Fair Value Measurements

6 Months Ended

Jun. 18, 2011

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 15 — FAIR VALUE MEASUREMENTS

Dole’s financial instruments primarily consist of short-term trade and grower receivables, trade payables, notes receivable and notes payable, as well as long-term grower receivables, capital lease obligations, term loans, a revolving loan, and notes and debentures. For short-term instruments, the carrying amount approximates fair value because of the short maturity of these instruments. For the long-term financial instruments, excluding Dole’s secured notes and unsecured debentures, and term and revolving loans, the carrying amount approximates fair value since they bear interest at variable rates or fixed rates which approximate market.

The inputs used to measure fair value are based on a hierarchy that prioritizes observable and unobservable inputs used in valuation techniques. These levels, in order of highest to lowest priority are described below:

Level 1:  Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3:  Unobservable inputs that are not corroborated by market data.

The following table provides a summary of the assets and liabilities measured at fair value on a recurring basis:

	June 18, 2011				January 1, 2011
			Fair Value				Fair Value
			Measurements Using				Measurements Using
			Significant				Significant
			Other Observable				Other Observable
			Inputs				Inputs
	Total		(Level 2)		Total		(Level 2)
	(In thousands)
Assets:
Foreign currency exchange contracts	$	6,702	$	6,702	$	17,869	$	17,869
Bunker fuel contracts		1,947		1,947		1,587		1,587
	$	8,649	$	8,649	$	19,456	$	19,456
Liabilities:
Foreign currency exchange contracts	$	182,051	$	182,051	$	31,061	$	31,061
Interest rate swap		—		—		11,310		11,310
Cross currency swap, net		—		—		128,796		128,796
	$	182,051	$	182,051	$	171,167	$	171,167

For Dole, the assets and liabilities that are required to be recorded at fair value on a recurring basis are the derivative instruments. The fair values of Dole’s derivative instruments are determined using Level 2 inputs, which are defined as “significant other observable inputs.” The fair values of the foreign currency exchange contracts, bunker fuel contracts, interest rate swap and cross currency swap were estimated using internal discounted cash flow calculations based upon forward foreign currency exchange rates, bunker fuel futures, interest-rate yield curves or quotes obtained from brokers for contracts with similar terms, less any credit valuation adjustments. Dole recorded a credit valuation adjustment at June 18, 2011 which reduced the derivative liability balances. The credit valuation adjustment was $6.5 million at June 18, 2011 and $0.5 million at January 1, 2011. For the half year ended June 18, 2011, the net change in credit valuation adjustment resulted in an unrealized gain of $6 million, which was recorded as other income (expense), net. For the half year ended June 19, 2010, the net change in the credit valuation adjustment resulted in a loss of $1.2 million. Of this loss, $0.4 million was recorded as interest expense and $0.8 million was recorded as other income (expense), net. For the quarter ended June 18, 2011, the net change in the credit valuation adjustment resulted in a loss (income) of $1.8 million, which was recorded as other income (expense), net. For the quarter ended June 19, 2010, the net change in the credit valuation adjustment resulted in a loss of $0.2 million. Of this loss, $0.1 million was recorded as interest expense and $0.1 million was recorded as other income (expense), net.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Dole is required to record assets and liabilities at fair value on a nonrecurring basis. Nonfinancial assets such as goodwill, indefinite-lived intangible assets and long-lived assets are measured on an annual basis during the second quarter, or as indicators of impairment arise and recorded at fair value only when an impairment is recognized.

The goodwill and indefinite-lived intangible asset impairment analysis was performed in the second quarter of 2011 using a combination of discounted cash flow models and market multiples. The discounted cash flow models used estimates and assumptions including pricing and volume data, anticipated growth rates, profitability levels, tax rates and discount rates.

Credit Risk

The counterparties to the foreign currency and bunker fuel forward contracts and the interest rate and cross currency swaps consist of a number of major international financial institutions. Dole has established counterparty guidelines and regularly monitors its positions and the financial strength of these institutions. While counterparties to hedging contracts expose Dole to credit-related losses in the event of a counterparty’s non-performance, the risk would be limited to the unrealized gains on such affected contracts. Dole does not anticipate any such losses.