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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2021
Summary of Significant Accounting Policies |
Summary of Significant Accounting Policies | Note 1 − Summary of Significant Accounting Policies Operations of Seaboard Corporation and its Subsidiaries Seaboard Corporation and its subsidiaries (collectively, “Seaboard”) together comprise a diverse group of integrated companies with a broad global presence. Seaboard is primarily engaged in hog production and pork processing in the U.S; commodity trading and grain processing in Africa and South America; cargo shipping services in the U.S., Caribbean and Central and South America; sugar and alcohol production in Argentina; and electric power generation in the Dominican Republic. Seaboard also has an equity method investment in Butterball, LLC (“Butterball”), a producer and processor of turkey products. Approximately 77% of the outstanding common stock of Seaboard is collectively owned by Seaboard Flour LLC and SFC Preferred, LLC. Principles of Consolidation and Investments in Affiliates The consolidated financial statements include the accounts of Seaboard Corporation and its domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Financial information from certain foreign subsidiaries and affiliates is reported on a one- to three-month lag, depending on the specific entity. As Seaboard conducts its agricultural commodity trading business with third parties, consolidated subsidiaries and affiliates on an interrelated basis, cost of sales on affiliates cannot be clearly distinguished without making numerous assumptions, primarily with respect to mark-to-market accounting for commodity derivatives. Use of Estimates The preparation of the 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Foreign Currency Transactions and Translation Seaboard has operations in several foreign countries, and the currencies of the countries fluctuate in relation to the U.S. dollar, resulting in exchange gains and losses. Certain Commodity Trading and Milling (“CT&M”) segment consolidated subsidiaries located in Brazil, Canada, Guyana, Ivory Coast, Senegal, South Africa and Zambia use local currency as their functional currency. Also, certain non-controlled, non-consolidated affiliates of the CT&M and Sugar and Alcohol segments use local currency as their functional currency. Assets and liabilities of these subsidiaries are translated to U.S. dollars at year-end exchange rates, and income and expenses are translated at average rates. Translation gains and losses are recorded as components of other comprehensive income (loss). GAAP requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100%. In mid-2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, indicated that the three-year cumulative inflation in that country exceeded 100%. As a result, Seaboard adopted highly inflationary accounting as of July 1, 2018 for Seaboard’s Sugar and Alcohol segment. Under highly inflationary accounting, the Sugar and Alcohol segment’s functional currency became the U.S. dollar, and its income statement and balance sheet are measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities are reflected in foreign currency gains (losses), net. For the years ended December 31, 2021, 2020 and 2019, Seaboard recognized $(1) million, $1 million and $(3) million, respectively, in foreign currency gains (losses) related to the adoption of highly inflationary accounting. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, management considers all demand deposits, overnight investments and other investments with original maturities less than three months as cash equivalents. Supplemental Cash Flow Information The amounts paid for interest and income taxes are as follows:
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​ | Years ended December 31, | ​
(Millions of dollars) | 2021 | ​ | 2020 | ​ | 2019 | ​
Interest, net of interest capitalized | $ | 10 | ​ | $ | 16 | ​ | $ | 36 | ​
Income taxes, net of refunds |  | 104 | ​ |  | 55 | ​ |  | 31 | ​
The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of right of use (“ROU”) assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the consolidated statements of cash flows.
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​ | ​ | ​ | Twelve months ended | ​
​ | ​ | ​ | December 31, | ​
(Millions of dollars) | ​ | ​ | ​ | 2021 | ​ | ​ | 2020 | ​ | ​ | 2019 | ​
Cash paid for amounts included in the measurement of lease liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating cash flows from operating leases | ​ | ​ | $ | 166 | ​ | $ | 142 | ​ | $ | 137 | ​
Operating cash flows from finance leases | ​ | ​ | ​ | 5 | ​ | ​ | 4 | ​ | ​ | 1 | ​
Financing cash flows from finance leases | ​ | ​ | ​ | 14 | ​ | ​ | 7 | ​ | ​ | 2 | ​
ROU assets obtained in exchange for new lease liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | ​ | $ | 244 | ​ | $ | 62 | ​ | $ | 95 | ​
Finance leases | ​ | ​ | ​ | 54 | ​ | ​ | 50 | ​ | ​ | 46 | ​
​ Other non-cash activities were related to the non-cash consideration paid in the acquisitions discussed further in Note 13 and capital expenditures of $5 million included in accounts payable. Short-Term Investments Short-term investments are categorized as trading securities and reported at their estimated fair value with any unrealized gains and losses included in other investment income (loss), net in the consolidated statements of comprehensive income. Purchases and sales are recorded on a settlement date basis, and gains and losses on investment sales are generally based on the specific identification method. Short-term investments are retained for future use in the business. Accounts Receivable The following table presents the components of Seaboard’s receivables as of December 31, 2021 and 2020:
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​ | ​ | ​ | December 31,
Millions of dollars | ​ | ​ | 2021 |  | 2020
Receivables: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Trade | ​ | $ | 553 | ​ | $ | 381 | ​
Due from affiliates | ​ |  | 128 | ​ |  | 111 | ​
Other | ​ |  | 112 | ​ |  | 68 | ​
Total receivables | ​ |  | 793 | ​ |  | 560 | ​
Allowance for credit losses | ​ |  | (31) | ​ |  | (28) | ​
Net receivables | ​ | $ | 762 | ​ | $ | 532 | ​
Accounts receivable are recorded at the invoiced amount and generally do not bear interest. The Power segment, however, collects interest on certain past due accounts, and the CT&M segment provides extended payment terms for certain customers in certain countries due to local market conditions. The allowance for credit losses is Seaboard’s best estimate of the amount of probable credit losses using the current expected credit loss model. This model estimates the lifetime of expected credit loss based on historical experience, current conditions and reasonable supportable forecasts. Changes in estimates, developing trends and other new information can have a material effect on future evaluations. As of December 31, 2021 and 2020, Seaboard had gross foreign receivables of approximately $578 million and $410 million, respectively, which generally represent more of a collection risk than the domestic receivables, although as of December 31, 2021 no individual material amounts were deemed to have a heightened risk of collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. ​ The activity within the allowance for credit losses was as follows:
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​ |  | Balance at | ​ |  | Transition | ​ |  | ​ | ​ |  | ​ | ​ |  | Balance at |
(Millions of dollars) | ​ | beginning of year | ​ | ​ | Adjustment(a) | ​ | ​ | Provision(b) | ​ | ​ | Net deductions(c) | ​ | ​ | end of year |
Allowance for Credit Losses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year Ended December 31, 2021 | ​ | $ | 28 | ​ | ​ | — | ​ | ​ | 5 | ​ |  | (2) | ​ | ​ | $ | 31 | ​
Year Ended December 31, 2020 | ​ | $ | 28 | ​ | ​ | 3 | ​ | ​ | — | ​ |  | (3) | ​ | ​ | $ | 28 | ​
Year Ended December 31, 2019 | ​ | $ | 33 | ​ | ​ | — | ​ | ​ | 5 | ​ |  | (10) | ​ | ​ | $ | 28 | ​
​ (a)Adjustment made upon adoption of new guidance to retained earnings. (b)Provision amounts are charged to selling, general and administrative expenses. (c)Includes write-offs net of recoveries, foreign currency translation adjustments and other adjustments. ​ Notes Receivable Notes receivable are included in other receivables, if current, and other non-current assets, if long-term. Seaboard monitors the credit quality of notes receivable, the majority of which are from its affiliates, using the current expected credit loss model as well. For notes receivable from affiliates, Seaboard obtains and reviews financial information monthly and inquires of Seaboard representatives that serve on their Board of Directors. The activity within the allowance for notes receivable was as follows:
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​ |  | Balance at |  | ​ |  | ​ |  | Balance at |
(Millions of dollars) | ​ | beginning of year | ​ | Provision | ​ | Net deductions | ​ | end of year |
Allowance for Notes Receivable: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year Ended December 31, 2021 | ​ | $ | 17 |  | 1 |  | — | ​ | $ | 18 | ​
Year Ended December 31, 2020 | ​ | $ | 17 |  | — |  | — | ​ | $ | 17 | ​
Year Ended December 31, 2019 | ​ | $ | 17 |  | — |  | — | ​ | $ | 17 | ​
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Inventories Grain, flour and feed inventories at the CT&M segment’s foreign milling operations are valued at the lower of weighted average cost and net realizable value (“NRV”). All other inventories are valued at the lower of first-in, first-out (“FIFO”) cost and NRV. In determining NRV, management makes assumptions regarding estimated sales prices, estimated costs to complete and estimated disposal costs. Changes in future market prices or facts and circumstances could result in a material write down in the value of inventory or decreased future margins on the sale of inventory. Property, Plant and Equipment Property, plant and equipment are carried at cost and are being depreciated on the straight-line method over useful lives, ranging from 3 to 30 years. Property, plant and equipment under finance leases are stated at the present value of minimum lease payments and subsequently amortized using the straight-line method over the earlier of the end of its useful life or the end of the lease term. Routine and planned major maintenance, repairs and minor renewals are expensed as incurred, while major renewals and improvements are capitalized. Property, plant and equipment and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the fourth quarter of 2021, management committed to a plan to dispose of an immaterial CT&M business, which resulted in an impairment of $14 million, primarily foreign currency translation adjustments. Right of Use Assets and Lease Liabilities ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at the lease commencement date. As Seaboard’s leases do not have readily determinable implicit discount rates, Seaboard adjusts its incremental borrowing rate to determine the present value of the lease payments. Seaboard determines the incremental borrowing rate for its leases by adjusting the local risk-free interest rate on its Term Loan due 2028 with a credit risk premium corresponding to Seaboard’s unreported credit rating. Seaboard has elected not to recognize ROU assets and lease liabilities for short-term leases for all classes of underlying assets. Short-term leases are leases with terms greater than 1 month, but less than 12 months. Also, Seaboard elected to account for lease and non-lease maintenance components as a single lease component for all classes of underlying assets. Equity Method Investments Investments in non-controlled affiliates where Seaboard has significant influence are accounted for by the equity method. For the CT&M segment, these investments are primarily in foreign countries, which are less developed than the U.S., and therefore, expose Seaboard to greater financial risks. At certain times when there are ongoing losses, local economies are depressed, commodity-based markets are less stable or foreign governments cause challenging business conditions, the fair value of the equity method investments is evaluated by management. The fair value of these investments is not readily determinable as almost all of these investments are not publicly traded. Management will use other methods to determine fair value such as estimated future cash flows, including assumptions on growth rates, for the business and consideration of other local business conditions as applicable. Goodwill and Other Intangible Assets Goodwill is assessed annually for impairment by each reporting unit at the quarter end closest to the anniversary date of the initial acquisition, or more frequently if circumstances indicate that impairment is likely. Any one event or a combination of events such as change in the business climate, a negative change in relationships with significant customers and changes to strategic decisions, could require an interim assessment prior to the next required annual assessment. If qualitative factors indicate more likely than not an impairment is possible, Seaboard performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. During the year ended December 31, 2021, certain immaterial reporting units recorded a total of $4 million of impairment charges. Based on the annual qualitative assessments conducted by the remaining reporting units, there were no other impairment charges recorded. The changes in the carrying amount of goodwill were as follows:
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​ | ​ | ​ | Pork | ​ | ​ | CT&M | ​ | ​ | ​
(Millions of dollars) |  | ​ | Segment |  | ​ | Segment | ​ | ​ | Total
Balance as of December 31, 2019 | ​ | $ | 18 | ​ | $ | 146 | ​ | $ | 164
Acquisition | ​ | ​ | — | ​ | ​ | 4 | ​ | ​ | 4
Foreign currency translation | ​ |  | — | ​ |  | (1) | ​ | ​ | (1)
Balance as of December 31, 2020 | ​ | ​ | 18 | ​ | ​ | 149 | ​ | ​ | 167
Impairment | ​ |  | — | ​ |  | (4) | ​ | ​ | (4)
Balance as of December 31, 2021 | ​ | $ | 18 | ​ | $ | 145 | ​ | $ | 163
Separable intangible assets with finite lives are amortized over their estimated useful lives and evaluated for impairment similar to property, plant and equipment discussed above. The gross carrying amount and accumulated amortization for finite-lived intangible were as follows:
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​ | ​ | December 31, 2021 | ​ | ​ | December 31, 2020 | ​
​ | ​ | Customer | ​ | Trade | ​ | ​ | ​ | ​ | Customer | ​ | Trade | ​ | ​ | ​
(Millions of dollars) | ​ | relationships | ​ | names | ​ | Total | ​ | ​ | relationships | ​ | names | ​ | Total | ​
Gross carrying amount | $ | 51 | $ | 28 | $ | 79 | ​ | $ | 51 | $ | 28 | $ | 79 | ​
Accumulated amortization and currency translation | ​ | (22) | ​ | (12) | ​ | (34) | ​ | ​ | (16) | ​ | (9) | ​ | (25) | ​
Net carrying amount | $ | 29 | $ | 16 | $ | 45 | ​ | $ | 35 | $ | 19 | $ | 54 | ​
Amortization of intangible assets was $9 million and $8 million for the years ended December 31, 2021 and 2020, respectively. Using the exchange rates in effect at year-end, estimated amortization of intangible assets as of December 31, 2021 is $9 million each year for the next five years. Accrued Self-Insurance Seaboard is self-insured for certain levels of workers’ compensation, health care coverage, property damage, vehicle, product recall and general liability. The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims. Changes in estimates to previously recorded reserves are reflected in current operating results. Asset Retirement Obligation Seaboard has recorded long-lived assets and a related liability for the asset retirement obligation costs associated with the closure of the hog lagoons it is legally obligated to close in the future should Seaboard cease operations or plan to close such lagoons voluntarily in accordance with a changed operating plan. Based on detailed assessments and appraisals obtained to estimate the future asset retirement obligation costs, Seaboard recorded the present value of the projected costs in non-current other liabilities in the consolidated balance sheets with the retirement asset depreciated over the economic life of the related asset. The following table shows the changes in the asset retirement obligation:
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​ | ​ | Years ended December 31,
(Millions of dollars) |  | 2021 |  | 2020
Beginning balance | ​ | $ | 27 | ​ | $ | 25
Accretion expense | ​ |  | 1 | ​ |  | 2
Liability for additional lagoons | ​ |  | 1 | ​ |  | —
Ending balance | ​ | $ | 29 | ​ | $ | 27
Revenue Recognition Seaboard recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to receive in exchange for those goods or services. The majority of Seaboard’s revenue arrangements consist of a single performance obligation as the promise to transfer the individual product or service is not separately identifiable from other promises in the contracts, including shipping and handling and customary storage, and, therefore, not distinct. Revenue from goods and services transferred to customers at a single point in time account for approximately 85% of Seaboard’s net sales. Substantially all of the sales in Seaboard’s Marine segment are recognized ratably over the transit time for each voyage as Seaboard believes this is a faithful depiction of the performance obligation to its customers. Seaboard’s transaction prices are mostly fixed, but occasionally include minimal variable consideration for early payment, volume and other similar discounts, which are highly probable based on the history with the respective customers. Taxes assessed by a governmental authority that are collected by Seaboard from a customer are excluded from sales. Almost all of Seaboard’s contracts with its customers are short-term, defined as less than one year. Seaboard does not disclose the value of unsatisfied performance obligations for: (i) contracts with an original expected length of one year or less; and (ii) contracts for which revenue is recognized at the amount to which it has the right to invoice for services performed. Also, Seaboard recognizes a financing component only on obligations that extend longer than one year. Deferred revenue represents cash payments received in advance of Seaboard’s performance or revenue billed that is unearned. The CT&M segment requires certain customers to pay in advance or upon delivery to avoid collection risk. The Marine segment’s deferred revenue balance primarily relates to the unearned portion of billed revenue when a ship is on the water and has not arrived at the designated port. Deferred revenue balances are reduced when revenue is recognized. The deferred revenue balance as of December 31, 2020 was recognized as revenue during the first quarter of 2021. Derivative Instruments and Hedging Activities Seaboard recognizes all derivatives as either assets or liabilities at their fair values. Accounting for changes in the fair value of a derivative depends on its designation and effectiveness. Derivatives qualify for treatment as hedges for accounting purposes when there is a high correlation between the change in fair value of the instrument and the related change in value of the underlying commitment. Additionally, in order to designate a derivative financial instrument as a hedge for accounting purposes, extensive record keeping is required. For derivatives that qualify as hedges for accounting purposes, the change in fair value has no net impact on earnings, to the extent the derivative is considered effective, until the hedged transaction affects earnings. For derivatives that are not designated as hedging instruments for accounting purposes, or for the ineffective portion of a hedging instrument, the change in fair value affects current period net earnings. From time to time, Seaboard uses derivative instruments to manage various types of market risks, including primarily commodity futures and option contracts, foreign currency exchange agreements, interest rate exchange agreements and equity future contracts. While management believes each of these instruments are primarily entered into in order to effectively manage various market risks, as of December 31, 2021, none of the derivatives were designated and accounted for as hedges, primarily as a result of the extensive record-keeping requirements. Research and Development Seaboard conducts continuous research and development activities to develop new products and to improve existing products and processes. Seaboard incurred research and development expenses of $191 million, $134 million and $143 million for the years ended December 31, 2021, 2020 and 2019, respectively. Income Taxes Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Seaboard accounts for the global intangible low-taxed income (“GILTI”) provision and the base-erosion and anti-abuse tax (“BEAT”) provision taxes in the period incurred. Earnings Per Common Share Earnings per common share are based upon the weighted average shares outstanding during the period. Basic and diluted earnings per share are the same for all periods presented. Accounting Standards 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.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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