Accounting Policies and Basis of Presentation (Policies)

3 Months Ended

Mar. 30, 2019

Summary of Significant Accounting Policies

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“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 condensed 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, lease liabilities and right of use (“ROU”) assets and accrued pension liability. Actual results could differ from those estimates.

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Non-cash investing and financing activities included purchases of property, plant and equipment in accounts payable of $8 million and the impact upon adoption of the new leasing guidance further discussed below. During the three months ended March 30, 2019, $30 million of operating lease ROU assets were obtained in exchange for new operating lease liabilities. Cash paid for amounts included in the measurement of operating lease liabilities was $33 million, all included in net cash from operating activities.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill of $1 million from year-end to March 30, 2019 was related to foreign currency exchange differences within the Commodity Trading and Milling (“CT&M”) segment. As of March 30, 2019, intangible assets were $66 million, net of accumulated amortization of $8 million.

Recently Issued Accounting Standards Adopted

Recently Issued Accounting Standard Adopted

On January 1, 2019, Seaboard adopted new guidance which requires the recognition of ROU assets and lease liabilities for all leases with terms longer than 12 months. As a result of this adoption on January 1, 2019, Seaboard recorded operating lease ROU assets of $460 million, adjusted for the deferred rent liability balance at year-end, and lease liabilities of $498 million. The adoption of the new guidance did not have a material impact on the condensed consolidated statement of comprehensive income and the condensed consolidated statement of cash flows. The accounting for finance leases, formerly called capital leases, remained substantially unchanged. Seaboard adopted the new guidance using the effective date method and, therefore, prior period financials were not revised. Seaboard elected the package of practical expedients available upon transition, which permitted Seaboard to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. All of Seaboard’s equity method investments must adopt the new standard by December 31, 2020. See Note 4 for additional details on the impact of adopting this new accounting standard.