Equity Method Investments

12 Months Ended

Dec. 31, 2020

Equity Method Investments

Equity Method Investments

Note 7 – Equity Method Investments

Seaboard has several investments in and advances to non-controlled, non-consolidated affiliates that are all accounted for using the equity method of accounting. See Note 15 for detail of the investments in and advances to affiliates by segment. Financial information from certain foreign affiliates is reported on a one- to three-month lag, depending on the specific entity.

Pork Segment		December 31,
(Millions of dollars)		2020		2019		2018
Net sales	$	1,543	$	1,453	$	927
Net loss	$	(18)	$	(43)	$	(60)
Total assets	$	586	$	639	$	623
Total liabilities	$	245	$	277	$	243
Total equity	$	341	$	362	$	380

The Pork segment has a 50% noncontrolling interest in Daily’s Premium Meats, LLC (“Daily’s”) and Seaboard Triumph Foods, LLC (“STF”). Daily’s produces and markets raw and pre-cooked bacon. STF operates a pork processing plant, which began operations in September 2017. Seaboard’s Pork segment supplies raw materials to both of these facilities for processing and provides marketing services to STF for its pork products. Combined condensed financial information of these entities for each of Seaboard’s years ended is included in the table above.

CT&M Segment	December 31,
(Millions of dollars)	2020			2019		2018
Net sales	$	2,482	$	3,129	$	3,238
Net loss	$	(2)	$	(12)	$	(13)
Total assets	$	1,745	$	1,697	$	1,914
Total liabilities	$	1,185	$	1,075	$	1,242
Total equity	$	560	$	622	$	672

The CT&M segment has noncontrolling interests in foreign businesses conducting flour, maize and feed milling, baking operations, poultry production and processing, and agricultural commodity trading. Seaboard’s CT&M segment supplies commodities to the majority of its equity method milling affiliates. As of December 31, 2020, the location and percentage ownership of CT&M’s affiliates were as follows: Botswana (50%), Democratic Republic of Congo (50%), Gambia (50%), Kenya (46.87%-49%), Lesotho (50%), Mauritania (50%), Morocco (11.44%-17.08%), Nigeria (25%-48.33%), Senegal (49%), South Africa (30%-50%), Tanzania (49%) and Zambia (49%) in Africa; Colombia (40%-42%), Ecuador (25%-50%), Guyana (50%), and Peru (50%) in South America; Jamaica (50%) and Haiti (23.33%) in the Caribbean; Turkey (25%) in Europe; Australia (30%-33.33%); and Canada (45%) and the U.S. (40%) in North America. Combined condensed financial information of these entities for each of Seaboard’s years ended is included in the table above. As of December 31, 2020, the CT&M segment’s carrying value of certain investments in affiliates was more than its share of the affiliates’ book value by $54 million. The excess is attributable primarily to the valuation of property, plant and equipment and intangible assets. Certain basis adjustments are being amortized to income (loss) from affiliates over the remaining life of the assets.

During 2018, Seaboard’s CT&M segment acquired a 50% noncontrolling interest in a grain trading and flour milling business in Mauritania for total consideration of $16 million.

Marine Segment		December 31,
(Millions of dollars)		2020		2019		2018
Net sales	$	66	$	70	$	66
Net income	$	8	$	12	$	11
Total assets	$	253	$	269	$	272
Total liabilities	$	98	$	107	$	133
Total equity	$	155	$	162	$	139

The Marine segment has a 21% noncontrolling interest in a cargo terminal business in Jamaica and a 18% noncontrolling interest in a holding company that owns a Caribbean terminal operation. Combined condensed financial information of these entities for each of Seaboard’s years ended is included in the table above. These affiliates provide terminal and stevedoring services to the Marine segment. As of December 31, 2020, the Marine segment’s carrying value of certain investments in affiliates was less than its share of the affiliates’ book value by $29 million. The difference is attributable primarily to the valuation of property, plant and equipment and impairments taken by Seaboard, but not the respective entity. Certain basis adjustments are being amortized to income (loss) from affiliates over the remaining life of the assets.

Sugar and Alcohol Segment	December 31,
(Millions of dollars)	2020			2019		2018
Net sales	$	7	$	10	$	5
Net income	$	1	$	3	$	3
Total assets	$	14	$	13	$	10
Total liabilities	$	2	$	2	$	2
Total equity	$	12	$	11	$	8

The Sugar and Alcohol segment has noncontrolling interests in two sugar-related businesses in Argentina (48% and 50%). Combined condensed financial information of these entities for each of Seaboard’s years ended is included in the table above.

Power Segment	December 31,
(Millions of dollars)	2020			2019		2018
Net sales	$	1	$	143	$	138
Net income	$	—	$	10	$	33
Total assets	$	12	$	11	$	247
Total liabilities	$	6	$	4	$	139
Total equity	$	6	$	7	$	108

The Power segment has noncontrolling interests in two energy-related businesses in the Dominican Republic (45% and 50%). In September 2019, Seaboard’s Power segment sold its 29.9% noncontrolling interest in a Dominican Republic electricity generation facility for $23 million cash, net of $1 million in selling expenses and taxes and recorded a $6 million note receivable in other non-current assets in the consolidated balance sheet. There was no gain or loss recognized in the consolidated statements of comprehensive income upon the sale. Combined condensed financial information of these entities for each of Seaboard’s years ended is included in the table above.

Turkey Segment	December 31,
(Millions of dollars)	2020			2019		2018
Net sales	$	1,675	$	1,612	$	1,591
Operating loss	$	(6)	$	(20)	$	(16)
Net loss	$	(20)	$	(40)	$	(30)
Total assets	$	993	$	1,038	$	1,072
Total liabilities	$	481	$	507	$	502
Total equity	$	512	$	531	$	570

The Turkey segment represents Seaboard’s 50% noncontrolling interest in Butterball. Butterball’s condensed financial information for each of Seaboard’s years ended is included in the table above. Within total assets, Butterball had trade name intangible assets of $111 million and goodwill of $66 million as of December 31, 2020.

Seaboard holds warrants, which upon exercise for a nominal price, would enable Seaboard to acquire an additional 5% equity interest in Butterball. The warrants qualify for equity treatment under accounting standards and are classified as investments in and advances to affiliates in the consolidated balance sheets. Seaboard can exercise these warrants at any time prior to December 31, 2025, when 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 interest. Therefore, Seaboard records 52.5% of Butterball’s earnings as income (loss) from affiliates 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 were exercised, unless Seaboard already owned a majority of the voting rights at the time of exercise.