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Fair Value Measurements
 12 Months Ended
Oct. 31, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements

15. 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 October 31, 2013 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)

    $ 45,531         —           —         $ 45,531   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets at fair value

    $ 45,531       $ —         $ —         $ 45,531   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1) The investment in Limoneira Company consists of marketable securities in the Limoneira Company stock. We currently own approximately 12% of Limoneira’s outstanding common stock. These securities are measured at fair value by quoted market prices. Limoneira’s stock price at October 31, 2013 and October 31, 2012 equaled $26.34 per share and $22.47 per share. Unrealized gains and losses are recognized through other comprehensive income. Unrealized investment holding gains arising during the year ended October 31, 2013 and 2012 was $6.7 million and $8.9 million. Unrealized investment holding losses arising during the year ended October 31, 2011 was $5.0 million.

 

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

Liabilities at fair value:

            

Salsa Lisa contingent consideration(2)

      —           —         $ 676       $ 676   

RFG contingent consideration(2) (3)

      —           —           —           —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities at fair value

    $ —         $ —         $ 676       $ 676   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(2) Each period, we revalue our 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 the assumed timing and amount of revenue and expense estimates, changes in the probability of payment scenarios, as well as changes in capital market conditions, which impact the discount rate used in the fair valuation. 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 in fiscal year 2013 and 2012 totaled $1.6 million and $0.4 million. Total net decrease to the contingent considerations in fiscal year 2011 totaled $0.5 million. See Note 16 for further discussion.
(3) In 2013, we amended our acquisition agreement with RFG in regards to the cash payment portion of the Stage II & III earnouts. See Note 16.

 

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

 

     Balance at
10/31/12		      Interest      Revalue
Adjustment		     Reclassification     Balance at
10/31/13		  
     (All amounts are presented in thousands)  

Salsa Lisa contingent consideration

    $ 857       $ 49       $ (230 )    $ —        $ 676   

RFG contingent consideration(1)

      2,322         97         1,801        (4,220 )      —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Total

    $ 3,179       $ 146       $ 1,571      $ (4,220 )    $ 676   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

 

     Balance at
10/31/11		      Interest      Revalue
Adjustment		     Reclassification      Balance at
10/31/12		  
     (All amounts are presented in thousands)  

Salsa Lisa contingent consideration

    $ 978       $ 56       $ (177 )    $ —         $ 857   

RFG contingent consideration

      1,652         73         597        —           2,322   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ 2,630       $ 129       $ 420      $ —         $ 3,179   
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

 

(1) We have amended our acquisition agreement with RFG in regards to the cash payment portion of the Stage II & III earnouts. See Note 16.