Segment Information

12 Months Ended

Dec. 31, 2020

Segment Information

Segment Information

Note 15 - Segment Information

Seaboard has six reportable segments: Pork, CT&M, Marine, Sugar and Alcohol, Power and Turkey, each offering a specific product or service. Seaboard’s reporting segments are based on information used by Seaboard’s Chief Executive Officer in his capacity as chief operating decision maker to determine allocation of resources and assess performance. Each of the six segments is separately managed, and each was started or acquired independent of the other segments. The Pork segment primarily produces hogs to process and sells fresh and frozen pork products to further processors, foodservice operators, distributors and grocery stores throughout the U.S. and to foreign markets. This segment also produces biodiesel from pork fat and other animal fats and vegetable oils for sale to third parties. Substantially all of Seaboard’s Pork segment’s hourly employees at its processing plant are covered by a collective bargaining agreement that expires in 2024. The CT&M segment is an integrated agricultural commodity trading, processing and logistics operation that internationally markets wheat, corn, soybean meal and other agricultural commodities in bulk to third-party customers and to non-consolidated affiliates. This segment also operates flour, maize and feed mills and bakery operations in numerous foreign countries. The Marine segment provides cargo shipping services in the U.S., the Caribbean and Central and South America. The Sugar and Alcohol segment produces and processes sugar and alcohol in Argentina, primarily to be marketed locally. The Power segment is an independent power producer in the Dominican Republic operating a power generating barge. The Turkey segment, accounted for using the equity method, produces turkeys to process and sells turkey products. Total assets for the Turkey segment represent Seaboard’s investment in Butterball. Revenues for the All Other segment are primarily derived from a jalapeño pepper processing operation. Below are significant segment events that impact financial results for the periods covered by this report.

In February 2019, the Pork segment entered into an asset purchase agreement to buy an idle ethanol plant in Hugoton, Kansas for approximately $40 million. Seaboard accounted for this transaction as an asset acquisition as no workforce or substantive processes were acquired. The purchase price was allocated to property, plant and equipment based on a relative fair value basis. The Pork segment is converting the Hugoton, Kansas plant to a renewable diesel production facility, with operations currently expected to begin in 2022. The Pork segment’s biodiesel plants have historically received federal blender’s credits for the biodiesel they blend. As a result of the 2019 Tax Act, Seaboard recognized $60 million of net

revenue related to the 2018 and 2019 federal blender’s credits. Revenue was recognized as earned during 2020 based on biodiesel production and will be recognized in the same manner for years 2021 and 2022.

In October 2019, the CT&M segment obtained control of a former non-consolidated affiliate that operates a grain trading business in Peru. On January 5, 2018, the CT&M segment acquired flour milling and associated businesses in Senegal, Ivory Coast and Monaco. See Note 2 for further details of these acquisitions.

The Power segment is currently constructing a power barge for use in the Dominican Republic that is anticipated to begin operations by the end of 2021, alongside its existing barge; however Seaboard continues to explore strategic alternatives for the existing barge, including selling or relocating.

The following tables set forth specific financial information about each segment as reviewed by Seaboard’s management, except for the Turkey segment information previously disclosed in Note 7. Operating income and total assets in 2019 and 2018 have been adjusted in the Pork segment to reflect the change in inventory accounting method as described in Note 1. Operating income for segment reporting is prepared on the same basis as that used for consolidated operating income. Operating income, along with income (loss) from affiliates for the Pork, CT&M and Turkey segments, are used as the measures of evaluating segment performance because management does not consider interest, other investment income (loss) and income tax 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. 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 programs, which are offset by the effect of the mark-to-market adjustments on these investments recorded in other investment income (loss), net.

Net Sales:

	Years ended December 31,
(Millions of dollars)	2020		2019		2018
Pork	$	1,941	$	1,851	$	1,774
CT&M		3,994		3,672		3,428
Marine		1,005		1,061		1,057
Sugar and Alcohol		106		121		184
Power		64		117		122
All Other		16		18		18
Segment/Consolidated Totals	$	7,126	$	6,840	$	6,583

Operating Income (Loss):

	Years ended December 31,
			2019		2018
(Millions of dollars)	2020		ADJUSTED		ADJUSTED
Pork	$	131	$	60	$	144
CT&M		118		62		46
Marine		21		4		25
Sugar and Alcohol		2		(16)		9
Power		3		27		21
All Other		1		2		2
Segment Totals		276		139		247
Corporate		(31)		(29)		(11)
Consolidated Totals	$	245	$	110	$	236

Income (Loss) from Affiliates:

	Years ended December 31,
(Millions of dollars)	2020		2019		2018
Pork	$	(9)	$	(22)	$	(30)
CT&M		(2)		(5)		(11)
Marine		2		3		2
Sugar and Alcohol		1		1		1
Power		—		3		10
Turkey		(10)		(21)		(16)
Segment/Consolidated Totals	$	(18)	$	(41)	$	(44)

Depreciation and Amortization:

	Years ended December 31,
(Millions of dollars)	2020		2019		2018
Pork	$	106	$	75	$	73
CT&M		28		25		22
Marine		23		23		24
Sugar and Alcohol		7		6		6
Power		8		8		8
Segment Totals		172		137		133
Corporate		—		1		1
Consolidated Totals	$	172	$	138	$	134

Total Assets:

	December 31,
			2019
(Millions of dollars)	2020		ADJUSTED
Pork	$	1,927	$	1,866
CT&M		1,585		1,621
Marine		508		554
Sugar and Alcohol		153		139
Power		302		283
Turkey		265		275
All Other		6		10
Segment Totals		4,746		4,748
Corporate		1,653		1,601
Consolidated Totals	$	6,399	$	6,349

Investments in and Advances to Affiliates:

	December 31,
(Millions of dollars)	2020		2019
Pork	$	172	$	183
CT&M		222		237
Marine		30		32
Sugar and Alcohol		6		5
Power		3		3
Turkey		265		275
Segment/Consolidated Totals	$	698	$	735

Capital Expenditures:

	Years ended December 31,
(Millions of dollars)	2020		2019		2018
Pork	$	207	$	164	$	86
CT&M		8		23		29
Marine		10		26		18
Sugar and Alcohol		5		15		5
Power		27		121		23
All Other		2		—		—
Segment Totals		259		349		161
Corporate		—		—		1
Consolidated Totals	$	259	$	349	$	162

Geographic Information

Seaboard had sales in Colombia totaling $812 million, $778 million and $757 million for the years ended December 31, 2020, 2019 and 2018, respectively, representing approximately 11% of total sales for each year. Seaboard had sales in South Africa totaling $743 million, $668 million and $589 million for the years ended December 31, 2020, 2019 and 2018, respectively, representing approximately 10%, 10% and 9% of total sales for each respective year. No other individual foreign country accounted for 10% or more of sales to external customers.

The following table provides a geographic summary of net sales based on the location of product delivery:

	Years ended December 31,
(Millions of dollars)	2020		2019		2018
Caribbean, Central and South America	$	2,744	$	2,792	$	2,753
Africa		2,099		1,859		1,668
United States		1,536		1,447		1,408
Pacific Basin and Far East		435		370		381
Canada/Mexico		202		308		255
Europe		101		52		100
All other		9		12		18
Totals	$	7,126	$	6,840	$	6,583

The following table provides a geographic summary of Seaboard’s property, plant and equipment according to their physical location and primary port for the vessels:

	December 31,
(Millions of dollars)	2020		2019
United States	$	1,053	$	899
Singapore		155		139
Dominican Republic		109		103
Argentina		59		59
Senegal		42		43
Ivory Coast		34		33
Zambia		25		38
All other		105		117
Totals	$	1,582	$	1,431