Segment Information

9 Months Ended

Oct. 01, 2022

Segment Information

Segment Information

Note 8 – Segment Information

Seaboard has six reportable segments: Pork, CT&M, Marine, Sugar and Alcohol, Power and Turkey, each offering a specific product or service. For details on the respective products or services of each segment, see Note 13 to the consolidated financial statements included in Seaboard’s annual report for the year ended December 31, 2021.

On January 1, 2022, Seaboard’s Pork segment sold a 50% interest in Seaboard de Mexico USA LLC, its ham-boning operations in Mexico, to Triumph Foods, LLC, a partner in the Pork segment’s other joint ventures, for cash proceeds of approximately $9 million, net of cash sold. As a result of this transaction, the subsidiary was deconsolidated and Seaboard’s Pork segment recognized a $6 million gain on sale of a controlling interest in a subsidiary, classified in Miscellaneous, net. Seaboard’s Pork segment retained a 50% non-controlling interest in Seaboard de Mexico USA LLC, valued at $12 million, that is accounted for using the equity method of accounting.  

On September 2, 2022, Seaboard’s Pork segment acquired hog inventory and certain hog farms in the central U.S. from The Maschhoffs, LLC for total cash consideration of $58 million. These additional farms increase the Pork segment’s sow base, resulting in less reliance on third-party hog suppliers. The purchase was recorded at fair value and the preliminary purchase price allocation was $9 million to inventories, $45 million to property, plant and equipment and $4 million to goodwill. Goodwill represents the assembled workforce and the benefits of acquiring an existing operation.

During the second quarter of 2022, Seaboard’s CT&M segment sold a 20% interest in a protein and commodity trading company to the majority owner for cash proceeds of $12 million. After this transaction, Seaboard retains a 20% interest.

The following tables present Seaboard’s sales disaggregated by revenue source and segment:

Net Sales:		Three Months Ended October 1, 2022
								Sugar
								and				All		Consolidated
(Millions of dollars)		Pork		CT&M		Marine		Alcohol		Power		Other		Totals
Major Products/Services Lines:
Products	$	500	$	1,598	$	—	$	30	$	—	$	4	$	2,132
Transportation		3		—		525		—		—		—		528
Energy		167		—		—		3		52		—		222
Other		8		5		—		—		—		—		13
Segment/Consolidated Totals	$	678	$	1,603	$	525	$	33	$	52	$	4	$	2,895

Net Sales:		Three Months Ended October 2, 2021
								Sugar
								and				All		Consolidated
(Millions of dollars)		Pork		CT&M		Marine		Alcohol		Power		Other		Totals
Major Products/Services Lines:
Products	$	527	$	1,264	$	—	$	29	$	—	$	4	$	1,824
Transportation		3		—		343		—		—		—		346
Energy		84		—		—		3		10		—		97
Other		6		3		—		—		—		—		9
Segment/Consolidated Totals	$	620	$	1,267	$	343	$	32	$	10	$	4	$	2,276

Net Sales:		Nine Months Ended October 1, 2022
								Sugar
								and				All		Consolidated
(Millions of dollars)		Pork		CT&M		Marine		Alcohol		Power		Other		Totals
Major Products/Services Lines:
Products	$	1,504	$	4,872	$	—	$	85	$	—	$	12	$	6,473
Transportation		8		—		1,514		—		—		1		1,523
Energy		428		—		—		3		117		—		548
Other		21		12		—		—		—		—		33
Segment/Consolidated Totals	$	1,961	$	4,884	$	1,514	$	88	$	117	$	13	$	8,577

Net Sales:		Nine Months Ended October 2, 2021
								Sugar
								and				All		Consolidated
(Millions of dollars)		Pork		CT&M		Marine		Alcohol		Power		Other		Totals
Major Products/Services Lines:
Products	$	1,618	$	3,784	$	—	$	79	$	—	$	11	$	5,492
Transportation		6		—		962		—		—		1		969
Energy		236		—		—		5		34		—		275
Other		18		11		—		—		—		—		29
Segment/Consolidated Totals	$	1,878	$	3,795	$	962	$	84	$	34	$	12	$	6,765

The following tables present Seaboard’s operating income (loss) and income (loss) from affiliates by segment. Operating income (loss) for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income (loss), along with income or loss from affiliates for the Pork, CT&M and Turkey segments, is used as the measure to evaluate segment performance because management does not consider interest, other investment income (loss) and income tax benefit (expense) on a segment basis. 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 of general corporate management oversight costs.

Operating Income (Loss):	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
(Millions of dollars)	2022		2021		2022		2021
Pork	$	(51)	$	52	$	(23)	$	242
CT&M		49		25		91		57
Marine		155		42		423		95
Sugar and Alcohol		1		—		3		—
Power		7		(3)		8		(10)
All Other		—		—		1		1
Segment Totals		161		116		503		385
Corporate		(6)		(4)		(10)		(16)
Consolidated Totals	$	155	$	112	$	493	$	369

Income (Loss) from Affiliates:	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
(Millions of dollars)	2022		2021		2022		2021
Pork	$	5	$	—	$	12	$	(2)
CT&M		10		7		19		17
Marine		—		2		3		4
Sugar and Alcohol		—		—		—		—
Power		—		—		—		—
Turkey		33		(10)		60		(19)
Segment/Consolidated Totals	$	48	$	(1)	$	94	$	—

The following tables present total assets by segment and the investments in and advances to affiliates by segment. Corporate assets primarily include cash and short-term investments, other current assets related to deferred compensation plans, long-term investments and other miscellaneous items. Corporate operating results represent certain operating costs not specifically allocated to individual segments and include costs related to Seaboard’s deferred compensation plans, which are offset by the effect of the mark-to-market adjustments on these investments recorded in other investment income (loss), net.

Total Assets:	October 1,		December 31,
(Millions of dollars)	2022		2021
Pork	$	2,582	$	2,265
CT&M		2,164		2,054
Marine		854		749
Sugar and Alcohol		158		155
Power		349		359
Turkey		307		245
All Other		7		7
Segment Totals		6,421		5,834
Corporate		1,323		1,669
Consolidated Totals	$	7,744	$	7,503

Investments in and Advances to Affiliates:	October 1,		December 31,
(Millions of dollars)	2022		2021
Pork	$	155	$	142
CT&M		215		224
Marine		35		33
Sugar and Alcohol		2		4
Power		3		3
Turkey		307		245
Segment/Consolidated Totals	$	717	$	651

The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC (“Butterball”). As of October 1, 2022 and December 31, 2021, Butterball had total assets of $1.2 billion and $1.0 billion, respectively. Butterball’s summarized income statement information was as follows:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
(Millions of dollars)	2022		2021		2022		2021
Net sales	$	552	$	464	$	1,368	$	1,176
Operating income (loss)	$	65	$	(15)	$	105	$	(35)
Net earnings (loss)	$	63	$	(18)	$	114	$	(36)

Since 2010, Seaboard held warrants, which upon exercise for a nominal price, enabled Seaboard to acquire an additional 5% equity interest in Butterball. The warrants qualified for equity treatment under accounting standards and were classified as investments in and advances to affiliates in the consolidated balance sheets. Seaboard could exercise these warrants at any time prior to December 31, 2025, when the warrants would have expired. Butterball had the right to repurchase the warrants for fair market value. The warrant agreement essentially provided Seaboard with a 52.5% economic interest, as these warrants were in substance an additional equity interest. Therefore, Seaboard has historically recorded 52.5% of Butterball’s earnings as income (loss) from affiliates in the consolidated statements of comprehensive income. On April 19, 2022, Seaboard exercised these warrants for nominal consideration to acquire the additional 5% of the issued and outstanding stock units in Butterball, resulting in no impact to the financial statements. All significant corporate governance matters upon exercise are still to be shared equally between Seaboard and its partner in Butterball. Seaboard did not acquire any new consequential rights upon exercise of the warrants.