Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 17 — Fair Value Measurements

Dole’s financial instruments primarily consist of short-term trade and grower receivables, trade payables, notes receivable and notes payable, as well as long-term grower receivables, derivatives, capital lease obligations, term loans, a revolving loan, and notes and debentures. For short-term instruments, the carrying amount approximates fair value because of the short maturity of these instruments. For long-term financial instruments, excluding Dole’s secured and unsecured notes and debentures, and term loans, the carrying amount approximates fair value since they bear interest at variable rates or fixed rates which approximate market.

The inputs used to measure fair value are based on a hierarchy that prioritizes observable and unobservable inputs used in valuation techniques. These levels, in order of highest to lowest priority are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following table provides a summary of the assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
	December 31, 2011			January 1, 2011
	(In thousands)
Assets:
Foreign currency exchange contracts	$	5,632		$	17,869
Bunker fuel contracts		1,563			1,587
	$	7,195		$	19,456
Liabilities:
Foreign currency exchange contracts	$	(194,034	)	$	(31,061	)
Interest rate swap		—			(11,310	)
Cross currency swap, net		—			(128,796	)
	$	(194,034	)	$	(171,167	)

For Dole, the assets and liabilities that are required to be recorded at fair value on a recurring basis are the derivative instruments. The fair values of Dole’s derivative instruments are determined using Level 2 inputs, which are defined as “significant other observable inputs.” The fair values of the foreign currency exchange contracts, bunker fuel contracts, interest rate swap and cross currency swap were estimated using internal discounted cash flow calculations based upon forward foreign currency exchange rates, bunker fuel futures, interest-rate yield curves or quotes obtained from brokers for contracts with similar terms less any credit valuation adjustments. Dole recorded a credit valuation adjustment at December 31, 2011 which reduced the derivative liability balances. The credit valuation adjustment was $10.5 million at December 31, 2011. The net change in the credit valuation adjustment resulted in an unrealized gain of $8.1 million during the year ended December 31, 2011, which was recorded as other income (expense). The credit valuation adjustment was $0.5 million at January 1, 2011 which reduced the derivative liability balances. In addition a $1.9 million unrealized gain was recorded in AOCI. The net change in the credit valuation adjustment resulted in an unrealized loss of $1.8 million during the year ended January 1, 2011. Of this loss, $0.5 million was recorded as interest expense and $1.3 million was recorded as other income (expense), net.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Dole is required to record assets and liabilities at fair value on a nonrecurring basis. Nonfinancial assets such as goodwill, indefinite-lived intangible assets and long-lived assets are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized.

During 2011 and 2010, respectively, $6.2 million and $4.8 million of assets were written down to their estimated fair value of $0 based on level 3 inputs.

The goodwill and indefinite-lived intangible asset impairment analysis were performed by Dole during 2011 using a combination of discounted cash flow models and market multiples. The discounted cash flow models used estimates and assumptions including pricing and volume data, anticipated growth rates, profitability levels, tax rates and discount rates. The fair value of the goodwill and indefinite-lived intangible asset are highly sensitive to differences between estimates and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets.

Credit Risk

The counterparties to the foreign currency and bunker fuel forward contracts and the interest rate and cross currency swaps consist of a number of major international financial institutions. Dole has established counterparty guidelines and regularly monitors its positions and the financial strength of these institutions. While counterparties to hedging contracts expose Dole to credit-related losses in the event of a counterparty’s non-performance, the risk would be limited to the unrealized gains on such affected contracts. Dole does not anticipate any such losses.

Fair Value of Retirement Plan Assets

Dole estimates the fair value of its retirement plan assets based on current quoted market prices. In instances where quoted market prices are not readily available, the fair value of the investments is estimated by the trustee. The carrying value and estimated fair values of Dole’s retirement plan assets are summarized below:

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active  Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2011
	(In thousands)
Cash and cash equivalents	$	508	$	—	$	—	$	508
Corporate debt instruments		—		3,462		—		3,462
Common stock		973		—		—		973
Interest in registered investment companies		27,106		—		—		27,106
Common collective trusts		—		87,678		1,439		89,117
Interests in limited partnerships		—		—		365		365
Interest in 103-12 investment companies		—		50,740		7,351		58,091
Unallocated annuity contracts		—		—		11,149		11,149
Preferred stock and other		—		800		—		800
Total	$	28,587	$	142,680	$	20,304	$	191,571

	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active  Markets for Identical Assets (Level 1)			Significant  Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		January 1, 2011
	(In thousands)
Cash and cash equivalents	$	421		$	—		$	—	$	421
U.S. government securities		9,856			11,925			—		21,781
Foreign government/state/municipal securities		—			608			—		608
Corporate debt instruments		—			16,887			—		16,887
Common stock		905			—			—		905
Interest in registered investment companies		38,983			—			—		38,983
Common collective trusts		—			99,378			1,652		101,030
Interests in limited partnerships		—			—			4		4
Interest in 103-12 investment companies		—			—			14,534		14,534
Unallocated annuity contracts		—			—			10,762		10,762
Preferred stock and other		—			642			—		642
Due to (from) broker for investments, net		(147	)		(6,485	)		—		(6,632	)
Total	$	50,018		$	122,955		$	26,952	$	199,925

The table below sets forth a summary of changes in the fair value of the plan’s Level 3 assets for the year ended December 31, 2011:

	Fair Value Measurements Using significant Unobservable Inputs (Level 3)
	Common Collective Trusts			Interest in Limited Trusts			Unallocated Annuity Contracts			Interest in 103-12 Investment Companies			Total
	(In thousands)
Beginning balance — January 2, 2010	$	1,849		$	28		$	10,420		$	11,666		$	23,963
Net realized and unrealized gains/(losses)		19			10			(3	)		2,982			3,008
Net purchases, issuances and settlements		(216	)		(34	)		345			(114	)		(19	)
Net transfer in or (out) of Level 3		—			—			—			—			—
Beginning balance — January 1, 2011		1,652			4			10,762			14,534			26,952
Net realized and unrealized gains/(losses)		171			—			—			(1,866	)		(1,695	)
Net purchases, issuances and settlements		(384	)		—			387			(5,317	)		(5,314	)
Net transfer in or (out) of Level 3		—			361			—			—			361
Ending balance — December 31, 2011	$	1,439		$	365		$	11,149		$	7,351		$	20,304