Notes Payable and Long-Term Debt

3 Months Ended

Mar. 24, 2012

Notes Payable and Long-Term Debt [Abstract]

NOTES PAYABLE AND LONG-TERM DEBT

NOTE 9 — NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt consisted of the following:

	March 24, 2012			December 31, 2011
	(In thousands)
Unsecured debt:
8.75% debentures due 2013	$	155,000		$	155,000
Secured debt:
13.875% notes due 2014		174,904			174,904
8% notes due 2016		315,000			315,000
Revolving credit facility		50,000			69,300
Term loan facilities		895,500			895,500
Contracts and notes, at a weighted average interest rate of 4.6% in 2012 (3.8% in 2011) through 2018		7,070			7,294
Capital lease obligations, at a weighted average interest rate of 2.7% in 2012 (3.0% in 2011)		59,793			57,000
Notes payable, at a weighted average interest rate of 2.3% in 2012 (3.1% in 2011)		56,438			27,969
Unamortized debt discounts		(20,890	)		(22,130	)
		1,692,815			1,679,837
Notes payables and current maturities, net of unamortized debt discounts		(66,982	)		(38,725	)
	$	1,625,833		$	1,641,112

Notes Payable

Dole borrows funds primarily on a short-term basis to finance current operations. The terms of these borrowings range from one month to six months. Dole’s notes payable at March 24, 2012 consist primarily of foreign borrowings in Asia and Latin America.

2011 Refinancing

Dole’s senior secured term loan and the asset-based lending senior secured revolving credit facility (“ABL revolver”) were amended and restated on July 8, 2011 (“2011 Refinancing”). The amendments reduced borrowing rates on the ABL revolver, with an opportunity to also reduce future borrowing rates on the term loan and eliminated the financial maintenance covenants of total leverage ratio and minimum interest coverage ratio (such covenants had been in the previous term loan facilities, but not the revolving credit facility). The amended credit facilities provide $895.5 million of term debt due 2018 and a $350 million revolving credit facility due 2016. During the third quarter of fiscal 2011, Dole incurred debt issuance costs of $13 million.

Term Loans and Revolving Credit Facility

As of March 24, 2012, the term loan facilities consisted of $313.4 million of Term Loan B and $582.1 million of Term Loan C. The term loan facilities bear interest, at Dole’s option, at a rate per annum equal to either (i) the London Interbank Offer Rate (“LIBOR”) plus 3.75%, with a LIBOR floor of 1.25%; or (ii) a base rate plus 2.75%. Interest on the term loan facilities is payable quarterly in arrears or at maturity of LIBOR contracts. The weighted average variable interest rate at March 24, 2012 for Term Loan B and Term Loan C was 5.03%. The term loan facilities require quarterly principal payments, plus a balloon payment due in 2018.

As of March 24, 2012, there was $50 million outstanding under the asset-based lending senior secured revolving credit facility (“ABL revolver”). Amounts outstanding under the ABL revolver bear interest, at Dole’s option, at a rate per annum equal to either (i) LIBOR plus 1.75% to 2.25%, or (ii) a base rate plus 0.75% to 1.25%, in each case, based upon Dole’s historical borrowing availability under this facility. The weighted average variable interest rate at March 24, 2012 for the ABL revolver was 2.70%. As of March 24, 2012, the borrowing base for the ABL revolver was $321.8 million. After taking into account approximately $98.4 million of outstanding letters of credit issued under the ABL revolver and the outstanding ABL balance, Dole had approximately $173.4 million available for borrowings as of March 24, 2012. The ABL revolver matures in 2016.

Covenants

Provisions under the amended senior secured credit facilities and the indentures governing Dole’s senior secured notes and debentures require Dole to comply with certain covenants. These covenants include limitations on, among other things, indebtedness, investments, liens, loans to subsidiaries, employees and third parties, the issuance of guarantees and the payment of dividends. The ABL revolver also contains a “springing covenant,” which would not be effective unless the availability under the ABL revolver were to fall below the greater of (i) $35 million and (ii) 12.5% of the lesser of the Total Commitment (as defined) and the borrowing base. To date, the springing covenant has never been effective and Dole does not currently anticipate that the springing covenant will become effective. At March 24, 2012, Dole was in compliance with all applicable covenants.

A breach of a covenant or other provision in any debt instrument governing Dole’s current or future indebtedness could result in a default under that instrument and, due to customary cross-default and cross-acceleration provisions, could result in a default under Dole’s other debt instruments. Upon the occurrence of an event of default under the senior secured credit facilities or other debt instrument, the lenders or holders of such debt could elect to declare all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If Dole were unable to repay those amounts, the lenders could proceed against the collateral granted to them, if any, to secure the indebtedness. If the lenders under Dole’s indebtedness were to accelerate the payment of the indebtedness, Dole cannot give assurance that its assets would be sufficiently liquid to repay in full its outstanding indebtedness on an accelerated basis.

Debt Issuance Costs

Debt issuance costs are capitalized and amortized into interest expense over the term of the underlying debt. During the quarters ended March 24, 2012 and March 26, 2011, Dole amortized deferred debt issuance costs of $1.3 million and $1.5 million, respectively.

Debt discounts are amortized into interest expense over the term of the underlying debt. During the quarters ended March 24, 2012 and March 26, 2011, Dole amortized debt discounts of $1.2 million and $1.1 million, respectively.

Fair Value of Debt

Dole estimates the fair value of its secured and unsecured notes and debentures based on current quoted market prices. The term loans are traded between institutional investors on the secondary loan market, and the fair values of the term loans are based on the last available trading price.

The carrying values and estimated fair values of Dole’s debt are summarized below:

	March 24, 2012				December 31, 2011
	Carrying Values		Estimated Fair  Values		Carrying Values		Estimated Fair  Values
	(In thousands)
Secured and unsecured notes and debentures	$	634,802	$	698,003	$	633,970	$	694,314
Term loans		884,712		898,858		884,304		888,784

Carrying values are net of debt discounts.