Fair Value Measurements

9 Months Ended

Sep. 25, 2020

14. Fair Value Measurements (continued)

The following table provides a summary of the fair values of our derivative financial instruments measured on a recurring basis under the ASC on “Fair Value Measurements and Disclosures” (U.S. dollars in millions):


	Fair value measurements
	Foreign currency forward contracts, net (liability) asset				Bunker fuel contracts, net liability (1)			Interest rate contracts, net liability
	September 25, 2020		December 27, 2019			September 25, 2020		December 27, 2019		September 25, 2020		December 27, 2019
Quoted prices in active markets for identical assets (Level 1)	$	—	$	—		$	—	$	—	$	—	$	—
Significant observable inputs (Level 2)	(2.8)		1.0			(1.2)		—		(55.1)		(30.3)
Significant unobservable inputs (Level 3)	—		—			—		—		—		—

(1) Includes both designated and dedesignated cash flow hedges. Refer to Note 13, “Derivative Financial Instruments”, for the balances of each.

In estimating our fair value disclosures for financial instruments, we use the following methods and assumptions:

Cash and cash equivalents: The carrying amount reported in the Consolidated Balance Sheets for these items approximates fair value due to their liquid nature and are classified as Level 1.

Trade accounts receivable and other accounts receivable, net: The carrying value reported in the Consolidated Balance Sheets for these items is net of allowances, which includes a degree of counterparty non-performance risk and are classified as Level 2.

Accounts payable and other current liabilities: The carrying value reported in the Consolidated Balance Sheets for these items approximates their fair value, which is the likely amount for which the liability with short settlement periods would be transferred to a market participant with a similar credit standing as ours and are classified as Level 2.

Long-term debt: The carrying value of our long-term debt reported in the Consolidated Balance Sheets approximates their fair value since they bear interest at variable rates which contain an element of default risk. The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for those or similar instruments. Refer to Note 8, “Debt and Finance Lease Obligations.”

Fair Value of Non-Financial Assets

The fair value of the banana reporting unit's goodwill and the prepared food reporting unit's goodwill and remaining trade names and trademarks are highly sensitive to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets. We disclosed the sensitivity related to the banana reporting unit's goodwill and the prepared food reporting unit's goodwill and remaining trade names and trademarks in our notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2019.

In addition, certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows. To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to impairment of these assets.

14. Fair Value Measurements (continued)

During the nine months ended September 25, 2020, we performed a comprehensive review of our asset portfolio aimed at identifying non-strategic assets to dispose of while driving further efficiencies in our operations. As a result of the review, we identified certain property, plant, and equipment across various of our regions which we intend to sell over the next 12 months and which met the held for sale criteria as of September 25, 2020. These assets primarily relate to our fresh and value-added products segment. Included in the $35.4 million of assets held for sale as of September 25, 2020 were the following: $19.2 million consists of facilities and related assets in the Middle East and the United States, $7.3 million is related to vacant land located in the Kingdom of Saudi Arabia and Mexico, $4.7 million consists of an office, farm land and associated assets in Chile, $3.4 million consists of farm land and associated assets in Asia and Central America, and the remaining $0.8 million relates to a refrigerated vessel. These assets are recognized at the lower of cost or fair value less cost to sell.

During nine months ended September 25, 2020, we received proceeds of $2.1 million from the sale of surplus land in Chile and recorded a gain on disposal of property, plant and equipment, net of $1.7 million.

Subsequent to the quarter ended September 25, 2020 and in connection with our ongoing asset optimization efforts, we finalized a transaction to sell a Middle East facility and related assets reflected in assets held for sale for a total purchase price of $15.4 million. Pursuant to the terms of the agreement, we received cash proceeds of $7.1 million associated with the sale during the quarter ended September 25, 2020, with the remainder of the purchase price to be collected over a five-year term. The $7.1 million in proceeds is reflected as a liability within accounts payable and accrued expenses in our Consolidated Balance Sheet as of the quarter ended September 25, 2020. Contemporaneously with the closing of the sale, we entered into an operating lease agreement in which we leased back approximately 40% of the facility for a term of six years.

During the first nine months of 2019, we recorded a $2.9 million impairment related to an equity investment. The fair value of this asset is classified as Level 3 in the fair value hierarchy due to the mix of unobservable inputs utilized. During the second quarter of 2019, we sold the equity investment.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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