Accounting Policies and Basis of Presentation (Policies)

3 Months Ended

Apr. 04, 2015

Accounting Policies and Basis of Presentation

Use of Estimates

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with 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 and accrued pension liability.  Actual results could differ from those estimates.

Supplemental Non-Cash Transactions

Supplemental Non-Cash Transactions

Seaboard has notes receivable from affiliates which accrue pay-in-kind interest income, primarily from one affiliate as discussed in Note 9. Seaboard recognized $4,360,000 and $3,628,000, respectively, of non-cash, pay-in-kind interest income and accretion of discount for the first quarter ended April 4, 2015 and March 29, 2014, respectively, related to these notes receivable.

Recently Issued Accounting Standards Not Yet Adopted

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board issued guidance to develop a single, comprehensive revenue recognition model for all contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. Seaboard is currently evaluating the impact this new guidance will have on its consolidated financial statements and related disclosures.  Seaboard will be required to adopt this guidance on January 1, 2017 and it is currently anticipated that Seaboard will apply this guidance using the cumulative effect transition method.

Subsequent Event

Subsequent Event

Subsequent to April 4, 2015, Seaboard invested $10,000,000 in a business operating a 300 megawatt electricity generating facility in the Dominican Republic.  This investment increased Seaboard’s ownership interest to 29.9% from less than 20%.  Seaboard’s previous investment of $5,910,000 in this business was made in 2006 and was accounted for using the cost method.  As a result of this additional investment in 2015, Seaboard will be required to change its accounting method for this investment to the equity method in the Power segment beginning in the second quarter of 2015.  As a result of this change in accounting method, Seaboard will be required to adjust retroactively as if the equity method had been in effect during all previous periods since Seaboard’s initial investment in 2006.  Had this accounting change occurred as of April 4, 2015, net income for quarters ended April 4, 2015 and March 29, 2014 would not have been materially affected and total investment in affiliates and equity at April 4, 2015 would increase by $19,382,000.  There is no tax impact to Seaboard on these amounts.