Note 9 - Segment Information

As of September 27, 2014, Seaboard's Pork segment sold a 50% interest in Daily's to Triumph resulting in a gain on sale of controlling interest in subsidiary of $64,392,000 ($39,279,000 net of taxes, or $33.56 per share) in the third quarter of 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 Condensed Consolidated Balance Sheet as of September 27, 2014 (see Note 1, Supplemental Non-Cash Transactions). Seaboard's remaining 50% investment in Daily's is accounted for in the Pork segment by using the equity method of accounting. Both Seaboard and Triumph supply raw product to Daily's.

The Commodity Trading and Milling segment has a 50% noncontrolling interest in a bakery located in the Democratic Republic of Congo (“DRC”), which began operations in the fourth quarter of 2012. The bakery has been incurring operating losses since it began operations as it continues to resolve equipment problems and attempts to gain market share. As a result of the continuing equipment problems, other production challenges and unfavorable local market conditions causing challenges in gaining market share, Seaboard's management determined achieving improved operating results would take significantly longer than 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 recorded a write-down in the fourth quarter of 2014, which represented the remaining equity investment in this business. As part of its investment, Seaboard has an interest bearing long-term note receivable from this bakery, the terms of which require periodic principal payments and a final maturity date of December 2020. No payment was received in June 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. As of October 3, 2015, the recorded balance of this note receivable from affiliate and previous accrued interest was $34,556,000, all classified as long-term given uncertainty of the timing of payments in the future. Repayment of this note is primarily dependent upon this business improving existing operations to generate adequate future cash flows to make future payments. If the future cash flows of this bakery do not improve, 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. Including this business, as of October 3, 2015 Seaboard had a total of $58,712,000 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 Seaboard'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 $17,000,000 in a flour production business in Brazil for a 50% noncontrolling equity interest and provided a $13,000,000 long-term loan to this business. Half of the interest on this long-term note receivable from affiliate is payable currently in cash and the other half accrues as pay-in-kind interest. This note receivable matures in September 2020 but can be repaid with Seaboard having the option to convert the note receivable to equity 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. Seaboard’s share of additional investments and advances totaled $17,735,000 and $23,289,000 during the three and nine months ended October 3, 2015, respectively. This business, which has received additional third party loans during 2015, incurred significant operating losses in 2014 and for the first nine months of 2015. During the three and nine months ended October 3, 2015, Seaboard recorded losses from affiliate of $4,296,000 and $26,209,000, respectively, related to this investment. Based on current discussions with Seaboard’s business partner and the management of the business, the extent of the losses and revised financial outlook of the business, the halting of the construction plans for a new plant and the amount of existing third party debt of $27,481,000, Seaboard has also reserved an additional $12,937,000 and $22,282,000 for the three and nine months ended October 3, 2015, respectively, 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 October 3, 2015. 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. However, there is no certainty that Seaboard will successfully be able to obtain control. As of December 31, 2014, the recorded balance of this note receivable from affiliate was $13,849,000 and Seaboard's equity investment and advances in this business was $11,669,000. Seaboard also had a gross receivable due from affiliate related to this business resulting from sales of grain and supplies of $22,042,000 and $13,969,000 as of October 3, 2015 and December 31, 2014, respectively, which Seaboard recorded an additional reserve of $5,700,000 during the third quarter for a total reserve of $8,700,000 as of October 3, 2015 based on an analysis of collectability and working capital. It is possible that additional reserves will be necessary during the remainder of 2015.

In September 2014, Seaboard invested $17,333,000 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 reported on a three-month lag basis and thus Seaboard's first proportionate share of earnings was recognized in the first nine months of 2015.

The Power segment had been operating a floating power generating facility (72 megawatts) in the Dominican Republic under a short-term lease agreement, but 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 $4,953,000 gain from sale of assets in operating income related to these items in the third quarter of 2014. During the second quarter of 2015, Seaboard invested an additional $10,000,000 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 $5,910,000 initial investment from Corporate to the Power segment along with $12,691,000 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, 2014.

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC (“Butterball”). Butterball had total net sales for the three and nine months ended October 3, 2015 of $511,125,000 and $1,299,562,000, respectively, compared to total net sales for the three and nine months ended September 27, 2014 of $486,971,000 and $1,218,402,000, respectively. Butterball had operating income for the three and nine months ended October 3, 2015 of $68,997,000 and $162,956,000, respectively, compared to operating income for the three and nine months ended September 27, 2014 of $35,881,000 and $85,311,000, respectively. As of October 3, 2015 and December 31, 2014, Butterball had total assets of $1,074,210,000 and $1,021,182,000, respectively.

In conjunction with Seaboard’s initial investment in Butterball in December 2010, Seaboard has a long-term note receivable from Butterball which had a balance of $154,000,000 as of October 3, 2015. Part of the interest earned on this note is pay-in-kind interest, which accumulates and is paid at maturity in December 2017.

The following tables set forth specific financial information about each segment as reviewed by Seaboard’s management. Operating income for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income, along with income or losses from affiliates for the Commodity Trading and Milling segment, is used as the measure of evaluating segment performance because management does not consider interest, other investment income and income tax expense on a segment basis.

Sales to External Customers:


	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
(Thousands of dollars)	2015		2014		2015		2014
Pork	$	347,137	$	454,927	$	999,284	$	1,303,752
Commodity Trading and Milling		755,750		858,497		2,355,026		2,562,001
Marine		230,328		205,260		708,667		616,684
Sugar		48,938		47,786		139,304		145,128
Power		25,078		51,622		77,719		158,503
All Other		3,542		4,549		11,017		10,800
Segment/Consolidated Totals	$	1,410,773	$	1,622,641	$	4,291,017	$	4,796,868

Operating Income (Loss):


	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
(Thousands of dollars)	2015		2014		2015		2014
Pork	$	25,895	$	70,400	$	60,828	$	241,090
Commodity Trading and Milling		(4,463)		13,309		7,399		43,502
Marine		(2,314)		(4,564)		9,916		(15,013)
Sugar		3,024		6,280		8,016		22,695
Power		3,121		15,044		10,097		19,489
All Other		673		531		1,016		860
Segment Totals		25,936		101,000		97,272		312,623
Corporate		(2,985)		(4,914)		(14,820)		(16,995)
Consolidated Totals	$	22,951	$	96,086	$	82,452	$	295,628

Income (Loss) from Affiliates:


	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
(Thousands of dollars)	2015		2014		2015		2014
Pork	$	2,087	$	-	$	8,576	$	-
Commodity Trading and Milling		(18,720)		(4,729)		(43,916)		(6,934)
Marine		504		-		1,570		-
Sugar		87		(112)		614		636
Power		1,971		400		2,096		1,354
Turkey		30,097		14,333		70,122		30,237
Segment/Consolidated Totals	$	16,026	$	9,892	$	39,062	$	25,293

Total Assets:


	October 3,		December 31,
(Thousands of dollars)	2015		2014
Pork	$	809,716	$	821,172
Commodity Trading and Milling		972,480		1,103,461
Marine		299,547		283,276
Sugar		186,371		198,271
Power		231,599		219,604
Turkey		445,024		393,425
All Other		6,695		5,887
Segment Totals		2,951,432		3,025,096
Corporate		852,801		666,662
Consolidated Totals	$	3,804,233	$	3,691,758

Investments in and Advances to Affiliates:


	October 3,		December 31,
(Thousands of dollars)	2015		2014
Pork	$	101,592	$	79,832
Commodity Trading and Milling		196,736		178,344
Marine		18,356		17,333
Sugar		3,328		2,994
Power		32,444		20,348
Turkey		283,493		244,560
Segment/Consolidated Totals	$	635,949	$	543,411

Administrative services provided by the corporate office are allocated to the individual segments and represent corporate services rendered to and costs incurred for each specific segment, with no allocation to individual segments for 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 losses represent certain operating costs not specifically allocated to individual segments and include costs related to Seaboard’s deferred compensation programs (which are offset by the effect of the mark-to-market investments recorded in other investment income (loss), net).