, managers, members, directors, employees and agents (each a " Buyer Indemnified Party ") from and against any and all losses, Liabilities, damages, penalties, judgments, awards, settlements, costs, fees, expenses (including reasonable attorneys' fees) and disbursements (each a " Loss " and, collectively, " Losses ") incurred or suffered by any of such Persons based upon, arising out of or otherwise related to (i) any inaccuracy in any representation or warranty of Seller Parties contained in this Agreement (including any Schedule), any Ancillary Agreement (other than the TMSA) or any certificate or other document delivered pursuant to this Agreement or any Ancillary Agreement (other than the TMSA); (ii) any breach of any covenant (including with respect to the Davis County Matter) or agreement of a Seller Party contained in this Agreement (including any Schedule), any Ancillary Agreement (other than the TMSA) or any certificate or other document delivered pursuant to this Agreement or any Ancillary Agreement (other than the TMSA); and (iii) any Retained Liabilities.

(b) Subject to the conditions and limitations contained in this Article 10 , Buyer Parties shall, severally but not jointly, indemnify, defend and hold harmless Seller Parties, their Affiliates and each of their respective stockholders, partners, officers, managers, members, directors, employees and agents (each a " Seller Indemnified Party ") from and against any and all Losses incurred or suffered by any of such Persons based upon, arising out of or otherwise related to (i) any inaccuracy in any representation or warranty of such Buyer Party contained in this Agreement (including any Schedule), any Ancillary Agreement (other than the TMSA) or any certificate or other document delivered pursuant to this Agreement or any Ancillary Agreement (other than the TMSA), in each case, to which such Buyer Party is a party; (ii) any breach of any covenant or agreement of such Buyer Party contained in this Agreement (including any Schedule), any Ancillary Agreement (other than the TMSA) or any certificate or other document delivered pursuant to this Agreement or any Ancillary Agreement (other than the TMSA); and (iii) any Assumed Liability of such Buyer Party.

10.2 Scope of Indemnification .

(a) No Seller Party shall be obligated to indemnify any Buyer Indemnified Party for any Losses under Section 10.1(a) , and no Buyer Party shall be obligated to indemnify any Seller Indemnified Party for any Losses under Section 10.1(b) , as the case may be, unless and until (i) in the case of any Losses under Section 10.1(a)(iii) with respect to the Retained Liabilities set forth in Section 1.4(e) , the aggregate amount of such Losses exceeds $1,000,000.00 (the " Environmental Deductible "), in which event Seller Parties shall be liable for all such Losses in excess of the Environmental Deductible (which, for the avoidance of doubt, shall not include the amount equal to the Environmental Deductible), and (ii) in the case of any other Losses under Section 10.1(a) or any Losses under Section 10.1(b) , the aggregate amount of such Losses exceeds $150,000.00 (the " Tipping Basket "), in which event Seller Parties or Buyer Parties, as the case may be, shall be liable for all such Losses (which, for the avoidance of doubt, shall include the amount equal to the Tipping Basket).

(b) No Seller Party shall be obligated to provide indemnification to the Buyer Indemnified Parties pursuant to Section 10.1(a) in an aggregate amount exceeding the Total Consideration. Buyer Parties shall not be obligated to provide indemnification to the Seller Indemnified Parties pursuant to Section 10.1(b) in an aggregate amount exceeding the Total Consideration.

(c) The right to indemnification, payment of damages or other remedy pursuant to this Article 10 shall not be affected by the Indemnified Party's investigation with respect to, or any knowledge acquired (or capable of having been acquired) about, the accuracy or inaccuracy of or compliance with, any representation, warranty, agreement, covenant or obligation under this Agreement or any Ancillary Agreement.

(d) Notwithstanding anything to the contrary herein, all references in this Agreement and the Schedules hereto to "material," "material respects," "Material Adverse Effect" and similar qualifications are to be excluded with regard to determining the amount of any Losses for which a Buyer Indemnified Party or Seller Indemnified Party is entitled to indemnification under this Article 10 . For the avoidance of doubt, such qualifications are not to be excluded for purposes of determining the existence of a breach hereunder.

10.3 Notice and Third Party Claims .

(a) Notice of Claims . As soon as is reasonably practicable after any Seller Party or Buyer Party becomes aware of any claim that such Party has under Section 10.1 that may result in a Loss for which such Party or any other Buyer Indemnified Party or Seller Indemnified Party, as applicable, is entitled to indemnification hereunder (a " Claim "), such Party (the " Indemnified Party ") shall give notice of such Claim (a " Claims Notice ") to Seller Parties, in the case of a Claim by a Buyer Party, or to Buyer Parties, in the case of a Claim by a Seller Party (such Party, the " Indemnifying Party "). A Claims Notice must describe the Claim in reasonable detail and must indicate, to the extent feasible, the estimated amount of the Loss that has been or may be suffered by the Indemnified Party and any other Buyer Indemnified Party or Seller Indemnified Party, as applicable. No delay in or failure to give a Claims Notice by the Indemnified Party to the Indemnifying Party pursuant to this Section 10.3(a) shall adversely affect any of the other rights or remedies that the Indemnified Party or any other Buyer Indemnified Party or Seller Indemnified Party, as applicable, has under this Agreement or alter or relieve the Indemnifying Party of its obligation to indemnify the Indemnified Party or any other Buyer Indemnified Party or Seller

Indemnified Party, as applicable, except to the extent that such delay or failure has increased the Loss or prejudiced the Indemnifying Party.

(b) Third Party Claims . If any Claims Notice identifies a Claim brought by an unaffiliated third party (any such Claim, a " Third Party Claim "), then a Buyer Party may at its sole election assume and conduct the defense (which, for the avoidance of doubt, includes the settlement) of such Third Party Claim with counsel selected by Buyer Parties; provided , however , that if a Buyer Party fails to take reasonable steps necessary to defend diligently such Third Party Claim, a Seller Party, so long as it continues to satisfy the Litigation Conditions, may assume such defense, and Seller Parties, if a Seller Party is the Indemnifying Party, shall be liable for all reasonable costs or expenses paid or incurred in connection with such defense, including any reasonable attorneys' fees. Notwithstanding anything to the contrary herein, only Buyer Parties shall control the defense and settlement of any Third Party Claim if such Third Party Claim (i) involves an allegation of criminal charges against any Buyer Indemnified Party, (ii) seeks restrictions on the business of any Buyer Indemnified Party or (iii) involves a customer or client of any Buyer Indemnified Party. Notwithstanding anything to the contrary herein, each of the Indemnified Party and the Indemnifying Party, as applicable, has the right to participate in (but not control if the other Party has assumed control), at its own expense, the defense of any Third Party Claim which the other is defending as provided in this Agreement, which participation rights shall include, to the extent permitted by Law, the right to notice reasonably in advance of any hearings or proceedings in connection with such Third Party Claim, the right to attend any meetings with a Governmental Authority or hearings or proceedings before any Governmental Authority and the right to receive copies of all pleadings, notices and communications related to such Third Party Claim. The Indemnifying Party, if it has assumed the defense of any Third Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnified Party, consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim that (A) does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party and to any other Buyer Indemnified Party or Seller Indemnified Party, as applicable, a complete release from all Liability in respect of such Third Party Claim, (B) grants any injunctive or equitable relief or (C) may reasonably be expected to have a Material Adverse Effect on the Indemnified Party or any other Buyer Indemnified Party or Seller Indemnified Party, as applicable. The Indemnified Party, if it has assumed the defense of any Third Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnifying Party, (1) admit in any settlement or entry of judgment to any civil or criminal wrongdoing on the part of any director, officer, manager, shareholder or member of a Seller Party, or (2) agree to the imposition of any direct personal liability (exclusive of any indemnification obligations under this Agreement) on any director, officer, manager, shareholder or member of a Seller Party. Notwithstanding anything to the contrary in this Section 10.3(b) , Seller Parties shall have the right to assume and conduct the defense, with counsel of its own choosing, of any Third Party Claim related to Taxes in which a Buyer Indemnified Party is not a named party to the Claim; provided, however , no Seller Party shall settle any Third Party Claim related to Taxes without Buyer Parties' prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, if the resolution of such Third Party Claim reasonably could be expected to materially adversely affect the Tax Liability or Tax attributes of a Buyer Party or its Affiliates for any Tax period ending after the Closing Date. If a Seller Party fails to assume and conduct the defense of any such Third Party Claim related to Taxes, a Buyer Party may assume and conduct such defense.

10.4 Survival . The representations and warranties of Seller Parties and Buyer Parties contained in this Agreement or in any Ancillary Agreement shall survive the Closing Date and Claims, including any Third-Party Claims, relating to any inaccuracy in such representations and warranties may be brought until the second anniversary of the Closing Date (the " Expiration Date "). Notwithstanding the foregoing, (a) the

Expiration Date for any Claims relating to any inaccuracy in the representations and warranties set forth in Section 3.12 (Employee Plans) and Section 3.19 (Taxes) shall be the expiration of the applicable statute of limitations related to such Claim as extended under any Law plus 60 days and (b) there shall be no Expiration Date for any Claims relating to any inaccuracy in the representations and warranties set forth in the Fundamental Representations. Any Claims pending on the applicable Expiration Date for such Claims for which written notice has been given in accordance with Section 10.3 on or before the applicable Expiration Date may continue to be asserted and indemnified against until finally resolved. There shall be no Expiration Date with respect to any Claims relating to any Fraud committed by any Seller Party or by any Buyer Party. Except as otherwise specified in Section 8.1 , all of the covenants and agreements of Seller Parties and Buyer Parties contained in this Agreement shall survive after the Closing Date indefinitely.

10.5 Tax Treatmen t . Amounts paid to or on behalf of Seller Parties or Buyer Parties following the Closing Date shall be treated as adjustments to the Total Consideration for Tax purposes, to the extent permitted by applicable Law.

10.6 Damages . In no event shall any Party be liable for, nor shall the definition of Losses include, any punitive, exemplary or speculative damages that could not be recovered under Law, except (a) to the extent such damages are included in an Order or settlement Contract in respect of a Third Party Claim or (b) with respect to such damages arising out of Fraud by or on behalf of an Indemnifying Party.

10.7 Indemnification in Case of Strict Liability or Indemnitee Negligence . THE PROVISIONS IN THIS ARTICLE 10 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER A CLAIM OR LOSS IS BASED UPON PAST, PRESENT OR FUTURE ACTS, ACTIONS OR LAW AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE INDEMNIFYING PARTY) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF ANY PERSON (INCLUDING THE INDEMNIFIED PARTY), OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE INDEMNIFIED PARTY.

10.8 Duty to Mitigate . Each Indemnified Party shall take, and cause its Affiliates to take, all commercially reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance that would be reasonably expected to give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such Loss.

10.9 Insurance and Tax Benefits . Payments by an Indemnifying Party pursuant to Sections 10.1(a) and 10.1(b) in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received by the Indemnified Party in respect of any such Claim. Further, Payments by an Indemnifying Party pursuant to Sections 10.1(a) and 10.1(b) in respect of any Loss shall be reduced by an amount equal to any Tax benefit realized as a result of such Loss by the Indemnified Party. If the Indemnified Party receives payment or other indemnification from an Indemnifying Party hereunder, the Indemnifying Party shall be subrogated to the extent of such payment or indemnification to all rights in respect of the subject matter of such Claim to which the Indemnified Party may be entitled, and shall have the right to institute appropriate action for the recovery thereof, and the Indemnified Party agrees reasonably to assist and cooperate with the Indemnifying Party at no expense to the Indemnified Party in enforcing such rights.

10.10 Indemnification Exclusive Remedy . Except in the case of Fraud and except with respect to Sections 1.7 , 8.1 and 10.10 and Article 7 , the sole recourse and exclusive remedy of any Indemnified Party for the breach of any representations, warranties, covenants and agreements contained in this Agreement, any Schedule to this Agreement, any Ancillary Agreement (other than the TMSA) or any certificate or other document delivered pursuant to this Agreement, any Schedule to this Agreement or any

Ancillary Agreement (other than the TMSA), shall be to assert a claim for indemnification under the indemnification provisions of this Article 10 . Except in the case of Fraud, the only legal action which may be asserted by any Party against any other Party with respect to any matter which is the subject of this Article 10 shall be a contract action to enforce, or to recover Losses as an indemnification claim for the breach of, this Agreement pursuant to the recourse described in this Article 10 . Notwithstanding the foregoing, nothing contained in this Section 10.10 shall limit the rights of any Indemnified Party to seek or obtain any form of equitable relief, including injunctive relief, specific performance, or any other equitable remedy to which such Indemnified Party is otherwise entitled under this Agreement or any Ancillary Agreement (other than the TMSA) in addition to any relief such Indemnified Party is entitled under Article 10 .

ARTICLE 1 1
DEFINITIONS

11.1 Definitions . For purposes of this Agreement, the following terms have the meanings specified or referenced in this Section 11.1 :

" Access Parties " has the meaning set forth in Section 5.3 .

" Acquired Assets " has the meaning set forth in Section 1.1(b) .

" Acquired Contracts " has the meaning set forth in Section 1.1(c)(iii) .

" Acquired Permits " has the meaning set forth in Section 1.1(c)(v) .

" Acquisition Proposal " has the meaning set forth in Section 5.6(a) .

" Acquisitions " has the meaning set forth in the Recitals.

" Action " means any claim, cause of action, complaint, demand, action, litigation, suit, legal proceeding or hearing, audit, assessment, investigation, interference, opposition, reexamination, inter partes review, post grant review, opposition, nullification, supplemental examination, concurrent use, controversy, cancellation, administrative enforcement proceeding or arbitration or mediation proceeding before or under the direction of any Governmental Authority.

" Affiliate " means with respect to any Person, a Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. The term "control" as used in this definition (including the terms "controlled by" or "under common control with") means, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, membership interests, by contract or otherwise. Notwithstanding the foregoing, the following trusts shall not be deemed Affiliates for purposes of this Agreement, to-wit: Marital Share Trust created under Article IV of the Last Will and Testament of Robert A. Christensen, dated March 18, 1999; Family Share Trust created under Article V of the Last Will and Testament of Robert A. Christensen, dated March 18, 1999; RAC Trust Agreement, dated July 27, 2007; and Robert A. Christensen Family Irrevocable Trust, dated December 22, 2004 .

" Agreement " has the meaning set forth in the Preamble.

" Allocation " has the meaning set forth in Section 9.1 .

" Allocation Statement " has the meaning set forth in Section 9.1 .

" Ancillary Agreements " means the Bill of Sale, the Assignment and Assumption Agreement, the TMSA, the Deeds, the FIRPTA Certificates and each agreement, document, instrument or certificate contemplated by this Agreement or to be executed or delivered by any Buyer Party or any Seller Party in connection with the consummation of the transactions contemplated by this Agreement, in each case only as applicable to the relevant party or parties to such Ancillary Agreement, as indicated by the context in which such term is used.

" Assignment and Assumption Agreement " has the meaning set forth in Section 2.2(c) .

" Assignment of Easements " has the meaning set forth in Section 2.2(f) .

" Assumed Liabilities " has the meaning set forth in Section 1.3 .

" Bare Land Property " has the meaning set forth in Section 1.1(c)(ii) .

" Bill of Sale " has the meaning set forth in Section 2.2(b) .

" Breeding Stock " means the Colorado Breeding Stock together with the Iowa Breeding Stock.

" Business " has the meaning set forth in the Recitals.

" Business Day " means any day except Saturday, Sunday or a day on which banking institutions in the State of Iowa or Colorado are required by Law to be closed.

" Business Employee " means the employees of each Seller Party listed on Schedule 3.11(d) .

" Buyer " has the meaning set forth in the Preamble.

" Buyer Indemnified Party " has the meaning set forth in Section 10.1(a) .

" Buyer Party " and " Buyer Parties " have the respective meanings set forth in the Preamble.

" Casualty Loss " has the meaning set forth in Section 5.7(a) .

" CFF Sites " has the meaning set forth in the Recitals.

" CFFI " has the meaning set forth in the Preamble.

" CFM " has the meaning set forth in the Preamble.

" Claim " has the meaning set forth in Section 10.3(a) .

" Claims Notice " has the meaning set forth in Section 10.3(a) .

" Closing " has the meaning set forth in Section 2.1 .

" Closing Date " has the meaning set forth in Section 2.1 .

" COBRA " has the meaning set forth in Section 3.12(e) .

" Code " means the Internal Revenue Code of 1986, as amended.

" Colorado Breeding Stock " has the meaning set forth in Section 1.1(b)(iii) .

" Colorado CFF Sites " has the meaning set forth in Section 1.1(a)(i) .

" Colorado Effluent Easements " has the meaning set forth in Section 1.1(b)(x) .

" Colorado Feed Inventory " has the meaning set forth in Section 1.1(b)(v) .

" Colorado Grow-Finish Inventory " has the meaning set forth in Section 1.1(b)(iv) .

" Colorado Other Inventory " has the meaning set forth in Section 1.1(b)(vi) .

" Colorado Rolling Stock " has the meaning set forth in Section 1.1(b)(vii) .

" Colorado Swine Inventory " has the meaning set forth in Section 1.1(b)(iv) .

" Colorado Tangible Personal Property " has the meaning set forth in Section 1.1(b)(viii) .

" Colorado Unweaned Pig Inventory " has the meaning set forth in Section 1.1(b)(ii) .

" Confidential Information " means all information, whatever its nature and form and whether obtained orally, by observation, from written materials or otherwise, that relates to any business or commercial activities or plans of a Seller Party with respect to the Business (to the extent in existence on or prior to the Closing Date) or Buyer Parties or their Affiliates, including all servicing methods and business techniques, route and rate information, processes, compilations of technical and non-technical information, improvements, designs, Software, Software code, databases, concepts, procedures, training, promotional materials, training courses and other training and instructional materials, vendor and product information, sales intermediary lists and other sales intermediary information, and customer lists and other customer information, whether or not patented or patentable, and all other information (a) that is not otherwise generally available to the public or could constitute a trade secret of such Person or such Affiliate under the Uniform Trade Secrets Act or common law or (b) for which a duty of confidentiality is owed to any third party. The term " Confidential Information " does not include (i) any information that is or becomes generally available to the public through no action of a Seller Party, including its representatives and agents and (ii) any information primarily related to the Excluded Assets.

" Confidentiality Agreement " means that certain Confidentiality Agreement, dated as of February 2, 2015, by and between SF and CFFI.

" Consent " means any consent, approval, authorization, qualification, waiver, registration or notification required to be obtained from, filed with or delivered to a Person, including with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act .

" Continuing Employees " has the meaning set forth in Section 8.6(a) .

" Contract Producer Sites " has the meaning set forth in the Recitals.

" Contracts " means all contracts, agreements (including employment agreements and non-competition agreements), leases (whether real or personal property), licenses, sublicense, commitments, understandings, courses of dealings or performance, instruments, guarantees, bids, orders and proposals, whether oral or written.

" Count Team " has the meaning set forth in Section 1.7(a)(iii) .

" Davis County Matter " has the meaning set forth in Section 8.8 .

" Deeds " has the meaning set forth in Section 2.2(a) .

" Defects " means runts, uncastrated males, freshly castrated males, ruptures, abscesses, fresh cuts, unhealed wounds, or any other condition which causes a downgrade or condemnation of any hog by the USDA inspectors.

" Effective Time " has the meaning set forth in Section 2.1 .

" Effluent Easements " has the meaning set forth in Section 1.1(c)(iv) .

" Employee Plan " and " Employee Plans " have the respective meanings set forth in Section 3.12(a) .

" Environment " means soil, water (including navigable waters, oceans, streams, ponds, reservoirs, drainage basins, wetlands, surface waters, underground waters, drinking waters and water vapor), land, sediments, surface or subsurface strata, ambient air, indoor air, noise, plant life, animal life and all other environmental media or natural resources including any material or substance used in the physical structure of any building or improvement.

" Environmental Condition " means any condition of the Environment with respect to the Owned Real Property, the Leased Real Property or off-site properties.

" Environmental Law " means any health, safety, land use, ecological, occupational, environmental, and natural resource laws and orders, including all laws, orders, and private land use restrictions (such as covenants, conditions, and restrictions) relating to the following: (a) noise and odors; (b) the pollution or protection of the air, soil, surface water, ground water, or other elements of the environment; (c) the use, Release, storage, disposal, emission, handling, discharge, transport, treatment, processing, distribution, or manufacturing of any Hazardous Materials; (d) the registration, labeling of Hazardous Materials; and (e) the cleanup, removal, recovery, assessment, or remediation of any damage, abandonment, leak, emission, discharge, pollution, or contamination of or into air, soil, buildings, surface water, groundwater, or personal property; in each case, whether previously, presently or hereafter in effect, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. Section 2701 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. 11001 et seq.), the Endangered Species Act (16 U.S.C. Section 1531 et seq.), Export Administration Regulations (15 C.F.R. Parts 730 – 774) and the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) and all similar or equivalent Laws adopted by any other Governmental Authority, and any and all implementing rules, regulations and guidance relating to any of the foregoing.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended.

" ERISA Affiliate " has the meaning set forth in Section 3.12(a) .

" Environmental Deductible " has the meaning set forth in Section 10.2(a) .

" Excluded Assets " has the meaning set forth in Section 1.2 .

" Excluded Contracts " has the meaning set forth in Section 1.2(f) .

" Expiration Date " has the meanings set forth in Section 10.4 .

" Facilities " has the meaning set forth in the Recitals.

" Feed Inventory " has the meaning set forth in Section 1.1(b)(v) .

" Feed Mill " has the meaning set forth in the Recitals.

" Feed Mill Inventory Report " has the meaning set forth in Section 1.7(b) .

" Financials " has the meaning set forth in Section 3.18(a) .

" FIRPTA Certificate " means an affidavit of an authorized representative of each Seller Party, prepared in accordance with the requirements of Section 1445 of the Code and the Treasury Regulations thereunder, substantially in the form as Exhibit F hereto .

" FLSA " means the Fair Labor Standards Act of 1938, as amended.

" Fraud " means , with respect to any Person, such Person's intentional or knowing fraud regarding the representations and warranties expressly set forth in Article 3 .

" Fundamental Representations " means the representations and warranties contained in Section 3.1 (Existence and Good Standing; Organization), Section 3.2 (Power), Section 3.3 (Authority, Validity, Effect and No Conflict), Section 3.5 (Subsidiaries), Section 3.6(a) (Title to Property), Section 3.22 (Brokers), Section 4.1 (Existence and Good Standing), Section 4.2 ( Authority, Validity, Effect and No Conflict ) and Section 4.4 (Brokers).

" Funds Flow Statement " means the funds flow statement delivered by Seller Parties to Buyer Parties two Business Days prior to the Closing Date containing the instructions (including bank wiring instructions) for delivering the portion of the Total Consideration to be paid at Closing and other amounts to the Persons set forth thereon, including (a) any creditors with whom a Seller Party has any outstanding Indebtedness immediately prior to the Closing that is to be paid at Closing (to ensure that the Acquired Assets are free and clear of all Indebtedness and Liens) , (b) any Person to whom a Seller Party owes or shall owe any Selling Expenses, and (c) Seller Parties in the amounts shown thereon, dated as of the Closing Date, in form and substance reasonably acceptable to Buyer Parties.

" GAAP " means accounting principles generally accepted in the U.S. as in effect from time to time, consistently applied.

" General Enforceability Exceptions " has the meaning set forth in Section 3.3(a) .

" Government Contract " means (a) any Contract between a Seller Party, on the one hand, and any Governmental Authority, on the other hand, or (b) any Contract between a Seller Party, on the one hand, and any Person (including any subcontract or at any tier), on the other hand, pursuant to which goods or services provided by a Seller Party are to be delivered or provided to or incorporated in items delivered or provided to a Governmental Authority .

" Government Official " means (a) any official, officer, employee, representative or instrumentality of, or any Person acting in an official capacity for or on behalf of, any Governmental Authority, (b) any political party, or employee, manager, director or other official thereof or candidate for political offices or (c) any Person owned, in whole or in part, or controlled by any Person described in clause (a) or (b) above.

" Governmental Authority " means any government or political subdivision or regulatory authority, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision or regulatory authority, or any federal, state, local or foreign court or arbitrator or mediator.

" Grow-Finish Inventory " means the Colorado Swine Inventory together with the Iowa Swine Inventory.

" Guarantee " by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing or otherwise supporting in whole or in part the payment of any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, products, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligations of the payment of such Indebtedness or performance of such obligations or to protect such obligee against loss in respect of such Indebtedness or obligations (in whole or in part). The term " Guarantee " used as a verb has a correlative meaning.

" Hazardous Material " means any pollutant, toxic substance, hazardous, special, industrial or other waste, hazardous material, hazardous substance, contaminant, petroleum or petroleum-containing materials, asbestos and asbestos-containing materials, radiation or radioactive materials, leaded paints, toxic mold and other harmful biological agents, soil gases, including petroleum and chemical vapors, and polychlorinated biphenyls or any other material which could otherwise give rise to Liability under any Environmental Law.

" HSR Act " means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time.

" Improvements " means all buildings, fixtures, structures, improvements, lagoons, roads, water and effluent pipelines, utility access and other facilities situated on any Real Property.

" Indebtedness " of any Person means: (a) any Liability of such Person (i) for borrowed money (including the current portion thereof), (ii) under any reimbursement obligation relating to a letter of credit, bankers' acceptance or note purchase facility, (iii) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation), (iv) for the payment of money relating to leases that are required to be classified as a capitalized lease obligations in accordance with GAAP, (v) for all or any part of the deferred purchase price of property or services (other than trade payables), including any "earnout" or similar payments or any non-compete payments, (vi) under interest rate swap, hedging or similar agreements or (vii) for Taxes and (b) any Liability of others described in the preceding clause (a) that such Person has Guaranteed, that is recourse to such Person or any of its assets or that is otherwise its legal Liability or that is secured in whole or in part by the assets of such Person. For purposes of this Agreement, Indebtedness of a Seller Party includes (A) any and all accrued interest, success fees, prepayment premiums, make-whole premiums or penalties and fees or expenses actually incurred (including attorneys' fees) associated with the prepayment of any Indebtedness of a Seller Party, (B) cash,

book or bank account overdrafts of a Seller Party and (C) any and all amounts owed by a Seller Party to any of its Affiliates.

" Indemnified Party " has the meaning set forth in Section 10.3(a) .

" Indemnifying Party " has the meaning set forth in Section 10.3(a) .

" Intellectual Property means any and all of the following, and all rights in, arising out of, or associated therewith, in any jurisdiction throughout the world, whether protected, created or arising under any applicable Law, License, or otherwise: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), products, processes, prototypes, articles of manufacture, compositions of matter, know-how and other things and information, all improvements thereto, and all patent disclosures and patents (including patent applications), including all utility models, provisional applications, continuations, divisionals, and continuations-in-part thereof and patents issuing thereon, along with all reissues, reexaminations, inter partes review proceedings, post grant review proceedings, opposition, nullification, supplemental examination proceedings and extensions thereof; (b) all copyrights, copyrightable subject matter and works of authorship (whether or not embodied in any tangible form, including instruction manuals, samples, studies and summaries), and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications and registrations in connection therewith, along with all reversions, extensions and renewals thereof; (c) trade or service marks, logos, trade names, corporate names, including the name of each Seller Party, rights in telephone numbers and trade dress rights, together with all translations, adaptations, derivations and combinations thereof and including the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof; (d) Confidential Information, including trade secrets and know-how (including ideas, research and development, formulae, algorithms, routines, compositions, technical data, customer and supplier lists, pricing, rate, route and cost information, and business and marketing plans and proposals); (e) all internet domain names and registrations and renewals thereof; (f) all Software and web sites; (g) registrations and applications for registration of each of the foregoing and all equivalent, similar or corresponding rights throughout the world; (h) all advertising and promotional materials and product labels; (i) all other intellectual property and other proprietary rights, and (j) all copies and tangible embodiments thereof (in whatever form or medium).

" Inventory " means all inventory produced, acquired or ordered by Seller Parties and held for use or sale primarily or exclusively in connection with the Business , including Swine Inventory, Feed Inventory and Other Inventory.

" Iowa Breeding Stock " has the meaning set forth in Section 1.1(a)(v) .

" Iowa Effluent Easements " has the meaning set forth in Section 1.1(c)(iv) .

" Iowa Feed Inventory " has the meaning set forth in Section 1.1(a)(vii) .

" Iowa Grow-Finish Inventory " has the meaning set forth in Section 1.1(a)(vi) .

" Iowa Other Inventory " has the meaning set forth in Section 1.1(a)(viii) .

" Iowa Rolling Stock " has the meaning set forth in Section 1.1(a)(ix) .

" Iowa Swine Inventory " has the meaning set forth in Section 1.1(a)(vi) .

" Iowa Tangible Personal Property " has the meaning set forth in Section 1.1(c)(vi) .

" Iowa Unweaned Pig Inventory " has the meaning set forth in Section 1.1(a)(iv) .

" Knowledge of Seller Parties " means the actual knowledge of Glenn Stolt, Jeff Jagerson, Greg Howard, Jeff Rusch, Matt Burkett, Dave Rosenhamer, Adam Barka, Valerie Johnson and Leon Steffl on the date hereof after due inquiry with respect to the matters at hand.

" Law " means any foreign, federal, state or local law, statute, code, ordinance, regulation, judicial decision, rule, Order, executive order or other requirement.

" Leased Real Property " has the meaning set forth in Section 3.6(b)(ii) .

" Liabilities " means any liabilities, Taxes, adverse claims, Indebtedness, fines and penalties or other obligations, whether accrued, fixed, due or to become due, absolute or contingent, matured or unmatured, determined or determinable, known or unknown, unliquidated or otherwise, regardless of when asserted.

" License " means any license, sublicense, Contract, covenant not to sue or permission.

" Liens " means any hypothecation, mortgage, assignment, lease, license or other right of possession, deed of trust, encumbrance, Real Property title defect, infringement, interference, charge, claim, community property interest, easement, right of way, covenant, servitude, condition, equitable interest, lien, option, pledge, security interest, purchase rights, right of first refusal, tag along right or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

" Litigation Conditions " means (a) the defense of such Third Party Claim by the Indemnifying Party shall not, in the reasonable judgment of the Indemnified Party, materially prejudice any defense or right of the Indemnified Party or any other Buyer Indemnified Party or Seller Indemnified Party, as applicable; (b) the Indemnifying Party has sufficient financial resources, in the reasonable judgment of the Indemnified Party, to satisfy the amount of any adverse monetary judgment that is reasonably likely to result; (c) the Third Party Claim seeks (and continues to seek) only monetary damages; and (d) the Indemnifying Party expressly agrees in writing that as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party may only satisfy and discharge the Third Party Claim in accordance with this Agreement.

" Loss " and " Losses " have the respective meanings set forth in Section 10.1(a) .

" Material Contracts " has the meaning set forth in Section 3.14(a) .

" Material Adverse Effect " means any event, occurrence, fact, condition or change that is materially adverse to the business, results of operations, financial condition, prospects or assets of the Business, taken as a whole; provided , however , that " Material Adverse Effect " shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (a) general economic or political conditions; (b) conditions generally affecting the industries in which the Business operates, including any livestock disease conditions such as Porcine Reproductive and Respiratory Syndrome and Porcine Epidemic Diarrhea Virus; (c) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (d) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (e) any action required or permitted by this Agreement or any action taken (or omitted to be taken) with the written consent of or at the written request of Buyer Parties; (f) any changes in applicable Laws or accounting rules (including GAAP) or the enforcement, implementation or interpretation thereof; (g) losses or threatened losses of employees, customers, suppliers, distributors or

others having relationships with Seller Parties and the Business; (h) any natural or man-made disaster or acts of God; or (i) any failure by the Business to meet any internal or published projections, forecasts or revenue or earnings predictions; provided , further , that such exclusions from the definition of Material Adverse Effect listed in clauses (a) - (d) , (f) or (h) above , in each case, shall not apply to the extent such event, occurrence, fact, condition or change has a disproportionate impact on the Business relative to other Persons engaged in a business similar to the Business.

" Net Closing Cash Payment " has the meaning set forth in Section 1.6 .

" Operating Costs " has the meaning set forth in Section 8.7 .

" Order " means any order, judgment, injunction, award, decree, ruling, charge, writ, assessment, arbitration award or other requirement of any Governmental Authority.

" Ordinary Course " means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency), provided , however , that violations of Law or any failure to comply with Contracts shall not be deemed to be within the Ordinary Course.

" Other Inventory " has the meaning set forth in Section 1.1(b)(vi) .

" Owned Real Property " has the meaning set forth in Section 3.6(b)(i) .

" Packer Contracts " means that certain Evergreen Procurement Agreement between Tyson Fresh Meats, Inc. and CFFI dated December 24, 2012; and that certain Hog Purchase Contract between JBS USA, LLC and CFFI dated July 1, 2013.

" Parent " has the meaning set forth in the Preamble.

" Party " and " Parties " have the respective meanings set forth in the Preamble.

" Permits " means any License, permit, product registration, approval, certificate, authorization, privilege, immunity, certificate of occupancy, authority, qualification or similar document or authority that has been issued or granted by any Person.

" Permitted Liens " shall mean (a) all Liens specifically approved in writing by Buyer Parties; (b) statutory or contractual Liens arising out of operation of applicable Law with respect to a liability incurred in the Ordinary Course and which is not yet due or delinquent; (c) Liens for Taxes, business improvement district charges, water and sewer charges, and other governmental charges and impositions not yet due and payable nor subject to penalties for nonpayment or are being contested in good faith through appropriate proceedings; (d) mechanics', material men's, carriers', workmen's, warehousemen's, repairmen's, landlords' or other like Liens and security obligations that are not yet due or delinquent; and (e) those Liens set forth on Schedule 11.1(a) .

" Person " means any individual, sole proprietorship, partnership, corporation, limited liability company, unincorporated society or association, trust, Governmental Authority or other entity.

" Pre-Closing Tax Period " means any Tax period (or portion thereof) ending on or before the Closing Date, including, for the avoidance of doubt, for any Tax period beginning on or before the Closing Date and ending after the Closing Date, the portion of such period that is before the Closing Date and through and including the Closing Date.

" Proceeding " has the meaning set forth in Section 12.8 .

" Property Taxes " has the meaning set forth in Section 9.6(a)(i) .

" Proration Statement " has the meaning set forth in Section 9.6(b) .

" Real Property " means any and all real property and interests in real property, including the Owned Real Property and the Leased Real Property, and any other real property leaseholds and subleaseholds, purchase options, easements, Licenses, rights to access and rights of way and any other real property.

" Real Property Leases " has the meaning set forth in Section 3.6(b)(ii) .

" Records " means, the following written materials, data and records (in whatever form or medium) to the extent in the possession or control of a Seller Party and relating primarily or exclusively to the Business or that are maintained in the Ordinary Course at the Facilities: (a) business records, including customer lists and records and route, rate, hauling, transportation and logistics records; (b) equipment logs; (c) service, warranty and claim records; (d) maintenance records and other documents relating to any Real Property and the Tangible Personal Property; (e) Material Safety Data Sheets or Safety Data Sheets, analytical test data, health and safety studies, engineering reports and studies, environmental reports and studies, research and development results, and other information relating to compliance with Environmental Laws; (f) documents and other information necessary to demonstrate compliance with applicable Laws or Permits, including any inspections results and training records; (g) operating guides and manuals; (h) training manuals; (i) employment, occupational, exposure and medical records of the Business Employees (other than employment records related to any Business Employee that is not offered employment by a Buyer Party, or an Affiliate of a Buyer Party) or that does not accept an offer of employment therefrom); (j) records relating to any inventory; (k) records posted to Seller Parties' electronic data room; and (l) all other documents otherwise used primarily or exclusively in the Business, including marketing, advertising and promotional materials and documents related to any of the Acquired Assets or Assumed Liabilities.

" Release " means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing, abandoning or dumping of a Hazardous Material into the Environment and any condition that results in the exposure of a Person to Hazardous Material.

" Retained Liabilities " has the meaning set forth in Section 1.4 .

" Rolling Stock " has the meaning set forth in Section 1.1(b)(vii) .

" Rolling Stock Value " means the fair market value, at the Effective Time, of the Rolling Stock.

" Schedule " means any schedule to this Agreement.

" Seller Indemnified Party " has the meaning set forth in Section 10.1(b) .

" Seller Party " and " Seller Parties " have the respective meanings set forth in the Preamble.

" Selling Expenses " means all unpaid costs, fees and expenses of outside professionals incurred by Seller Parties relating to the process of selling the assets of each Seller Party, whether incurred in connection with this Agreement or otherwise, including all broker fees and expenses or legal, accounting, tax and investment banking fees and expenses.

" SF " has the meaning set forth in the Preamble.

" SF Acquired Assets " has the meaning set forth in Section 1.1(b) .

" SF Acquired Contracts " has the meaning set forth in Section 1.1(b)(ix) .

" SF Acquired Permits " has the meaning set forth in Section 1.1(b)(xi) .

" SF Purchase Price " has the meaning set forth in Section 1.5(b) .

" SFI " has the meaning set forth in the Preamble.

" SFI Acquired Assets " has the meaning set forth in Section 1.1(a) .

" SFI Acquired Contracts " has the meaning set forth in Section 1.1(a)(x) .

" SFI Acquired Permits " has the meaning set forth in Section 1.1(a)(xi) .

" SFI Purchase Price " has the meaning set forth in Section 1.5(a) .

" SFI Tangible Personal Property " has the meaning set forth in Section 1.1(a)(xii) .

" Shortfall Amount " has the meaning set forth in Section 1.7(a)(iii)(B) .

" Software " means all computer software, programs and code, including assemblers, applets, compilers, source code, object code, executable code, net lists, development tools, design tools, user interfaces and data, databases in any form or format, however fixed, and all related documentation.

" Solvent " means, with respect to any Person, that such Person (a) owns and shall own assets the fair saleable value of which are (i) greater than the total amount of its Liabilities (including contingent obligations) and (ii) greater than the amount that shall be required to pay the probable Liabilities of its then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to it; (b) has capital that is not unreasonably small in relation to its business as presently conducted or after giving effect to any contemplated transaction; and (c) does not intend to incur and does not believe that it shall incur debts beyond its ability to pay such debts as they become due.

" Straddle Period " means any Tax period which begins on or before the Closing Date and ends after the Closing Date. With respect to any Property Taxes for Real Property, " Straddle Period " means any fiscal year period beginning on July 1 of a year and ending on June 30 of the following year.

" Subsidiary " means any Person of which at least twenty percent (20%) of the outstanding shares of capital stock or other equity securities or interests having ordinary voting power for the election of directors or comparable managers of such Person are at the time owned by a Seller Party, by one or more directly or indirectly wholly or partially owned subsidiaries of a Seller Party or by a Seller Party and one or more such subsidiaries, whether or not at the time the shares of any other class or classes or other equity interests of such Person have or might have voting power by reason of the happening of any contingency.

" Swine Inventory " means the Colorado Swine Inventory together with the Iowa Swine Inventory.

" Swine Inventory Report " has the meaning set forth in Section 1.7(a)(i) .

" Tangible Personal Property " has the meaning set forth in Section 1.1(c)(vi) .

" Tax Clearance Certificates " means any tax clearance certificates or similar certificates with respect to Seller from any Taxing Authority.

" Tax " means (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, License, withholding, payroll, employment, withholding, excise, severance, stamp, occupation, premium, personal property, real property, special assessment, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, as well as any Liabilities under any state abandonment or unclaimed property, escheat or similar Laws, together with any interest, penalty, addition to tax or additional amount imposed by any Law or Taxing Authority, whether disputed or not, (b) any Liability for the payment of any amounts of any of the foregoing types as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement or arrangement whereby Liability for payment of such amounts was determined or taken into account with reference to the Liability of any other Person and (c) any Liability for the payment of any amounts of the foregoing types as a result of being a transferee or successor under applicable Law, or a party to any agreements or arrangements (whether or not written), or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other Person.

" Tax Proceeding " has the meaning set forth in Section 9.3 .

" Tax Return " means any return, declaration, report, information return or other document (including schedules or any related or supporting information) filed or required to be filed with any Governmental Authority, including any return, attachment or schedule of an affiliated, consolidated, combined or unitary group, in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

" Taxing Authority " means any Governmental Authority responsible for the administration, collection or imposition of any Tax.

" Third Party Claim " has the meaning set forth in Section 10.3(b) .

" Tipping Basket " has the meaning set forth in Section 10.2(a) .

" Title Company " has the meaning set forth in Section 2.1 .

" TMSA " has the meaning set forth in Section 2.2(e) .

" Total Consideration " has the meaning set forth in Section 1.5(d) .

" Transfer Taxes " has the meaning set forth in Section 9.2 .

" Treasury Regulations " means the regulations promulgated under the Code by the U.S. Department of the Treasury.

" Truck Washes " has the meaning set forth in the Recitals.

" Unweaned Pig Inventory " has the meaning set forth in Section 1.1(b)(ii) .

" U.S. " means the United States of America.

" Windfall Amount " has the meaning set forth in Section 1.7(a)(iii)(B) .

" Woodford " has the meaning set forth in the Preamble.

" Woodford Acquired Assets " has the meaning set forth in Section 1.1(c) .

" Woodford Acquired Contracts " has the meaning set forth in Section 1.1(c)(iii) .

" Woodford Acquired Permits " has the meaning set forth in Section 1.1(c)(v) .

" Woodford Purchase Price " has the meaning set forth in Section 1.5(c) .

ARTICLE 1 2
MISCELLANEOUS

12.1 Assignment . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any Party without the prior written consent of the other Parties; provided , however , that each Buyer Party may assign this Agreement and any or all rights or obligations hereunder (including Buyer Parties' rights to seek indemnification hereunder) to any Affiliate or Affiliates of a Buyer Party or any Person or Persons to which a Buyer Party or any of its Affiliates sells, transfers, assigns or delegates all or any portion of the Acquired Assets, Assumed Liabilities or Business. Upon any such permitted assignment, the references in this Agreement to the assignor Buyer Party shall also apply to any such assignees unless the context otherwise requires. The Parties may, prior to the Closing, assign or exchange their respective rights (but not their respective obligations) under this Agreement to a Qualified Intermediary, as provided in Treasury Regulation 1.1031(k) – 1(g), provided that Seller Parties will bear and remain liable and responsible for any such assignment or exchange, including all costs, fees and charges associated therewith.

12.2 Headings . The headings contained in this Agreement are included for purposes of convenience only and do not affect the meaning or interpretation of this Agreement.

12.3 Integration, Modification and Waiver . This Agreement, together with any Schedules delivered hereunder and (when executed) the Ancillary Agreements and any side letters, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior understandings of the Parties. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by Buyer Parties and Seller Parties. No waiver of any of the provisions of this Agreement shall be deemed to be or shall constitute a continuing waiver. No waiver shall be binding unless executed in writing by the Party making the waiver.

12.4 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Unless the context clearly indicates otherwise: (a) each definition herein includes the singular and the plural, (b) each reference herein to any gender includes the masculine, feminine and neuter where appropriate, (c) the words "include" and "including" and variations thereof shall not be deemed terms of limitation, but rather shall be deemed to be followed by the words "without limitation," (d) the words "hereof," "herein," "hereto," "hereby," "hereunder" and derivative or similar words refer to this Agreement as an entirety and not solely to any particular provision of this Agreement, (e) the word "extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase does not mean simply "if," (f) each reference in this Agreement to a particular Article, Section or Schedule means an Article or Section of, or a Schedule

to, this Agreement, unless another agreement is specified, (g) unless otherwise specified, any definition of or reference to any agreement, instrument, document, statute or regulation herein shall be construed as referring to such agreement, instrument, document, statute or regulation as it may from time to time be amended, supplemented or otherwise modified, (h) any accounting term not defined herein shall have the meaning ascribed to it under GAAP and (i) all references to "$" or "Dollars" shall mean U.S. Dollars.

12.5 Severabilit y . Subject to Section 8.1(d) , if any provision of this Agreement or the application of any provision of this Agreement to any Party or circumstance is, to any extent, adjudged invalid or unenforceable, the application of the remainder of such provision to such Party or circumstance, the application of such provision to other Parties or circumstances, and the application of the remainder of this Agreement shall not be affected thereby.

12.6 Notices . All notices and other communications required or permitted under this Agreement must be in writing and shall be deemed to have been duly given and delivered (a) when delivered in person, (b) one Business Day after having been dispatched by a nationally recognized overnight courier service or (c) upon tender by the U.S. Post Office after being sent by registered or certified mail, return receipt requested, postage prepaid, to the appropriate Party at the following address or facsimile number:

If to a Seller Party:

Christensen Farms & Feedlots, Inc.

23971 County Road 10

Sleepy Eye, MN 56085

Attention: Glenn Stolt

with a copy to (which shall not constitute notice):

Gislason & Hunter, LLP

2700 S. Broadway

New Ulm, MN 56073

Attention: Gary Koch

If to SFI or SF:

c/o Seaboard Corporation

9000 W. 67 th Street

Merriam, Kansas 66202

Attention: Chief Financial Officer

with a copy to (which shall not constitute notice):

c/o Seaboard Corporation

9000 W. 67 th Street

Merriam, Kansas 66202

Attention: General Counsel

If to Woodford:

Stephen Summerlin

9000 W. 67 th Street, Suite 200

Merriam, Kansas 66202

Any Party may change its address, electronic mail address for the purposes of this Section 12.6 by giving notice to the other Parties as provided in this Agreement.

12.7 Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the Laws of the State of Iowa without regard to principles of conflicts of law.

12.8 Jurisdiction and Venue; Prevailing Parties . Each of the Parties hereby irrevocably and unconditionally, for itself and its property, submits to the exclusive jurisdiction of the U.S. federal or state courts sitting in the State of Iowa, and any appellate court from any thereof, in any judicial proceeding brought against any of the Parties in connection with any dispute (each a " Proceeding ") and agrees that all claims in respect of any such Proceeding may be heard and determined in any such court, and each of the Parties hereby irrevocably and unconditionally (a) agrees not to commence any such Proceeding or other Action except in the U.S. federal or state courts sitting in the State of Iowa, (b) agrees that any claim in respect of any such Proceeding may be heard and determined in the U.S. federal or state courts sitting in the State of Iowa, and any appellate court from any thereof, (c) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the U.S. federal or state courts sitting in the State of Iowa, and (d) waives, to the fullest extent it may legally and effectively do so, the defense of an inconvenient forum to the maintenance of such Proceeding in the U.S. federal or state courts sitting in the State of Iowa. In the event of any Proceeding under this Agreement, the prevailing Party shall be entitled to recover its attorneys' fees and court costs from the other Party. A judgment in any Proceeding may be enforced in any jurisdiction by suit on the judgment or in any other manner provided by Law.

12.9 Waiver of Jury Trial . EACH OF THE PARTIES WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

12.10 Specific Performance . Each Party acknowledges and agrees that the subject matter of this Agreement, including the assets and properties of the Business, is unique, that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached, and that the remedies at Law would not be adequate to compensate such other Parties not in default or in breach. Accordingly, each Party agrees that the other Parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in addition to any other remedy to which they may be entitled, at Law or in equity. The Parties waive any defense that a remedy at Law is adequate and any requirement to post bond or provide similar security in connection with actions instituted for injunctive relief or specific performance of this Agreement.

12.11 No Third Party Beneficiaries . Except for the rights and remedies available to any Buyer Indemnified Party or Seller Indemnified Party pursuant to Article 10 , this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein express or implied

shall give or be construed to give to any Person, other than the Parties and such respective successors and permitted assigns, any legal or equitable right or remedy of any nature whatsoever hereunder.

12.12 Counterparts . This Agreement and any Ancillary Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement and any Ancillary Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile transmission or as an attachment to an electronic mail message in "pdf" or similar format, shall be treated in all manners and respects as an original agreement or instrument and shall be considered to have the same and binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any Ancillary Agreement, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties.

12.13 Disclosure Schedules . No representation or warranty of Seller Parties contained in Article 3 shall be deemed untrue or incorrect, and Seller Parties shall not be deemed to have breached any such representation or warranty, as a consequence of the existence of any fact, circumstance or event of which is expressly disclosed in the Schedules to Article 3 , subject to the following sentence. The information contained in the Schedules to Article 3 constitutes exceptions to the applicable representations and warranties contained in Article 3 only so long as a Schedule with respect to such representation and warranties contains an explicit and express reference to the representation or warranty for which an exception is intended to apply.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the day and year first above written.

	CHRISTENSEN FARMS & FEEDLOTS, INC.
	a Minnesota corporation


	By:	/s/ Glenn Stolt
	Name:	Glenn Stolt
	Title:	President and Chief Executive Officer


	CHRISTENSEN FARMS MIDWEST, LLC
	a Minnesota limited liability company


	By:	/s/ Glenn Stolt
	Name:	Glenn Stolt
	Title:	President and Chief Executive Officer


	SEABOARD FOODS OF IOWA, LLC
	a Delaware limited liability company


	By:	/s/ Terry J. Holton
	Name:	Terry J. Holton
	Title:	President


	SEABOARD FOODS LLC
	an Oklahoma limited liability company


	By:	/s/ Terry J. Holton
	Name:	Terry J. Holton
	Title:	President and Chief Executive Officer


	WOODFORD CREEK FARMS LLP
	an Iowa limited liability partnership


	By:	/s/ Stephen G. Summerlin
	Name:	Stephen G. Summerlin
	Title:	President and Chief Executive Officer

[Signature Page to Asset Purchase Agreement]

EXHIBITS TO THE ASSET PURCHASE AGREEMENT

Following is a list of the Exhibits to the Asset Purchase Agreement, which are omitted from the Asset Purchase Agreement which is filed with the Securities and Exchange Commission ("SEC"). Seaboard Corporation ("Seaboard") undertakes to provide to the SEC the Exhibits, as requested, subject to Seaboard's right to request confidential treatment under the Freedom of Information Act.

Exhibit A Pig Inventory Value Methodology

Exhibit B Form of Bill of Sale

Exhibit C Form of Assignment and Assumption Agreement

Exhibit D Form of Transition Management Support and Services Agreement

Exhibit E Form of Assignment of Easements

Exhibit F Form of FIRPTA Certificates

Exhibit 10.25

FIRST AMENDMENT TO asset purchase AGREEMENT

This First Amendment to Asset Purchase Agreement (this “Amendment”) is made and entered into this 6th day of February , 201 6 , by and among Seaboard Foods of Iowa, LLC, a Delaware limited liability company (" SFI "), Seaboard Foods LLC, an Oklahoma limited liability company (" SF "), Woodford Creek Farms LLP, an Iowa limited liability partnership (" Woodford " and, together with SFI and SF, " Buyer Parties " and each individually a " Buyer Party "), Christensen Farms & Feedlots, Inc., a Minnesota corporation (" CFFI "), and Christensen Farms Midwest, LLC, a Minnesota limited liability company (" CFM " and, together with CFFI, " Seller Parties " and each individually a " Seller Party "). Each Seller Party and Buyer Party is sometimes individually referred to as a " Party ," and they are sometimes collectively referred to as the " Parties ."

WHEREAS, the Parties wish to amend certain provisions and schedules of that certain Asset Purchase Agreement , dated January 2 6 , 20 16 , b y and among the Parties (the “ Agreement ” ) as set forth below.

NOW, THEREFORE, in consideration of the terms, conditions and covenants contained herein, the parties mutually agree to amend the terms and conditions of the Agreement as follows:

1. All capitalized terms not defined herein have the meanings assigned to them in the Agreement.

2. Acquired Assets Purchased by SFI .

a. The parties amend and restate Section 1.1(a)(i) of the Agreement in its entirety as follows:

“ the real property owned by Seller Parties and comprising the CFF Sites located in Colorado, as more specifically identified and described on Schedule 1.1(a)(i) , together with all Improvements located thereon and all easements (other than the Effluent Easements), rights-of-way, water rights, oil, gas and mineral rights, wells, all other rights appurtenant thereto and all zoning rights, air rights and development rights, in each case, relating to CFF Sites located in Colorado; ”

b. The parties amend and restate Section 1.1(a)(x) of the Agreement in its entirety as follows:

“ all of Seller Parties' rights and incidents of interest in, to and under the Contracts set forth on Schedule 1.1(a)(x) (1) , including the contractor-producer Contracts related to the Contract Producer Sites identified and described on Schedule 1.1(a)(x) (2) , the lease Contracts related to the leased Iowa Rolling Stock, and the effluent and manure spreading agreements related to the CFF Sites located in Colorado (collectively, the " SFI Acquired Contracts "); ”

c. The parties amend and restate Section 1.1(a)(xii) of the Agreement in its entirety as follows:

“ all fixed assets, equipment, machinery, inventory, fixtures, furniture, computers and Software on the computers necessary to operate such hardware at the Facilities, tools, spare parts, supplies and other tangible personal property owned or leased by a Seller Party, in each case, that is (A) located at the Facilities in Colorado, (B) located at the Feed Mill, (C) located at a Truck Wash, (D) located at the Bloomfield, Iowa office, (E) identified in Schedule 1.1(a)(xii) or Schedule 1.1(b)(viii) , or (F) used or held for use primarily or exclusively in connection with the Business located in Colorado (the " SFI Tangible Personal Property "); ”

d. The parties add the following as Section 1.1(a)(xvii) of the Agreement:

“ all of Seller Parties' rights and incidents of interest in, to and under the easements set forth on Schedule 1.1(b)(x) (collectively, the " Colorado Effluent Easements ") ;”

3. Acquired Assets Purchased by SF .

a. The parties amend and restate Section 1.1(b)(i) of the Agreement in its entirety as follows:

“[Intentionally Omitted]”

b. The parties amend and restate Section 1.1(b)(viii) of the Agreement in its entirety as follows:

“[Intentionally Omitted]”

c. The parties amend and restate Section 1.1(b)(ix) of the Agreement in its entirety as follows:

“all of Seller Parties' rights and incidents of interest in, to and under the Contracts (in each case, other than the Colorado Effluent Easements) set forth on Schedule 1.1(b)(ix) , including the lease Contracts related to the leased Colorado Rolling Stock (collectively, the " SF Acquired Contracts "); ”

d. The parties amend and restate Section 1.1(b)(x) of the Agreement in its entirety as follows:

“[Intentionally Omitted]”

4. Acquired Assets Purchased by Woodford .

a. The parties amend Section 1.1(c)(vi) of the Agreement by deleting all references to the “Colorado Tangible Personal Property.”

5. Total Consideration .

a. The parties amend and restate Section 1.5(a)(i) of the Agreement in its entirety as follows: “ $ 21 , 620 , 412 , plus .”

b. The parties amend and restate Section 1.5(b)(i) of the Agreement in its entirety as follows: “ $ 4 4 , 500 , plus .”

6. Definitions .

a. The Parties hereby delete the defined term and definition of “Colorado Tangible Personal Property” from Section 11.1 of the Agreement.

b. The Parties hereby amend and restate the definition of “Colorado Effluent Easements” in Section 11.1 of the Agreement in its entirety as follows:

“ Colorado Effluent Easements " has the meaning set forth in Section 1.1(a)(xvii) .”

7. Exhibit A . The Parties hereby amend and restate Exhibit A to the Agreement in its entirety and replace it with the Exhibit A attached hereto as Schedule 1 .

8. Schedules to the Agreement . The Parties hereby amend and restate the Schedules to the Agreement in their entirety and replace them with the Schedules attached hereto as Schedule 2 .

9. This Amendment amends and modifies the Agreement only to the extent of the items expressly noted herein. Except for those items expressly modified, deleted or amended herein, all the terms, conditions, covenants and warranties contained in the Agreement are ratified as of the date hereof, are incorporated herein by this reference and remain in full force and effect, unaltered and unchanged by this Amendment.

10. This Amendment and the Agreement shall be binding upon the legal representatives, successors and assigns of the parties hereto.

11. The parties acknowledge and agree that any further modification, deletion, amendment or extension of the Agreement shall be the subject of separate negotiations between the parties, and that the Agreement and this Amendment shall not be further modified or extended, except by written instrument executed by all parties hereto.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Amendment effective as of the day and year first above written.

	CHRISTENSEN FARMS & FEEDLOTS, INC.
	a Minnesota corporation


	By:	/ s/ Glenn Stolt
	Name:	Glenn Stolt
	Title:	President and Chief Executive Officer


	CHRISTENSEN FARMS MIDWEST, LLC
	a Minnesota limited liability company


	By:	/s/ Glenn Stolt
	Name:	Glenn Stolt
	Title:	President and Chief Executive Officer


	SEABOARD FOODS OF IOWA, LLC
	a Delaware limited liability company

	By:	/s/ Terry J. Holton
	Name:	Terry J. Holton
	Title:	President


	SEABOARD FOODS LLC
	an Oklahoma limited liability company


	By:	/s/ Terry J. Holton
	Name:	Terry J. Holton
	Title:	President and Chief Executive Officer


	WOODFORD CREEK FARMS LLP
	an Iowa limited liability partnership


	By:	/s/ Stephen G. Summerlin
	Name:	Stephen G. Summerlin
	Title:	President and Chief Executive Officer

schedules to the FIRST AMENDMENT TO asset purchase AGREEMENT

Following is a list of the Schedules to the First Amendment to Asset Purchase Agreement , which are omitted from the First Amendment to Asset Purchase Agreement which is filed with the Securities and Exchange Commission ("SEC"). Seaboard Corporation ("Seaboard") undertakes to provide to the SEC the Exhibits, as requested, subject to Seaboard's right to request confidential treatment under the Freedom of Information Act.

Schedule 1 Exhibit A to the Agreement

Schedule 2 Schedules to the Agreement

Exhibit 10.8

FIRST AMENDMENT TO THE

SEABOARD CORPORATION

409A EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED

EFFECTIVE JANUARY 1, 2013

Seaboard Corporation (the “Company”) adopted the Seaboard Corporation 409A Executive Retirement Plan, amended and restated and effective January 1, 2013 (the “Plan”), and desires to adopt this First Amendment (the “Amendment”) to amend the Plan effective January 1, 2015 to allow other Participants to enter the Plan, and to make certain other changes to the Plan with respect to said Participants.

NOW, THEREFORE, the Plan is amended as follows:

1. Amendment to Section 3.1 . Section 3.1 of the Plan is amended to delete at the end of said Section the following sentence: “There will be no other Participants in the Plan.”, and to add the following sentence in place thereof:

The President of the Company may designate additional employees of the Company to become a Participant in the Plan. If an additional employee is so designated, a new Addendum B, including the added Participant, shall be prepared and attached to the Plan. Such employee’s Participation Date will be the date specified by the President of the Company.

2. Amendment to Section 2.4 – Definition of Actuarial Value . Section 2.4 of the Plan setting forth the definition of Actuarial Value is deleted and replaced with the following definition:

Section 2.4 Actuarial Value means the lump sum equivalent value as of the payment date of a Participant’s Post 2012 Accrued Benefit or Pre 2013 Accrued Benefit payable at his Normal Retirement Date and determined by using (i) the average annual interest rate on 30 year Treasury securities as specified by the Commissioner of the Internal Revenue Service (the “Commissioner”) for the 36 month period ending on November immediately preceding the Plan Year in which the earlier of such lump sum is (a) paid to the Participant or (b) calculated and credited to the Participant’s 162(m) Account, which interest rate shall not be less than 5 percent to determine the Actuarial Value for any employee becoming a Participant in the Plan on or after January 1, 2015, and (ii) the applicable mortality table used for purposes of satisfying the requirements of Code Section 417(e) as of the applicable benefit commencement date set forth in Section 6.3.

3. Amendment to Section 2.12 – Definition of Disability . Section 2.12 of the Plan is amended to change the two references in Section 2.12 from “six months” to “twelve months” in the fourth and sixth lines of said Section 2.12.

4. Amendment to Section 2.19 – Definition of Final Average Earnings Limit . Section 2.19 of the Plan setting forth the definition for Final Average Earnings Limit is deleted and replaced with the following definition:

Section 2.19. Final Average Earnings Limit means:

(A) with respect to Participants in the Plan prior to the Effective Date, a limitation generally based upon a Participant’s Earnings for the 2011 Plan Year, as provided in this Section 2.19. Unless otherwise provided in an agreement between a Participant and the Company, for each of Steven Bresky, Robert Steer, David Dannov and Terry Holton, Final Average Earnings cannot exceed one hundred percent (100%) of such Participant’s 2011 Earnings. Unless otherwise provided in an agreement between a Participant and the Company, for any other Participant,

Final Average Earnings cannot exceed one hundred fifty percent (150%) of such Participant’s 2011 Earnings; and

(B) with respect to employees becoming Participants in the Plan on or after January 1, 2015, the Final Average Earnings for purposes of the Plan cannot exceed the amount specified in the designation of the President pursuant to Section 3.1 pursuant to which the employee became a Participate in the Plan.

5. Amendment to Section 2.45 – Years of Post Participation Accrual Service Limit .

Section 2.45. Years of Post Participation Accrual Service Limit means:

(A) (a) with respect to Participants in the Plan prior to the Effective Date, unless otherwise provided in an agreement between a Participant and the Company, for each Participant who is as of the Effective Date a Named Executive Officer or an Officer of Seaboard Corporation, 20 Years of Post Participation Accrual Service, (b) for each Participant who is as of the Effective Date an Officer of a Related Company, 15 Years of Post Participation Accrual Service, and (c) for each Participant who is as of the Effective Date neither a Named Executive Officer nor an Officer of the Company or any Related Company, 10 Years of Post Participation Accrual Service. For these purposes, the General Counsel of SOTG (Zach Holden) is an Officer of a Related Company and not the Company; and

(B) with respect to employees becoming Participants in the Plan on or after January 1, 2015, the Years of Post Participation Accrual Service Limit for purposes of the Plan cannot exceed the amount specified in the designation of the President pursuant to Section 3.1 pursuant to which the employee became a Participate in the Plan.

6. Amendment to Section 4.1(b)(ii) – Post Participation Service Benefit . Section 4.1(b)(ii) is deleted from the Plan and replaced with the following:

(ii) Post Participation Service Benefit . A Participant’s Post Participation Service Benefit will be determined taking into account the Participant’s Years of Post Participation Accrual Service and will be an amount equal to: (A) with respect to Participants in the Plan prior to January 1, 2015, two and one half percent (2.5%) of Final Average Earnings, multiplied by his Years of Post Participation Accrual Service; and (B) with respect to employees who become Participants in the Plan on or after January 1, 2015, two percent (2%) of his Final Average Earnings, multiplied by his Years of Post Participation Accrual Service. The relevant Post Participation Service Benefit percentage for each Participant shall be listed on Addendum B.

7. Plan Continues in Effect . The Plan, as amended by this First Amendment, shall continue in full force and effect, pursuant to the terms of the Plan, as amended by this First Amendment.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of this 14th day of January, 2016.


	SEABOARD CORPORATION

	By:	/s/ Steven J. Bresky
		Steven J. Bresky
		President

Table of Contents

Exhibit 13

UNTITLED

2015 Annual Report

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SEABOARD CORPORATION

Description of Business

Seaboard Corporation is a diverse global agribusiness and transportation company. In the United States (“U.S.”), Seaboard is primarily engaged in pork production and processing and ocean transportation. Overseas, Seaboard is primarily engaged in commodity merchandising, grain processing, sugar production and electric power generation. Seaboard also has an interest in a turkey operation in the U.S.

Table of Contents


Letter to Stockholders	2
Principal Locations	5
Division Summaries	6
Summary of Selected Financial Data	8
Company Performance Graph	9
Quarterly Financial Data (unaudited)	10
Management’s Discussion & Analysis of Financial Condition and Results of Operations	11
Management’s Responsibility for Consolidated Financial Statements	25
Management’s Report on Internal Control over Financial Reporting	25
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements	26
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	27
Consolidated Statements of Comprehensive Income	28
Consolidated Balance Sheets	29
Consolidated Statements of Cash Flows	30
Consolidated Statements of Changes in Equity	31
Notes to Consolidated Financial Statements	32
Stockholder Information	60

This report, including information included or incorporated by reference in this report, contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Seaboard Corporation and its subsidiaries (“Seaboard”). Forward-looking statements generally may be identified as statements that are not historical in nature and statements preceded by, followed by or that include the words: “believes,” “expects,” “may,” “will,” “should,” “could,” “anticipates,” “estimates,” “intends,” or similar expressions. In more specific terms, forward-looking statements, include, without limitation: statements concerning the projection of revenues, income or loss, capital expenditures, capital structure or other financial items, including the impact of mark-to-market accounting on operating income; statements regarding the plans and objectives of management for future operations; statements of future economic performance; statements regarding the intent, belief or current expectations of Seaboard and its management with respect to: (i) Seaboard’s ability to obtain adequate financing and liquidity; (ii) the price of feed stocks and other materials used by Seaboard; (iii) the sales price or market conditions for pork, grains, sugar, turkey and other products and services; (iv) the recorded tax effects under certain circumstances and changes in tax laws; (v) the volume of business and working capital requirements associated with the competitive trading environment for the Commodity Trading and Milling segment; (vi) the charter hire rates and fuel prices for vessels; (vii) the fuel costs and related spot market prices in the Dominican Republic; (viii) the effect of the fluctuation in foreign currency exchange rates; (ix) the profitability or sales volume of any of Seaboard’s segments; (x) the anticipated costs and completion timetables for Seaboard’s scheduled capital improvements, acquisitions and dispositions; ( xi) the productive capacity of facilities that are planned or under construction, and the timing of the commencement o f operations at such facilities; (xii) the increase in Seaboard's hog and other production capaci ty attributable to acquisitions; (xiii) Seaboard's ability to convert its Haiti port project loan to equity, including the satisfaction of the conditions for such conversion; (xiv) the amount of Seaboard's funding commitment for an Oklahom a refined coal processing plant; or (xv) other trends affecting Seaboard’s financial condition or results of operations, and statements of the assumptions underlying or relating to any of the foregoing statements.

This list of forward-looking statements is not exclusive. Seaboard undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or otherwise. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to a variety of factors. The information contained in this report, including, without limitation, the information under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Letter to Stockholders” identifies important factors which could cause such differences.

2015 Annual Report 1

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SEABOARD CORPORATION

Letter to Stockholders

Letter to Stockholders is intentionally omitted from Exhibit 13 and will be included in printed Annual Report.

2 2015 Annual Report

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SEABOARD CORPORATION

Letter to Stockholders

Letter to Stockholders is intentionally omitted from Exhibit 13 and will be included in printed Annual Report.

2015 Annual Report 3

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SEABOARD CORPORATION

Letter to Stockholders

Letter to Stockholders is intentionally omitted from Exhibit 13 and will be included in printed Annual Report.

4 2015 Annual Report

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SEABOARD CORPORATION

Principal Location s

Corporate Office

Seaboard Corporation

Merriam, Kansas

Pork

Seaboard Foods LLC

Pork Division Office

Merriam, Kansas

Processing Plant

Guymon, Oklahoma

High Plains Bioenergy, LLC

Guymon, Oklahoma

Seaboard de Mexico USA LLC

Mexico

Daily’s Premium Meats, LLC*

Salt Lake City, Utah

Missoula, Montana

Commodity Trading and Milling

Commodity Trading Operations

Atlanta, Georgia*

Australia*

Canada

Chapel Hill, North Carolina

Colombia

Ecuador

Greece

Isle of Man

Kenya

Peru*

Singapore

South Africa

Uruguay *

Africa Poultry Development Limited*

Kenya and Zambia

Bag Yaglari Sanayi ve Ticaret T.A.S. *

Turkey

Belarina Alimentos S.A.*

Brazil

Bolux Group Proprietary Limited*

Botswana

Compania Industrial de Productos

Agreopecuarios S . A . *

Rafael del Castillo & Cia. S.A.*

Colombia

Gambia Milling Corporation*

Gambia

National Milling Company of Guyana, Inc.

Guyana

Les Moulins d’H aiti S.E.M.*

Haiti

Lesotho Flour Mills Limited*

Lesotho

Flour Mills of Ghana

Ghana

Life Flour Mill Ltd.*

Nigeria

LMM Farine, S.A.

Madagascar

Congo Poultry Limited*

Minoterie de Matadi, S.A.*

Societe Africaine de Developpement

Industriel Alimentaire*

Democratic Republic of Congo

Minoterie du Congo, S.A.

Republic of Congo

Moderna Alimentos, S.A.*

Molinos Champion, S.A.*

Ecuador

Paramount Mills (Pty) Ltd.*

South Africa

National Milling Corporation Limited

Zambia

Un g a Holdings Limited*

Kenya and Uganda

Marine

Seaboard Marine Ltd.

Marine Division Office

Miami, Florida

Port Operations

Brooklyn, New York

Houston, Texas

Miami, Florida

New Orleans, Louisiana

Philadelphia, Pennsylvania

Agencias Generales Conaven, C.A.

Venezuela

Agencia Maritima del Istmo, S.A.

Costa Rica

Cayman Freight Shipping Services, Ltd.

Cayman Islands

JacintoPort International LLC

Houston, Texas

Representaciones Maritimas y Aereas, S.A.

Guatemala

Sea Cargo, S.A.

Panama

Seaboard de Colombia, S.A.

Colombia

Seaboard de Nicaragua, S.A.

Nicaragua

Seaboard del Peru, S.A.

Peru

Kingston Wharves Limited*

Seaboard Freight & Shipping Jamaica

Limited

Jamaica

Seaboard Honduras, S. de R.L. de C.V.

Honduras

Seaboard Marine (Trinidad) Ltd.

Trinidad

Seaboard Marine of Haiti, S.E.

Haiti

SEADOM, S.A.

Dominican Republic

SeaMaritima S.A. de C.V.

Mexico

Sugar

Alconoa S.R.L.

Ingenio y Refineria San Martin del

Tabacal S.R.L.

Argentina

Power

Transcontinental Capital Corp.

(Bermuda) Ltd.

La Compania de Electricidad de San

Pedro de Macoris*

Dominican Republic

Turkey

Butterball LLC*

Division Office

Garner, North Carolina

Processing Plants

Huntsville, Arkansas

Ozark, Arkansas

Carthage, Missouri

Mt. Olive, North Carolina

Further Processing Plants

Jonesboro, Arkansas

Montgomery, Illinois

Raeford, North Carolina

Other

Mount Dora Farms de Honduras,

S.R.L.

Honduras

Mount Dora Farms Inc.

Houston, Texas

*Represents a noncontrolled, non-consolidated affiliate

2015 Annual Report 5

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SEABOARD CORPORATION

Division Summaries

Pork Divisio n

Seaboard is a vertically integrated pork producer and its Pork Division is one of the largest producers and processors in the U.S. Seaboard is able to efficiently control pork production across the entire life cycle of the hog, beginning with research and development in nutrition and genetics and extending to the production of high quality meat products at our processing and further processing facilities.

Seaboard’s hog processing facility is located in Guymon, Oklahoma. The facility is a double shift operation that processes approximately 20,500 hogs per day and generally operates at capacity. Weekend shifts are added as market conditions dictate. Hogs processed at the plant are primarily Seaboard raised hogs. The remaining hogs processed are raised by third parties and purchased under contract or occasionally in the open market. Seaboard produces and sells fresh and frozen pork products to further processors, food service operators, grocery stores, distributors and retail outlets throughout the U.S. Seaboard also sells to distributors, trading companies and further processors in Japan, Mexico and numerous other foreign markets.

Seaboard’s hog production facilities consist of genetic and commercial breeding, farrowing, nursery and finishing buildings located in the Central U.S. These facilities have a capacity to produce over four million hogs annually. Seaboard owns and operates five centrally located feed mills to provide formulated feed to these hogs.

Seaboard produces biodiesel at a facility in Guymon, Oklahoma. The biodiesel is primarily produced from pork fat from Seaboard’s Guymon pork processing plant and from animal fat supplied by non-Seaboard facilities. The biodiesel is sold to fuel blenders for distribution and in the retail markets. The facility can also produce biodiesel from vegetable oil.

Seaboard’s Pork Division has an agreement with a similar size pork processor, Triumph Foods, LLC (“Triumph”), to market substantially all of the pork products produced at Triumph’s plant in St. Joseph, Missouri. The agreement enhances the efficiency of Seaboard’s sales and marketing efforts and expands Seaboard’s geographic footprint. Seaboard receives a fee on a per head basis on all Triumph products. According to Successful Farming and Informa Economics , trade publications, Seaboard was ranked number three in pork production (based on sows in production) and number four (based on daily processing capacity) in processing in the U.S. (including Triumph volume) in 2015 .

As of September 27, 2014, Seaboard’s Pork Division sold to Triumph a 50% interest in its processed meats division, Daily’s Premium Meats (“Daily’s”). As a result, Seaboard’s Pork Division now has a 50% noncontrolling interest in Daily’s. Daily’s produces and markets raw and pre-cooked bacon, ham and sausage primarily for the food service industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located in Salt Lake City, Utah and Missoula, Montana, and a third plant under construction in St. Joseph, Missouri, expected to commence operations in mid-2016. Seaboard and Triumph each supply raw product to Daily’s.

On May 13, 2015, Seaboard’s Pork Division and Triumph entered into a new joint venture, Seaboard Triumph Foods, LLC, which is constructing a new pork processing facility in Sioux City, Iowa. Construction is expected to be completed by mid-2017. The plant is designed to process about three million market hogs annually operating a single shift. As part of the operations, Seaboard’s Pork Division agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Division, in combination with a newly formed limited liability partnership that will be consolidated with Seaboard, acquired hog inventory and related assets in the Central U.S. that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.

Commodity Trading and Milling Division

Seaboard’s Commodity Trading and Milling Division is an integrated agricultural commodity trading and processing and logistics operation. This division sources, transports and markets approximately nine million metric tons per year of wheat, corn, soybean meal and other commodities primarily to third-party customers and affiliated companies. These commodities are purchased worldwide, with primary destinations in Africa, South America, the Caribbean and Asia. Seaboard integrates the delivery of commodities to its customers through the use of company-owned and short-term chartered bulk carriers.

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SEABOARD CORPORATION

Division Summaries

Seaboard’s Commodity Trading and Milling Division operates facilities in 28 countries. The commodity trading business has ten offices in nine countries, in addition to four non-consolidated affiliates in three other countries. The grain processing businesses operate facilities at 35 locations in 21 countries, and include 5 consolidated and 19 non-consolidated affiliates primarily in Africa, South America, the Caribbean and Asia. Seaboard and its affiliates produce approximately four million metric tons of wheat flour, maize meal and manufactured feed per year in addition to other related grain based products.

Marine Division

Seaboard’s Marine Division provides cargo shipping services between the U.S., the Caribbean Basin and Central and South America. Seaboard’s primary operations, located in Miami, include an off-port warehouse for cargo consolidation and temporary storage and a terminal at PortMiami. At the Port of Houston, Seaboard operates a cargo terminal facility that includes on-dock warehouse space for temporary storage of bagged grains, resins and other cargoes. Seaboard also makes scheduled vessel calls to Brooklyn, New York, New Orleans, Louisiana, Philadelphia, Pennsylvania, and various foreign ports in the Caribbean Basin and Central and South America.

This Division’s fleet consists of chartered and, to a lesser extent, owned vessels, and includes dry, refrigerated and specialized containers and other cargo related equipment. Seaboard is the largest shipper in terms of cargo volume in PortMiami. Seaboard provides extensive service between our domestic ports of call and multiple foreign destinations.

To maximize fleet utilization, Seaboard uses a network of offices and agents throughout the U.S., Canada, Latin America and the Caribbean Basin to sell freight at multiple points. Seaboard’s full service capabilities allow transport by truck or rail of import and export cargo to and from various U.S. ports. Seaboard’s frequent sailings and fixed-day schedules allow customers to coordinate manufacturing schedules and maintain inventories at cost-efficient levels.

Sugar Division

In Argentina, Seaboard grows sugarcane, which it uses to produce refined sugar and alcohol. The sugar is primarily marketed locally, with some exports to the U.S. and other South American countries. Seaboard’s sugar processing plant, one of the largest in Argentina, has an annual capacity to produce approximately 250,000 metric tons of sugar and approximately 15 million gallons of alcohol per year. The mill is located in the Salta Province of Argentina, with administrative offices in Buenos Aires. Land owned by Seaboard in Argentina is planted primarily with sugarcane, which supplies the majority of the raw material processed. Depending on local market conditions, sugar may also be purchased from third parties for resale. In addition, this division sells dehydrated alcohol to certain oil companies under the Argentine governmental bio-ethanol program, which requires alcohol to be blended with gasoline. This division also owns a 51 megawatt cogeneration power plant. The plant is fueled by the burning of sugarcane by-products, natural gas and other biomass when available.

Power Division

In the Dominican Republic, Seaboard is an independent power producer generating electricity for the local power grid from an owned floating power generating facility with a capacity to generate 108 megawatts. Seaboard primarily sells power on the spot market and is not directly involved in the transmission or distribution of electricity. Principal buyers are government-owned distribution companies and partially government-owned generation companies. In addition, Seaboard has a 29.9% noncontrolling interest in a business operating a 300 megawatt electricity generating facility in the Dominican Republic.

Other Divisions

Seaboard has a 50% noncontrolling voting interest in Butterball, LLC (“Butterball”). Butterball is the largest vertically integrated producer, processor and marketer of branded and non-branded turkey and other products in the U.S. Butterball has four processing plants, three further processing plants and numerous live production and feed milling operations located in North Carolina, Arkansas, Missouri, Illinois and Kansas. Butterball produces over one billion pounds of turkey each year. Butterball is a national supplier to retail and foodservice outlets, and also exports products to Mexico and numerous other foreign markets.

Seaboard processes jalapeño peppers at its plant in Honduras, which are primarily shipped to and sold in the U.S.

2015 Annual Report 7

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SEABOARD CORPORATION

Summary of Selected Financial Data



	Years ended December 31,
(Millions of dollars except per share amounts)	2015		2014		2013		2012		2011
Net sales	$	5,594	$	6,473	$	6,670	$	6,189	$	5,747
Operating income	$	126	$	424	$	204	$	310	$	407
Net earnings attributable to Seaboard	$	171	$	367	$	212	$	287	$	349
Basic earnings per common share	$	146.44	$	311.44	$	177.53	$	238.24	$	287.28
Total assets	$	4,431	$	3,692	$	3,431	$	3,354	$	3,008
Long-term debt, less current maturities	$	518	$	—	$	80	$	121	$	116
Stockholders’ equity	$	2,882	$	2,735	$	2,493	$	2,314	$	2,081
Dividends per common share	$	—	$	—	$	—	$	12.00	$	—

In the above table, prior years’ net earnings attributable to Seaboard, basic earnings per common share, total assets and stockholder s’ equity have been adjusted to reflect the second quarter 2015 increased investment in a Power segment business, previously accounted for as a cost method investment, but retrospectively adjusted to reflect the equity method of accounting from the date of the initial investment . The impact was not material in any year presented as previously reported . See Note 1 to the Consolidated Financial Statements for further discussion.

In the fourth quarter of 2015, Seaboard recorded interest income of $23 million, net of taxes ($31 million before taxes), or $19.49 per common share, for interest recognized on certain outstanding customer receivable balances in its Power segment. This interest income related to amounts determined to be collect ible as of December 31, 2015, but previously had been considered uncollectable in prior years. This amount was fully collected by Seaboard in January 2016.

As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods , LLC a 50% in terest in Daily’s Premium Meats. Included in net earnings attributable to Seaboard for 2014 is a gain on sale of controlling interest in subsidiary of $40 million , net of taxes ($66 million gain before taxes), or $34.14 per common share.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (the “ Tax Act ”) was signed into law. As the Tax Act was signed into law in 2013, the effects of the retroactive provisions in the new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a tax benefit of $8 million or $6.66 per common share, recorded in the first quarter of 2013 related to certain 2012 income tax credits. In addition to this amount was a credit of approximately $11 million, or $9.43 per common share, for 2012 Federal blender’s credits that was recognized as revenues in the first quarter of 2013. There was no tax expense on these transactions.

In December 2012, Seaboard declared and paid a dividend of $12.00 per common share. The increased amount of the dividend (which has historically been $0.75 per common share on a quarterly basis or $3.00 per common share on an annual basis) represented a prepayment of the annual 2013, 2014, 2015 and 2016 dividends ($3.00 per common share per year). Seaboard does not currently intend to declare any further dividends for 2016. Seaboard did not declare a dividend in 2015, 2014, 2013 and 2011. In 2010, Seaboard declared and paid dividends of $9.00 per common share, which included a prepayment of the annual 2011 and 2012 dividends ($3.00 per common share per year). Basic and diluted earnings per common share are the same for all periods presented.

In 2011, Seaboard closed the sale of its two floating power generating facilities in the Dominican Republic resulting in a gain on sale of assets of $53 million, or $43.56 per common share, included in operating income. There was no tax expense on this transaction.

8 2015 Annual Report

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SEABOARD CORPORATION

Company Performance Graph

The Securities and Exchange Commission requires a five-year comparison of stock performance for Seaboard with that of an appropriate broad equity market index and similar industry index. Seaboard’s common stock is traded on the NYSE MKT and provides an appropriate comparison for Seaboard’s s tock performance. Because there is no single industry index to compare stock performance, the companies comprising the Dow Jones Food and Marine Transportation Industry indices (the “Peer Group”) were chosen as the second comparison.

The following graph shows a five-year comparison of cumulative total return for Seaboard, the NYSE MKT Index and the companies comprising the Dow Jones Food and Marine Transportation Industry indices, weighted by market capitalization for the five fiscal years commencing December 31, 2010 and ending December 31, 2015 . The information presented in the performance graph is historical in nature and is not intended to represent or guarantee future returns.

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


	12/31/10		12/31/11		12/31/12		12/31/13		12/31/14		12/31/15

Seaboard Corporation	$	100.00	$	102.26	$	127.70	$	141.08	$	211.90	$	146.12
NYSE MKT Composite	$	100.00	$	104.50	$	110.18	$	118.63	$	120.72	$	107.77
Peer Group	$	100.00	$	115.07	$	124.00	$	166.58	$	186.65	$	202.53

2015 Annual Report 9

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SEABOARD CORPORATION

Quarterly Financial Data (unaudited)



(UNAUDITED)	1st		2nd		3rd		4th		Total for
(Millions of dollars except per share amounts)	Quarter		Quarter		Quarter		Quarter		the Year
2015
Net sales	$	1,452	$	1,428	$	1,411	$	1,303	$	5,594
Operating income	$	28	$	32	$	23	$	43	$	126
Net earnings attributable to Seaboard	$	33	$	32	$	3	$	103	$	171
Earnings per common share	$	28.11	$	27.04	$	2.59	$	88.70	$	146.44
Dividends per common share	$	—	$	—	$	—	$	—	$	—
Closing market price range per common share:
High	$	4,640.00	$	4,005.00	$	3,675.00	$	3,441.00
Low	$	3,705.00	$	3,253.00	$	2,971.95	$	2,892.00
2014
Net sales	$	1,480	$	1,694	$	1,623	$	1,676	$	6,473
Operating income	$	65	$	135	$	96	$	128	$	424
Net earnings attributable to Seaboard	$	49	$	94	$	105	$	119	$	367
Earnings per common share	$	41.09	$	79.28	$	89.83	$	101.72	$	311.44
Dividends per common share	$	—	$	—	$	—	$	—	$	—
Closing market price range per common share:
High	$	2,771.00	$	3,069.45	$	3,097.60	$	4,197.95
Low	$	2,455.01	$	2,356.00	$	2,480.15	$	2,606.00

In the above table , net earnings attributable to Seaboard and earnings per common share have been adjusted to reflect the second quarter 2015 increased investment in a Power segment business, previously accounted for as a cost method investment, but retrospectively adjusted to reflect the equity method of accounting from the date of the initial investment . The impact was not material in any quarter of 2014 or to the first quarter of 2015 as previously reported .

On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 (the “2015 Tax Act”) was signed into law. The 2015 Tax Act reinstated and made permanent certain expired corporate income tax provisions that impact current and deferred taxes for financial reporting purposes. The annual effects of the provisions in the new law on current and deferred tax assets and liabilities for Seaboard were recorded in the fourth quarter of 2015. The impact was a tax benefit of $13 million, or $10.92 per common share, primarily related to certain income tax credits. In addition to this amount was a credit of $17 million, or $14.88 per common share, for the 2015 Federal blender’s credits (extended by the 2015 Tax Act through December 31, 2016) that was recognized as revenues in the fourth quarter of 2015. There was no tax expense on these transaction s .

In the fourth quarter of 2015, Seaboard recorded interest income of $23 million, net of taxes ( $31 million before taxes), or $19.49 per common share, for interest recognized on certain outstanding customer receivable balances in its Power segment. This interest income related to amounts determined to be collect ible as of December 31, 2015, but previously had been considered uncollectable in prior years. This amount was fully collected by Seaboard in January 2016.

On December 19, 2014, the Tax Increase Prevention Act of 2014 (the “2014 Tax Act”) was signed into law. The 2014 Tax Act extended for 2014 only many expired corporate income tax provisions that impact current and deferred taxes for financial reporting purposes. The total annual effects of the provisions in the new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the fourth quarter of 2014. The impact was a tax benefit of $11 million, or $9.75 per common share, primarily related to certain income tax credits. In addition to this amount was a credit of $15 million, or $13.20 per common share, for the 2014 Federal blender’s credits that was recognized as revenues in the fourth quarter of 2014. There was no tax expense on these transactions.

As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods, LLC a 50% interest in Daily’s Premium Meats, its processed meats division. Included in net earnings attributable to Seaboard for third and fourth quarters of 2014 is a gain on sale of controlling interest in subsidiary of $39 million and $1 million, respectively, net of taxes ($66 million total gain before taxes), or $33.56 per common share and $0.82 per common share, respectively.

No dividends were paid during 2015 or 2014 as they were declared and prepaid in December 2012. During 2015, Seaboard did not repurchase any common shares. During 2014, Seaboard repurchased 1,667 and 16,738 common shares in the first and second quarters, respectively.

10 2015 Annual Report

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SEABOARD CORPORATION

Management’s Discussion & Analysis

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIO N AND RESULTS OF OPERATIONS

OVERVIEW

Seaboard is a diverse global agribusiness and transportation company, with operations in several industries. Most of the 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 distinct industries and different geographical locations, management evaluates their operations separately. Seaboard’s reporting segments are based on information used by Seaboard’s Chief Executive Officer in his capacity as chief operating decision maker to determine allocation of resources and assess performance.

Pork Segment

The Pork segment is primarily a U.S. business, with some export sales to Japan, Mexico, and numerous other foreign markets. Revenues from the sale of pork products are primarily generated from a single hog processing plant in Guymon, Oklahoma, which generally operates at daily double shift processing capacity of approximately 20,500 hogs , and a ham boning and processing plant in Mexico. In 2015, Seaboard raised approximately 76% of the hogs processed at the Guymon plant, with the remaining hog requirements purchased primarily under contracts from independent producers. This segment is Seaboard’s most capital intensive segment, representing approximately 48% of Seaboard’s total fixed assets in addition to material amounts of inventories.

Within the portfolio of Seaboard’s businesses, management believes profitability of the Pork segment is most susceptible to commodity price fluctuations. As a result, this segment’s operating income and cash flows can materially fluctuate from year to year, significantly affecting Seaboard’s consolidated operating income and cash flows. 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. With the Guymon plant generally operating at capacity, Seaboard is constantly looking for ways to enhance the facility’s operational efficiency, while also looking to increase margins by introducing new, higher value products.

The Pork segment also produces biodiesel which is sold to third parties. Biodiesel is produced from pork fat from Seaboard’s pork processing plant and from animal fat purchased from third parties. The processing plant also is capable of producing biodiesel from vegetable oil.

The Pork segment has an agreement with Triumph Foods, LLC (“Triumph”) to market substantially all of the pork products produced at Triumph’s plant in St. Joseph, Missouri. The Pork segment markets the related pork products for a fee primarily based on the number of head processed by Triumph. Triumph has processing capacity similar to that of Seaboard’s Guymon plant and operates with an integrated model similar to Seaboard’s. Seaboard’s sales prices for its pork products are primarily based on a margin sharing arrangement that considers the average sales price and mix of products sold from both Seaboard’s and Triumph’s hog processing plants.

The Pork segment has a 50% noncontrolling interest in Daily’s Premium Meats (“Daily’s”). Daily’s produces and markets raw and pre-cooked bacon, ham and sausage primarily for the food service industry and, to a lesser extent, retail markets. Daily’s has two further processing plants located in Salt Lake City, Utah and Missoula, Montana, and a third plant under construction in St. Joseph, Missouri, expected to commence operations in mid-2016. Seaboard and Triumph each supply raw product to Daily’s.

On May 13, 2015 , Seaboard’s Pork segment and Triumph entered into a new joint venture, Seaboard Triumph Foods, LLC, which is constructing a new pork processing facility in Sioux City, Iowa. Construction is expected to be completed by mid-2017. The plant is designed to process about three million market hogs annually operating a single shift. As part of the operations, Seaboard’s Pork segment agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork segment, in combination with a newly formed limited liability partnership that will be consolidated with Seaboard, acquired hog inventory and related assets in the Central U.S. that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply.

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Management’s Discussion & Analysis

Commodity Trading and Milling Segment

The Commodity Trading and Milling segment, which is managed under the name of Seaboard Overseas and Trading Group, primarily operates overseas and is an integrated agricultural commodity trading and processing and logistics operation with locations in Africa, South America, the Caribbean, Europe and Asia. These foreign operations 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 currency fluctuations. This segment’s sales are also significantly affected by fluctuating prices of various commodities, such as wheat, corn, soybeans and, to a lesser degree, various other agricultural commodity products. Although this segment owns three ships , the majority of the third-party trading business is transacted with short-term chartered ships. Freight rates, influenced by available charter capacity for worldwide trade in bulk cargoes, and related fuel costs affect business volumes and margins. The grain processing businesses, both consolidated and non-consolidated affiliates, operate in foreign and, in most cases, lesser developed countries. Flour exports of various countries can exacerbate volatile market conditions that may have a significant impact on both the trading and milling businesses’ sales and operating income. This segment is Seaboard’s most working capital intensive segment, representing approximately 15% of Seaboard’s total working capital at December 31, 2015 , and primarily consisted of inventories and receivables.

The majority of the Commodity Trading and Milling segment’s sales derive from its commodity trading business in which agricultural commodities are sourced from multiple origins and delivered to third-party and affiliate customers in various international locations. 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 quarter to quarter. Profit margins are sometimes protected by using commodity derivatives and other risk management practices. Seaboard invested in several entities in recent years and continues to seek opportunities to expand its trading, milling and agro-processing businesses.

Marine Segment

The Marine segment provides cargo shipping services primarily between the U.S. and 26 c ountries in the Caribbean Basin and Central and South America. Fluctuations in economic conditions and political instability in the regions or countries in which Seaboard operates may affect trade volumes and operating profits. In addition, cargo rates can fluctuate depending on local supply and demand for shipping services. This segment time-charters or leases the majority of its ocean cargo vessels and is thus affected by fluctuations in charter hire rates, as well as fuel costs. Seaboard continues to explore ways to increase volumes on existing routes, while seeking opportunities to broaden its route structure in the regions it serves.

Sugar Segment

The Sugar segment operates a vertically integrated sugar and alcohol production facility in Argentina. This segment’s sales and operating income are significantly affected by local and worldwide sugar prices. Domestic sugar production levels in Argentina may affect the local price. Global sugar price fluctuations, to a lesser extent, have an impact in Argentina as well. Depending on local market conditions, this business purchases sugar from third parties for resale. Over the past several years, Seaboard has taken a number of steps to enhance the efficiency of its operations and expand its sugar and alcohol production capacity. This segment sells dehydrated alcohol to certain oil companies under an Argentine government bio-ethanol program, which mandates alcohol to be blended with gasoline. This segment also owns a 51 megawatt cogeneration power plant, which is fueled by the burning of sugarcane by-products, natural gas and other biomass when available. The functional currency of the Sugar segment is the Argentine peso. The currency exchange rate can have an impact on reported U.S. dollar sales, operating income and cash flows. Seaboard continues to explore various ways to improve and expand this segment, investing in efficiency improvements and production capacity increases. The Sugar segment plans to spend $42 million in 2016 primarily for increasing the milling capacity, effluent treatment, and irrigation projects.

Power Segment

The Power segment is an independent power producer in the Dominican Republic generating electricity from a system of diesel engines mounted on a floating power generating facility for the local power grid. Seaboard sells power on the spot market primarily to government-owned distribution companies and partially government-owned generation companies. This segment is subject to delays in obtaining timely collections from sales to these government related entities. In some prior years, operating cash flows have fluctuated from inconsistent customer collections. Supply of power in the Dominican Republic is determined by a government body and is subject to fluctuations based on government budgetary

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Management’s Discussion & Analysis

constraints. While fuel is this segment’s largest cost component and is subject to price swings, higher fuel costs generally have been passed on to customers. In 2015, Seaboard invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic, increasing Seaboard’s ownership interest to 29.9%. See Note 4 to the Consolidated Financial Statements for further discussion. Seaboard may pursue further power industry investments in the future.

Turkey Segment

In December 2010, Seaboard purchased a 50% noncontrolling voting interest in Butterball, LLC (“Butterball”). Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other products. Butterball has four processing plants, three further processing plants and numerous live production and feed milling operations located in North Carolina, Arkansas, Missouri, Illinois and Kansas. 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 the profitability and cash flows of Butterball. The turkey business is seasonal only on the whole bird side, with Thanksgiving and Christmas holidays driving the majority of those sales.

LIQUIDITY AND CAPITAL RESOURCE S

Summary of Sources and Uses of Cash

Cash and short-term investments as of December 31, 2015 increased $777 million from December 31, 2014 . The increase was primarily the result of net cash from proceeds related to issuance of long-term debt of $522 million, operating activities of $416 million, notes payable borrowings of $83 million and proceeds from sale of fixed assets of $48 million. Partially offsetting the increase was cash used for capital expenditures of $139 million, investments in affiliates of $119 million and purchase of long-term investments of $28 million. Cash from operating activities increased $42 million for 2015 primarily as a result of decreases in a ccounts receivable and increases in current liabilities , principally in the Commodity Trading and Milling segment, partially offset by lower net earnings.

Cash and short-term investments as of December 31, 2014 increased $181 million from December 31, 2013 . The increase was primarily the result of net cash used for operating activities of $374 million, proceeds from sale of controlling interest in subsidiary of $74 million and increases in notes payable of $1 7 million. Partially offsetting the increase was cash used for capital expenditures of $121 million, principal payments of long-term debt of $91 million, repurchases of common stock of $5 3 million and investment in affiliates of $31 million. Cash from operating activities increased $249 million for 2014 primarily as a result of changes in working capital, principally from changes in receivables. Receivables were relatively unchanged for 2014 compared to 2013, principally related to significant collections of past due amounts in the Power segment offsetting other segments’ increases, while receivables increased significantly in 2013 compared to 2012 for the Power segment and U.S. income tax receivables.

Capital Expenditures, Acquisitions and Other Investing Activities

During 2015 , Seaboard invested $139 million in property, plant and equipment, of which $ 40 million was in the Pork segment, $ 40 million in the Commodity Trading and Milling segment and $4 3 million in the Marine segment. The Pork segment expenditures were primarily for improvements to existing facilities and related equipment and additional hog finishing barns. Of the Commodity Trading and Milling segment expenditures, $30 million was for the construction of dry bulk vessels, two of which were delivered and then sold and leased back by Seaboard at book v alue of $44 million in 2015. The Marine segment expenditures were primarily for purchases of cargo carrying and handling equipment and $8 million for the purchase of a containerized cargo vessel. All other capital expenditures were of a normal recurring nature and primarily included replacements of machinery and equipment, and general facility modernizations and upgrades.

The total 2016 capital expenditures budget is $232 million. The Pork segment plans to spend $73 million primarily for improvements to existing facilities and related equipment and additional hog finishing barns. The Commodity Trading and Milling segment plans to spend $68 million primarily for final payments of $29 million for two dry bulk vessels being built for a total estimated cost of $45 million, $24 million for a new wheat mill in Zambia, and other improvements to existing facilities and related equipment. However, Seaboard currently anticipates selling and leasing back the two vessels as they are completed, which would result in Seaboard receiving back the amounts spent to build at each individual lease inception with no gain or loss on sale. Payments under the lease agreements will be finalized upon delivery of the vessels. One vessel was delivered in January 2016, and the final vessel is expected to be delivered during the first half of 2016. The Marine segment has budgeted $47 million primarily for additional cargo carrying and handling equipment. In addition, management will be evaluating whether to purchase additional containerized cargo vessels for

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Management’s Discussion & Analysis

the Marine segment during 2016. The Sugar segment plans to spend $42 million primarily for increasing the milling capacity, effluent treatment, and irrigation projects. The balance of $2 million is planned to be spent in all other businesses primarily for normal upgrades to existing operations. Management anticipates paying for these capital expenditures from a combination of available cash, the use of available short-term investments and Seaboard’s available borrowing capacity.

During 2014 , Seaboard invested $121 million in property, plant and equipment, of which $54 million was in the Pork segment, $21 million in the Commodity Trading and Milling segment and $29 million in the Marine segment. The Pork segment expenditures were primarily for improvements to existing facilities and related equipment, additional finishing barns and compressed natural gas semi-tractors and related refueling stations. The Commodity Trading and Milling segment expenditures were primarily for payments related to building four vessels. The Marine segment expenditures were primarily for purchases of cargo carrying and handling equipment. All other capital expenditures were of a normal recurring nature and primarily included replacements of machinery and equipment, and general facility modernizations.

During 2013 , Seaboard invested $150 million in property, plant and equipment, of which $80 million was in the Pork segment, $24 million in the Commodity Trading and Milling segment, $23 million in the Marine segment, $17 million in the Sugar segment and $4 million in the Power segment. The Pork segment expenditures were primarily for additional finishing barns, semi-tractors, improvements to existing facilities and related equipment and construction of a new feed mill. The Commodity Trading and Milling segment expenditures were primarily for the purchase of two dry bulk vessels and improvements to existing facilities and related equipment. The Marine segment expenditures were primarily for purchases of cargo carrying and handling equipment. In the Sugar segment, the capital expenditures were primarily for normal upgrades to existing operations, including cane re-planting. All other capital expenditures were of a normal recurring nature and primarily included replacements of machinery and equipment, and general facility modernizations .

During the fourth quarter of 2015, Seaboard contributed $13 million in cash , a small amount of other assets , certain employees and rights to sell certain agricultural commodities that Seaboard had previously sold through its subsidiary, PS International , LLC, for a 40% noncontrolling interest in a commodity trading business in Atlanta, Georgia.

On May 13, 2015, Seaboard agreed to contribute to a new joint venture with Triumph up to $207 million to jointly develop and operate a pork processing facility in Sioux City, Iowa. As of December 31, 2015, $26 million had been contributed. Approximately $97 million is expected to be contributed in 2016, with the remainder due through 2019. The facility is expected to begin operations in mid-2017. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Segment, in co mbination with a newly formed limited liability partnership that will be consolidated with Seaboard, acquired hog inventory and related assets in the Central U.S. for a purchase price of $148 million that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.

In the second quarter of 2015, Seaboard invested $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic, increasing Seaboard’s ownership interest to 29.9%. See Note 4 to the Consolidated Financial Statements for further discussion.

Also, in the second quarter of 2015, Seaboard invested $8 million in a flour milling business in Botswana for a 49% noncontrolling interest and $10 million for a 45% noncontrolling interest in a commodity trading and flour milling business in Uruguay. In March 2015, Seaboard invested $10 million in an oilseed crushing business in the Republic of Turkey for a 25% noncontrolling interest. In the second quarter of 2015, Seaboard also invested $18 million for a 12% noncontrolling interest in a grain trading and poultry business in Morocco, which is accounted for using the cost method.

During the second quarter of 2015, Seaboard provided an additional $4 million short-term loan to a port project in Haiti consisting primarily of a marine terminal operation, electric power generating plant and free trade zone development. This loan, which totals $8 million when combined with the $4 million loaned in 2014 , is convertible into equity by Seaboard once certain business operating conditions are met in Haiti. Seaboard does anticipate these conditions being met in 2016, at which time it intends to convert the loan to equity and invest an additional $7 million for a total minority equity investment of less than 25%.

In February 2015, Seaboard committed to invest in a limited liability company that operates a refined coal processing plant in Oklahoma. Production of refined coal generates federal income tax credits. Seaboard’s funding commitment for this company can vary depending on production and, based on current production estimates, is anticipated to be between

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$4 million and $9 million per year until 2021, for a total estimate of approximately $53 million. Seaboard invested $ 9 million in this company during 2015.

As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods, LLC a 50% interest in its Daily’s Premium Meats division for cash of $74 million. In September 2014, Seaboard invested $17 million in a cargo terminal business in Jamaica for a 21% noncontrolling interest. See Note 4 to the Consolidated Financial Statements for further discussion.

In September 2013, Seaboard invested $17 million in a flour production business in Brazil for a 50% noncontrolling equity interest and provided a $13 million long-term loan to this business. During 2015, Seaboard provided $28 million of additional investments and advances to this business. See Note 4 to the Consolidated Financial Statements for further discussion. Also in September 2013, Seaboard invested $7 million in a flour milling business located in South Africa for a 49% noncontrolling interest. In July 2013, Seaboard acquired a 50% noncontrolling interest in a flour milling business located in Gambia by making a total investment in and advances to this affiliate of $9 million during 2013.

On December 31, 2012, Seaboard provided a loan of $81 million to its non-consolidated affiliate, Butterball to fund its purchase of assets from Gusto Packing Company, Inc. On March 28, 2013, Butterball repaid in full this loan. See Note 4 to the Consolidated Financial Statements for further discussion of these transactions.

Beginning in 2010, Seaboard invested in a bakery built in the Democratic Republic of Congo (“DRC”) for a 50% noncontrolling interest in this business. During 2014 and 2013, Seaboard invested an additional $3 million and $5 million, respectively, in equity, long-term advances and long-term notes receivable for a total investment of $53 million in this business. The bakery began operations in the fourth quarter of 2012. See Note 4 to the Consolidated Financial Statements for further discussion of this investment.

Financing Activities, Debt and Related Covenants

The following table presents a summary of Seaboard’s available borrowing capacity as of December 31, 2015 . At December 31, 2015 , there were no committed lines of credit, and borrowings under the uncommitted lines of credit totaled $141 million, with all such borrowings related to foreign subsidiaries. See Note 7 to the Consolidated Financial Statements for further discussion.



	Total amount
(Millions of dollars)	available
Short-term uncommitted demand notes	$	298
Amounts drawn against lines		(141)
Letters of credit reducing borrowing availability		(3)
Available borrowing capacity at December 31, 2015	$	154

On December 4, 2015, Seaboard’s wholly-owned subsidiary, Seaboard Foods LLC, obtained a $500 million unsecured term loan with a maturity date of December 4, 2022. In 2015, Seaboard’ s Argentine subsidiary obtained long-term debt financing of $23 million , comprised of five loans denominated in Argentine pesos. See Note 7 to the Consolidated Financial Statements for further discussion.

In the fourth quarter of 2015, a $50 million foreign committed line expired, and Seaboard cancelled its $200 million long-term committed credit facility effective October 28, 2015. In July 2014, Seaboard provided notice of optional prepayment to its lenders related to a credit agreement with an original maturity date of 2021. The total principal payment of $86 million was made on August 29, 2014. In November 2013, Seaboard provided notice of call for early redemption to holders of certain Industrial Development Revenue Bonds (“IDRBs”) effective December 20, 2013 and paid $18 million in the fourth quarter of 2013. In April 2013, Seaboard provided notice of call for early redemption to holders of certain IDRBs effective May 13, 2013 and paid $11 million in the second quarter of 2013. In December 2012, Seaboard provided notice of call for early redemption to holders of certain IDRBs effective January 14, 2013 and paid $13 million in the first quarter of 2013.

As of December 31, 2015 , Seaboard has capacity under existing loan covenants to undertake additional debt financings of approximately $1,581 million. As of December 31, 2015 , Seaboard was in compliance with all restrictive covenants related to these loans and facilities. See Note 7 to the Consolidated Financial Statements for a summary of the material terms of Seaboard’s credit facilities, including financial ratios and covenants.

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Management’s Discussion & Analysis

As of December 31, 2015 , Seaboard had cash and short-term investments of $1,304 million and additional total working capital of $594 million. Accordingly, management believes Seaboard’s combination of internally generated cash, liquidity, capital resources and borrowing capabilities will be adequate for its existing operations and any currently known potential plans for expansion of existing operations or business segments for 2016 . Management intends to continue seeking opportunities for expansion in the industries in which Seaboard operates, utilizing existing liquidity, available borrowing capacity and other financing alternatives.

As of December 31, 2015 , $281 million of the $1,304 million of cash and short-term investments were held by Seaboard’s foreign subsidiaries and Seaboard could be required to accrue and pay taxes to repatriate these funds if needed for Seaboard’s operations in the U.S. However, Seaboard’s intent is to permanently reinvest these funds outside the U.S., and current plans do not demonstrate a need to repatriate them to fund Seaboard’s U.S. operations.

Seaboard used cash to repurchase 18,405 and 8,705 common stock shares at a total price of $53 million and $24 million in 2014 and 2013, respectively. There was no common stock repurchased in 2015. See Note 11 to the Consolidated Financial Statements for further discussion. There were no dividends declared or paid in 2015, 2014 and 2013.

Contractual Obligations and Off-Balance Sheet Arrangements

The following table provides a summary of Seaboard’s contractual obligations as of December 31, 2015 .



	Payments due by period
			Less than		1-3		3-5		More than
(Millions of dollars)	Total		1 year		years		years		5 years
Vessel, time and voyage-charter commitments	$	186	$	51	$	45	$	44	$	46
Contract grower finishing agreements		29		11		16		2		—
Other operating lease payments		321		28		54		49		190
Total lease obligations		536		90		115		95		236
Long-term debt		523		4		38		77		404
Other long-term liabilities		85		7		16		15		47
Short-term notes payable		141		141		—		—		—
Interest payments		87		19		32		22		14
Investment in pork processing facility joint venture		181		97		68		16		—
Other purchase commitments		853		669		150		34		—
Total contractual cash obligations and commitments	$	2,406	$	1,027	$	419	$	259	$	701

The Marine and Commodity Trading and Milling segments enter into contracts to time-charter vessels for use in operations. To support the operations of the Pork segment, Seaboard has contract grower finishing agreements in place with farmers to raise a portion of Seaboard’s hogs. Seaboard has entered into grain and feed ingredient purchase contracts to support the live hog operations of the Pork segment, and has contracted for the purchase of additional hogs from third parties. The Commodity Trading and Milling segment enters into commodity purchase contracts, primarily to support sales commitments. Seaboard also leases various facilities and equipment under non-cancelable operating lease agreements. Seaboard third-party guarantees were not material as of December 31, 2015 . See Note 10 to the Consolidated Financial Statements for further discussion and for a more detailed listing of other purchase commitments.

Other long-term liabilities in the table above represent expected benefit payments for various non-qualified pension plans and supplemental retirement arrangements as discussed in Note 9 to the Consolidated Financial Statements, which are unfunded obligations that are deemed to be employer contributions. No contributions are planned at this time to the two qualified pension plans. Non-current deferred income taxes and certain other long-term liabilities on the Consolidated Balance Sheets are not included in the table above as management is unable to reliably estimate the timing of the payments for these items. In addition, deferred revenues and other deferred credits included in other long-term liabilities on the Consolidated Balance Sheets have been excluded from the table above since they do not represent contractual obligations.

Interest payments in the table above include the net payments for interest rate exchange agreements based on the fixed amounts paid and the variable amount received, which is estimated using the projected yield as of December 31, 2015 .

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Management’s Discussion & Analysis

Interest payments also include cash payments for interest on variable rate long-term debt based on interest rates as of December 31, 2015.

RESULTS OF OPERATIONS

Net sales for the years ended December 31, 2015, 2014 and 2013 were $5,594 million, $6,473 million and $6,670 million, respectively. The decrease for 2015 compared to 2014 primarily reflected lower prices for pork products sold and the deconsolidation of Daily’s in the Pork segment as discussed in Note 4 to the Consolidated Financial Statements, lower sales prices for almost all commodities sold and lower sales volume of corn for the Commodity Trading and Milling segment, and lower spot market rates and sales volume for the Power segment. The decreases were partially offset by higher cargo volumes for the Marine segment. The decrease for 2014 compared to 2013 primarily reflected lower sales volume for the Power segment, lower cargo volumes in certain markets for the Marine segment and lower volumes of sugar sold for the Sugar segment.

Operating income for the years ended December 31, 2015, 2014 and 2013 were $126 million, $424 million and $204 million, respectively. The decrease for 2015 compared to 2014 primarily reflected lower prices for pork products sold, lower margins on commodity trades to third parties, and higher production costs for sugar and alcohol. The increase for 2014 compared to 2013 primarily reflected higher prices for pork products sold.

Pork Segment



(Millions of dollars)	2015		2014		2013
Net sales	$	1,332	$	1,717	$	1,713
Operating income	$	116	$	349	$	148
Income from affiliates	$	11	$	4	$	—

Net sales for the Pork segment decreased $385 million for the year ended December 31, 2015 compared to 2014 . The decrease was primarily the result of lower prices for pork products sold and the deconsolidation of Daily’s. The decreases were partially offset by an increase in related sales volume.

Operating income decreased $233 million for the year ended December 31, 2015 compared to 2014 . The decrease was primarily the result of lower prices for pork products and, to a lesser degree, the deconsolidation of Daily’s. Partially offsetting the decreases were lower costs for third party hogs and lower feed costs for hogs internally grown. In December 2015, the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it blends was reinstated for 2015 and 2016, retroactive to January 1, 2015. As a result, the 2015 Federal blender’s credit of $17 million was recorded as revenues in the fourth quarter of 2015. See Note 12 to the Consolidated Financial Statements for further discussion of the Federal blender’s credit.

Management is unable to predict future market prices for pork products, the cost of feed or cost of third party hogs. However, management anticipates positive operating income for this segment in 2016, although lower than 2015.

Income from affiliate is primarily from Seaboard’s 50% proportionate share of earnings from Daily’s accounted for using the equity method, as discussed in Note 4 to the Consolidated Financial Statements. Seaboard’s first proportionate share of earnings for Daily’s was recognized in the fourth quarter of 2014.

Net sales for the Pork segment increased $4 million for the year ended December 31, 2014 compared to 2013 . The increase was primarily the result of higher prices for pork products sold. Partially offsetting the increase were lower sales volume of pork products from processing fewer internally grown hogs, lower sales prices and volumes for biodiesel, decreased payments received from the U.S. Government for biodiesel production, and the decrease in fourth quarter sales from the sale of a 50% interest in Daily’s as discussed in Note 4 to the Consolidated Financial Statements. In December 2014, the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it blends was reinstated for 2014, retroactive to January 1, 2014. As a result, the 2014 Federal blender’s credit of $15 million was recorded as revenues in the fourth quarter of 2014.

Operating income increased $201 million for the year ended December 31, 2014 compared to 2013 . The increase was primarily the result of higher prices for pork products sold and, to a lesser extent, lower feed costs for hogs internally grown. Partially offsetting the increase was lower margins for biodiesel from items discussed above and increased costs for third party hogs.

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Management’s Discussion & Analysis

Commodity Trading and Milling Segment



(Millions of dollars)	2015		2014		2013
Net sales	$	3,022	$	3,499	$	3,501
Operating income as reported	$	2	$	54	$	38
Mark-to-market adjustments		(5)		(13)		4
Operating income (loss) excluding mark-to-market adjustments	$	(3)	$	41	$	42
Loss from affiliates	$	(50)	$	(24)	$	(1)

Net sales for the Commodity Trading and Milling segment decreased $477 million for the year ended December 31, 2015 compared to 2014 . The decrease primarily reflected lower sales prices for almost all commodities sold and, to a lesser extent, lower sales volume primarily for corn.

Operating income decreased $52 million for the year ended December 31, 2015 , compared to 2014 . The decrease primarily reflected certain unfavorable market conditions, which resulted in lower margins on commodity trades to third parties. The decrease also reflected an increase in bad debt expense primarily attributable to trade receivables with an affiliate in Brazil (See Note 4 to the Consolidated Financial Statements for further discussion) and fluctuations of $8 million of mark-to-market derivative contracts as discussed below. Excluding the effects of mark-to-market adjustments for derivatives contracts, operating income decreased $44 million.

Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which Seaboard operates, and the current volatility in the commodity markets, management is unable to predict future sales and operating results for this segment. However, management anticipates positive operating income for this segment in 2016, 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 in 2015 and 2014 would have been lower by $5 million and $13 million, respectively, and in 2013 higher by $4 million. While management belie ves its commodity futures, options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked to market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time and thus, these mark-to-market adjustments could reverse in fiscal 2016 . Management believes eliminating these mark-to-market adjustments provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.

Loss from affiliates for the year ended December 31, 2015 increased by $26 million from 2014 . The increase primarily reflected operating and currency losses recorded against the investment and reserves for notes receivable and advances from an affiliate in Brazil totaling $60 million. Partially offsetting the increase was an $11 million write-down recorded in 2014 and a decrease in losses in 2015 compared to 2014 in a bakery business discussed below. Based on the uncertainty of local political and economic environments in the countries in which Seaboard’s affiliates operate, management cannot predict future results. However, management anticipates continuing losses from its affiliate in Brazil for 2016 although lower than 2015. See Note 4 to the Consolidated Financial Statements for further discussion of this affiliate.

Net sales for the Commodity Trading and Milling segment decreased $2 million for the year ended December 31, 2014 compared to 2013 . Lower sales prices for various commodities were principally offset by higher sales volumes for such commodities, especially corn.

Operating income increased $16 million for the year ended December 31, 2014 compared to 2013 . The increase primarily reflected fluctuations of $17 million of marking to market derivative contracts. Excluding the effects of mark-to-market adjustments for derivatives contracts as discussed above, operating income decreased $1 million. The decrease primarily reflected recoveries of $5 million in 2013 of inventory write-downs for customer contract performance issues recognized in prior years partially offset by improved operation income at certain milling locations.

Loss from affiliates for the year ended December 31, 2014 increased by $23 million from 2013 . The increase primarily reflected a $11 million write-down recorded in the fourth quarter of 2014 as a result of a decline in value considered other than temporary for Seaboard’s investment in a bakery located in the DRC and losses incurred in 2014 from an

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Management’s Discussion & Analysis

affiliate in Brazil newly invested by Seaboard during the latter part of 2013. See Note 4 to the Consolidated Financial Statements for further discussion of the write-down and investments in these affiliates.

Marine Segment



(Millions of dollars)	2015		2014		2013
Net sales	$	940	$	853	$	914
Operating income (loss)	$	19	$	(3)	$	(26)
Income from affiliate	$	2	$	—	$	—

Net sales for the Marine segment increased $87 million for the year ended December 31, 2015 compared to 2014 . The increase was primarily the result of higher cargo volumes, partially offset by lower cargo rates in certain markets during 2015 compared to 2014 .

Operating income increased $22 million for the year ended December 31, 2015 compared to 2014 . The increase was primarily the result of lower voyage costs, principally fuel costs, on a per unit shipped basis, partially offset by lower cargo rates. Management cannot predict changes in future cargo volumes, cargo rates and fuel costs, or to what extent changes in economic conditions in markets served will affect net sales or operating income during 2016 . However, management anticipates this segment will have positive operating income for 2016 .

Net sales for the Marine segment decreased $61 million for the year ended December 31, 2014 , compared to 2013 . The decrease was primarily the result of lower cargo volumes in certain markets, most notably Venezuela, during 2014 compared to 2013 .

Operating loss decreased by $23 million for the year ended December 31, 2014 , compared to 2013 . The decrease, which occurred during the second half of 2014, was primarily the result of lower voyage costs, such as fuel costs and, to a lesser extent, charter hire, on a per unit shipped basis partially offset by lower operating results related to the Venezuela operations.

Sugar Segment



(Millions of dollars)	2015		2014		2013
Net sales	$	188	$	200	$	245
Operating income	$	2	$	27	$	24
Income from affiliates	$	1	$	1	$	1

Net sales for the Sugar segment decreased $12 million for the year ended December 31, 2015 compared to 2014 . The decrease primarily reflected lower volumes of sugar sold. Sugar and alcohol sales are denominated in Argentine pesos and an increase in local sales prices in terms of U.S. dollars were principally offset by exchange rate changes as the Argentine peso continued to weaken against the U.S. dollar in 2015 . Management cannot predict local sugar and alcohol prices for 2016 , but management anticipates that the Argentine peso will continue to weaken against the U.S. dollar based on the devaluation of the Argentine peso in December 2015, which should result in lower sale prices in terms of U.S. dollars in 2016. Also, see Note 12 to the Consolidated Financial Statements for discussion of this devaluation’s impact on stockholders’ equity in the first quarter of 2016.

Operating income decreased $25 million for the year ended December 31, 2015 compared to 2014 . The decrease primarily reflected higher production costs for sugar and alcohol. To a lesser extent, the decrease in operating income was also the result of higher selling, general and administrative expenses principally from increased personnel related costs and lower volume of sugar sold. Also, operating income in 2014 included a $4 million gain as discussed below. Based on recent market conditions, management currently cannot predict if this segment will be profitable for 2016.

Net sales for the Sugar segment decreased $45 million for the year ended December 31, 2014 compared to 2013 . The decrease primarily reflected lower volumes for sugar and, to a much lesser extent, lower sales prices for sugar. Sugar sales are denominated in Argentine pesos and the lower sales prices for sugar in terms of U.S. dollars were primarily the result of the exchange rate changes as the Argentine peso continued to weaken against the U.S, dollar in 2014 .

Operating income increased $3 million for the year ended December 31, 2014 compared to 2013 . The increase primarily represents a $4 million gain recorded in the second quarter of 2014 from a final insurance settlement for property damage and business interruption claims related to prior years and lower selling, general and administrative expenses

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Management’s Discussion & Analysis

from the exchange rate changes discussed above. Partially offsetting the increase was lower income from sugar sales as a result of lower volumes of sugar sold and lower sales prices as noted above.

Power Segment



(Millions of dollars)	2015		2014		2013
Net sales	$	97	$	189	$	284
Operating income	$	7	$	19	$	43
Income from affiliate	$	3	$	2	$	6

Net sales for the Power segment decreased $92 million for the year ended December 31, 2015 compared to 2014 . The decrease primarily reflected lower spot market rates and lower volumes. The lower spot market rates were attributable primarily to lower fuel costs, a component of pricing. The lower volumes were a result of cancelling the short-term leasing of a power generating facility on September 3, 2014 as discussed in Note 12 to the Consolidated Financial Statements.

Operating income decreased $12 million for the year ended December 31, 2015 compared to 2014 . The decrease primarily reflected lower spot market rates and lower volumes, partially offset by lower fuel costs per kilowatt hour generated and lower other production costs. Also, operating income in 2014 included a gain on sale of assets of $5 million as noted below. Management cannot predict future fuel costs or the extent that spot market rates will fluctuate compared to fuel costs. However, management anticipates positive operating income for this segment in 2016 .

Net sales for the Power segment decreased $95 million for the year ended December 31, 2014 compared to 2013 . The decrease primarily reflected lower volumes and, to a lesser extent, lower spot market rates.

Operating income decreased $24 million for the year ended December 31, 2014 compared to 2013 . The decrease primarily reflected lower spot market rates and lower volumes partially offset by lower fuel costs per kilowatt hour generated and a gain on sale of assets of $5 million as discussed in Note 12 to the Consolidated Financial Statements.

Turkey Segment



(Millions of dollars)	2015		2014		2013
Income (loss) from affiliate	$	103	$	54	$	(10)

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball. The increase in income from affiliate for 2015 compared to 2014 was primarily the result of lower feed costs and higher prices of turkey products sold. Management is unable to predict future market prices for turkey products, the cost of feed or the impact from avian influenza. However, management anticipates positive income for this segment in 2016 .

The increase in income from affiliate for 2014 compared to 2013 was primarily the result of lower feed costs and higher prices of turkey products sold. In addition, Butterball incurred charges in 2013 for impairment of fixed assets related to the planned sale of its closed processing plant in Longmont, Colorado. Seaboard’s proportionate share was $4 million recognized in loss from affiliate for 2013. This plant was sold in the second quarter of 2014 for approximately the remaining net book value.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2015 increased by $16 million over 2014 to $270 million. The increase was primarily the result of bad debt expense in the Commodity Trading and Milling segment and increased personnel related costs in most segments. As a percentage of revenues, SG&A increased to 5% for 2015 compared to 4% for 2014 .

SG&A expenses for the year ended December 31, 2014 decreased by $10 million over 2013 to $254 million. The decrease was primarily the result of lower expenses for the Sugar segment from exchange rate changes discussed above and lower bad debt expense. As a percentage of revenues, SG&A was 4% for 2014 and 2013 .

Interest Expense

Interest expense totaled $18 million, $20 million and $11 million for the years ended December 31, 2015, 2014 and 2013 , respectively. The decrease in 2015 compared to 2014 primarily related to a $4 million charge in 2014 as discussed below. The increase in 2014 compared to 2013 primarily reflected higher interest rates on notes payable related to

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Management’s Discussion & Analysis

foreign subsidiaries and a $4 million charge for early payment of debt as discussed in Note 7 to the Consolidated Financial Statements.

Interest Income

Interest income totaled $40 million, $14 million and $18 million for the years ended December 31, 2015, 2014 and 2013 , respectively. The increase for 2015 compared to 2014 primarily reflected an increase in interest recognized on outstanding customer receivable balances in the Power segment. See Note 12 to the Consolidated Financial Statements for further discussion. The decrease for 2014 compared to 2013 primarily reflected a decrease in interest received on outstanding customer receivable balances in the Power segment.

Interest Income from Affiliates

Interest income from affiliates totaled $29 million, $27 million and $25 million for the years ended December 31, 2015, 2014 and 2013 , respectively. The increases primarily represented additional interest income from the Butterball note receivable related to the pay-in-kind interest component.

Other Investment Income (Loss), Net

Other investment income (loss), net totaled $(5) million , $2 million and $8 million for the years ended December 31, 2015, 2014 and 2013 , respectively. The decrease for 2015 compared to 2014 primarily reflects Seaboard’s losses associated with its investment in a refined coal processing plant, of which a portion are offset by tax credits in income tax expense . The fluctuation from 2014 to 2013 primarily reflects mark-to-market fluctuations from investments, especially high yield trading debt securities.

Foreign Currency Gains (Losses), Net

Foreign currency gains (losses), net totaled $1 million, $(9) million and $0 million for the years ended December 31, 2015, 2014 and 2013 , respectively. The decrease in foreign currency losses, net in 2015 compared to 2014 primarily reflect gains in th e South African rand, partiall y offset during the year by fluctuations of other currency exchange rates in several foreign countries. The increase in foreign currency losses, net in 2014 compared to 2013 reflects increased losses related to multiple currencies, with the more significant changes related to the euro, Zambian kwacha and South African rand. The political and economic conditions of the countries in which Seaboard operates and 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 by Seaboard. Although Seaboard does not utilize hedge accounting, Seaboard does utilize foreign currency exchange contracts to manage its risks and exposure to foreign currency fluctuations primarily related to the South African rand. Management believes gains and losses on commodity transactions, including the mark-to-market effects, of such foreign currency contracts relate to the underlying commodity transactions and classifies such gains and losses in cost of sales. All other gains and losses on foreign currency exchange agreements are included in foreign currency gains (losses), net.

Gain on Sale of Controlling Interest in Subsidiary

During the third quarter of 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in Daily’s resulting in a pre-tax gain of $66 million. See Note 4 to the Consolidated Financial Statements for further discussion.

Miscellaneous, Net

Miscellaneous, net totaled $(2) million, $(5) million and $6 million for the years ended December 31, 2015, 2014 and 2013 , respectively. Miscellaneous, net primarily reflected mark-to-market fluctuations on interest rate exchange agreements.

Income Tax Expense

The effective tax rate for 2015 was low er than 2014 primarily due to a change in the mix of domestic and foreign earnings from prior year. The effective tax rate for 2014 was higher than 2013 primarily as the mix of domestic and foreign earnings for 2014 fluctuated from prior year resulting in more income taxed at a higher tax rate and because the 2013 rate included two years of tax benefits due to the retroactive nature of the Tax Act as discussed in Note 6 to the Consolidated Financial Statements.

OTHER FINANCIAL INFORMATION

See Note 1 to the Consolidated Financial Statements for a discussion of recently issued accounting standards. Management does not believe its businesses have been materially adversely affected by inflation.

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SEABOARD CORPORATION

Management’s Discussion & Analysis

CRITICAL ACCOUNTING ESTIMATES

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management has identified the accounting estimates believed to be the most important to the portrayal of Seaboard’s financial condition and results, and which require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has reviewed these critical accounting estimates with the Audit Committee of the Board of Directors.

Allowance for Doubtful Accounts – Seaboard primarily uses a specific identification approach to evaluate the adequacy of this reserve for estimated uncollectible receivables at the consolidated balance sheet date. Changes in estimates, developing trends and other new information can have a material effect on future evaluations. Furthermore, Seaboard’s total current receivables are heavily weighted toward foreign receivables ($356 million or 73% at December 31, 2015 ), including foreign receivables due from affiliates ($81 million at December 31, 2015 ), which generally represent more of a collection risk than its domestic receivables. Receivables due from affiliates are generally associated with entities located in foreign countries considered less developed than the U.S., which can experience conditions causing sudden changes to their ability to pay such receivables on a timely basis or in full. Based on various historical experiences, future collections of receivables or lack thereof could result in a material charge or credit to earnings depending on the ultimate resolution of each individual customer past due receivable. For example, the Commodity Trading and Milling segment has an investment in a non-consolidated affiliate in Brazil that resulted in a $ 9 million bad debt expense for Seaboard in 2015. See Note 12 to the Consolidated Financial Statements for further discussion. Bad debt expense for the years ended December 31, 2015, 2014 and 2013 was $13 million, $0 million and $3 million, respectively.

Valuation of Inventories – Inventories are generally valued at the lower of cost or market. In determining market, management makes assumptions regarding replacement costs, estimated sales prices, estimated costs to complete, estimated disposal costs and normal profit margins. For commodity trading inventories, when contract performance by a customer becomes a concern, management must also evaluate available options to dispose of the inventory, including assumptions about potential negotiated changes to sales contracts, sales prices in alternative markets in various foreign countries and potentially additional transportation costs. At times, management must consider probability weighting various viable alternatives in its determination of the net realizable value of the inventories. These assumptions and probabilities are subjective in nature, and are based on management’s best estimates and judgments existing at the time of preparation. Changes in future market prices of grains or facts and circumstances could result in a material write-down in value of inventory or decreased future margins on the sale of inventory.

Impairment of Long-Lived Assets – At each balance sheet date, long-lived assets, primarily property, plant and equipment, 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 a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Some of the key assumptions utilized in determining future projected cash flows include estimated growth rates, expected future sales prices and estimated costs. In some cases, judgment is also required in assigning probability weighting to the various future cash flow scenarios. The probability weighting percentages used and the various future projected cash flow models prepared by management are based on facts and circumstances existing at the time of preparation and management’s best estimates and judgment of future operating results. Seaboard cannot predict the occurrence of certain future events that might adversely affect the reported value of long-lived assets, which include, but are not limited to, a change in the business climate, government incentives, a negative change in relationships with significant customers, and changes to strategic decisions made in response to economic and competitive conditions. Changes in these facts, circumstances and management’s estimates and judgment could result in an impairment of property, plant and equipment resulting in a material charge to earnings.

Investments in and advances to Affiliates and Notes Receivable from Affiliates – Seaboard has numerous investments in and advances to various businesses that it owns 50% or less for a noncontrolling interest and are accounted for using the equity method. In addition, for some of these investments, Seaboard also has notes receivable for loans it provided to these businesses. For the Commodity Trading and Milling segment, these investments are primarily in various foreign countries, which are less developed than the U.S. and thus expose Seaboard to various greater financial risks. At certain

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Management’s Discussion & Analysis

times when there are ongoing operating 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 investment is evaluated by management. The fair value of these investments is not readily determinable as almost all of these investments are not publicly traded. Management will use other methods to determine fair value such as estimated future cash flows, including assumptions on growth rates, for the business and consideration of other local business conditions as applicable. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded to income (loss) from affiliate based on the excess of the carrying value over the best estimate of fair value of the investment. In addition, if based on current information and events it is probable that Seaboard will be unable to collect all amounts due according to the contractual terms of the notes receivable from affiliates and an amount can be reasonably estimated, Seaboard will write-down the amounts to estimated realizable value. Information and events creating uncertainty about the realization of recorded amounts for notes from affiliates include, but are not limited to, the estimated cash flows generated by the affiliates’ business, the sufficiency of collateral securing the amounts, the creditworthiness of the counterparties involved, and consideration of other local business conditions as applicable. Changes in facts, circumstances and management’s estimates and judgment could result in a material charge to earnings. See Note 4 to the Consolidated Financial Statements for further discussion on the Commodity Trading and Milling segment and its $22 million reserve recorded in loss from affiliates in 2015 related to its investment in a flour production business in Brazil and its $11 million write-down recorded in loss from affiliates in 2014 related to its investment in a bakery located in the DRC.

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, which could alter previous conclusions 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. As of December 31, 2015 , Seaboard had deferred tax assets of $153 million, net of the valuation allowance of $19 million, and deferred tax liabilities of $194 million. For the years ended December 31, 2015, 2014 and 2013 , income tax expense included $(9) million, $25 million and $35 million, respectively, for deferred taxes to federal, foreign, state and local taxing jurisdictions.

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, turnover rates, 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 $3 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 U.S. generally accepted accounting principles (“GAAP”). Accordingly, accumulated gains or losses in excess of the 10% corridor are amortized over the average future service of active participants. See Note 9 to the Consolidated Financial Statements for further discussion.

DERIVATIVE INFORMATION

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 and interest rates. 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. Management believes it uses derivatives primarily as economic hedges, although they do not qualify as hedges for accounting purposes. 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. Seaboard also enters into speculative derivative transactions related to its market risks.

Changes in commodity prices affect the cost of necessary raw materials and other inventories, finished product sales and firm sales commitments. Seaboard uses various grain, 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 then 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

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Management’s Discussion & Analysis

contract. From time to time, hog futures are used to manage risks of increasing prices of live hogs acquired for processing, and hog futures are used to manage risks of fluctuating prices of pork product inventories and related future sales. From time to time, Seaboard may enter into short positions in energy related resources (i.e., heating oil, crude oil, etc.) to manage certain exposures related to bio-energy margins. Inventories that are sensitive to changes in commodity prices, including carrying amounts at December 31, 2015 and 2014 , are presented in Note 3 to the Consolidated Financial Statements. Raw material requirements, finished product sales and firm sales commitments are also sensitive to changes in commodity prices.

Because 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 forward exchange agreements. Changes in interest rates affect the cash required to service variable rate debt. Seaboard uses interest rate swaps to manage risks of increasing interest rates.

During 2014, Seaboard initially put into place four, approximately eight-year interest rate exchange agreements with mandatory early termination dates in the second half of 2014 and early 2015 for one of the agreements. During 2014 and 2015, these agreements were terminated and replaced, each with a mandatory early termination date, which coincided with the revised anticipated delivery dates in 2015 and 2016 of dry bulk vessels to be leased, and have similar terms as the original agreements terminated . Payments made by Seaboard to unwind these agreements were not material. The two exchange agreements, still outstanding as of December 31, 2015 , involve the exchange of fixed-rate and variable-rate interest payments without the exchange of the underlying notional amounts to mitigate the potential effects of fluctuations in interest rates on the anticipated dry bulk vessel leases in 2016 . Seaboard pays a fixed rate and receives a variable rate of interest on the notional amounts of $22 million each. During 2010, Seaboard entered into three ten-year interest rate exchange agreements, which involve the exchange of fixed-rate and variable-rate interest payments over the life of the agreements without the exchange of the underlying notional amounts to mitigate the effects of fluctuations in interest rates on variable rate debt. Seaboard pays a fixed rate and receives a variable rate of interest on three notional amounts of $25 million each. All five of these interest rate exchange agreements outstanding as of December 31, 2015, do not qualify as hedges for accounting purposes. Accordingly, the changes in fair value of these agreements are recorded in miscellaneous, net in the Consolidated Statements of Comprehensive Income.

The following table presents the sensitivity of the fair value of Seaboard’s open net commodity future and option contracts, foreign currency contracts and interest rate exchange agreements to a hypothetical 10% change in market prices, foreign exchange rates and interest rates as of December 31, 2015 and December 31, 2014 . For all open derivatives, the fair value of such positions is a summation of the fair values calculated for each item by valuing each net position at quoted market prices as of the applicable date.



(Millions of dollars)	December 31, 2015		December 31, 2014
Grains and oilseeds	$	12	$	8
Hogs		2		2
Energy related resources		—		1
Vegetable oils		—		1
Foreign currencies		13		19
Interest rates		1		1

The table below provides information about Seaboard’s non-trading financial instruments sensitive to changes in interest rates at December 31, 2015. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. At December 31, 2015, long-term debt included foreign subsidiary obligations payable in Argentine Pesos of $23 million. There was no long-term debt outstanding at December 31, 2014. Short-term instruments, including short-term investments, non-trade receivables and current notes payable have carrying values that approximate market and are not included in this table due to their short-term nature.



(Millions of dollars)		2016		2017		2018		2019		2020		Thereafter		Total
Long-term debt:
Variable rate	$	4	$	17	$	21	$	34	$	43	$	404	$	523
Average interest rate		9.58%		9.57%		8.93%		6.70%		6.00%		1.92%		3.16%

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SEABOARD CORPORATION

Management’s Reports

Management’s Responsibilit y for Consolidated Financial Statements

The management of Seaboard Corporation and its consolidated subsidiaries (“Seaboard”) is responsible for the preparation of its consolidated financial statements and related information appearing in this report. Management believes that the consolidated financial statements fairly present Seaboard’s financial position and results of operations in conformity with U.S. generally accepted accounting principles, and necessarily includes amounts that are based on estimates and judgments which it believes are reasonable based on current circumstances with due consideration given to materiality.

Management relies on a system of internal controls over financial reporting that is designed to provide reasonable assurance that assets are safeguarded, transactions are executed in accordance with company policy and U.S. generally accepted accounting principles and are properly recorded, and accounting records are adequate for preparation of financial statements and other information and disclosures. The concept of reasonable assurance is based on recognition that the cost of a control system should not exceed the benefits expected to be derived, and such evaluations require estimates and judgments. The design and effectiveness of the system are monitored by a professional staff of internal auditors.

All internal control systems, no matter how well designed, have inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance, and is subject to lapses in judgment and breakdowns resulting from human failures. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Board of Directors pursues its review of auditing internal controls and financial statements through its audit committee, composed entirely of independent directors. In the exercise of its responsibilities, the audit committee meets periodically with management, with the internal auditors and with the independent registered public accounting firm to review the scope and results of audits. Both the internal auditors and the independent registered public accounting firm have unrestricted access to the audit committee, with or without the presence of management.

Management’s Report on Internal Control Over Financial Reporting

The management of Seaboard Corporation and its consolidated subsidiaries (“Seaboard”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 rule 13a-15(f). Under the supervision, and with the participation of management and its Internal Audit Department, Seaboard conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its evaluation under the framework in Internal Control - Integrated Framework (2013) , management concluded that Seaboard’s internal control over financial reporting was effective as of December 31, 2015 .

Seaboard’s independent registered public accounting firm, that audited the consolidated financial statements included in the annual report, has issued an audit report on the effectiveness of Seaboard’s internal control over financial reporting. Their report is included herein.

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SEABOARD CORPORATION

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Seaboard Corporation:

We have audited the accompanying consolidated balance sheets of Seaboard Corporation and subsidiaries (the “ Company ” ) as of December 31, 2015 and 2014 and 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, 2015 . These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Seaboard Corporation and subsidiaries as of December 31, 2015 and 2014 , and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015 , in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Seaboard Corporation’s internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ( “ COSO ” ), and our report dated February 25, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Kansas City, Missouri

February 25, 2016

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SEABOARD CORPORATION

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Seaboard Corporation:

We have audited Seaboard Corporation’s internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ( “ COSO ” ) . Seaboard Corporation’s management is responsible 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 internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit 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 audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.

In our opinion, Seaboard Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Seaboard Corporation and subsidiaries as of December 31, 2015 and 2014 , and 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, 2015 , and our report dated February 25, 2016 expressed an unqualified opinion on those consolidated financial statements.




Kansas City, Missouri
February 25, 2016

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SEABOARD CORPORATION

Consolidated Statements of Comprehensiv e Income


	Years ended December 31,
(Millions of dollars except share and per share amounts)	2015		2014		2013
Net sales:
Products (includes sales to affiliates of $835, $846 and $745)	$	4,515	$	5,373	$	5,431
Services revenues		973		906		953
Other		106		194		286
Total net sales		5,594		6,473		6,670
Cost of sales and operating expenses:
Products		4,244		4,818		5,090
Services		866		813		878
Other		88		164		234
Total cost of sales and operating expenses		5,198		5,795		6,202
Gross income		396		678		468
Selling, general and administrative expenses		270		254		264
Operating income		126		424		204
Other income (expense):
Interest expense		(18)		(20)		(11)
Interest income		40		14		18
Interest income from affiliates		29		27		25
Income (loss) from affiliates		70		37		(4)
Other investment income (loss), net		(5)		2		8
Foreign currency gains (losses), net		1		(9)		—
Gain on sale of controlling interest in subsidiary		—		66		—
Miscellaneous, net		(2)		(5)		6
Total other income, net		115		112		42
Earnings before income taxes		241		536		246
Income tax expense		(69)		(168)		(32)
Net earnings	$	172	$	368	$	214
Less: Net income attributable to noncontrolling interests		(1)		(1)		(2)
Net earnings attributable to Seaboard	$	171	$	367	$	212

Earnings per common share	$	146.44	$	311.44	$	177.53

Other comprehensive income (loss), net of income tax benefit of $0, $27 and $(10):
Foreign currency translation adjustment		(34)		(39)		(46)
Unrealized gain (loss) on investments		—		1		(1)
Unrecognized pension cost		9		(33)		37
Other comprehensive loss, net of tax	$	(25)	$	(71)	$	(10)
Comprehensive income (loss)		147		297		204
Less: Comprehensive loss (income) attributable to the noncontrolling interests		(1)		(1)		(2)
Comprehensive income (loss) attributable to Seaboard	$	146	$	296	$	202

Average number of shares outstanding		1,170,550		1,178,441		1,193,801

See accompanying notes to consolidated financial statements .

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Consolidated Balance Sheet s


	December 31,
(Millions of dollars except share and per share amounts)	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	50	$	36
Short-term investments		1,254		491
Receivables:
Trade		330		328
Due from affiliates		86		202
Other		115		116
Total receivables		531		646
Allowance for doubtful accounts		(21)		(12)
Net receivables		510		634
Inventories		739		736
Deferred income taxes		—		46
Other current assets		111		110
Total current assets		2,664		2,053
Net property, plant and equipment		831		847
Investments in and advances to affiliates		671		543
Notes receivable from affiliates		200		197
Goodwill		12		15
Other intangible assets, net		3		4
Other non-current assets		50		33
Total Assets	$	4,431	$	3,692
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable to banks	$	141	$	76
Current maturities of long-term debt		4		—
Accounts payable		200		182
Payables due to affiliates		39		32
Accrued compensation and benefits		121		126
Deferred revenue		47		44
Deferred revenue from affiliates		46		7
Accrued voyage costs		44		45
Accrued commodity inventory		26		30
Other current liabilities		98		93
Total current liabilities		766		635
Long-term debt, less current maturities		518		—
Accrued pension liability		132		136
Deferred income taxes		41		96
Other liabilities and deferred credits		92		90
Total non-current liabilities		783		322
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 1,170,550 shares		1		1
Accumulated other comprehensive loss		(278)		(253)
Retained earnings		3,153		2,982
Total Seaboard stockholders’ equity		2,876		2,730
Noncontrolling interests		6		5
Total equity		2,882		2,735
Total Liabilities and Stockholders’ Equity	$	4,431	$	3,692

See accompanying notes to consolidated financial statements .

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Consolidated Statements of Cash Flow s


	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Cash flows from operating activities:
Net earnings	$	172	$	368	$	214
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization		91		92		93
Gain from sale of fixed assets		—		(3)		(4)
Gain from sale of power generating facility assets		—		(5)		—
Deferred income taxes		(10)		26		30
Pay-in-kind interest and accretion on notes receivable from affiliates		(17)		(16)		(14)
Loss (income) from affiliates		(70)		(37)		4
Dividends received from affiliates		69		14		11
Other investment loss (income), net		5		(2)		(8)
Gain on sale of controlling interest in a subsidiary		—		(66)		—
Other, net		5		—		1
Changes in assets and liabilities:
Receivables, net of allowance		119		(7)		(154)
Inventories		(35)		(81)		36
Other current assets		(3)		24		(13)
Current liabilities, exclusive of debt		75		44		(73)
Other, net		15		23		2
Net cash from operating activities		416		374		125
Cash flows from investing activities:
Purchase of short-term investments		(1,320)		(1,097)		(612)
Proceeds from the sale of short-term investments		526		876		625
Proceeds from the maturity of short-term investments		29		18		6
Capital expenditures		(139)		(121)		(150)
Proceeds from the sale of fixed assets		48		8		15
Proceeds from the sale of power generating facility assets		—		8		—
Investments in and advances to affiliates, net		(119)		(31)		(39)
Long-term notes receivable issued to affiliates		—		(1)		(17)
Principal payments received on long-term notes receivable from affiliates		—		1		81
Principal payments received on notes receivable		2		2		19
Purchase of long-term investments		(28)		(3)		(4)
Proceeds from the sale of controlling interest in a subsidiary		—		74		—
Other, net		(3)		1		(2)
Net cash from investing activities		(1,004)		(265)		(78)
Cash flows from financing activities:
Notes payable to banks, net		83		17		41
Proceeds from long-term debt		522		—		—
Principal payments of long-term debt		—		(91)		(54)
Repurchase of common stock		—		(53)		(24)
Other, net		—		(2)		(1)
Net cash from financing activities		605		(129)		(38)
Effect of exchange rate changes on cash and cash equivalents		(3)		1		(2)
Net change in cash and cash equivalents		14		(19)		7
Cash and cash equivalents at beginning of year		36		55		48
Cash and cash equivalents at end of year	$	50	$	36	$	55

See accompanying notes to consolidated financial statements .

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Consolidated Statements of Changes in Equit y


			Accumulated
			Other
	Common		Comprehensive		Retained		Noncontrolling
(Millions of dollars)	Stock		Loss		Earnings		Interests		Total
Balances, January 1, 2013	$	1	$	(172)	$	2,475	$	4	$	2,308
Cumulative effect of a change in accounting method (see Note 1)						6				6
Comprehensive income:
Net earnings						212		2		214
Other comprehensive loss, net of tax				(10)						(10)
Repurchase of common stock						(24)				(24)
Reduction to noncontrolling interests						(1)				(1)
Balances, December 31, 2013		1		(182)		2,668		6		2,493
Comprehensive income:
Net earnings						367		1		368
Other comprehensive loss, net of tax				(71)						(71)
Repurchase of common stock						(53)				(53)
Dividends paid to noncontrolling interests								(2)		(2)
Balances, December 31, 2014		1		(253)		2,982		5		2,735
Comprehensive income:
Net earnings						171		1		172
Other comprehensive loss, net of tax				(25)						(25)
Balances, December 31, 2015	$	1	$	(278)	$	3,153	$	6	$	2,882

See accompanying notes to consolidated financial statements .

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

Note 1

Summary of Significant Accounting Policies

Operations of Seaboard Corporation and its Subsidiaries

Seaboard Corporation and its subsidiaries (“Seaboard”) is a diverse global agribusiness and transportation company. In the United States (“U.S.”), Seaboard is primarily engaged in pork production and processing and ocean transportation. Overseas, Seaboard is primarily engaged in commodity merchandising, grain processing, sugar production, and electric power generation. Seaboard also has an interest in a turkey operation in the U.S. Seaboard Flour LLC and SFC Preferred LLC, entities owned by the chief executive officer and his family, hold approximately 76% of Seaboard’s outstanding common stock.

Principles of Consolidation and Investments in Affiliates

The consolidated financial statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Investments in non-controlled affiliates are accounted for by the equity method. Financial information from certain foreign subsidiaries and affiliates is reported on a one- to three-month lag, depending on the specific entity.

Short-Term Investments

Short-term investments are retained for future use in the business. Investments held by Seaboard that are categorized as available-for-sale are reported at their estimated fair value with any related unrealized gains and losses reported net of tax, as a component of accumulated other comprehensive loss. Investments held by Seaboard that are categorized as trading securities are reported at their estimated fair value with any unrealized gains and losses included in other investment income (loss), net on the Consolidated Statements of Comprehensive Income. Gains and losses on sale of investments are generally based on the specific identification method.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and generally do not bear interest. The Power segment, however, collects interest on certain past due accounts, and the Commodity Trading and Milling segment provides extended payment terms for certain customers in certain countries due to local market conditions. The allowance for doubtful accounts is Seaboard’s best estimate of the amount of probable credit losses. For most operating segments, Seaboard uses a specific identification approach to determine, in management’s judgment, the collection value of certain past due accounts based on contractual terms. For the Marine segment, the allowance for doubtful accounts is based on an aging percentage methodology primarily based on historical write-off experience. Seaboard reviews its allowance for doubtful accounts monthly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

Seaboard uses the lower of last-in, first-out (“LIFO”) cost or market for determining inventory cost of live hogs, fresh pork product and related materials. Grain, flour and feed inventories at foreign milling operations are valued at the lower of weighted average cost or market. All other inventories, including further processed pork products, are valued at the lower of first-in, first-out (“FIFO”) cost or market.

Property, Plant and Equipment

Property, plant and equipment are carried at cost and are being depreciated on the straight-line method over useful lives, ranging from 3 to 30 years. Property, plant and equipment leases which are deemed to be installment purchase obligations have been capitalized and included in the property, plant and equipment accounts. Routine and planned major maintenance, repairs and minor renewals are expensed as incurred, while major renewals and improvements are capitalized.

Impairment of Long-Lived Assets

Long-lived assets, primarily property, plant and equipment, 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 a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which 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.

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Notes to Consolidated Financial Statements

Notes Receivable from Affiliates

Seaboard monitors the credit quality of notes receivable from its affiliates by obtaining and reviewing financial information for these affiliates on a monthly basis and by having Seaboard representatives serve on the Board of Directors of these affiliates. If based on current information and events it is probable that Seaboard will be unable to collect all amounts due according to the contractual terms of the notes receivable from affiliates and an amount can be reasonably estimated, Seaboard will write- down the notes receivable to estimated realizable value.

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 acquisition, or more frequently if circumstances indicate that impairment is likely. Separable intangible assets with finite lives are amortized over their estimated useful lives. Any one event or a combination of events such as change in the business climate, a negative change in relationships with significant customers and changes to strategic decisions, including decisions to expand made in response to economic or competitive conditions could require an interim assessment prior to the next required annual assessment. Goodwill is related to the repurchase in 2007 of a noncontrolling interest of Seaboard Foods LLC (“Seaboard Foods”) in the Pork segment for a total of $12 million as of December 31, 2015 and 2014 . Based on the annual assessment conducted by this reporting unit during 2015 , there were no impairment charges recorded for the year ended December 31, 2015 .

Accrued Self-Insurance

Seaboard is self-insured for certain levels of workers’ compensation, health care coverage, property damage and general, vehicle and product recall liability. The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims. Changes in estimates to previously recorded reserves are reflected in current operating results.

Asset Retirement Obligation

Seaboard has recorded long-lived assets and a related liability for the asset retirement obligation costs associated with the closure of the hog lagoons it is legally obligated to close in the future should Seaboard cease operations or plan to close such lagoons voluntarily in accordance with a changed operating plan. 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 non-current other liabilities on the Consolidated Balance Sheets, with the retirement asset depreciated over the economic life of the related asset. The following table shows the changes in the asset retirement obligation during 2015 and 2014 :



	Years ended December 31,
(Millions of dollars)	2015		2014
Beginning balance	$	17	$	16
Accretion expense		1		1
Ending balance	$	18	$	17

Income Taxes

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. However, in the future, as these timing differences reverse, a lower statutory tax rate may apply pursuant to the provisions for domestic manufacturers of the American Jobs Creation Act of 2004. In accordance with U.S. generally accepted accounting principles (“GAAP”) , Seaboard will recognize the benefit or cost of this change in the future.

Revenue Recognition

As a result of a marketing agreement with Triumph Foods, LLC (“Triumph”), Seaboard’s sales prices for its pork products included in product revenues are primarily based on a margin sharing arrangement that considers the average sales price and mix of products sold from both Seaboard’s and Triumph’s hog processing plants. Seaboard earns a fee for marketing the pork products of Triumph, and recognizes this fee as service revenue primarily based on the number of head processed by Triumph. Revenues for the Commodity Trading and Milling Segment are recognized when the commodity is delivered to the customer, collection is reasonably assured and the sales price is fixed or determinable. Revenues for cargo services are recognized ratably over the transit time for each voyage, with expenses associated with cargo services recognized as incurred. Revenues for all other commercial exchanges are recognized at the time products

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

are shipped or delivered in accordance with shipping terms or services rendered, the customer takes ownership and assumes risk of loss, collection is reasonably assured and the sales price is fixed or determinable.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include those related to allowance for doubtful accounts, valuation of inventories, impairment of long-lived assets, potential write-down related to investments in and advances to affiliates and notes receivable from affiliates, income taxes and accrued pension liability. Actual results could differ from those estimates.

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.

Change in Accounting Method

During the second quarter of 2015, Seaboard invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic. This investment increased Seaboard's ownership interest to 29.9% from less than 20% . Seaboard's previous investment of $6 million was accounted for using the cost method and as a result of this additional investment, Seaboard changed its accounting method to the equity method. This change in accounting required Seaboard to present its prior period financial results to reflect the equity method of accounting from the date of the initial investment, which resulted in a $6 million adjustment to retained earnings and a corresponding increase to its investment as of January 1, 2013. There is no tax impact to Seaboard on these amounts. See Note 12 for more information.

Cash and Cash Equivalents

For purposes of the Consolidated Statements of Cash Flows, management considers all demand deposits and overnight investments as cash equivalents. The following table shows the amounts paid for interest and income taxes:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Interest	$	17	$	20	$	11
Income taxes, net of refunds		60		135		60

Supplemental Non-Cash Transactions

As more fully described in Note 4, as of September 27, 2014 Seaboard’s Pork segment sold to Triumph a 50% interest in its processed meats division, Daily’s Premium Meats (“Daily’s”). As a result, Seaboard deconsolidated Daily’s from its Consolidated Balance Sheet as of September 27, 2014. The following table summarizes the non-cash transactions resulting from this deconsolidation:



(Millions of dollars)
Decrease in net working capital	$	21
Increase in investment in and advances to affiliates		(74)
Decrease in property, plant and equipment		16
Decrease in goodwill		28
Decrease in other intangible assets, net (not subject to amortization)		17
Gain on sale of controlling interest in subsidiary		66
Net proceeds from sale of controlling interest in subsidiary	$	74

As discussed in Note 4, as of December 31, 2015 and 2014 , Seaboard has notes receivable from affiliates which accrue pay-in-kind interest income. Non-cash, pay-in-kind interest income and accretion of discount recognized on these notes receivable for the years ended December 31, 2015, 2014 and 2013 was $17 million, $16 million and $14 million, respectively.

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. Certain of the major contracts and transactions, however, are denominated in U.S. dollars. In addition, the value

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Notes to Consolidated Financial Statements

of the U.S. dollar fluctuates in relation to the currencies of countries where certain of Seaboard’s foreign subsidiaries and affiliates primarily conduct business. These fluctuations result in exchange gains and losses. The activities of these foreign subsidiaries and affiliates are primarily conducted with U.S. subsidiaries or operate in hyper-inflationary environments. As a result, the financial statements of certain foreign subsidiaries and affiliates are re-measured using the U.S. dollar as the functional currency.

Seaboard’s Sugar segment, three consolidated subsidiaries (Commodity Trading and Milling segment businesses in Canada, Guyana and Zambia) and nine non-controlled, non-consolidated affiliates (Marine segment business in Jamaica and Commodity Trading and Milling segment businesses in Australia, Brazil, Colombia, Kenya, Lesotho, 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). For these entities, U.S. dollar denominated net asset or liability conversions to the local currency are recorded through income.

Derivative Instruments and Hedging Activities

Seaboard recognizes all derivatives as either assets or liabilities at their fair values. Accounting for changes in the fair value of a derivative depends on its designation and effectiveness. Derivatives qualify for treatment as hedges for accounting purposes when there is a high correlation between the change in fair value of the instrument and the related change in value of the underlying commitment. Additionally, in order to designate a derivative financial instrument as a hedge for accounting purposes, extensive record keeping is required. For derivatives that qualify as hedges for accounting purposes, the change in fair value has no net impact on earnings, to the extent the derivative is considered effective, until the hedged transaction affects earnings. For derivatives that are not designated as hedging instruments for accounting purposes, or for the ineffective portion of a hedging instrument, the change in fair value affects current period net earnings.

Seaboard uses various derivative instruments to manage various types of market risks from its day-to-day operations, primarily including commodity futures and option contracts, foreign currency exchange agreements and interest rate exchange agreements. While management believes each of these instruments primarily are entered into in order to effectively manage various market risks, as of December 31, 2015 , none of the derivatives were designated and accounted for as hedges, primarily as a result of the extensive record-keeping requirements. Seaboard also enters into speculative derivative transactions not directly related to its raw material requirements.

Recently Issued Accounting Standard Adopted

In November 2015, the Financial Accounting Standards Board (“FASB”) issued simplification guidance that requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. Since early adoption is permitted, Seaboard adopted this guidance as of December 31, 2015 using the prospective transition method. Seaboard reclassified its current deferred income tax assets to non-current deferred income tax liabilities as of December 31, 2015 on the Consolidated Balance Sheet. Prior periods were not retroactively adjusted.

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the FASB issued guidance to develop a single, comprehensive revenue recognition model for all contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. Seaboard is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures. Seaboard will be required to adopt this guidance on January 1, 2018 , and it is currently anticipated that Seaboard will apply this guidance using the cumulative effect transition method.

In July 2015, the FASB issued guidance to simplify the subsequent measurement of inventory measured using last-in, first-out or the retail inventory method. Under the new standard, inventory should be recorded at the lower of cost and net realizable value. The new guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Seaboard is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on net earnings.

In January 2016, the FASB issued guidance that requires entities to measure equity investments, other than those accounted for using the equity method of accounting, at fair value and recognize any changes in fair value in net income

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Notes to Consolidated Financial Statements

if a readily determinable fair value exists. For equity investments without readily determinable fair values, the cost method of accounting is also eliminated. An entity may elect to record these equity investments at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. The new guidance is effective for interim and annual periods beginning after December 15, 2017. Seaboard is analyzing the impact of this new standard on certain of its equity investments and, at this time, cannot estimate the impact of adoption on net earnings .

Note 2

Investments

The following is a summary of the amortized cost and estimated fair value of short-term investments for both available-for- sale and trading securities at the end of each year :



	December 31, 2015				December 31, 2014
	Amortized		Fair		Amortized		Fair
(Millions of dollars)	Cost		Value		Cost		Value
Money market funds	$	81	$	81	$	142	$	142
Corporate bonds		—		—		11		11
U.S. Government agency securities		—		—		10		10
Other available-for-sale securities		—		—		4		4
Total available-for-sale short-term investments		81		81		167		167
Domestic equity securities		475		466		115		115
Domestic debt securities		452		450		5		5
Foreign equity securities		120		120		—		—
High yield debt securities		108		104		188		182
Money market funds held in trading accounts		22		22		21		21
Collateralized loan obligation		10		10		—		—
Other trading securities		1		1		1		1
Total trading short-term investments		1,188		1,173		330		324
Total short-term investments	$	1,269	$	1,254	$	497	$	491

Unrealized losses related to trading securities were $(12) m illion, $(7) million and $(1) million for the years ended December 31, 2015, 2014 and 2013 , respectively. Seaboard had $80 million of equity securities denominated in foreign currencies at December 31, 2015, with $25 million in Euros, $20 million in Japanese Yen, $15 million in the British Pound, $7 million in the Swiss Franc and the remaining $13 million in various other currencies . Also , money market funds included $3 million and $8 m illion denominated in various foreign currencies a t December 31, 2015 and 2014 .

In addition to its short-term investments, Seaboard also has trading securities related to Seaboard’s deferred compensation plans classified in other current assets on the Consolidated Balance Sheets. See Note 8 for information on the types of trading securities held related to the deferred compensation plans and Note 9 for a discussion of assets held in conjunction with investments related to Seaboard’s defined benefit pension plan.

Seaboard had $20 million and $4 million of cost method investments classified in other non-current assets on the Consolidated Balance Sheets as of December 31, 2015 and 2014, respectively. During 2015, Seaboard invested $18 million for a 12% noncontrolling interest in a grain trading and poultry business in Morocco .

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Notes to Consolidated Financial Statements

Note 3

Inventories

The following table is a summary of inventories at the end of each year:



	December 31,
(Millions of dollars)	2015		2014
At lower of LIFO cost or market:
Live hogs and materials	$	210	$	209
Fresh pork and materials		26		29
		236		238
LIFO adjustment		(28)		(37)
Total inventories at lower of LIFO cost or market		208		201
At lower of FIFO cost or market:
Grains, oilseeds and other commodities		330		320
Sugar produced and in process		52		49
Other		61		57
Total inventories at lower of FIFO cost or market		443		426
Grain, flour and feed at lower of weighted average cost or market		88		109
Total inventories	$	739	$	736

The use of the LIFO method increased 2015 , 2014 , and 2013 net earnings by $5 million ($4.39 per common share), $16 million ($13.29 per common share) , and by $17 million ($14.56 per common share), respectively. If the FIFO method had been used for certain inventories of the Pork segment, inventories would have been higher by $28 million and $37 million as of December 31, 2015 and 2014 , respectively.

Note 4

Investments in and Advances to Affiliates and Notes Receivable from Affiliates

Seaboard’s investments in and advances to non-controlled, non-consolidated affiliates are primarily related to Butterball, LLC ( “ Butterball ” ), as discussed below, Commodity Trading and Milling segment foreign businesses conducting flour, maize and feed milling, baking operations and poultry production and processing , and Daily’s and Seaboard Triumph Foods, LLC in the Pork segment, also discussed below. As of December 31, 2015 , the location and percentage ownership of these foreign affiliates are as follows: Botswana (49%) , Democratic Republic of Cong o (“ DRC ”) (50%) , Gambi a (50%) , Keny a (35% - 49% ), Lesoth o (50%) , Nigeri a (25% - 48% ), South Afric a (30% - 50% ) , and Zambi a (49%) in Africa; Brazi l (50%) , Colombi a (40% - 42% ) and Ecuado r (25% - 50% ) in South America, Jamaica (50%) and Hait i (23%) in the Caribbean , and Turkey (25%) in Europe. Also, Seaboard has investments in agricultural commodity trading businesses in Australia (25%) , Peru (50%) , Uruguay (45%) and United States ( 4 0 %) . Seaboard generally is the primary provider of choice for grains, feed and supplies purchased by these non-controlled affiliates. As Seaboard conducts its agricultural commodity trading business with third parties, consolidated subsidiaries and affiliates on an interrelated basis, cost of sales on affiliates cannot be clearly distinguished without making numerous assumptions, primarily with respect to mark-to-market accounting for commodity derivatives. In addition, Seaboard has investments in and advances to a cargo terminal business in Jamaic a (21%) in the Marine segment, two sugar-related businesses in Argentin a (46% - 50% ) in the Sugar segment , and one power related business in the Dominican Republic (29.9%) . The equity metho d is used to account for all of the above investments.

Seaboard has a 50% noncontrolling voting interest in Butterball. Butterball is a vertically integrated producer, processor and marketer of branded and non-branded turkey and other products. As of December 31, 2015 , Butterball had intangible assets of $111 million for trade name and $74 million for goodwill.

In connection with its initial investment in Butterball in December 2010, Seaboard provided Butterball with a $100 million unsecured subordinated loan (the “ subordinated loan ” ) with a seven -year maturity and interest of 15% per annum, comprised of 5% payable in cash semi-annually, plus 10% pay-in-kind interest, compounded semi-annually , which accumu lates and is paid at maturity. Also i n connection with providing the subordinated loan, Seaboard received detachable warrants, which upon exercise for a nominal price, would enable Seaboard to acquire an additional 5% equity interest in Butterball. In January 2016, the interest on the subordinated loan was modified to 10% per annum , payable in

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

cash semi-annually and the warrants were also modified, whereby Seaboard can exerc ise these warrants at any time after December 31 , 20 18 or prior to December 31, 2025 after which time the warrants expire . Butterball has the right to repurchase the warrants for fair market value. The warrant agreement essentially provides Seaboard with a 52.5% economic interest, as these warrants are in substance an additional equity intere st. Therefore, Seaboard records 52.5% of But terball’s earnings as income from a ffiliates in the Consolidated Statements of Comprehensive Income. However, all significant corporate governance matters would continue to be shared equally between Seaboard and its partner in Butterball even if the warrants are exercised, unless Seaboard already owns a majority of the voting rights at the time of exercise. The warrants qualify for equity treatment under accounting standards. Accordingly, as of December 2010, the warrants were allocated a value of $11 million, classified as investments in and a dvances to a ffiliates on the Consolidated Balance Sheets, and the subordinated loan was allocated a discounted value of $89 million, classified as Notes Receivable from Affiliates on the Consolidated Balance Sheets, of the total $100 million subordinated financing discussed above. The discount on the subordinated loan is being accreted monthly in Interest Income From Affiliates through the maturity date of December 6, 2017. At December 31, 2015 and 2014 , the recorded balance of this Note Receivable from Affiliates was $158 million and $141 million, respectively.

On December 31, 2012, Seaboard provided a loan of $81 million to Butterball and was included in Notes Receivable from Affiliates. This loan was made to fund Butterball’s purchase of assets from Gusto Packing Company, Inc., a pork and turkey further processor located in Montgomery, Illinois. In late March 2013, Bu tterball renegotiated its third- party financing and on March 28, 2013 repaid in full this loan from Seaboard.

During the third quarter of 2011, Seaboard provided a term loan of $13 million to Butterball to pay off capital leases for certain fixed assets which originally were financed with third parties. The effective interest rate on this term loan is approximately 12% . Although the term loan expires on January 31, 2018, Butterball can pay off the term loan prior to such expiration date as Butterball has for sale all of the related assets and is required to remit the proceeds from such sale to Seaboard to repay the loan. As of December 31, 2015 and 2014 , the balance of the term loan included in Notes Receivable from Affiliates was $8 million.

As of September 27, 2014, Seaboard’s Pork segment sold to Triumph a 50% interest in Daily’s for cash proceeds of $74 million r esulting in a gain on sale of controlling interest in subsidiary of $66 million ($40 million net of taxes, or $34.14 per share) in 2014. Daily’s produces and markets raw and pre-cooked bacon, ham and sausage and has two further processing plants located in Salt Lake City, Utah and Missoula, Montana. The Pork segment currently has a business relationship with Triumph under which Seaboard markets substantially all of the pork products produced at Triumph’s plant in St. Joseph, Missouri. Through September 27, 2014, Seaboard consolidated the operating results of Daily’s as part of its Pork segment operations. As a result of this transaction, Seaboard deconsolidated Daily’s from its Consolidated Balance Sheet as of September 27, 2014 (see Note 1, Supplemental Non-Cash Transactions, for details of the impact on the Consolidated Balance Sheet from this deconsolidation). Seaboard’s remaining 50% investment in Daily’s is accounted for in the Pork segment by using the equity method of accounting. Based on the cash consideration received for this transaction and third- party valuations for fixed assets and certain intangible assets, it was determined the fair value of Seaboard’s remaining 50% investment in Daily’s exceeded book value by $33 million, which is included in the gain on sale above, for a total fair value of $74 million. In addition, both Seaboard and Triumph contributed $2 million each to Daily’s as additional equity to provide Daily’s with additional working capital resulting in a beginning total investment in affiliate of $76 million related to Daily’s. Pro forma results of operations are not presented as the effects of deconsolidation are not material to Seaboard’s results of operations, primarily as Seaboard supplies raw product to Daily’s. Triumph also supplies raw product to Daily’s. It is expected that both Seaboard and Triumph will continue to sell raw product to Daily’s.

On May 13, 2015, Seaboard’s Pork segment and Triumph entered into a new joint venture, Seaboard Triumph Foods, LLC, with equal ownership of 50% . This joint venture is constructing a new pork processing facility in Sioux City, Iowa, with construction expected to be completed by mid-2017. Seaboard agreed to contribute up to $207 million in connection with the development and operation of the facility. As of December 31, 2015, $26 million had been contributed and approximately $97 million is expected to be contributed in 2016, with the remainder due through 2019.

The Commodity Trading and Milling segment has a 50% noncontrolling interest in a bakery located in the DRC, which began operations in the fourth quarter of 2012. As a result of continuing equipment problems, other production challenges and unfavorable local market conditions causing operating losses and challenges in gaining market share, Seaboard’s management determined achieving improved operating results would take significantly longer than initi ally

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Notes to Consolidated Financial Statements

anticipated. As a result, Seaboard’s management determined there was a decline in value considered other than temporary as of December 31, 2014, and thus Seaboard record ed a write-down of $11 million i n loss from affiliate in the fourth quarter of 2014, which represented the remaining equity investment in this business and suspended the use of the equity method as of December 31, 2014 . There was no tax benefit from t his transaction. As part of its original investment, Seaboard has an interest bearing long-term note receivable from this affili ate with the first payment due June 2015 and a final m aturity date of December 2020. No payments were received in 2015, and Seaboard agreed to temporarily waive this default to allow time to work with the business management and its other owners on revisions to the payment schedule to better align with the bakery’s forecasted cash flows. In addition, Seaboard discontinued recognizing further interest income on the note receivable duri ng the fourth quarter of 2014. As of December 31, 2015 , the recorded balance of this note receivable and previous accrued in terest was $35 million, all classified as long-term given uncertainty of the timing of payments in the future. Based on current cash flow projections, this note receivable was not impaired at December 31, 2015. If the future long-term cash flows of this bakery do not improve and forecasted cash flow projections are not met , there is a possibility that some of the recorded value of the Note Receivable from Affiliate could be deemed uncollectible in the future, which may result in a material charge to earnings. I ncluding this business, as of December 31, 2015, Seaboard had a total of $59 million of investments in, advances to and notes receivable from all of its affiliates in the DRC, which represents the single largest foreign country risk exposure for Seaboar d’s equity method investments. One of the other affiliates in the DRC, to which Seaboard sells wheat, is the only supplier of flour to this bakery.

In September 2013, Seaboard invested $17 million in a flour production business in Brazil for a 50% noncontrolling equity interest and provided a $13 million long-term loan to this business. Half of the interest on this long-term note receivable from affiliate is to be paid currently in cash and the other half accrues as pay-in-kind interest. This note receivable matures in September 2020 , but can be repaid after one year with Seaboard having the option to convert the note receivable to equity after one year , and the other equity holders having the option to match such conversion with a purchase of new shares to avoid dilution. In addition, at the time of Seaboard’s initial investment in this business, plans included potential future equal additional investments by the owners to improve existing operations and expand operations to improve long-term operating results. In 2015 , Seaboard’s share of additional investment and advances totaled $28 million. This business, which has received additional third-party loans during 2015, incurred significant operating losses in 2015 and 2014. Seaboard recorded total losses from affiliate of $60 million and $8 million related to this investment in 2015 and 2014, respectively. Based on current discussions with the business’ other 50% shareholder and the executive management of the business, the extent of the losses and revised financial forecast of the business and the Brazilian economy, the halting of the construction plans for a new plant and the amount of existing third-party debt, Seaboard reserved $22 million for the year ended December 31, 2015, related to its advances and long-term note receivable. These charges were recorded as a reduction to income from affiliates in the Condensed Consolidated Statements of Comprehensive Income and were used to reduce Seaboard's investment in the business, advances and long-term note receivable to zero as of December 31, 2015. As of December 31, 2014, the recorded balance of this note receivable from affiliate was $14 million and Seaboard's equity investment and advances in this business was $12 million. Seaboard also had a gross trade receivable due from affiliate related to this business resulting from sales of grain and supplies of $17 million and $14 million as of December 31, 2015 and December 31, 2014, respectively. Seaboard recorded a reserve of $9 million related to the trade receivable during 2015 based on an analysis of collectability and working capital. Seaboard has begun the legal process, as allowed per the Shareholders Agreement, to convert its debt to equity that, if successful, would allow Seaboard to obtain control of the business during 2016 at which time the entity would become consolidated . However, there is no certainty that Seaboard will successfully be able to obtain control. Included in the Commodity Trading and Milling Segment table below is Seaboard’s Brazil affiliate’s summarized financial information, which includes: net sales of $53 million and $114 million for 2015 and 2014, respectively, net loss of $69 million and $16 million for 2015 and 2014, respectively, total assets of $52 million and $101 million as of December 31, 2015 and 2014, respectively, and third-party debt of $16 million and $15 million, as of December 31, 2015 and 2014, respectively. This business is recorded on a three -month lag.

During the fourth quarter of 2015, Seaboard contributed $13 million in cash , a small amount of other assets , certain employee s and rights to sell certain agricultural commodities that Seaboard had previously sold through its subsidiary, PS International , LLC, for a 40% noncontrolling interest in a commodity trading business in Atlanta, Georgia.

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Notes to Consolidated Financial Statements

Also in 2015, Seaboard invested $10 million in an oilseed crushing business in the Republic of Turkey for a 25% noncontrolling interest, $8 million in a flour milling business in Botswana for a 49% noncontrolling interest, and $10 million for a 45% noncontrolling interest in a commodity trading and flour milling business in Uruguay.

During the second quarter of 2015, Seaboard invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic and changed its method of accounting from a cost method investment at Corporate to an equity method investment in the Power segment. As a result, Seaboard reclassified the $6 million initial investment from Corporate to the Power segment along with $6 million of Seaboard’s interest in this business’ reported net income since the date of its initial investment, which is reflected as an adjustment to retained earnings as of January 1, 2013. See Note 12 for more information.

In September 2014, Seaboard invested $17 million in a cargo terminal business in Jamaica for a 21% noncontrolling interest. This investment is accounted for in the Marine segment using the equity method repor ted on a three-month lag basis. Seaboard’s first proportionate share of earnings was recognized in the first quarter of 2015.

I n September 2013, Seaboard invested $7 million in a flour milling business located in South Africa for a 49% noncontrolling interest. In July 2013, Seaboard acquired a 50% noncontrolling interest in a flour milling business located in Gambia by making a total investment in and advances to this affiliate of $9 million during 2013.

Combined condensed financial information of the noncontrolled, non-consolidated affiliates for their fiscal periods ended within each of Seaboard’s years ended were as follows:



Pork Segment		December 31,
(Millions of dollars)		2015	2014	2013
Net sales	$	295	71	—
Net income	$	22	7	—
Total assets	$	247	175	—
Total liabilities	$	17	15	—
Total equity	$	230	160	—



Commodity Trading and Milling Segment	December 31,
(Millions of dollars)	2015		2014	2013
Net sales	$	2,321	2,223	1,908
Net income (loss)	$	(52)	(20)	8
Total assets	$	1,265	1,132	1,039
Total liabilities	$	809	732	615
Total equity	$	456	400	424



Marine Segment		December 31,
(Millions of dollars)		2015	2014	2013
Net sales	$	38	—	—
Net income	$	11	—	—
Total assets	$	148	119	—
Total liabilities	$	30	36	—
Total equity	$	118	83	—



Sugar Segment	December 31,
(Millions of dollars)	2015		2014	2013
Net sales	$	9	9	12
Net income	$	2	2	1
Total assets	$	9	8	9
Total liabilities	$	2	2	3
Total equity	$	7	6	6

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Notes to Consolidated Financial Statements



Power Segment	December 31,
(Millions of dollars)	2015		2014	2013
Net sales	$	141	50	135
Net income	$	12	9	34
Total assets	$	327	328	332
Total liabilities	$	219	230	243
Total equity	$	108	98	89



Turkey Segment	December 31,
(Millions of dollars)	2015		2014	2013
Net sales	$	1,902	1,833	1,730
Net income (loss)	$	195	104	(20)
Total assets	$	1,087	1,021	907
Total liabilities	$	541	547	505
Total equity	$	546	474	402

At December 31, 2015 , Seaboard’s carrying value of certain of these investments in affiliates was more than its share of the affiliate’s book value by $30 million in the Commodity Trading and Milling segment. The excess is attributable primarily to the valuation of property, plant and equipment and intangible assets. The amortizable assets are being amortized to income (loss) from affiliates over the remaining life of the assets.

Note 5

Net Property, Plant and Equipment

The following table is a summary of property, plant and equipment at the end of each year:



	Useful				December 31,
(Millions of dollars)	Lives				2015		2014
Land and improvements	3	-	15	years	$	185	$	185
Buildings and improvements			30	years		405		389
Machinery and equipment	3	-	20	years		1,025		1,001
Vessels and vehicles	3	-	18	years		150		160
Office furniture and fixtures			5	years		27		26
Construction in progress						38		26
						1,830		1,787
Accumulated depreciation and amortization						(999)		(940)
Net property, plant and equipment					$	831	$	847

Note 6

Income Taxes

Income taxes attributable to continuing operations for the years ended December 31, 2015, 2014 and 2013 differed from the amounts computed by applying the statutory U.S. Federal income tax ra te of 35% to earning s before income taxes excluding noncontrolling interest s for the following reasons:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Computed “expected” tax expense excluding noncontrolling interests	$	84	$	187	$	83
Adjustments to tax expense attributable to:
Foreign tax differences		22		4		2
Tax-exempt income		(11)		(9)		(33)
State income taxes, net of federal benefit		1		10		3
Federal tax credits		(16)		(12)		(21)
Domestic manufacturing deduction		(8)		(11)		(2)
Other		(3)		(1)		—
Total income tax expense	$	69	$	168	$	32

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

Certain of Seaboard's foreign operations are subject to no income tax or a tax rate , which is considerably lower than the U.S. corporate tax rate. Fluctuation of earnings or losses incurred from certain foreign operations conducting business in these jurisdictions can impact the mix of taxable earnings for each fiscal year. The treatment of biodiesel production credits as tax-exempt income was clarified by the U.S. Internal Revenue Service ( “ IRS ” ) in 2013 for 2013 and prior years and thus the amount of benefit re cognized in 2013 above includes $17 million f or related refund claims for prior years not previously treated as tax-exempt.

Earnings before income taxes consisted of the following:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
United States	$	196	$	472	$	164
Foreign		44		63		80
Total earnings excluding noncontrolling interests		240		535		244
Less: net income attributable to noncontrolling interests		(1)		(1)		(2)
Total earnings before income taxes	$	241	$	536	$	246

The components of total income taxes were as follows:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Current:
Federal	$	52	$	111	$	(34)
Foreign		20		20		28
State and local		6		12		3
Deferred:
Federal		(14)		20		25
Foreign		8		1		5
State and local		(3)		4		5
Income tax expense		69		168		32
Unrealized changes in other comprehensive income		—		(27)		10
Total income taxes	$	69	$	141	$	42

As of December 31, 2015 and 2014 , Seaboard had income taxes receivable of $33 million and $49 million, respectively, primarily related to domestic tax jurisdictions, and had income taxes payable of $4 million and $5 million, respectively, primarily related to foreign tax jurisdictions.

Components of the net deferred income tax liability at the end of each year were as follows:



	December 31,
(Millions of dollars)	2015		2014
Deferred income tax liabilities:
Depreciation	$	112	$	107
Domestic partnerships		53		49
LIFO		11		42
Cash basis farming adjustment		9		10
Other		9		4
	$	194	$	212
Deferred income tax assets:
Reserves/accruals	$	103	$	111
Deferred earnings of foreign subsidiaries		36		35
Net operating and capital loss carry-forwards		10		19
Tax credit carry-forwards		14		15
Other		9		3
		172		183
Valuation allowance		19		21
Net deferred income tax liability	$	41	$	50

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

Seaboard recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. For the years ended December 31, 2015, 2014 and 2013 , such interest and penalties were not material. The Company had approximately $4 million and $3 million accrued for the payment of interest and penalties on uncertain tax positions at December 31, 2015 and 2014 , respectively.

As of December 31, 2015 and 2014 , Seaboard had $7 million and $7 million, respectively, in total unrecognized tax benefits all of which, if recognized, would affect the effective tax rate. Seaboard does not have any material uncertain tax positions in which it is reasonably possible that the total amounts of the unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. The following table is a reconciliation of the beginning and ending amount of unrecognized tax benefits:



(Millions of dollars)	2015		2014
Beginning balance at January 1	$	7	$	7
Additions for uncertain tax positions of prior years		1		—
Decreases for uncertain tax positions of prior years		(2)		—
Additions for uncertain tax positions of current year		1		—
Ending balance at December 31	$	7	$	7

Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material adjustments. Seaboard’s U.S. federal income tax years are closed through 2011. The jurisdictions that most significantly impact Seaboard’s effective tax rate are the U.S., Dominican Republic and Argentina.

As of December 31, 2015 , Seaboard had not provided for U.S. Federal i ncome and foreign withholding taxes on $977 million of undistributed earnings from foreign operations, as Seaboard intends to reinvest such earnings indefinitely outside of the U.S . Determination of the tax that might be paid on these undistributed earnings if eventually remitted is not practical. If Seaboard decided at a later date to repatriate these earnings to the U.S., Seaboard would be required to provide for the net tax effects on these amounts.

Management believes Seaboard’s future taxable income will be sufficient for full realization of the net deferred tax assets. The valuation allowance relates to the tax benefits from foreign net operating losses. Management does not believe these benefits are more likely than not to be realized due to limitations imposed on the deduction of these losses. At December 31, 2015 , Seaboard had foreign net operating loss carry-forwards of approximately $22 million, a portion of which expire in varying amounts between 2016 and 2035 , while others have indefinite expiration periods. At December 31, 2015 , Seaboard had state tax credit carry-forwards of approximately $21 million, net of valuation allowance, all of which carry-forward indefinitely.

Seaboard has certain investments in various limited partnerships as a limited partner that are expected to enable Seaboard to obtain certain low income housing tax credits over a period of approximately ten years. Seaboard uses the proportional amortization method of accounting for all of its qualified affordable housing project investments by amortizing the initial cost of the investment in proportion to the income tax credits received and recognizing the net investment performance in the Consolidated Statements of Comprehensive Income as a co mponent of income tax expense. The amounts of affordable housing tax credits and other tax benefits and related amortization expense recognized as components of income tax expense were not material for the years ended December 31, 2015, 2014 and 2013 . The balance of these investments recognized on the Consolidated Balance Sheets as of December 31, 2015 and 2014 was $10 million and $12 million, respectively.

In February 2015, Seaboard committed to invest in a limited liability company that will operate a refined coal processing plant in Oklahoma. Production of refined coal generates federal income tax credits. Seaboard contributed $9 million during 2015. Seaboard’s funding commitment for this company can vary depending on production and, based on current production estimates, is anticipated to be between $4 million and $9 million per year until 2021, for a total estimate of approximately $53 million.

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

this amount was a credit of $17 million, or $14.88 per common share, for the 2015 Federal blender’s credits (extended by the 2015 Tax Act through December 31, 2016) that was recognized as revenues in the fourth quarter of 2015. There was no tax expense on these transactions. See Note 12 for further discussion of this Federal blender’s credit.

On December 19, 2014, the Tax Increase Prevention Act of 2014 (the “ 2014 Tax Act ” ) was signed into law. The 2014 Tax Act extended many expired corporate income tax provisions through December 31, 2014, which impacted current and deferred income taxes for financial reporting purposes. The total annual effects of the provisions in the new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the fourth quarter of 2014. The impact was a tax benefit of $11 million, or $9.68 per common share, recorded primarily related to certain income tax credits. In addition to this amount was a credit of $15 million f or the Federal blender’s credits for 2014 that was recognized as revenues in the fourth quarter of 2014. See Note 1 2 for further discussion of this Federal blender’s credit. Since the 2014 Tax Act only extended these tax provisions, including the Federal blender’s credits, through December 31, 2014 , future legislation would be required to extend these expired tax provisions.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (the “ Tax Act ” ) was signed into law. The Tax Act extended many expired corporate income tax provisions that impact current and deferred taxes for financial reporting purposes. In accordance with GAAP, the determination of current and deferred taxes is based on the provisions of the enacted law as of the balance sheet date; the effects of future changes in tax law are not anticipated. The effects of changes in tax laws, including retroactive changes, are recognized in the financial statements in the period that the changes are enacted. Accordingly, as the Tax Act was signed into law in 2013, the effects of the retroactive provisions in the new law on current and deferre d tax assets and liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a one-time tax benefit of $8 million r ecorded in the first quarter of 2013 related to certain 2012 income tax credits. In ad dition to this amount was a credit of approximately $11 million f or the 2012 Federal blender’s credits that was recognized as revenues in the first quarter of 2013 . See Note 1 2 for further discussion of this Federal blender’s credit.

Note 7

Notes Payable and Long-Term Debt

Notes payable of $141 million and $76 million a t December 31, 2015 and 2014 , respectively, consisted of obligations due to banks on demand or based on Seaboard’s ability and intent to repay within one year. All of the notes payable outstanding at December 31, 2015 related to foreign subsidiaries, with $61 million denominated in South African rand and $33 million denominated in Argentine pesos. The weighted average interest rate for outstanding notes payable was 11.74% and 14.34% at December 31, 2015 and 2014 , respectively.

As of December 31, 2015 , Seaboard had uncommitted bank lines totaling $298 million, o f which $248 million o f the uncommitted lines relate to foreign subsidiaries. Seaboard’s borrowing capacity was reduced by $141 million outstanding under the uncommitted lines and $3 million of le tters o f credit . The notes payable to banks under the credit lines ar e unsecured and do not require compensating balances. Facility fees on these agreements are not material. Seaboard has no committed lines of credit as of December 31, 2015. Seaboard cancelled its $200 million long-term committed credit facility effective October 28, 2015. Also, a $50 million committed line related to a foreign subsidiary for the Commodity Trading and Milling segment expired on October 23, 2015.

The following table is a summary of long-term debt at the end of each year:



		December 31,
(Millions of dollars)		2015		2014
Term Loan due 2022	$	500	$	—
Foreign subsidiary obligations due 2020 through 2023		23		—
Total long-term debt at face value		523		—
Current maturities of long-term debt and unamortized discount		(5)		—
Long-term debt, less current maturities and unamortized discount	$	518	$	—

Seaboard entered into a Term Loan Credit Agreement dated December 4, 2015 (“Credit Agreement”) with CoBank, ACB; Farm Credit Ser vices of America, PCA; and the lenders p arty thereto pursuant to which Seaboard Foods obtained a $500 million unsecured term loan ( “Term Loan”). Seaboard received proceeds of $499 million, net of a $1 million discount, which will be amortized to interest expense using the effective interest method. Seaboard has guaranteed all

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Notes to Consolidated Financial Statements

obligations of Seaboard Foods under the Term Loan. The Term Loan provides for quarterly payments of the principal balance pursuant to the amortization schedule included in the Credit Agreement , with the balance due on the maturity date, December 4, 2022. The Term Loan bears interest at fluctuating rates based on various margins over a Base Rate (defined as the highest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.50% per annum, or (c) the Adjusted LIBOR Rate for an Interest Period of one month on such day plus 1.00% per annum) or LIBOR, at the option of Seaboard Foods . The interest rate was 1.90% at December 31, 2015.

The Term Loan requires, among other terms, the maintenance of certain ratios involving a maximum debt to capitalization ratio, which shall not exceed 50% at the end of any fiscal quarter, and minimum tangible net wo rth, as defined, of not less $2 billion plus 25% of cumulative consolidated net income beginning with the quarter ended December 31, 2015. The Term Loan also includes restrictions of certain subsidiaries to grant liens on assets, incur indebtednes s over 15% of consolidated tangible net worth, make certain acquisitions, investments and asset dispositions in excess of specified amounts, and limits aggregate dividend payments to $25 million p er year under certain circumstances. Seaboard is in compliance with all restrictive debt covenants relating to these agreements as of December 31, 2015 .

In 2015, Seaboard’ s Argentine subsidiary obtained long-term debt financing, comprised of five loans denominated in Argentine pesos. The maturities range from May 2020 to May 2023, with principal payments due at least quarterly. Interest, payable monthly, is fixed for the first twelve months at rates ranging from 15.00% to 32.00% , then thereafter determined by the average interest rate paid by retail banks on 30 -day fixed-deposits over $1 million. The weighte d average interest rate was 30.23% at December 31, 2015. All of the foreign subsidiary debt is guaranteed by Seaboard, except $3 million is secured by property, plant and equipment.

The aggregate minimum principal payments required on long-term debt at December 31, 2015 are as follows: $4 million in 2016, $17 million in 2017, $21 million in 2018, $34 million in 2019, $43 million in 2020 and $404 million thereafter.

In July 2014, Seaboard provided notice of optional prepayment to its lenders related to a credit agreement with an original maturity of 2021. The total principal payment of $86 million was made on August 29, 2014. In addition, Seaboard was required to pay an approximately $4 million fee for early payment of this long-term debt that was charged to interest expense in the third quarter of 2014. In November 2013, Seaboard provided notice of call for early redemption to holders of certain IDRBs effective December 20, 2013 and paid $18 million in the fourth quarter of 2013. In April 2013, Seaboard provided notice of call for early redemption to holders of certain IDRBs effective May 13, 2013 and paid $11 million in the second quarter of 2013. In December 2012, Seaboard provided notice of call for early redemption to holders of certain IDRBs effective January 14, 2013 and paid $13 million i n the first quarter of 2013.

Note 8

Derivatives and Fair Value of Financial Instruments

GAAP discusses several valuation techniques, such as the market approach (prices and other relevant information generated by market conditions involving identical or comparable assets or liabilities), the income approach (techniques to convert future amounts to single present amounts based on market expectations including present value techniques and option pricing) and the cost approach (amount that would be required to replace the service capacity of an asset, which is often referred to as replacement cost). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fai r value into three broad levels, as described below :

Level 1: Quoted Prices in Active Markets for Identical Assets - Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 : Significant Other Observable Inputs - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Significant Unobservable Inputs - Unobservable inputs that reflect the reporting entity’s own assumptions.

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

The following tables show assets and liabilities measured at fair value (derivatives exclude margin accounts) on a recurring basis as of December 31, 2015 and 2014 , respectively, and also the level within the fair value hierarchy used to measure each category of assets. Seaboard uses the end of the reporting period to determine if there were any transfers between levels. There were no transfers between levels that occurred in 2015 and 2014 .



	Balance
	December 31,
(Millions of dollars)	2015		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities short-term investments:
Money market funds	$	81	$	81	$	—	$	—
Trading securities – short term investments:
Domestic equity securities		466		466		—		—
Domestic debt securities		450		450		—		—
Foreign equity securities		120		120		—		—
High yield debt securities		104		—		104		—
Money market funds held in trading accounts		22		22		—		—
Collateralized loan obligation		10		—		10		—
Other trading securities		1		—		1		—
Trading securities – other current assets:
Domestic equity securities		31		31		—		—
Foreign equity securities		5		5		—		—
Fixed income mutual funds		4		4		—		—
Other		3		2		1		—
Derivatives
Commodities (1)		4		4		—		—
Foreign currencies		8		—		8		—
Total Assets	$	1,309	$	1,185	$	124	$	—
Liabilities:
Derivatives:
Commodities (1)	$	18	$	18	$	—	$	—
Interest rate swaps		6		—		6		—
Total Liabilities	$	24	$	18	$	6	$	—

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Notes to Consolidated Financial Statements



	Balance
	December 31,
(Millions of dollars)	2014		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities – short-term investments:
Money market funds	$	142	$	142	$	—	$	—
Corporate bonds		11		—		11		—
U.S. Government agency securities		10		—		10		—
Other available-for-sale securities		4		—		4		—
Trading securities – short term investments:
High yield debt securities		182		—		182		—
Domestic equity securities		115		115		—		—
Money market funds held in trading accounts		21		21		—		—
Domestic debt securities		5		3		2		—
Other trading securities		1		—		1		—
Trading securities – other current assets:
Domestic equity securities		34		34		—		—
Foreign equity securities		7		7		—		—
Fixed income mutual funds		5		5		—		—
Other		2		2		—		—
Derivatives
Commodities (1)		6		6		—		—
Foreign currencies		1		—		1		—
Total Assets	$	546	$	335	$	211	$	—
Liabilities:
Derivatives:
Commodities (1)	$	2	$	2	$	—	$	—
Interest rate swaps		8		—		8		—
Total Liabilities	$	10	$	2	$	8	$	—

(1) Seaboard’s commodity derivative assets and liabilities are presented in the Consolidated Balance Sheets on a net basis, including netting the derivatives with the related margin accounts. As of December 31, 2014, the commodity derivatives had a margin account balance of $4 million resulting in a net other current asset on the Consolidated Balance Sheet of $9 million and a net other current liability of $1 million.

Financial instruments consisting of cash and cash equivalents, net receivables, notes payable and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments. The fair value of long-term debt is estimated by comparing interest rates for debt with similar terms and maturities. If Seaboard’s debt was measured at fair value on its Consolidated Balance Sheets, it would have been classified as level 2 in the fair value hierarchy. As Seaboard’s debt was issued during the latter part of the year and is variable-rate, carrying amount approximates fair value. The amortized cost and estimated fair values of investments and long-term debt at December 31, 2015 and 2014 , are presented below:



December 31,	2015				2014
(Millions of dollars)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Short-term investments, available-for-sale	$	81	$	81	$	167	$	167
Short-term investments, trading debt securities		1,188		1,173		330		324
Long-term debt		522		522		—		—

While management believes its derivatives are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these types of transactions as hedges for accounting purposes.

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Notes to Consolidated Financial Statements

Commodity Instruments

Seaboard uses various derivative futures and options to manage its risk to price fluctuations for raw materials and other inventories, finished product sales and firm sales commitments. Seaboard also enters into speculative derivative transactions not directly related to its raw material requirements. The nature of Seaboard’s market risk exposure has not changed materially since December 31, 2014 . Commodity derivatives are recorded at fair value, with any cha nges in fair value being marked-to- market as a component of cost of sales on the Consolidated Statements of Comprehensive Income. Since these derivatives are not accounted for as hedges, fluctuations in the related commodity prices could have a material impact on earnings in any given period.

At December 31, 2015 , Seaboard had open net derivative contracts to purchase 25 million pounds of hogs, 22 million bushels of grain, 3 million pounds of sugar, and open net derivative contracts to sell 8 million pounds of soybean oil. At December 31, 2014 , Seaboard had open net derivative contracts to purchas e 20 million pounds of hogs , 20 million pounds of soybean oil , 16 million pounds of sugar, 11 million bushels of grain, and open net derivative contracts to sell 4 million gallons of heating oil. For the years ended December 31, 2015, 2014 and 2013 , Seaboard recognized net realized and unrealized gains (losses) of $(45) million, $18 million and $(17) million, respectively, related to commodity contracts, primarily included in cost of sales on the Consolidated Statements of Comprehensive Income.

Foreign Currency Exchange Agreements

Seaboard enters into foreign currency exchange agreements to manage the foreign currency exchange rate risk with respect to certain transactions denominated in foreign currencies. Foreign currency exchange agreements that primarily relate to an un derlying commodity transaction are recorded at fair value with changes in value marked-to- market as a compone nt of cost of sales on the Consolidated Statements of Comprehensive Income. For eign currency exchange agreements that a re not related to an underlying commodity transaction are recorded at fair value with changes in value marked-to- market as a com ponent of foreign currency gains (losses), net on the Consolidated Statements of Comprehensive Income. Since these agreements are not accounted for as hedges, fluctuations in the related foreign currency exchange rates could have a material impact on earnings in any given year. At December 31, 2015 and 2014 , Seaboard had foreign currency exchange agreement s to cover its firm sales and purchase commitments and related trade receivables and payables, with notional amounts of $94 million and $144 million, r espectively, primarily related to the South African rand .

Interest Rate Exchange Agreements

During 2010, Seaboard entered into three ten -year interest rate exchange agreements , which involve the exchange of fixed-rate and variable-rate interest payments over the life of the agreements without the exchange of the underlying notional amounts to mitigate the effects of fluctuation s in interest rates on variable- rate debt. Seaboard pays a fixed rate and receives a variable rate of interest on the notional amounts of $25 million e ach.

These interest rate exchange agreements do not qualify as hedges for accounting purposes. Accordingly, the changes in fair value of these agreements are recorded in m iscellaneous, net in the Consolidated Statements of Comprehensive Income. At December 31, 2015 and 2014 , Seaboard had five and seven agreements outstanding, respectively, with a total notional value of $119 million and $163 million, r espectively.

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Notes to Consolidated Financial Statements

The following tabl e provides the amount of gain (loss) recognized for each type of derivative and where it was recognized in the Consolidated Statements of Comprehensive Income for the year ended December 31, 2015 and 2014 :



(Millions of dollars)		2015		2014
Commodities	Cost of sales	$	(45)	$	18
Foreign currencies	Cost of sales		16		4
Foreign currencies	Foreign currency		2		4
Interest rate	Miscellaneous, net		(4)		(8)

The following table provides the fair value of each type of derivative held as of December 31, 2015 and 2014 and where each derivative is included on the Consolidated Balance Sheets:



		Asset Derivatives					Liability Derivatives
		December 31,		December 31,			December 31,		December 31,
(Millions of dollars)		2015		2014			2015		2014
Commodities (1)	Other current assets	$	4	$	6	Other current liabilities	$	18	$	2
Foreign currencies	Other current assets		8		1	Other current liabilities		—		—
Interest rate	Other current assets		—		—	Other current liabilities		6		8

(1) Seaboard’s commodity derivative assets and liabilities are presented in the Consolidated Balance Sheets on a net basis, including netting the derivatives wit h the related margin accounts. As of December 31, 2015 and 2014 , the commodity derivatives had a margin account balance of $29 million and $4 million, respectively, resulting in a net other current asset on the Consolidated Balance Sheets of $15 million and $9 million, respectively, and a net other current liability of $0 million and $1 million as of December 31, 2015 and 2014 .

Counterparty Credit Risk

From time to time Seaboard is subject to counterparty credit risk related to its foreign currency exchange agreements and interest rate swa ps should the counterparties fail to perform according to the terms of the contracts. As of December 31, 2015 , Seaboard had $8 million of credit risk to seven co unterparties related to its foreign currency exchange agreements and no credit risk related to its interest rate swaps. Seaboard does not hold any collateral related to these agreements.

Note 9

Employee Benefits

Seaboard maintains two defined benefit pension plans ( the “ Plans”) for its domestic salaried and clerical employees. The Plans generally provide eligibility for participation after one year of service upon attaining the age of 21 . Effective January 1, 2014, newly hired employees do not qualify for participation. Benefits are generally based upon the number of years of service and a percentage of final average pay.

Seaboard has historically based pension contributions on minimum funding standards to avoid the Pension Benefit Guaranty Corporation ( “ PBGC ” ) variable rate premiums established by the Employee Retirement Income Security Act (“ERISA”) of 1974. During the third quarter of 2013, Seaboard completed future funding analyses for these plans and in September 2013 made a deductible contribution of $10 million f or the 2012 plan year, principally to avoid future PBGC variable rate premiums established pursuant to the ERISA. Management did not make any contributions in 201 5 and 201 4 and currently does not plan on making any contributions to the Plans in 201 6 .

Seaboard has separat e investment policies for each p lan. The difference in target allocation percentages are based on one plan having more current retirees and thus a more conservative portfolio versus the other plan, which can assume greater risk as it will have a longer investment time horizon. In July 2013, Seaboard modified its investment policy for each plan by decreasing the percentage of fixed income investments of the total for its allocation targets and actual investment composition within each plan. Assets are invested in the Plans to achieve a diversified target allocation of approximately 40% - 50% in domestic equities, 20% - 25% in international equities, 10% - 25% in fixed income securities and 10% - 15% in alternative investments. The investment strategy provides investment managers’ discretion, and is periodically reviewed by management for adherence to policy and performance against benchmarks.

As described in Note 8 to the Consolidated Financial Statements, GAAP utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad le vels. The following tables show the Plans’

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Notes to Consolidated Financial Statements

assets measured at estimated fair value as of December 31, 2015 and 2014 , respectively, and also the level within the fair value hierarchy used to measure each category of assets:



	Balance
	December 31,
(Millions of dollars)	2015		Level 1		Level 2		Level 3
Assets:
Domestic equity securities	$	64	$	64	$	—	$	—
Foreign equity securities		27		27		—		—
Real estate mutual fund		8		8		—		—
Fixed income mutual funds		5		5		—		—
Commodity mutual funds		2		2		—		—
Money market funds		2		2		—		—
International fixed income mutual funds		1		1		—		—
Other		5		—		5		—
Total Assets	$	114	$	109	$	5	$	—



	Balance
	December 31,
(Millions of dollars)	2014		Level 1		Level 2		Level 3
Assets:
Domestic equity securities	$	67	$	67	$	—	$	—
Foreign equity securities		28		28		—		—
Real estate mutual fund		9		9		—		—
Fixed income mutual funds		4		4		—		—
Commodity mutual funds		4		4		—		—
International fixed income mutual funds		3		3		—		—
Money market funds		2		2		—		—
Other		5		—		5		—
Total Assets	$	122	$	117	$	5	$	—

Seaboard also sponsors non-qualified, unfunded supplemental executive plans, and has certain individual, non-qualified, unfunded supplemental retirement agreements for certain retired employees. The unamortized prior service cost is being amortized over the average remaining working lifetime of the active participants for these plans. Management has no plans to provide funding for these supplemental executive plans in advance of when the benefits are paid.

Assumptions used in determining pension information for all of the above plans were:



	Years ended December 31,
	2015				2014				2013
Weighted-average assumptions
Discount rate used to determine obligations	3.20	-	4.80	%	3.15	-	4.40	%	3.55	-	5.20	%
Discount rate used to determine net periodic benefit cost	2.70	-	4.40	%	3.55	-	5.20	%	2.50	-	4.15	%
Expected return on plan assets	6.75	-	7.50	%	7.00	-	8.00	%	6.50	-	7.25	%
Long-term rate of increase in compensation levels			4.00	%			4.00	%			4.00	%

Management selected the discount rate based on a model-based result where the timing and amount of cash flows approximates the estimated payouts. The expected returns on the Plans’ assets assumption are based on the weighted average of asset class expected returns that are consistent with historical returns. The assumed rate selected was based on model-based results that reflect the Plans’ asset allocation and related long-term projected returns. The measurement date for all plans is December 31. The unrecognized net actuarial losses are generally amortized over the average remaining working lifetime of the active participants for all of these plans.

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Notes to Consolidated Financial Statements

The changes in the plans’ benefit obligations and fair value of assets for the Plans, supplemental executive plans and retirement agreements and the funded status were as follows:



	December 31,
(Millions of dollars)	2015		2014
Reconciliation of benefit obligation:
Benefit obligation at beginning of year	$	257	$	203
Service cost		10		8
Interest cost		10		10
Actuarial losses (gains)		(18)		44
Benefits paid		(8)		(7)
Other		(2)		(1)
Benefit obligation at end of year	$	249	$	257
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year	$	122	$	120
Actual return on plan assets		(4)		7
Employer contributions		4		3
Benefits paid		(8)		(7)
Other		—		(1)
Fair value of plan assets at end of year	$	114	$	122
Funded status	$	(135)	$	(135)

The net funded status of the Plans wa s $(50) million an d $(48) million at December 31, 2015 and 2014 , respectively. The benefit obligation decreased primarily due to a n increase in discount rates for all plans. The accumulated benefit obligation for the Plans was $143 million and $144 million a nd for all the other plans was $73 million and $7 3 million a t December 31, 2015 and 2014 , respectively. Expected future net benefit payments for all plans during each of the next five years and in aggregate for the five year period beginning with the sixth year are as follows: $1 2 million, $12 million, $1 4 million, $1 3 million, $1 5 million a nd $ 8 5 million, r espectively.

In late April 2013, Mr. Joseph E. Rodrigues, Seaboard’s board member and retired former Executive Vice President and Treasurer of Seaboard Corporation, passed away. During retirement, Mr. Rodrigues received retirement payments under an individual, non-qualified, unfunded supplemental retirement agreement. Upon his death, this agreement terminated which eliminated the remaining accrued pension liability. This resulted in a one-time agreement termination gain of $3 million , or $2 million net of tax, which was recognized in net earnings in addition to a gain of $2 million, or $1 million ne t of tax, from the elimination of unrecognized pension cost in other comprehensive income in 2013.

The net periodic cost of benefits of these plans was as follows:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Components of net periodic benefit cost:
Service cost	$	10	$	8	$	9
Interest cost		10		10		8
Expected return on plan assets		(8)		(9)		(6)
Amortization and other		5		2		6
Agreement termination gain		(1)		—		(3)
Net periodic benefit cost	$	16	$	11	$	14

The amounts not reflected in net periodic benefit cost and included in accumulated other comprehensive loss ( “ AOCL ” ) before taxes at December 31, 2015 and 2014 are $72 million and $86 million, r espectively. Such amounts primarily represent accumulated losses, net of gain. The amounts in AOCL expected to be recognized as components of net periodic benefit cost in 2016 are $4 million.

S eaboard participates in a multi- employer pension fund, th e United Food and Commercial Workers International Union-Industry Pension Fund, which covers certain union employees under a collective bargaining agreement. This fund’s employer identification number is 51-6055922 , and this plan’s number is 001. For the plan year beginning July 1, 201 5 ,

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Notes to Consolidated Financial Statements

this plan’s “zone status” is green and is not subject to a funding improvement plan. Seaboard is required to make contributions to this plan in amounts established under the collective bargaining agreement that expires in July 201 9 . Contribution expense for this plan was $1 million, $1 million and $1 million for the years ended December 31, 2015, 2014 and 2013 , respectively, which represents less than five percent of total contributions to this plan. The applicable portion of the total plan benefits and net assets of this plan is not separately identifiable, although Seaboard has received notice that, under certain circumstances, it could be liable for unfunded vested benefits or other expenses of this jointly administered union plan. Seaboard has not established any liabilities for potential future withdrawal, as such withdrawal from this plan is not probable.

Seaboard maintains a defined contribution plan covering most of its domestic salaried and clerical employees. In 2015 , 2014 and 2013 , Seaboard contributed to this plan an amou nt equal to 50% of the first 6% of each e mployee’s contributions to the plan. Employee vesting is based upon years of service, with 20% vested after one year of service and an additional 20% vesting with each additional complete year of service. Contribution expense for this plan was $2 million, $2 million and $2 million for the years ended December 31, 2015, 2014 and 2013 , respectively.

Seaboard has a deferred compensation plan which allows certain employees to reduce their compensation in exchange for values in various investments. Seaboard also has an Investment Option Plan which allowed certain employees to reduce their compensation in exchange for an option to acquire interests measured by reference to three investments. However, as a result of U.S. tax legislation passed in 2004, reductions to compensation earned after 2004 are no longer allowed under the Investment Option Plan. The exercise price for each investment option was established based upon the fair market value of the underlying investment on the date of grant. Under both plans, Seaboard contributes 3% of the employees’ reduced compensat ion. Seaboard’s expense for these two deferred compensation plans, which primarily includes amounts r elated to the change in fair value of the underlying investment accounts, was $3 million and $6 million for the years ended December 31, 2014 and 2013 , respectively. The change in fair value of these investment accounts was not material for 2015. Included in other liabilities at December 31, 2015 and 2014 are $38 million and $43 million, r espectively, representing the market value of the payable to the employees upon distribution or exerci se for each plan. In conjunction with these plans, Seaboard purchased the specified number of units of the employee-designated investment, plus the applicable option price for the Investment Option Plan. These investments are treated as trading securities and are stated at their fair market values. Accordingly, as of December 31, 2015 and 2014 , $43 million and $48 million, r espectively, were included in other current assets on the Consolidated Balance Sheets. Investment income related to the mark-to-market of these investments for 2014 and 2013 totale d $3 million and $6 million, r espectively. The change in fair value of these investment accounts was not material for 2015.

Note 1 0

Commitments and Contingencies

On April 29, 2015, Seaboard received from the Department of Justice, Asset Forfeiture and Money Laundering Section (“AFMLS”), a Grand Jury subpoena issued by the U.S. District Court for the District of Columbia (the “DC District Court”) requesting records related to 37 specified foreign companies and five individuals. Seaboard has previously produced documents responsive to Grand Jury subpoenas dated September 18, 2014 and October 17, 2014. The subpoena issued September 18, 2014 requested records related to nine entities and one individual, and the subpoena issued October 17, 2014 requested records with respect to eight additional entities and one additional individual. Two additional subpoenas, each dated July 2, 2015 were received by Seaboard requesting records related to a certain customer. The companies and individuals as to which the requested records relate to are not affiliated with Seaboard. The AFMLS attorney conducting the investigation has advised Seaboard that it is not a target of the investigation. Seaboard has retained outside counsel and is cooperating with the government’s investigation. It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome or to estimate the amount of potential loss, if any, resulting from the government’s inquiry.

On September 19, 2012, the U.S. Immigration and Customs Enforcement (“ICE”) executed three search warrants authorizing the seizure of certain records from Seaboard’s offices in Merriam, Kansas and at the Seaboard Foods employment office and the human resources department in Guymon, Oklahoma. The warrants generally called for the seizure of employment-related files, certain e-mails and other electronic records relating to Medicaid and Medicaid recipients, certain health care providers in the Guymon area, and Seaboard’s health plan and certain personnel issues. The U.S. Attorney’s Office for the Western District of Oklahoma (“USAO”), which has been leading the investigation, previously advised Seaboard it intended to close its investigation and that no charges would be brought against

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Notes to Consolidated Financial Statements

Sea board. However, discussions with the USAO continue regarding the status of the investigation and the possibility of proceedings by the USAO, ICE and/or the Oklahoma Attorney General’s office remains. No proceedings have been filed or brought as of this time. It is not possible at this time to determine whether any agencies will continue to pursue an investigation or whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter.

On February 16 , 2016, Seaboard’s subsidiar y, Seaboard Foods, received an information r equest (“Request”) from the U.S. Environmental Protection Agency (“EPA”) seeking information under the Clean Air Act with regard to various ammonia releases at Seaboard Foods’ pork processing plant in Guymon, Oklahoma. Seaboard has been cooperating with the EPA with regard to the investigation and is in the p rocess of responding to the Request. It is not possible at this time to determine whether Seaboard will incur any material fines, penalties or liabilities in connection with this matter.

Seaboard is subject to various administrative and judicial proceedings and other legal matters related to the normal conduct of its business. In the opinion of management, the ultimate resolutions of these items are not expected to have a material adverse effect on the Consolidated Financial Statements of Seaboard.

Contingent Obligations

Certain of the non- consolidated affiliates and third party contractors who perform services for Seaboard have bank debt supporting their underlying operations. From time to time, Seaboard will provide guarantees of that debt in order to further business objectives. Seaboard does not issue guarantees of third parties for compensation. As of December 31, 2015 , guarantees outstanding to third parties were not material. Seaboard has not accrued a liability for any of the third party or affiliate guarantees as management considers the likelihood of loss to be remote. See Note 7 for discussion of letters of credit.

Commitments

As of December 31, 2015 Seaboard had various firm non-cancelable purchase commitments and commitments under other agreements, arrangements and operating leases, as described in the table below:



	Years ended December 31,
(Millions of dollars)	2016		2017		2018		2019		2020		Thereafter
Hog procurement contracts	$	139	$	101	$	33	$	12	$	—	$	—
Grain and feed ingredients		78		—		—		—		—		—
Grain purchase contracts for resale		358		—		—		—		—		—
Fuel supply contract		5		—		—		—		—		—
Equipment purchases and facility improvements		25		—		—		—		—		—
Construction of new dry bulk vessels		29		—		—		—		—		—
Other purchase commitments		35		8		8		9		13		—
Total firm purchase commitments		669		109		41		21		13		—
Vessel, time and voyage-charters		51		23		22		22		22		46
Contract grower finishing agreements		11		9		7		2		—		—
Other operating lease payments		28		28		26		25		24		190
Investment in pork processing facility joint venture		97		46		22		16		—		—
Total unrecognized firm commitments	$	856	$	215	$	118	$	86	$	59	$	236

Seaboard has contracted with third parties for the purchase of live hogs to process at its pork processing plant, and has entered into grain and feed ingredient purchase contracts to support its live hog operations. The commitment amounts included in the table are based on projected market prices as of December 31, 2015 . During 2015 , 2014 and 2013 , this segment paid $171 million, $227 million and $191 million, respectively, for live hogs purchased under committed contracts.

The Commodity Trading and Milling segment enters into grain purchase contracts, primarily to support firm sales commitments. These contracts are valued based on projected commodity prices as of December 31, 2015 .

The Power segment has a natural gas supply contract for 2016 for a portion of the fuel required for the operation of the dual fuel power generating facility. The commitment has both fixed and variable price components and thus the amount included in the table above is partially based on market prices as of December 31, 2015 .

In June 2012, Seaboard entered into an agreement to build four dry bulk vessels to be used by the Commodity Trading and Milling segment at an estimated total cost of $90 million. During 2015, the Commodity Trading and Milling

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Notes to Consolidated Financial Statements

Division took delivery of two dry bulk vessels. As of December 31, 2015, two dry bulk vessels had not been delivered. Seaboard took delivery of one vessel in January 2016 and the final vessel is expected to be delivere d during the first half of 2016 . Seaboard entered into sales-leaseback transactions for the completed vessels, which results in Seaboard receiving back the amounts spent to build at each individual lease inception.

The Marine and Commodity Trading and Milling segment s enter into contracts to time-charter vessels for use in their operations , which include short-term time charters for a few months and long-term commitments ranging from one to eleven years. The s e segment s ’ charter hire expenses during 2015, 2014 and 2013 totaled $99 million, $87 million and $91 million, r espectively.

To support the operations of the Pork segment, Seaboard has contract grower finishing agreements in place with farmers to raise a portion of Seaboard’s hogs according to Seaboard’s specifications under long-term service agreements. Under the terms of the agreements, additional payments would be required if the grower achieves certain performance standards. The contract grower finishing obligations shown above do not reflect these incentive payments which, given current operating performance, total approximately $1 million p er year. In the event the farmer is unable to perform at an acceptable level, Seaboard has the right to terminate the contract. During the years ended 2015 , 2014 and 2013 , Seaboard paid $12 million, $13 million and $13 million, r espectively, under contract grower finishing agreements.

Seaboard also leases various fac ilities and equipment under non- cancelable operating lease agreements including a termin al operations agreement at PortMiami which runs through 2028. Rental expense for operating leases for all segments amounted to $42 million, $35 million and $34 million in 2015 , 2014 and 2013 , respectively.

As discussed in Note 4, on May 13, 2015, Seaboard, through a wholly-owned subsidiary, agreed to contribute up to $207 million to jointly develop and operate a pork processing facility in Sioux City, Iowa. As of December 31, 2015, $26 million had been contributed with the remaining amounts due through 2019. As part of the operations, Seaboard agreed to provide a portion of the hogs to be processed at the facility. In February 2016, the Pork Segment, in co mbination with a newly formed limited liability partnership that will be consolidated with Seaboard, acquired hog inventory and related assets in the Central U.S. for a cash purchase price of $148 million that are expected to increase Seaboard’s hog production capacity to meet the majority of such hog supply commitment for single shift processing at the new plant. Due to the timing of the purchase, the initial accounting is not complete. Seaboard is currently in the process of obtaining an initial valuation related to the acquired assets and liabilities. Seaboard anticipates buying additional hog inventory and related assets during 2016 to fulfill the remaining amount of such hog supply commitment.

Note 1 1

Stockholders’ Equity and Accumulated Other Comprehensive Loss

In October 2015, the Board of Directors extended through October 31, 2017 the share repurchase program initially approved in November 2009, and increased the authorized amount of repurchases from the $51 million t hat remained available to $100 million. As of December 31, 2015 , $100 million remained available for repurchases under this program. Seaboard did not repurchase any shares of common stock during 2015 . In May 2014, the Board of Directors increased the dollar amount of Seaboard common stock authorized to be repurchased under the share repurchase program by $20 million, a nd Seaboard commenced a tender offer to repurchase shares. On June 19, 2014, Seaboard completed the tender offer, pursuant to which it repurchased 16,738 shares of common stock at a price per share of $2,950 , for a total cost of $49 million. Seaboard used cash to repurchase 18,405 and 8,705 shares of common stock at a total price of $53 million and $24 million in 2014 and 2013 , respectively.

Under this share repurchase program, Seaboard is authorized to repurchase its c ommon s tock from time to time in open market or privately negotiated purchases, which may be above or below the traded market price. During the period that the share repurchase program remains in effect, from time to time, Seaboard may enter into a 10b5-1 plan authorizing a third party to make such pu rchases on behalf of Seaboard. All stock repurchased will be mad e in compliance with applicable legal requirements and funded by cash on hand. The timing of the repurchases and the number of shares repurchased at any given time will depend upon market conditions, compliance with Securities and Exchange Commission regulations, and other factors. The Board of Director s ’ stock repurchase authorization does not obligate Seaboard to acquire a specific amount of common stock , and the stock repurchase program may be suspended at any time at Seaboard’s discretion. Shares repurchased will be retired and resume the status of a uthorized and unissued shares.

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

In December 2012, Seaboard declared and paid a dividend of $12.00 per share on the common stock. The increased amount of the dividend (which has historically been $0.75 per share on a quarterly basis or $3.00 per share on an annual basis) represented a prepayment of the annual 2013, 2014 , 2015 and 2016 dividend s ($ 3.00 per share per year). Seaboard did not declare or pay a dividend in 2015, 201 4 and 201 3, and does not currently intend to declare any further dividends for 2016.

The components of accumulated other comprehensive loss, net of related taxes, for 2013 , 2014 and 2015 are as follows:



	Cumulative
	Foreign		Unrealized
	Currency		Gain (Loss)		Unrecognized
	Translation		on		Pension
(Millions of dollars)	Adjustment		Investments		Cost			Total
Balance December 31, 2013	$	(155)	$	—	$	(27)		$	(182)
Other comprehensive income (loss) before reclassifications		(39)		1		(35)			(73)
Amounts reclassified from accumulated other comprehensive loss to net earnings		—		—		2	(1)		2
Other comprehensive income (loss), net of tax		(39)		1		(33)			(71)
Balance December 31, 2014	$	(194)	$	1	$	(60)		$	(253)
Other comprehensive income (loss) before reclassifications		(34)		—		5			(29)
Amounts reclassified from accumulated other comprehensive income loss to net earnings		—		—		4	(1)		4
Other comprehensive income (loss), net of tax		(34)		—		9			(25)
Balance December 31, 2015	$	(228)	$	1	$	(51)		$	(278)

(1) This primarily represents the amortization of actuarial losses that were included in net periodic pension cost and was recorded in operating income. See Note 9 for further discussion.

In 2013, Seaboard recognized a one-time retirement agreement termination gain of $1 million, net of tax, in unrecognized pension cost in other comprehensive income. See Note 9 for further discussion.

The foreign currency translation adjustment primarily represents the effect of the Argentine peso currency exchange fluctuation on the net assets of the Sugar segment. At December 31, 2015 , the Sugar segment had $9 6 million in net assets denominated in Argentine pesos and $1 million in net assets denominated in U.S. dollars in Argentina. At December 31, 2014 , the Sugar segment had $12 2 million in net assets denominated in Argentine pesos and $1 million in net assets denominated in U.S. dollars in Argent ina. Seaboard accounts for its S ugar segment on a one month lag basis. Based on the devaluation of the Argentine peso in December 2015, management anticipates that the Argentine peso will continue to weaken against the U.S. dollar , and thus it is anticipated that Seaboard will incur additional foreign currency translation adjustment losses in other comprehensive loss in 2016 . Using the prevailing official exchange rate compared to the net assets denominated in Argentine pesos at January 31, 2016, Seaboard would recognize an additional $16 million of other comprehensive loss, net of related taxes, during the first quarter of 2016. Impacts of further fluctuations in the currency exchange rate will be recorded in future periods.

Income taxes for cumulative foreign currency translation adjustments were recorded using a 35% effective tax rate except for $82 million and $5 6 million in 2015 and 2014 , respectively, related to certain subsidiaries for which no tax benefit was recorded. Income taxes for all other components of accumulated other comprehensive loss were recorded using a 39% effective rate except for unrecognized pension cost of $18 million and $20 million in 2015 and 2014 , respectively, related to employees at certain subsidiaries for which no tax benefit was recorded.

Note 1 2

Segment Information

Seaboard had six reportable segments through December 31, 2015 : Pork, Commodity Trad ing and Milling (“CT&M”) , Marine, Sugar, Power and Turkey, each offering a specific product or service. Seaboard’s reporting segments are based on information used by Seaboard’s Chief Executive Officer in his capacity as chief operating decision maker to determine allocation of resources and assess performance. Each of the six main segments is separately managed, and each was started or acquired independent of the other segments. The Pork segment produces and sells fresh and frozen

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

pork products to further processors, foodservice operators, grocery stores, distributors and retail outlets throughout the U.S. , and to Japan, Mexico and numerous other foreign markets. This segment also produces biodiesel primarily from pork fat for sale to third parties. The CT&M segment is an integrated agricultural commodity trading and processing and logistics operation that internationally markets wheat, corn, soybean meal and other agricultur al commodities in bulk to third- party customers and to non-consolidated affiliates. This segment also operates flour, maize and feed mills, baking operations, and poultry production and processing in numerous foreign countries. The Marine segment, based in Miami, Florida, provides cargo shipping services between the U.S. , the Caribbean Basin and Central and South America. The Sugar segment produces and processes sugar and alcohol in Argentina, primarily to be marketed locally. The Power segment is an unregulated independent power producer in the Dominican Republic operating a floating power generating facilit y . The Turkey segment, accounted for using the equity method, produces and sells branded and non-branded turkeys and other products. Total assets for the Turkey segment represents Seaboard’s investment in and notes receivable from this affiliate. Revenues for the All Other segment are primarily derived from a jalapeño pepper processing operation.

The 2015 Tax Act signed into law in December 2015 , as discussed in Note 6, renewed the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it blends, which had previously expired on December 31, 2014, retroactively to January 1, 2015 with an expiration of December 31, 2016. As a result, in the fourth quarter of 2015 the Pork segment recognized as revenue the 2015 Federal blender’s credits of $17 million. The 2014 Tax Act signed into law in December 2014 as discussed in Note 6, renewed the Federal blender’s credit that Seaboard is entitled to receive for biodiesel it blends which had previously expired on December 31, 2013 retroactively to January 1, 2014 with an expiration date of December 31, 2014 . As a result, in the fourth quarter of 2014 the Pork segment recognized as revenues the 2014 Federal blender’s credits of $15 million. Also, the Tax Act signed into law in January 2013 as discussed in Note 6 , renew ed and extend ed the Federal blender’s credits which had previously expired on December 31, 2011 and renewed retroactively to January 1, 2012 with an expiration of December 31, 2013. As a result, in the first quarter of 2013 the Pork segment recognized approximately $11 million as revenues related to this Federal blender’s tax incentive for gallons produced and sold in fiscal 2012.

Substantially all of Seaboard’s Pork segment ’s hourly employees at its Guymon , Oklahoma, processing plant are covered by a collective bargaining agreement. As more fully described in Note 4, as of September 27, 2014 Seaboard’s Pork segment sold to Triumph a 50% interest in its proc essed meats division, Daily’s. As a result, Seaboard deconsolidated Daily’s from its Consolidated Balance Sheet as of September 27, 2014. Seaboard’s remaining 50% investment in Daily’s is accounted for using the equity method of accounting.

In the fourth quarter of 2014, the CT&M segment recorded a n $11 millio n write-down in loss from affiliate from a decline in value considered other than temporary for its investment in a bakery located in the DRC . The CT&M segment historically derived a significant portion of its operating income from wheat sales to another non-consolidated affiliate in the DRC. Also, Seaboard historically had derived a significant portion of its income from affiliates from this same affiliate , but in 2014 and 2013 Seaboard incurred significant losses from this affiliate for its proportionate share. See Note 4 for further discussion of the write-down and investments in affiliates in the DRC.

In the fourth quarter of 2015, the Power segment recorded a receivable and interest income of $31 million for interest recognized on certain outstanding customer receivable balances. This interest income related to amounts determined to be collectible as of December 31, 2015 , but previously had been considered uncollectable in prior years. This amount was fully collected by Seaboard in early January 2016.

During the second quarter of 2015, Seaboard invested an additional $10 million in a business operating a 300 megawatt electricity generating facility in the Dominican Republic and changed its method of accounting from a cost method investment at Corporate to an equity method investment in the Power segment. As a result, Seaboard reclassified the $6 million initial investment from Corporate to the Power segment along with $6 million of Seaboard’s interest in this business’ reported net income since the date of its initial investment, which is reflected as an adjustment to retained earnings as of January 1, 2013.

The Power segment had been operating a floating power generating facility ( 72 megawatts) in the Dominican Republic under a short-term lease agreement. On April 1, 2014, Seaboard provided notice to cancel the lease and ceased operation of the leased facility on September 3, 2014. In conjunction with ceasing operations, Seaboard sold inventory related to these operations resulting in a $5 million gain from sale of assets in operating income related to these items in the third qu arter of 2014.

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Notes to Consolidated Financial Statements

The Turkey segment accounted for using the equity method, had operating income in 2015 , 2014 and 2013 of $231 million, $141 million and $5 million, r espectively. In 2013, Butterball incurred charges for impairment of fixed assets related to the planned sale of its closed processing plant in Longmont, Colorado of which Seaboard’s proportionate share of these charges represented $( 4 ) million recognized in loss from affiliates. This plant was sold in May 2014 for the approximate remaining net book value.

The following tables set forth specific financial information about each segment as reviewed by management, except for the Turkey segment information previously disclosed in Note 4 to the Consolidated Financial Statements. Operating income for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income, along with income (loss) from affiliates for the CT&M and Turkey segment, is used as the measure of evaluating segment performance because management does not consider interest and income tax expense on a segment basis.

Sales to External Customers:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Pork	$	1,332	$	1,717	$	1,713
Commodity Trading and Milling		3,022		3,499		3,501
Marine		940		853		914
Sugar		188		200		245
Power		97		189		284
All Other		15		15		13
Segment/Consolidated Totals	$	5,594	$	6,473	$	6,670

Operating Income (Loss):



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Pork	$	116	$	349	$	148
Commodity Trading and Milling		2		54		38
Marine		19		(3)		(26)
Sugar		2		27		24
Power		7		19		43
All Other		2		1		—
Segment Totals		148		447		227
Corporate		(22)		(23)		(23)
Consolidated Totals	$	126	$	424	$	204

Income (Loss) from Affiliates:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Pork	$	11	$	4	$	—
Commodity Trading and Milling		(50)		(24)		(1)
Marine		2		—		—
Sugar		1		1		1
Power		3		2		6
Turkey		103		54		(10)
Segment/Consolidated Totals	$	70	$	37	$	(4)

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

Depreciation and Amortization:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Pork	$	44	$	46	$	43
Commodity Trading and Milling		5		5		6
Marine		26		25		25
Sugar		8		8		11
Power		8		8		7
Segment Totals		91		92		92
Corporate		—		—		1
Consolidated Totals	$	91	$	92	$	93

Total Assets:



	December 31,
(Millions of dollars)	2015		2014
Pork	$	858	$	821
Commodity Trading and Milling		988		1,104
Marine		296		283
Sugar		202		198
Power		271		220
Turkey		448		393
All Other		6		6
Segment Totals		3,069		3,025
Corporate		1,362		667
Consolidated Totals	$	4,431	$	3,692

Investments in and Advances to Affiliates:



	December 31,
(Millions of dollars)	2015		2014
Pork	$	115	$	80
Commodity Trading and Milling		218		178
Marine		19		17
Sugar		3		3
Power		34		20
Turkey		282		245
Segment/Consolidated Totals	$	671	$	543

Capital Expenditures:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Pork	$	40	$	54	$	80
Commodity Trading and Milling		40		21		24
Marine		43		30		23
Sugar		15		14		17
Power		1		2		4
Segment Totals		139		121		148
Corporate		—		—		2
Consolidated Totals	$	139	$	121	$	150

Administrative services provided by the corporate office allocated to the individual segments represent corporate services rendered to and costs incurred for each specific segment, with no allocation to individual segments of general corporate management oversight costs. Corporate assets include short-term investments, other current assets related to deferred compensation plans, fixed assets, deferred tax amounts and other miscellaneous items. Corporate operating

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SEABOARD CORPORATION

Notes to Consolidated Financial Statements

losses represent certain operating costs not specifically allocated to individual segments and includes all costs related to Seaboard’s deferred compensation programs (which are offset by the effect of the mark-to-market investments recorded in other investment i ncome (loss) , n et).

Geographic Information

Seaboard had sales in South Africa totaling $646 million, $597 million and $561 million for the years ended December 31, 2015, 2014 and 2013, respectively, representing approximately 12% , 9% and 8% of total sales for each respective year. No other individual foreign country accounted for 10% or more of sales to external customers.

The following table provides a geographic summary of net sales based on the location of product delivery:



	Years ended December 31,
(Millions of dollars)	2015		2014		2013
Caribbean, Central and South America	$	2,112	$	2,414	$	2,572
Africa		1,577		1,661		1,578
United States		1,135		1,397		1,390
Pacific Basin and Far East		357		425		383
Canada/Mexico		242		348		394
Eastern Mediterranean		102		156		186
Europe		69		72		167
Totals	$	5,594	$	6,473	$	6,670

The following table provides a geogra phic summary of Seaboard’s long- lived assets according to their physical location and primary port for the vessels:



	December 31,
(Millions of dollars)	2015		2014
United States	$	553	$	543
Dominican Republic		128		134
Argentina		69		71
All other		83		100
Totals	$	833	$	848

Management believes its allowance for doubtful accounts is adequate and reduces receivables recorded to their expected net realizable value. At December 31, 2015 and 2014 , Seaboard had approximately $275 million and $26 7 million, r espectively, of foreign receivables, excluding receivables due from affiliates, which generally represent more of a collection risk than the domestic receivables, although as of December 31, 2015 no individual material amounts were deemed to have a heightened risk of collectability. See Note 4 for discussion of an allowance for doubtful accounts related to a receivable due from an affiliate in Brazil.

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SEABOARD CORPORATION

Stockholder Informatio n


Board of Directors
Steven J. Bresky Director and Chairman of the Board President and Chief Executive Officer of Seaboard David A. Adamsen Director and Audit Committee Member Former Vice President – Wholesale Sales, C&S Wholesale Grocers		Douglas W. Baena Director and Audit Committee Chair Self-employed, engaging in facilitation of equipment leasing financings and consulting Edward I. Shifman, Jr. Director and Audit Committee Member Retired, former Managing Director and Executive Vice President of Wachovia Capital Finance
Officers
Steven J. Bresky President and Chief Executive Officer Robert L. Steer Executive Vice President, Chief Financial Officer David M. Becker Senior Vice President, General Counsel and Secretary James L. Gutsch Senior Vice President, Engineering Ralph L. Moss Senior Vice President, Governmental Affairs David S. Oswalt Senior Vice President, Finance and Treasurer		David H. Rankin Senior Vice President, Taxation and Business Development Michael D. Trollinger Vice President, Corporate Controller and Chief Accounting Officer Ty A. Tywater Vice President, Audit Services Zachery J. Holden Assistant Secretary Catherine M. Verschelden Assistant Secretary Adriana N. Hoskins Assistant Treasurer
Chief Executive Officers of Principal Seaboard Operations
Terry J. Holton Pork David M. Dannov Commodity Trading and Milling Edward A. Gonzalez Marine		Hugo D. Rossi Sugar Armando G. Rodriguez Power
Stock Transfer Agent and Registrar of Stock Wells Fargo P.O. Box 64874 St. Paul, MN 55164-0874 (800) 468-9716 www.shareowneronline.com Independent Registered Public Accounting Firm KPMG LLP 1000 Walnut, Suite 1100 Kansas City, Missouri 64106 Stock Listing Seaboard’s common stock is traded on the NYSE MKT under the symbol SEB. Seaboard had 2, 621 shareholders of record of its common stock as of January 29, 2016.		Availability of Form 10-K Report Seaboard files its annual r eport on Form 10-K with the Securities and Exchange Commission. Copies of the Form 10-K for fiscal 2015 are available without charge by writing Seaboard Corporation, 9000 West 67 th Street, Merriam, Kansas 66202, Attention: Shareholder Relations or via the Internet at https://www.seaboardcorp.com/investors . Seaboard provides access to its most recent Form 10-K, Form 10-Q and Form 8-K reports on its Internet website, free of charge, as soon as reasonably practicable after those reports are electronically filed with the Securities and Exchange Commission .

60 2015 Annual Report

EXHIBIT 21


SUBSIDIARIES	NAMES UNDER	STATE OR OTHER
OF THE	WHICH SUBSIDIARIES	JURISDICTION
REGISTRANT	DO BUSINESS	OF INCORPORATION
All Staple Food, S.A.	ASTA Food	Republic of Congo

Africa Poultry Development Limited*	Same	Mauritius

Agencias Generales Conaven, C.A.	Conaven	Venezuela

Agencia Maritima del Istmo, S.A.	Same	Costa Rica

Akdeniz Yaglari Sanayi ve Ticaret A.S. *	Same	Turkey

Alconoa S.R.L.	Same	Argentina

Bag Yagları Sanayi ve Ticaret A.S. *	Same	Turkey

Bagin Yag Sanayi Tesisleri Imalat ve Isletmeciligi Ticaret A.S. *	Same	Turkey

BB Colorado Holdings LLC	Same	Colorado

Belarina Alimentos S.A.*	Same	Brazil

BINA Congo Limited*	Same	Bermuda

Bolux Group (Proprietary) Limited *	Same	Botswana

Butterball, LLC*	Same	North Carolina

Cape Fear Railways, Inc.	Same	North Carolina

Caravel Holdings LLC	Same	Delaware

Cayman Freight Shipping Services, Ltd. *	Same	Cayman Islands

Cereoil Uruguay S.A. *	Same	Uruguay

Chestnut Hill Farms Honduras, S. de R.L. de C.V.	Same	Honduras

Compania Industrial de Productos Agropecuarios S.A.*	CIPA	Colombia

Congo Poultry SPRL *	Same	Democratic Republic of Congo

ContiLatin del Peru S.A.*	Same	Peru

Corporacion Alto Valle, S.A.S.	ALVASA	Dominican Republic

Daily's Premium Meats, LLC*	Same	Delaware

Dalian Sino Fortune Trading Co., Ltd.	Same	China

Delta Packaging Company Ltd.*	Same	Nigeria

Ecuador Holdings, Ltd*	Same	Bermuda

Eureka Chickens Limited*	Same	Zambia

Eurogerm South Africa (Pty) Ltd.*	Same	Republic of South Africa

Fairfield Rice Inc.*	Same	Guyana

Fill-More Seeds Inc.	Same	Sa

Flour Mills of Ghana Limited	Same	Ghana

Franquicias Azucareras S.A.*	Same	Argentina

Gambia Milling Corporation Limited*	Same	The Gambia

Gloridge Bakery (PTY) Limited*	Same	Republic of South Africa

Granos Peruanos del Norte S.A.*	Same	Peru

Grassmere Holdings Limited *	Same	Mauritius

Green Island Maritime, Inc.	Same	Florida

High Plains Bioenergy, LLC	Same	Oklahoma

High Plains Transport LLC	Same	Oklahoma


SUBSIDIARIES	NAMES UNDER	STATE OR OTHER
OF THE	WHICH SUBSIDIARIES	JURISDICTION
REGISTRANT	DO BUSINESS	OF INCORPORATION
HPB Biodiesel Inc.	Same	Oklahoma

Hybrid Poultry (Mauritius) Limited*	Same	Mauritius

H and O Shipping Limited¹	Same	Liberia

I.A.G. (Zambia) Limited	Same	Zambia

Ingenio y Refineria San Martin del Tabacal S.R.L.	Tabacal	Argentina

InterAfrica Grains Ltd.	Same	Bermuda

InterAfrica Grains (Proprietary) Limited	Same	Republic of South Africa

Interra International, LLC*	Same	Delaware

Inversiones y Servicios Diversos, S.A.	INVERSA	Guatemala

JacintoPort International LLC	Same	Texas

Jamaica Grains and Cereals Limited*	Same	Jamaica

JP LP, LLC	Same	Delaware

Kenchic Limited *	Same	Kenya

Kenya Poultry Development Limited *	Same	Mauritius

Kingston Wharves Limited*	Same	Jamaica

La Compania de Electricidad de San Pedro de Macoris *	CESPM	Cayman Islands

Les Moulins d’Haiti S.E.M.*	Same	Haiti

Lesotho Flour Mills Limited*	Same	Lesotho

Life Flour Mill Limited.*	Same	Nigeria

LMM Farine S.A.	Same	Madagascar

Maple Creek Farms, LLC	Same	Kansas

Merriam Financial Services, Ltd.	Same	Bermuda

Merriam International Finance B.V.	Same	The Netherlands

Minoterie de Matadi, S.A. *	Midema	Democratic Republic of Congo

Minoterie du Congo, S.A.	Minoco	Republic of Congo

Mission Funding, L.L.C.	Same	Delaware

Mission Insurance Corporation	Same	Oklahoma

Moderna Alimentos, S.A.*	Same	Ecuador

Molinos Champion, S.A.*	MOCHASA	Ecuador

Mount Dora Farms de Honduras, S.R.L.	Same	Honduras

Mount Dora Farms Inc.	Same	Florida

National Milling Company of Guyana, Inc.	Namilco	Guyana

National Milling Corporation Limited	Same	Zambia

Paramount Mills (Pty) Ltd.*	Same	Republic of South Africa

Plum Grove Pty Ltd.*	Same	Australia

Productores de Alcoholes y Melaza S.A.*	PAMSA	Argentina

Productos Alimenticios Nutradeli Ecuador S.A.*	Same	Ecuador

PS International Canada Corp.	Same	Nova Scotia

PS International India Private Limited	Same	India

PS International, LLC	Same	Delaware

PSS Commodities, S. de R.L. de C.V.	Same	Mexico


SUBSIDIARIES	NAMES UNDER	STATE OR OTHER
OF THE	WHICH SUBSIDIARIES	JURISDICTION
REGISTRANT	DO BUSINESS	OF INCORPORATION

Rafael del Castillo & Cia. S.A.*	Molinos Tres Castillos	Colombia

RCF 3 IM4, LLC	Same	Delaware

Refined Coal Holdings 2, LLC	Same	Kansas

Representaciones Maritimas y Aereas, S.A.	REMARSA	Guatemala

RussellStone Protein (Pty) Ltd.*	Same	Republic of South Africa

SeaGrain Company	Same	Nova Scotia

Sea Cargo, S.A.	Same	Panama

Seaboard Bulk Services, Ltd.	Same	Bermuda

Seaboard de Colombia, S.A.	Same	Colombia

Seaboard de Mexico USA LLC²	Same	Delaware

Seaboard de Nicaragua, S.A.	Same	Nicaragua

Seaboard del Peru, S.A.	Same	Peru

Seaboard Farms of Athens, Inc.	Same	Kansas

Seaboard Farms of Elberton, Inc.	Same	Kansas

Seaboard Foods LLC	Same	Oklahoma

Seaboard Foods of Iowa, LLC	Same	Delaware

Seaboard Foods of Missouri, Inc.	Same	Missouri

Seaboard Freight & Shipping Jamaica Limited	Same	Jamaica

Seaboard Ghana Ltd.	Same	Bermuda

Seaboard Guyana Ltd.	Same	Bermuda

Seaboard Honduras, S. de R.L. de C.V.	Same	Honduras

Seaboard Marine Bahamas, Ltd.	Same	Bahamas

Seaboard Marine of Haiti, S.A.	Same	Haiti

Seaboard Marine Ltd.³	Same	Liberia

Seaboard Marine of Florida, Inc.	Same	Florida

Seaboard Marine (Trinidad) Limited *	Same	Trinidad

Seaboard Minoco Ltd.	Same	Bermuda

Seaboard MOZ Limited	Same	Bermuda

Seaboard Overseas Colombia Limitada	Same	Colombia

Seaboard Overseas (IOM) Ltd.	Same	Isle of Man

Seaboard Overseas (Kenya) Limited	Same	Kenya

Seaboard Overseas Limited	Same	Bermuda

Seaboard Overseas Management Company, Ltd.	Same	Bermuda

Seaboard Overseas Singapore Pte. Ltd.	Same	Singapore

Seaboard Overseas Trading and Shipping (PTY) Ltd.	Same	South Africa

Seaboard Power Management Inc.	Same	Florida

Seaboard Solutions de Honduras, S.de R.L.	Same	Honduras

Seaboard Solutions, Inc.	Same	Delaware

Seaboard Trading and Shipping, Ltd.	Same	Kansas

Seaboard Transport Canada, Inc.	Same	Delaware


SUBSIDIARIES	NAMES UNDER	STATE OR OTHER
OF THE	WHICH SUBSIDIARIES	JURISDICTION
REGISTRANT	DO BUSINESS	OF INCORPORATION
Seaboard Transport LLC	Same	Oklahoma

Seaboard Triumph Foods, LLC *	Same	Delaware

Seaboard Zambia Ltd.	Same	Bermuda

SEADOM, S.A.S.	Same	Dominican Republic

Sea Fin Holdings Limited	Same	Bermuda

SeaMaritima, S.A. de C.V.	Same	Mexico

SeaRice Guyana, Inc.	Same	Guyana

SeaRice Limited	Same	Bermuda

Secuador Limited	Same	Bermuda

SEEPC (Nigeria) Ltd.*	Same	Nigeria

Sermarin Servicios Maritimos Intermodales, C.A.	Same	Venezuela

Shawnee Funding, Limited Partnership	Same	Delaware

Shawnee GP LLC	Same	Delaware

Shawnee Leasing LLC	Same	Oklahoma

Shawnee LP LLC	Same	Delaware

Shilton Limited	Same	Cayman Islands

Shilton Zambia, Ltd. *	Same	Zambia

Societe Africaine de Developpement Industrielle Alimentaire*	SADIA	Democratic Republic of Congo

SSI Ocean Services, Inc.	Same	Florida

Stewart Southern Railway Inc.*	Same	Saskatchewan

Tanbreed Limited*	Same	Mauritius

TanFed Holdings Limited	Same	Mauritius

T-S Shared Operations, LLC*	Same	Missouri

TFL Life Foods Limited*	Same	Nigeria

Transcontinental Capital Corp. (Bermuda) Ltd.	TCCB	Bermuda

Unga Farmcare (East Africa) Limited*	Same	Kenya

Unga Holdings Limited*	Same	Kenya

Unga Limited*	Same	Kenya

Unga Millers (Uganda) Limited*	Same	Uganda

United African Grain Limited	Same	Zambia

Zenith Investment Limited*	Same	Nigeria

^1.

Owns eight foreign ship holding company subsidiaries

^2.

Owns three Mexican incorporated subsidiaries

^3.

Owns two foreign ship holding company subsidiaries

* Represents a non-controlled, non-consolidated affiliate.

Exhibit 31.1

CERTIFICATIONS

I, Steven J. Bresky, certify that:

1. I have reviewed this annual report on Form 10-K of Seaboard Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date:	February 2 5 , 201 6

		/s/ Steven J. Bresky
		Steven J. Bresky, President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Robert L. Steer, certify that:

1. I have reviewed this annual report on Form 10-K of Seaboard Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date:	February 2 5 , 201 6

		/s/ Robert L. Steer
		Robert L. Steer, Executive Vice President, Chief
		Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION. 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Annual Report on Form 10-K for the fiscal year ended December 31, 201 5 (the Report) by Seaboard Corporation (the Company), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 2 5 , 201 6

		/s/ Steven J. Bresky
		Steven J. Bresky, President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION. 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Annual Report on Form 10-K for the fiscal year ended December 31, 201 5 (the Report) by Seaboard Corporation (the Company), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

5
Date:	February 25, 2016

		/s/ Robert L. Steer
		Robert L. Steer, Executive Vice President, Chief
		Financial Officer

Exhibit 99.1

BUTTERBALL, LLC

Financial Statements

January 3, 2016 and December 28, 2014

(With Independent Auditors ’ Report Thereon)

KPMG LLP

Suite 1200

150 Fayetteville Street

Raleigh, NC 27601

Independent Auditors ’ Report

The Board of Directors

Butterball, LLC:

We have audited the accompanying financial statements of Butterball, LLC, which comprise the balance sheets as of January 3, 2016 and December 28, 2014, and the related statements of comprehensive income (loss), members ’ equity, and cash flows for each of the years ended January 3, 2016, December 28, 2014 and December 29, 2013, and the related notes to the financial statements.

Management ’ s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors ’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors ’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity ’ s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity ’ s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Butterball, LLC as of January 3, 2016 and December 28, 2014, and the results of its operations and its cash flows for each of the years ended January 3, 2016, December 28, 2014 and December 29, 2013, in accordance with U.S. generally accepted accounting principles.

Raleigh, North Carolina
February 12, 2016

KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity

BUTTERBALL, LLC

Balance Sheets

(In thousands)


	January 3,		December 28,
	2016		2014
Assets
Current assets:
Cash and cash equivalents	$	162,322	125,438
Accounts receivable, less allowance for doubtful accounts of $1,971 and $3,060 at January 3, 2016 and December 28, 2014, respectively		93,089	116,089
Other receivables		6,573	8,262
Inventories		277,142	276,728
Other current assets		14,563	5,199
Total current assets		553,689	531,716
Net property, plant and equipment		319,840	273,043
Other assets:
Trade names		111,000	111,000
Goodwill		73,667	73,667
Intangible assets with finite lives		6,068	8,931
Other assets		22,717	22,825
Total other assets		213,452	216,423
Total assets	$	1,086,981	1,021,182
Liabilities and Members’ Equity
Current liabilities:
Accounts payable	$	68,175	76,145
Accrued expenses		88,349	65,934
Current maturities of long-term debt		6,724	29,789
Total current liabilities		163,248	171,868
Long-term debt, less current maturities		193,164	200,870
Notes payable – Members, net of debt discount		165,939	148,865
Pension plan liability		4,406	8,958
Other liabilities		14,112	16,837
Total liabilities		540,869	547,398
Members’ equity:
Members’ equity		551,536	479,224
Accumulated other comprehensive loss		(5,424)	(5,440)
Total Members’ equity		546,112	473,784
Total liabilities and Members’ equity	$	1,086,981	1,021,182

See accompanying notes to financial statements.

BUTTERBALL, LLC

Statements of Comprehensive Income (Loss)

(In thousands)


	Year s ended
	January 3,		December 28,	December 29,
	2016		2014	2013
Net sales	$	1,901,805	1,833,141	1,729,568
Cost of goods sold		1,557,401	1,578,502	1,626,766
Gross profit		344,404	254,639	102,802
Selling and marketing expenses		62,993	59,728	52,696
General and administrative expenses		50,406	53,921	45,214
Operating income		231,005	140,990	4,892
Net finance expense		9,919	13,894	3,303
Related party finance expense		27,088	24,370	22,907
Other income		(1,309)	(1,404)	(1,762)
Net income (loss)		195,307	104,130	(19,556)

Other comprehensive income (loss):
Unrecognized actuarial gain (loss) of defined benefit plan, net of amounts included in net periodic benefit cost (income)		16	(8,729)	12,961
Comprehensive income (loss)	$	195,323	95,401	(6,595)

See accompanying notes to financial statements.

BUTTERBALL, LLC

Statements of Members’ Equity

(In thousands)


			Accumulated
			other
	Members’		comprehensive
	equity		income (loss)	Total
Members’ equity – December 30, 2012	$	438,326	(9,672)	428,654
Distributions to Members		(19,636)	—	(19,636)
Net loss		(19,556)	—	(19,556)
Unrecognized actuarial gain of defined benefit plan		—	12,961	12,961
Members’ equity – December 29, 2013		399,134	3,289	402,423
Distributions to Members		(24,040)	—	(24,040)
Net income		104,130	—	104,130
Unrecognized actuarial loss of defined benefit plan		—	(8,729)	(8,729)
Members’ equity – December 28, 2014		479,224	(5,440)	473,784
Distributions to Members		(122,995)	—	(122,995)
Net income		195,307	—	195,307
Unrecognized actuarial gain of defined benefit plan		—	16	16
Members’ equity – January 3, 2016	$	551,536	(5,424)	546,112

See accompanying notes to financial statements.

BUTTERBALL, LLC

Statements of Cash Flows

(In thousands)


	Year s ended
	January 3,		December 28,	December 29,
	2016		2014	2013
Cash flows from operating activities:
Net income (loss)	$	195,307	104,130	(19,556)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		36,695	33,185	32,545
Amortization		4,815	4,711	4,583
(Gain) loss on disposition of property, plant and equipment		180	(85)	304
Paid-in-kind interest and accretion on notes payable – Members		17,148	15,178	13,452
Impairment of long-lived assets		—	—	6,974
Changes in operating assets and liabilities:
Accounts receivable		23,000	(18,549)	(11,772)
Inventories		(14)	25,220	(3,005)
Other current assets		(7,675)	1,444	(1,440)
Other assets		(1,844)	(1,645)	(3,249)
Accounts payable		(7,970)	7,523	(19,751)
Accrued expenses		22,015	16,188	(7,098)
Other liabilities		(7,261)	259	980
Net cash provided (used) by operating activities		274,396	187,559	(7,033)
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment		297	6,007	790
Purchases of property, plant and equipment		(83,969)	(41,960)	(36,711)
Acquisition of business		—	—	(73,736)
Net cash used by investing activities		(83,672)	(35,953)	(109,657)
Cash flows from financing activities:
Net (payments) proceeds in revolving line of credit		(24,000)	2,000	6,000
Proceeds of long-term debt		—	—	201,500
Payments of long-term debt		(6,771)	(5,760)	(132,390)
Debt issuance costs		—	—	(2,376)
Proceeds of notes payable – Members		—	—	81,231
Payments of notes payable – Members		(74)	(1,300)	(81,396)
Distributions to Members		(122,995)	(24,040)	(19,636)
Net cash (used) provided by financing activities		(153,840)	(29,100)	52,933
Net increase (decrease) in cash and cash equivalents		36,884	122,506	(63,757)
Cash and cash equivalents – beginning of year		125,438	2,932	66,689
Cash and cash equivalents – end of year	$	162,322	125,438	2,932

Supplementary disclosures of cash flow information:
Cash paid during the year for interest	$	14,624	16,809	16,248

See accompanying notes to financial statements.

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(1)

Summary of Significant Accounting Policies

(a)

Description of Business and Basis of Presentation

Butterball, LLC (Butterball or the Company) is a limited liability company organized in the State of North Carolina. Tracing its roots back to 1954 and headquartered in Garner, North Carolina, Butterball is a vertically integrated producer, processor, and marketer of branded and non branded turkey and pork products. From seven facilities located across the United States, the Company produces a diverse portfolio of premium, value ‑ added turkey and pork products and commodity turkey products that are distributed through retail, foodservice, industrial, and international channels.

The Company is owned and operated as a joint venture by Maxwell Farms, LLC (50% and an affiliate of Goldsboro Milling Company (Maxwell)), and BB Kansas Holdings, Inc. (50% and an affiliate of Seaboard Corporation (Seaboard)), (together, the Members).

Butterball prepares its financial statements in accordance with accounting principles generally accepted in the United States ( U.S. GAAP), which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management ’ s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements, and such differences could be material.

(b)

Business Environment

Integrated turkey and non integrated pork processors operate in an environment where in the commodity nature of both their products for sale and their primary raw materials cause sales prices and purchase costs to fluctuate, often on a short ‑ term basis, due to the worldwide supply and demand situation for those commodities. The supply and demand factors for their products for sale and the supply and demand factors for their primary raw materials correlate to a degree, but are not the same, thereby causing margins between sales price and production costs to increase, decrease, or invert, often on a short ‑ term basis.

(c)

Fiscal Year

The Company follows a 52/53 ‑ week fiscal year that ends the Sunday closest to December 31st. The fiscal periods reflected in the accompanying financial statements consist of the periods December 29, 2014 to January 3, 2016, a 53 ‑ week fiscal year, December 30, 2013 to December 28, 2014, and December 31, 2012 to December 29, 2013, both 52 ‑ week fiscal years.

(d)

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all instruments purchased with an original maturity of three months or less to be cash equivalents.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(e)

Accounts Receivable

Accounts receivable consist of credit extended to the Company ’ s customers in the normal course of business and are reported net of an allowance for doubtful accounts. The Company reviews its customer accounts on a periodic basis and records bad debt expense for specific amounts that the Company evaluates as uncollectible. Past due status is determined based upon contractual terms. Amounts are written off at the point when collection attempts have been exhausted. Management uses significant judgment in estimating uncollectible amounts , considering such factors as current economic conditions and historic and anticipated customer performance. In addition, if needed, the Company provides an allowance for potentially uncollectible amounts that have not been specifically identified. While management believes the Company ’ s processes effectively address its exposure to doubtful accounts, changes in economic, industry or specific customer conditions may require adjustment to the allowance recorded by the Company. Management has included amounts believed to be uncollectible, as well as short pays and deductions incurred in the normal course of business, in the allowance for doubtful accounts.

(f)

Inventories

Processed meat inventories (finished product) are stated at the lower of actual cost or market. Live turkey inventory is valued at the total cost accumulated on the flock as of the end of the fiscal year. Accumulated cost includes poult cost, feed, supplies and other costs related to individual flocks. Grain inventories, supplies and other materials are stated at the lower of cost (weighted average cost) or market.

(g)

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is calculated using the straight ‑ line method over the useful lives of the assets. Gains and losses from disposition of property, plant and equipment are included in cost of sales.

The estimated useful lives are as follows:


Site improvements		10–25 years
Buildings		15–40 years
Water utility systems		10–20 years
Equipment		1–15 years
Furniture, fixtures and office equipment		1–10 years
Vehicles		1–5 years

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(h)

Long ‑ Lived Assets

The Company reviews the carrying value of long ‑ lived assets for impairment whenever triggering events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If a triggering event or changes in circumstances occur, the impairment to be recognized is measured by the excess of the carrying amount over the fair value of the assets.

(i)

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a transaction accounted for as a business combination. The fair value of identifiable intangible assets is estimated based upon discounted future cash flow projections. Intangible assets with finite lives are amortized over their estimated useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. While the Butterball trade names are not amortized because the Company expects the cash flows from these intangible assets to continue indefinitely, the Gusto trade name, grower and customer relationship as sets are amortized over 5 or 10 years.

Goodwill and the Butterball trade name are tested for impairment annually or sooner if impairment indicators arise. This determination consists of first assessing qualitative factors to determine the existence of events and circumstances that would indicate the likelihood of the carrying amount of assets exceeding its fair value. If such events or circumstances are determined to exist, the Company determines the fair value and compares it to its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized for any excess carrying amount of goodwill over the implied value.

Intangible assets with finite lives are amortized using the straight ‑ line method over their useful lives . W hen indicators of impairment are present, they are reviewed for recoverability using estimated future undiscounted cash flows related to those assets. The Company has determined that no impairment existed at January 3, 2016 or December 28, 2014. The Company uses the last day of its fiscal year to perform its annual impairment review of goodwill and trade names.

Intangible assets subject to amortization were as follows:


	January 3, 2016
			Accumulated	Net
	Gross cost		amortization	carrying value
Grower relationships	$	2,400	1,040	1,360
Customer lists		11,500	7,992	3,508
Trade name-Gusto		3,000	1,800	1,200
	$	16,900	10,832	6,068

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)


	December 28, 2014
			Accumulated	Net
	Gross cost		amortization	carrying value
Grower relationships	$	2,400	800	1,600
Customer lists		11,500	5,969	5,531
Trade name-Gusto		3,000	1,200	1,800
	$	16,900	7,969	8,931

Amortization expense in the accompanying statement of comprehensive income (loss) totaled $2,863 in each of the years ended January 3, 2016, December 28, 2014 and December 29, 2013.

Future amortization expense of finite ‑ lived intangible assets is estimated as follows:


2016	$	2,863
2017		2,325
2018		240
2019		240
2020		240
Thereafter		160
	$	6,068

(j)

Debt Issuance Costs

Debt issuance costs are classified within other assets and are being amortized as additional interest expense over the life of the underlying debt using either the effective interest or straight ‑ line methods. Amortization of debt issuance costs was $1,952, $1,848 and $1,720 for the years ended January 3, 2016, December 28, 2014 and December 29, 2013, respectively.

(k)

Derivative Financial Instruments

The Company enters into interest rate swap contracts to manage its exposure to fluctuations in interest rates and grain hedges to manage the changes in commodity prices. The Company has not designated the contracts as an accounting “ hedge ” . Accordingly, these contracts are measured at fair value with the resulting gain or loss recognized currently in the net finance expense and cost of goods sold in the accompanying statement of comprehensive income (loss).

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

In 2010, the Company entered into two forward interest rate swap agreements with notional amounts of $37,500 each. Under the terms of the two $37,500 swap agreements, the Company paid a fixed interest rate of 2.48% and received a variable interest rate based on the one ‑ month London Interbank Offered Rate (LIBOR) commencing on January 6, 2012 until maturity on December 6, 2015. On April 30, 2013, the Company entered into a series of 5 ‑7 year interest rate swap agreements with a total notional amount of $150,000 to effectively fix the interest rate at 1.38% on a portion of the floating rate indebtedness under its Amended and Restated Credit Agreement dated March 28, 2013. The effective date for $75,000 of the swap agreements was May 2, 2013 and the remaining $75,000 had an effective date of December 7, 2015. The new swap agreements have terms similar to those for the other interest rate exchange agreements referred to above. At January 3, 2016 and December 28, 2014, the fair market value of the interest swaps was a liability of $751 and an asset of $508 , respectively.

The Company has entered into multiple grain future, put and call contracts. At January 3, 2016 and December 28, 2014, the fair market value of these grain contracts was a liability of $4,862 and an asset of $2,376, respectively.

(l)

Income Taxes

The Company is not subject to federal or certain state income taxes; however, the Company is required to make an annual tax distribution for its Member based on the highest tax rate between the Members. The Company ’ s net income or loss is reported on the Members ’ federal income tax returns. The Company is subject to certain state taxes primarily consisting of gross margin tax and commercial activity, and records these within general and administrative expenses. The Company records unrecognized tax liabilities for known or anticipated tax issues based on its analysis of whether, and the extent to which, additional taxes will be due. The Company accrues interest and penalties related to unrecognized tax liabilities as accrued expenses and recognizes the related expense as tax expense included in general and administrative expenses.

(m)

Revenue Recognition

The Company recognizes revenue when delivery has occurred or services have been rendered; persuasive evidence of an agreement exists; the Company ’ s price to the buyer is fixed or determinable; and collectibility is reasonably assured.

(n)

Advertising

The Company expenses the cost of advertising as incurred. Advertising expense was $26,719, $27,499 and $20,989, respectively, for the years ended January 3, 2016, December 28, 2014 and December 29, 2013.

(o)

Shipping and Handling

All shipping and handling costs are included in cost of goods sold in the accompanying statements of comprehensive income (loss).

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(p)

Fair Value of Financial Instruments

Fair value is a market ‑ based measurement, not an entity ‑ specific measurement. Therefore, a fair value measurement is determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs th at are classified within Levels 1 and 2 of the hierarchy) and the reporting entity ’ s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The three levels of inputs used to measure fair value are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for the asset or liability, which are typically based on the Company ’ s own assumptions, as there is little, if any, related market activity.

For certain classes of the Company ’ s financial instruments, the carrying amounts approximate fair value due to their short ‑ term nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. See note 9 for fair value measurements of other classes of financial instruments made on a recurring and nonrecurring basis.

(q)

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance to develop a single, comprehensive revenue recognition model for all contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The Company is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures. The Company will be required to adopt this guidance on January 1, 2018 and it is currently anticipated that we will apply this guidance using the cumulative effect transition method.

In July 2015, the FASB issued guidance to simplify the subsequent measurement of inventory; excluding inventory measured using last ‑ in, first out or the retail inventory method. Under the new standard, inventory should be at the lower of cost and net realizable value. The new guidance is effective annual periods beginning after December 15, 2016 with early adoption permitted. The Company is analyzing the impact of this new standard and, at this time, cannot estimate the impact of adoption on net earnings.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(2)

Inventories

Inventories consist of the following:


	January 3,		December 28,
	2016		2014
Live birds, feed and feed ingredients	$	130,216	136,560
Finished goods		121,866	116,220
Materials and supplies		25,060	23,948
	$	277,142	276,728

(3)

Property, Plant, and Equipment

Property, plant, and equipment consists of the following:


	January 3,		December 28,
	2016		2014
Land	$	22,105	20,978
Site improvements		13,167	10,863
Buildings		144,237	120,125
Water utility systems		3,156	2,861
Equipment		201,110	152,283
Furniture, fixtures and office equipment		15,262	11,355
Vehicles		10,450	6,398
Construction in progress		57,427	59,673
Held for sale		8,909	8,987
		475,823	393,523
Accumulated depreciation		(155,983)	(120,480)
Net property, plant and equipment	$	319,840	273,043

On February, 19, 2015, the Company purchased land, buildings, and other tangible personal property of a turkey further processing facility located in Raeford, North Carolina ( Raeford ) from a private farm cooperative for $17,000. It is management ’ s intention that the Raeford facility will provide the Company with additional capacity to support its further processed turkey offerings.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(4)

Other Assets

Other assets consists of the following:


	January 3,		December 28,
	2016		2014
Deferred compensation program assets	$	15,986	14,939
Capitalized debt issuance costs		4,312	6,264
Other		2,419	1,622
	$	22,717	22,825

(5)

Notes Payable – Members

Notes payable – Members consists of following:


	January 3,		December 28,
	2016		2014
Subordinated note, net of debt discount	$	94,328	92,435
Accrued payment-in-kind interest		64,080	48,825
Real estate loan		7,531	7,605
	$	165,939	148,865

During 2010, the Company entered into a subordinated note agreement with Seaboard. The principal amount of this note was $100 million . As additional consideration for this note, the Company issued to Seaboard detachable warrants exercisable for 5.0% of the issued and outstanding units (currently 50 units are available for issue, 950 units are outstanding) of the Company for an initial exercise price of $0.01 per unit (effectively $0.50 for the 50 units). Based on written notes from the Company to Seaboard, these warrants will expire December 6, 2020. The units associated with these warrants have identical rights of the remaining units, with the exception that the warrants do not carry any voting rights, however, in the event of acquisition, sale or other similar transaction, these units will be given full Member unit rights. These warrants met the criteria for in ‑ substance units and were accounted for as a portion of contributed capital in Members ’ equity. The Company maintains the option to purchase these units at fair value. These warrants were valued at $10,586 at the date of the issuance.

As a result of the fair value allocated the warrants, the note was valued initially at $89,414. The note contains a stated interest rate of 15%, with 10% to be accrued as payment in ‑ kind (PIK), and the remaining 5% to be paid every six months. As a result of the fair value allocated to the warrants, the effective interest rate of the note is 16.8%. The note also contains a prepayment penalty until December 2016 of 3.75%; subsequent to December 2016 there is no prepayment penalty.

For the years ended January 3, 2016, December 28, 2014 and December 29, 2013 the Company incurred interest expense on these notes totaling $24,775, $22,096 and $19,728, respectively.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

During August, 2011, the Company entered into a real estate loan agreement with Seaboard. Under the terms of this agreement, the Company will make principal payments against the loan when the parcels of underlying real estate are sold. Under this arrangement, the Company incurred interest of $1,098, $1,164 and $1,147 for the years ended January 3, 2016, December 28, 2014 and December 29, 2013 respectively.

(6)

Long ‑ Term Debt

Long ‑ term debt consists of the following:


	January 3,		December 28,
	2016		2014
Note payable due to banks, maturing September 6, 2017, with interest payable monthly at LIBOR plus 200 basis points (2.42% at January 3, 2016) and varies based on certain performance criteria, secured by substantially all assets of the Company	$	145,875	147,750

Note payable due to banks, maturing September 6, 2017, with interest payable monthly at LIBOR plus 175 basis points (2.17% at January 3, 2016) and varies based on certain performance criteria, secured by substantially all assets of the Company		43,125	46,250

Acquisition note payable, maturing August 29, 2021, with interest payable annually at Prime minus 2% (1.5% at January 3, 2016)		9,700	11,314

Note payable due to municipalities, maturing November 1, 2023, with interest payable monthly at 1%		1,188	1,345

Revolving line of credit, maturing September 6, 2017, with variable interest payable based on LIBOR plus 175 basis points (2.17% at January 3, 2016) and varies based on certain performance criteria, secured by substantially all assets of the Company		—	24,000
		199,888	230,659
Less current maturities		6,724	29,789
Total long-term debt, less current maturities	$	193,164	200,870

Aggregate maturities of long ‑ term debt are as follows:


2016	$	6,724
2017		185,820
2018		1,747
2019		1,773
2020		1,699
Thereafter		2,125
	$	199,888

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

The Company ’ s credit facility consists of two term loans with a balance of $189,000 at January 3, 2016, and a revolving line of credit of $225,000. Availability under the line of credit was $220,517 at January 3, 2016. The revolving line of credit bears interest at LIBOR plus an amount based on certain performance criteria (currently 175 basis points). The credit facility contains covenants including total debt to capitalization ratio, fixed charge coverage ratio and tangible asset coverage ratio. The Company was in compliance with all covenants at January 3, 2016 and December 28, 2014.

(7)

Transactions with Members

The Company purchases finished feed, feed ingredients, and raw materials from its Members. The cost of materials purchased from companies affiliated with the Members was $229,217, $263,523 and $248,101 for the periods ended January 3, 2016, December 28, 2014, and December 29, 2013, respectively.

(8)

Commitments and Contingencies

a. Operating lease and rent expenses were $14,732, $13,392 and $6,628 for the years ended January 3, 2016, December 28, 2014, and December 29, 2013, respectively. As of January 3, 2016, minimum rental payments under non cancelable operating leases for machinery and equipment are summarized as follows:


	Lease
	commitments
2016	$	13,749
2017		12,794
2018		6,050
2019		3,480
2020		1,098
Thereafter		4,946
	$	42,117

b. The Company enters into third ‑ party contracts for the purchase of poults, the supply of grain and other feed ingredients, and various critical supplies utilized in both its live and processing operations. The purchase commitment amounts listed in the table below are based on projected market prices and volume expectations as of January 3, 2016, and are summarized as follows:


	Purchase
	commitments
2016	$	266,620
2017		4,379
2018		644
	$	271,643

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

c. The Company maintains self ‑ insurance programs for health care and workers ’ compensation coverages . The Company is liable for health care claims up to $500 each year per plan participant and workers ’ compensation claims up to $550 per occurrence, depending on state law. Self ‑ insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred, but not yet reported. The accompanying statement s of comp rehensive income (loss) include expenses relating to self ‑ insurance plans of $38,122, $32,672, and $31,212 for the years ended January 3, 2016, December 28, 2014 and December 29, 2013, respectively. A letter of credit in the amount of $4,149 has been issued as security for workers ’ compensation program .

d. The Company, from time to time, is involved in lawsuits which occur in the normal course of business. Management intends to vigorously defend these actions when they occur and believes no material losses will occur.

(9)

Retirement Plans

a. The Company has a defined benefit pension plan that was frozen effective January 15, 2006. The Company has historically based pension contributions on minimum funding standards to avoid the Pension Benefit Guaranty Corporation (PBGC) variable rate premiums established by the Employee Retirement Income Security Act (ERISA) of 1974. During the fourth quarter of 2015, the Company made a deductible contribution of $4,000, principally to avoid future PBGC variable rate premiums established pursuant to the ERISA. The Company anticipates making sufficient contributions during fiscal year 2016 in order to avoid variable rate premiums imposed by the PBGC.

The future benefit payments expected to be paid to plan participants are as follows:


2016	$	1,327
2017		1,442
2018		1,521
2019		1,610
2020		1,707
2021–2025		10,142
	$	17,749

Balances in accumulated other comprehensive income (loss) are as follows:

The Company expects to recognize $136 of accumulated other comprehensive (loss) into net periodic benefit cost in fiscal 2016.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

The following table presents a reconciliation of the beginning and ending balances of the benefit obligation, fair value of plan assets and the funded status of the aforementioned pension plans to the net amounts measured and recognized in the balance sheet.


	January 3,		December 28,
	2016		2014
Change in benefit obligation:
Benefit obligation – beginning of year	$	43,008	35,421
Interest cost		1,697	1,744
Actuarial (gain) loss		(2,577)	9,089
Provision paid		(1,306)	(2,842)
Settlement gain		—	(404)	*
Benefit obligation – end of year		40,822	43,008
Change in plan assets:
Fair value of plan assets – beginning of year		34,050	34,303
Actual return on plan assets		(328)	2,178
Employer contributions		4,000	411
Benefits paid		(1,306)	(2,842)
Fair value of plan assets – end of year		36,416	34,050
Funded status		(4,406)	(8,958)
Net liability recognized in the balance sheet	$	(4,406)	(8,958)

* Lump sum amounts in total were $404 less than the projected benefit obligation.

Components of net periodic (income) cost are:


	Year s ended
	January 3,		December 28,	December 29,
	2016		2014	2013
Interest cost on projected benefit obligation	$	1,697	1,744	1,611
Expected return on assets		(2,342)	(2,464)	(1,716)
Net amortization loss		111	—	506
Net periodic pension (income) expense		(534)	(720)	401
One-time additional expense from settlement accounting		—	241	—
Total pension (income) expense	$	(534)	(479)	401

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

The following are accounting assumptions used to determine benefit obligations and net periodic benefit costs:

	Benefit obligations				Benefit costs
	year s ended				year s ended
	January 3,		December 28,		January 3,		December 28,
	2016		2014		2016		2014
Discount rate	4.4	%	4.0	%	4.0	%	4.0	%
Expected long-term rate of return on assets	7.0		7.2		7.0		7.2
Rate of increase in maximum benefit and compensation limits	4.0		4.0		4.0		4.0

The Company ’ s expected long ‑ term return on plan assets assumption is based on a periodic review and modeling of the plan ’ s asset allocation and liability structure over a long ‑ term horizon. The expected long ‑ term rate of return on assets was selected from within the reasonable r ange of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investment policy, and (b) projections of inflation over the long ‑ term period during which benefits are payable to plan participants.

The plan provides for investments in various investment securities which, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. The Company is guided by an investment committee whose primary focus is to minimize the volatility of the funding ratio by aligning the plan assets with its liabilities in terms of how they both respond to interest rate changes, in order to achieve a satisfactory rate of return based on the long ‑ term asset allocation profile to adequately fund the plan ’ s benefit obligations, while incurring an acceptable pension cost to the Company.

The Company ’ s defined benefit pension plan weighted average asset allocations by asset category are as follows:


	January 3, 2016				December 28, 2014
	Market value		Percent		Market value		Percent
Mutual funds	$	33,912	93.2	%	$	31,433	92.3	%
Annuities		2,151	5.9			2,179	6.4
Common stocks		—	—			—	—
Principal cash		353	0.9			438	1.3
	$	36,416	100.0	%	$	34,050	100.0	%

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

The Company ’ s target allocation by asset category is as follows:


Asset category	Range
Fixed income funds	25–85	%
Equity mutual funds	15–75	%
Other	0–20	%
Cash	0–5	%

b. The Company has a frozen nonqualified deferred compensation plan for certain management personnel whereby participants were able to contribute a percentage of their annual salaries to the plan. At January 3, 2016 and December 28, 2014, the liability related to this plan was approximately $3,660 and $3,767, respectively. The assets of the plan consisted of life insurance policies with face amounts of approximately $10,365, and cash values of approximately $4,341 and $4,198, at January 3, 2016 and December 28, 2014, respectively. On the accompanying balance sheet, the asset is reported in other assets. On the balance sheet as of December 28, 2014, the liability was included in other liabilities. Due to management ’ s intention to terminate the plan during early 2016, the liability as of January 3, 2016 has been included in accrued expenses.

c. In 2004, the Company established a nonqualified deferred compensation plan for the same management group which was eligible to participate in the original plan detailed in the above note 9(b). The intent of management is for the new plan to replace the old plan for certain management personnel . The liabilities of the plan consist of the amounts deferred by the participants together with investment earnings from the participants ’ investment allocations .

While funding of the plan is not required, the Company has chosen to establish a Rabbi Trust whereby the Company sets aside assets for the plan, thus providing the participants with some level of security. At January 3, 2016 and December 28, 2014, the liability related to this plan was approximately $3,107 and $3,017, respectively, and the assets of the Rabbi Trust consisted of mutual funds and cash and cash equivalents of approximately $2,937 and $2,834, respectively. The assets are reported in other assets and the liability is included in other liabilities on the accompanying balance sheet.

d. In 2007, the Company established a nonqualified deferred compensation plan for certain members of management. The Company may make discretionary contributions to the plan. Participants begin vesting in the assets of the plan after one year. Plan participants who were members at the time of ownership change are 100% vested. At January 3, 2016 and December 28, 2014, the liability related to this plan was approximately $8,166 and $7,227, respectively. Assets of the plan held in a Rabbi Trust consisted of life insurance policies with face amounts of approximately $21,991, and cash values of approximately $8,448 and $7,724 held in underlying investments of cash and various mutual funds, at January 3, 2016 and December 28, 2014, respectively. The assets are reported in other assets and the liability is included in other liabilities on the accompanying balance sheet.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

e. The Company sponsors defined contribution benefit plans (401(k) plans) covering substantially all employees meeting eligibility requirements. The Company ’ s contributions vary depending on the plan, but are based primarily on each participant ’ s level of contribution and cannot exceed the maximum allowable for tax purposes. Total contributions were $3,066, $2,748 and $2,482 for the years ended January 3, 2016, December 28, 2014 and December 29, 2013, respectively.

The fair value levels of all Company-held retirement plan assets, are as follows:


	Quoted prices
	in active
	markets for		Other
	identical		observable	Unobservable
	assets		inputs	inputs
	(Level 1)		(Level 2)	(Level 3)	Total
January 3, 2016:
Pension plan assets:
Cash	$	353	—	—	353
Mutual funds		8,155	25,757	—	33,912
Annuities		—	—	2,151	2,151
Deferred compensation assets:
Cash		785	—	—	785
Mutual funds		10,770	—	—	10,770
Cash value – life i nsurance		—	—	4,431	4,431
Total assets at fair value	$	20,063	25,757	6,582	52,402

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)


	Quoted prices
	in active
	markets for		Other
	identical		observable	Unobservable
	assets		inputs	inputs
	(Level 1)		(Level 2)	(Level 3)	Total
December 28, 2014:
Pension plan assets:
Cash	$	438	—	—	438
Mutual funds		31,433	—	—	31,433
Annuities		—	—	2,179	2,179
Deferred compensation assets:
Cash		1,890	—	—	1,890
Mutual funds		8,851	—	—	8,851
Cash value – life i nsurance		—	—	4,198	4,198
Total assets at fair value	$	42,612	—	6,377	48,989

Cash surrender values are provided by the insurance carrier on a periodic basis. The values approximate the fair value of these policies. The values assigned to the individual policies, which are not actively traded on any exchange, are not observable and are considered within Level 3 of the valuation hierarchy. The fair value determined by each insurance carrier is based on the cash surrender values of each policy where the Company is the beneficiary.

The change in Level 3 investments is due to net appreciation of underlying investments of $205.

(10)

Concentrations of Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade receivables with a variety of customers, cash investments and other short ‑ term investments deposited with financial institutions. The Company generally does not require collateral from its customers. Such credit risk is considered by management to be limited due to the Company ’ s broad customer base and its customers ’ financial resources.

During the years ended January 3, 2016 and December 28, 2014 and at various times throughout these years, the Company maintained cash balances with financial institutions in excess of amounts that are Federally insured. Due to the financial stability of the financial institution where cash and cash equivalents are held, management believes the risk of loss of amounts in excess of these insured amounts is remote.

At January 3, 2016 approximately 10% of the Company ’ s employees were covered by collective bargaining agreements. None of the contracts will expire within one year.

(Continued)

BUTTERBALL, LLC

Notes to Financial Statements

January 3, 2016 and December 28, 2014

(In thousands)

(11)

Subsequent Events Evaluation Date

The Company evaluated the events and transactions subsequent to its January 3, 2016 balance sheet date and, in accordance with FASB ASC 855 ‑ 10 ‑ 50, Subsequent Events , determined there were no significant events to report through February 12, 2016, which is the date the Company issued its financial statements, except as follows:

Effective January 4, 2016, the Company amended both its subordinated debt and warrant agreements with Seaboard. The new debt agreement reduces the stated interest rate to 10%, with all interest incurred after the amendment date being paid every six months. All other terms under the note agreement remained similar. The elimination of the PIK interest accrual reduces the total cumulative estimated accrued payment at maturity in December 2017 to $164,251. The revised warrant agreement prohibits exercise of any warrants held by Seaboard until after December 31, 2018 while extending the period to exercise the warrants until December 31, 2025. The Company is evaluating the impact of this revision on the valuation of the warrants, and any adjustment will be recorded to the Company ’ s member equity records.