Operating Leases and Other Commitments

12 Months Ended

Dec. 29, 2012

Operating Leases and Other Commitments

Note 15 — Operating Leases and Other Commitments

In addition to obligations recorded on Dole’s Consolidated Balance Sheet as of December 29, 2012, Dole has commitments under cancelable and non-cancelable operating leases, primarily for land, machinery and equipment, vessels and containers and office and warehouse facilities. A significant portion of Dole’s lease payments are fixed.

Total rental expense, including rent related to cancelable and non-cancelable leases were as follows:

	December 29, 2012			December 31, 2011			January 1, 2011
	(In thousands)
Continuing Operations:
Rental expense, gross	$	118,536		$	133,158		$	156,908
Sublease income		(23,306	)		(17,336	)		(16,154	)
	$	95,230		$	115,822		$	140,754
Discontinued Operations:
Rental expense, gross		51,125			50,392			45,297
Sublease income		(152	)		(83	)		(157	)
	$	50,973		$	50,309		$	45,140

Dole and Castle and Cooke, Inc. are parties to a corporate aircraft lease agreement in which the parties are responsible for 68% and 32%, respectively, of all obligations. The corporate aircraft lease agreement includes a residual value guarantee of up to $7 million of which Dole’s share is $4.8 million at the termination of the lease in 2018. Dole does not currently anticipate any future payments related to this residual value guarantee.

As of December 29, 2012, Dole’s non-cancelable minimum lease commitments, including the residual value guarantee, before sublease income, were as follows:

Fiscal Year	Discontinued Operations		Continuing Operations		Total
	(In thousands)
2013	$	13,674	$	75,817	$	89,491
2014		10,722		53,460		64,182
2015		10,132		29,744		39,876
2016		9,251		17,499		26,750
2017		8,592		13,477		22,069
Thereafter		42,838		32,343		75,181
Total	$	95,209	$	222,340	$	317,549

Total expected future sublease income expected to be earned over 7 years is $0.1 million for Dole Asia and $20.9 million for Dole following the completion of the sale transaction.

In order to secure sufficient product to meet demand and to supplement Dole’s own production, Dole historically has entered into non-cancelable agreements with independent growers, primarily in Latin America and North America, to purchase substantially all of their production subject to market demand and product quality. Prices under these agreements are generally tied to prevailing market rates and contract terms generally range from one to ten years. Total purchases under these agreements for the years ended December 29, 2012, December 31, 2011 and January 1, 2011were $708.1 million, $667.6 million and $637.3 million, respectively. Of these total purchases, $132.8 million, $117.2 million and $91.4 million were related to discontinued operations for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively.

At December 29, 2012, aggregate future payments under such purchase commitments (based on December 29, 2012 pricing and volumes) were as follows:

Fiscal Year	Discontinued Operations		Continuing Operations		Total
	(In thousands)
2013	$	42,007	$	559,123	$	601,130
2014		12,887		254,147		267,034
2015		12,022		85,563		97,585
2016		11,412		14,972		26,384
2017		10,870		13,803		24,673
Thereafter		12,869		13,803		26,672
Total	$	102,067	$	941,411	$	1,043,478

In order to ensure a steady supply of packing supplies and to maximize volume incentive rebates, Dole historically has entered into contracts for the purchase of packing supplies; some of these contracts run through 2014. Prices under these agreements are generally tied to prevailing market rates. Purchases under these contracts for the years ended December 29, 2012, December 31, 2011 and January 1, 2011 were approximately $209 million, $199 million and $190.4 million, respectively. Of these total contracts, $44.9 million, $46.7 million and $32.9 million were related to discontinued operations for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively.

Under these contracts, Dole was committed at December 29, 2012 to purchase packing supplies, assuming current price levels, as follows:

Fiscal Year	Discontinued Operations		Continuing Operations		Total
	(In thousands)
2013	$	19,715	$	199,884	$	219,599
2014		7,539		90,000		97,539
Total	$	27,254	$	289,884	$	317,138

Dole has numerous collective bargaining agreements with various unions covering approximately 45% of Dole’s continuing operations hourly full-time and seasonal employees. Of these unionized employees, 57% are covered under a collective bargaining agreement that will expire within one year and the remaining 43% are covered under collective bargaining agreements expiring beyond the upcoming year. Dole Asia has collective bargaining agreements with various unions that cover approximately 29% of employees, of which 92% are covered under collective bargaining agreements that expire within one year, and 8% that expire beyond the upcoming year. These agreements are subject to periodic negotiation and renewal. Failure to renew any of these collective bargaining agreements may result in a strike or work stoppage; however, management does not expect that the outcome of these negotiations and renewals will have a material adverse impact on Dole’s financial condition or results of operations.