Seaboard earnings take hit from accounting error

Seaboard earnings take hit from accounting error Seaboard Corp., parent of Seaboard Marine, reported profit of $21 million in the quarter ending June 28, compared to $42.7 million in the same 2007 period.
   Sales were $1 billion for the quarter, compared to $742.2 billion in the same period a year earlier. Seaboard is involved in the grain, pork and sugar businesses in addition to shipping.
   Operating income for the marine segment for the quarter was $13.6 million, compared to $25.5 million in the same 2007 period. Sales were $229.7 million for the segment, compared to $205.8 million a year earlier.
   The company said results reflect corrections for an accounting error at the marine segment that was discovered in previously issued financial statements.
   The company said the error arose in how it accounts for foreign out-port operations. The error, if properly recorded, would have decreased sales and net earnings in 2006 by $2.1 million and in 2007 by $4.2 million, and decreased sales and net earnings in the first quarter of 2008 by $964,000.
   'As the effect on prior periods was not considered material, an adjustment to decrease sales and net earnings by $7,236,000 was recorded in the second quarter of 2008,' the company said.
   Seaboard said the increased marine sales reflect higher cargo rates and, to a lesser extent, higher cargo volumes. Rates were up because of higher cost recovery surcharges for fuel, while volumes were higher as a result of the expansion of services in some markets and continued favorable economic conditions in most Latin American markets served.
   The decrease in operating income for the shipping business reflected the higher fuel costs, and operating costs on a per unit shipped basis for stevedoring, terminal costs, charter hire and owned vessel operating costs, and trucking, as well as the $7.2 million accounting error.
   The company noted that on May 30 Seaboard Marine renewed its lease at the Port of Miami through 2029, with two five-year renewal options, the exercise of which are subject to certain conditions.
   The total minimum payments over the initial term are about $283 million and this minimum amount could increase if certain conditions are met. In addition, Seaboard marine will fund about $5 million in terminal upgrades subject to certain conditions. The port will also make certain improvements to Seaboard Marine's container yard and adjacent berths.