Fair value measurements (Tables)

9 Months Ended

Jul. 31, 2014

Financial Assets and Liabilities Measured on Recurring and Non-Recurring Basis

The following table sets forth our financial assets and liabilities as of July 31, 2014 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)	$	38,115	$	—	$	—	$	38,115

Total assets at fair value	$	38,115	$	—	$	—	$	38,115

(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 July 31, 2014 and October 31, 2013 equaled $22.05 per share and $26.34 per share. Unrealized gains and losses are recognized through other comprehensive income. Unrealized investment holding losses arising during the three months ended July 31, 2014 was $1.6 million. Unrealized investment holding losses arising during the nine months ended July 31, 2014 was $7.4 million.


	Level 1		Level 2		Level 3		Total
	(All amounts are presented in thousands)
Liabilities at fair value:
Salsa Lisa contingent consideration (2)	$	—	$	—	$	704	$	704

Total liabilities at fair value	$	—	$	—	$	704	$	704

(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. No revalue adjustments were necessary during the three and nine months ended July 31, 2014.

The following table sets forth our financial assets as of July 31, 2014 that are measured on a non-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 FreshRealm (3)	$	—	$	—	$	16,962	$	16,962

Total assets at fair value	$	—	$	—	$	16,962	$	16,962

(3)

See Note 10 for additional information on the deconsolidation of FreshRealm. We estimated the fair value of our noncontrolling interest in FreshRealm by performing a forecast projection analysis. This analysis was conducted with the consultation from a third party consulting firm. Increases or decreases in the fair value calculation 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. We recorded a gain on the deconsolidation of FreshRealm of $12.6 million, which has been recorded on the face of the income statement. Our investment in FreshRealm has been recorded as investment in unconsolidated subsidiaries on our balance sheet.

Reconciliation of Contingent Consideration

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


	Balance at October 31, 2013		Interest		Revalue Adjustment		Balance July 31, 2014
	(All amounts are presented in thousands)
Salsa Lisa contingent consideration	$	676	$	28	$	—	$	704

Total	$	676	$	28	$	—	$	704

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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