Investments and Derivative Instruments

9 Months Ended

Mar. 31, 2012

Investments and Derivative Instruments

Investments and Derivative Instruments

The Company purchases various derivative instruments as investments or to create economic hedges of its interest rate risk and commodity price risk. At March 31, 2012 and June 30, 2011, derivative instruments were not designated as accounting hedges as defined by ASC 815, “Accounting for Derivative Instruments and Hedging Activities.” The fair value of derivative instruments is based upon broker quotes. The Company records unrealized gains and losses on trading securities and changes in the market value of certain coffee contracts meeting the definition of derivatives in “Other, net.”

The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

• Level 1 — Valuation is based upon quoted prices for identical instruments traded in active markets.

• Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

• Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:

As of March 31, 2012	Total		Level 1		Level 2		Level 3
(In thousands)			(Unaudited)
Preferred stock(1)	$	18,487	$	13,575	$	4,912	$	—
Futures, options and other derivative assets(1)	$	228	$	—	$	228	$	—
Derivative liabilities(2)	$	1,200	$	—	$	1,200	$	—
As of June 30, 2011	Total		Level 1		Level 2		Level 3
(In thousands)
Preferred stock(1)	$	24,407	$	7,181	$	17,226	$	—
Futures, options and other derivative assets(1)	$	467	$	—	$	467	$	—
Derivative liabilities(2)	$	1,647	$	—	$	1,647	$	—

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(1) Included in “Short-term investments” on the consolidated balance sheet.

(2) Included in “Other current liabilities” on the consolidated balance sheet.

There were no significant transfers of securities between Level 1 and Level 2 in each of the periods presented.

Gains and losses, both realized and unrealized, are included in “Other, net.” Net realized and unrealized gains and losses are as follows:

	Three Months Ended March 31,					Nine Months Ended  March 31,
(In thousands)	2012			2011		2012			2011
	(Unaudited)
Net realized (losses) gains	$	(5,006	)	$	190	$	(4,925	)	$	190
Net unrealized gains (losses)	2,125			254		(206		)	2,844
Net realized and unrealized (losses) gains	$	(2,881	)	$	444	$	(5,131	)	$	3,034

Preferred stock investments as of March 31, 2012 consisted of securities with a fair value of $15.3 million in an unrealized gain position and securities with a fair value of $3.2 million in an unrealized loss position. Preferred stock investments as of June 30, 2011 consisted of securities with a fair value of $18.1 million in an unrealized gain position and securities with a fair value of $6.3 million in an unrealized loss position. The following tables show gross unrealized losses (although such losses have been recognized in the statements of operations) and fair value for those investments that were in an unrealized loss position as of March 31, 2012 and June 30, 2011, aggregated by the length of time those investments have been in a continuous loss position:

	March 31, 2012 (Unaudited)
	Less than 12 Months					Total
(In thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Preferred stock	$	1,516	$	(9	)	$	1,671	$	(1,214	)
	June 30, 2011
	Less than 12 Months					Total
(In thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Preferred stock	$	319	$	(3	)	$	6,326	$	(1,122	)