Basis of Presentation and Accounting Policies (Policies)

3 Months Ended

Apr. 03, 2021

Basis of Presentation and Accounting Policies

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements include the accounts of Seaboard Corporation and its subsidiaries (“Seaboard”). These financial statements should be read in conjunction with the consolidated financial statements of Seaboard for the year ended December 31, 2020 as filed in its annual report on Form 10-K. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Seaboard’s year-end is December 31. Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year.

The unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and cash flows. Seaboard has consistently applied all accounting policies as disclosed in its latest annual report on Form 10-K to all periods presented in these condensed consolidated financial statements. During the fourth quarter of 2020, Seaboard elected to change its method of valuing its inventories from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method. The effects of the change in accounting principle from LIFO to FIFO were retrospectively applied and, as a result, certain financial statement line items in the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March  28, 2020 were adjusted as necessary. For further information, refer to the annual report on Form 10-K for the year ended December 31, 2020.

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Non-cash investing activities for the three months ended April 3, 2021, included purchases of property, plant and equipment in accounts payable of $24 million. The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of right of use assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the condensed consolidated statements of cash flows.

	Three Months Ended
	April 3,		March 28,
(Millions of dollars)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	36	$	35
Operating cash flows from finance leases		1		1
Financing cash flows from finance leases		2		1
Operating right of use assets obtained in exchange for new operating lease liabilities	$	13	$	38
Finance right of use assets obtained in exchange for new finance lease liabilities		4		8

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill was related to foreign currency exchange differences of $5 million within the Commodity Trading and Milling (“CT&M”) segment. As of April 3, 2021, intangible assets, included in other non-current assets, were $54 million, net of accumulated amortization of $25 million.

Income Taxes

Income Taxes

Seaboard computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income or loss and adjusts the provision for discrete tax items recorded in the period.

Accounting Standards Recently Adopted

Accounting Standard Recently Adopted

On January 1, 2020, Seaboard adopted guidance which requires the use of a new current expected credit loss model in order to determine the allowance for credit losses with respect to receivables, among other financial instruments. This model estimates the lifetime of expected credit loss and replaces the existing incurred loss model. As a result of this adoption, Seaboard recorded a cumulative-effect adjustment of $3 million on January 1, 2020 that decreased retained earnings and increased the allowance for credit losses.