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Fair value measurements
 6 Months Ended
Apr. 30, 2012
Fair value measurements [Abstract]  
Fair value measurements

8.    Fair value measurements

A fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

 

The following table sets forth our financial assets and liabilities as of April 30, 2012 that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:

 

                                 
    Level 1     Level 2     Level 3     Total  
    (All amounts are presented in thousands)  

Assets at Fair Value:

                                

Investment in Limoneira Company (1)

   $ 29,057       —         —       $ 29,057  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total assets at fair value

   $ 29,057     $ —       $ —       $ 29,057  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) 

The investment in Limoneira Company consists of marketable securities in the Limoneira Company stock. We currently own approximately 15% of Limoneira’s outstanding common stock. These securities are measured at fair value by quoted market prices. Limoneira’s stock price at April 30, 2012 and October 31, 2011 equaled $16.81 per share and $17.35 per share. Unrealized gains and losses are recognized through other comprehensive income. Unrealized investment holding losses arising during the three months ended April 30, 2012 and 2011 were $2.0 million and $0.8 million. Unrealized investment holding losses arising during the six months ended April 30, 2012 were $0.9 million. Unrealized investment holding gains arising during the six months ended April 30, 2011 were $3.1 million.

 

                                     
    Level 1     Level 2     Level 3     Total  
    (All amounts are presented in thousands)  

Liabilities at fair value:

                                

Salsa Lisa contingent consideration (2)

     —         —       $ 1,006     $ 1,006  

RFG contingent consideration (2)

     —         —       $ 1,857     $ 1,857  
       

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities at fair value

   $ —       $ —       $ 2,863     $ 2,863  
       

 

 

    

 

 

    

 

 

    

 

 

  

 

(2) 

Each period we revalue the contingent consideration obligations to their fair value and record increases or decreases in the fair value into selling, general and administrative expense. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in assumed discount periods and rates, changes in the assumed timing and amount of revenue and expense estimates. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense we record in any given period. Total net increase to the contingent considerations during the three and six months ended April 30, 2012 totaled $0.1 million and $0.2 million.

The following is a reconciliation of the beginning and ending amounts of the contingent consideration for Salsa Lisa and RFG:

 

                                 
    Balance at
October 31,
2011		     Interest     Revalue
Adjustment		     Balance
April 30,
2012		  
    (All amounts are presented in thousands)  

Salsa Lisa contingent consideration

   $ 978     $ 28     $ —       $ 1,006  

RFG contingent consideration

     1,652       34       171       1,857  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 2,630     $ 62     $ 171     $ 2,863