LONG-TERM RECEIVABLES

9 Months Ended

Oct. 06, 2012

LONG-TERM RECEIVABLES

NOTE 7—LONG-TERM RECEIVABLES

At October 6, 2012, Dole’s long-term financing receivables consisted of $15.5 million of grower advances, net of allowances, $7 million of note receivable related to the sale of the fresh-cut flowers business, $21.4 million of notes receivable related to the sale of a German subsidiary and net long-term trade receivables of $2.3 million. These assets have been included in other assets in the accompanying condensed consolidated balance sheet as of October 6, 2012.

Dole monitors the collectability of these grower advances through periodic review of financial information received from these growers. At October 6, 2012, these advances had an allowance for credit losses of $14.9 million, of which approximately $4.6 million of the net grower advances were 90 days past due. Dole’s historical losses on its long-term grower advances have been immaterial and Dole expects this to continue. During the three quarters ended October 6, 2012, the allowance for grower advances increased by $2.2 million, which resulted in an increase in the provision that was recorded to cost of products sold.

At October 6, 2012, Dole had a $7 million note receivable from the buyer of the fresh-cut flowers business. This receivable is secured by properties that have an estimated fair value in excess of the note, which was due in January 2011. Two of the three Colombian companies that have granted mortgages in such properties to secure their guaranties of such note are currently under reorganization pursuant to Colombian Law 1116. Dole is currently renegotiating with the buyer the terms of the note, including the timing of payment and the interest rate. Dole believes that the note will be collected, based on its secured creditor position in the reorganization. During the second quarter of 2012, Dole received a cash payment of $2.9 million from the owner of certain properties. In exchange, Dole released the mortgages on such properties. Subsequent to such cash payment, the party that made the payment gave Dole written notice pursuant to which Dole allocated $1.3 million to repayment of principal on the note receivable and the remainder to interest.

During the fourth quarter of 2011, Dole entered into an agreement to sell a German subsidiary. The sale was completed during the first quarter of 2012. Net consideration from the sale totaled approximately $49.6 million. Of this amount, $20.6 million of cash proceeds, net of cash disposed, was collected and the remaining $29 million (€22 million) was recorded as notes receivable denominated in euros, which mature on various dates through March 2022. During the second and third quarter of 2012, $0.8 million (€0.6 million) and $6.1 million (€5 million), respectively were collected on the notes receivable. Of the remaining $21.4 million (€14.8 million) notes receivable, approximately $20.1 million was recorded as long-term notes receivable. These notes receivable have annual minimum payment requirements based on the financial performance of the business and are collateralized by the business.

Dole has gross long-term trade receivables of $19.1 million due from a customer in Eastern Europe, for which it is likely that payment will not be received during the next year. During fiscal 2010 and 2009, Dole recorded provisions for bad debt of $11.4 million and $4.4 million, respectively. During the second quarter of 2012, Dole recorded provisions for bad debt of $1 million, which is included in charges for restructuring and long-term receivables, bringing the total allowance for bad debt to $16.8 million. The net receivable of $2.3 million represents management’s best estimate of its net realizable value after consideration of collateral securing the receivables.