Note 9 - Segment Information

As of September 27, 2014, Seaboard’s Pork segment sold to Triumph Foods LLC (Triumph) a 50% interest in Daily’s. 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. 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% non-controlling interest in a bakery located in the Democratic Republic of Congo (DRC) which began start-up operations in the fourth quarter of 2012. As part of its investment in this bakery, Seaboard has an interest bearing long-term note receivable from this bakery the terms of which require periodic principal payments with the first payment due in June 2015 and a final maturity date of December 2020. Repayment of this note is primarily dependent upon this business improving existing operations to generate adequate future cash flows to make scheduled payments when due. 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 and suspended the use of the equity method as of December 31, 2014. Seaboard discontinued recognizing interest income on the note receivable during the fourth quarter of 2014. As of April 4, 2015, the recorded balance of this Note Receivable and previous accrued interest from Affiliates was $34,556,000, all classified as long-term given uncertainty of the timing of payments in the future. 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 April 4, 2015 Seaboard had a total of $56,939,000 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% non-controlling 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 paid 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 totaled $2,502,000 and $3,886,000 in 2015 and 2014, respectively. This business also incurred significant operating losses in 2014 and the first quarter of 2015. Discussions are ongoing between the owners to determine the extent and timing of future additional investments or loans, by either or both parties, for possible expansion plans to improve operating results. As of April 4, 2015 and December 31, 2014, the recorded balance of this Note Receivable from Affiliates was $14,018,000 and $13,849,000, respectively and Seaboard’s equity investment in this business was $1,950,000 and $11,669,000, respectively. As of April 4, 2015 and December 31, 2014, Seaboard also had a receivable due from affiliates of $14,207,000 and $13,969,000, respectively from sales of grain and supplies related to this business. During the first quarter of 2015, Seaboard recorded losses from affiliates of $11,666,000 related to this investment, which included $5,846,000 for its proportionate share of a deferred income tax asset allowance related to 2014 and 2013.

In September 2014, Seaboard invested $17,333,000 in a cargo terminal business in Jamaica for a 21% non-controlling 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 quarter 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. On April 1, 2014, Seaboard provided notice to cancel the lease. Seaboard ceased operation of the leased facility on September 3, 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 months ended April 4, 2015 and March 29, 2014 of $397,698,000 and $355,763,000, respectively. Butterball had operating income for the three months ended April 4, 2015 and March 29, 2014 of $42,597,000 and $20,748,000, respectively. As of April 4, 2015 and December 31, 2014, Butterball had total assets of $1,008,592,000 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 $145,450,000 as of April 4, 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
	April 4,		March 29,
(Thousands of dollars)	2015		2014
Pork	$	320,888	$	382,090
Commodity Trading and Milling	820,588		789,390
Marine	236,660		200,464
Sugar	45,259		50,356
Power	25,131		53,848
All Other	3,832		3,488
Segment/Consolidated Totals	$	1,452,358	$	1,479,636

Operating Income (Loss):

	Three Months Ended
	April 4,			March 29,
(Thousands of dollars)	2015			2014
Pork	$	16,396		$	60,477
Commodity Trading and Milling	4,482			11,930
Marine	6,779			(7,392		)
Sugar	3,999			6,761
Power	2,634			(1,684		)
All Other	108			337
Segment Totals	34,398			70,429
Corporate Items	(6,559		)	(5,226		)
Consolidated Totals	$	27,839		$	65,203

Income (Loss) from Affiliates:

	Three Months Ended
	April 4,			March 29,
(Thousands of dollars)	2015			2014
Pork	$	2,653		$	-
Commodity Trading and Milling	(9,249		)	(35		)
Marine	653			-
Sugar	416			305
Turkey	16,754			6,374
Segment/Consolidated Totals	$	11,227		$	6,644

Total Assets:

	April 4,		December 31,
(Thousands of dollars)	2015		2014
Pork	$	849,841	$	821,172
Commodity Trading and Milling	1,005,576		1,103,461
Marine	295,184		283,276
Sugar	185,184		198,271
Power	204,904		199,256
Turkey	407,234		393,425
All Other	5,324		5,887
Segment Totals	2,953,247		3,004,748
Corporate Items	761,417		672,572
Consolidated Totals	$	3,714,664	$	3,677,320

Investments in and Advances to Affiliates:

	April 4,		December 31,
(Thousands of dollars)	2015		2014
Pork	$	80,769	$	79,832
Commodity Trading and Milling	182,914		178,344
Marine	17,729		17,333
Sugar	3,339		2,994
Turkey	254,253		244,560
Segment/Consolidated Totals	$	539,004	$	523,063

Administrative services are provided by the corporate office 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. 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).