 
2002 Annual Report
Notes to Consolidated Financial Statements (17-18)
Note 17. Research and Development
The cost of research and development for both processed products and fresh fruit operations is charged to the Company's operations when incurred and amounted to $2.9 million in 2002 and $2.8 million in 2001.
Note 18. Additional Disclosures about the Financial Statements
Fair Value of Financial Instruments
Cash and cash equivalents, receivables, trade payables, short-term obligations, and long-term obligations - The carrying amounts of these items are a reasonable estimate of fair value due to the short-term nature or variable interest component of the instruments.
Investments - The fair value of the investments in marketable securities at October 31, 2002 and 2001 was $7.2 million and $9.5 million, respectively, and was determined based upon quoted market prices of investments. The carrying value of the investments is equal to the fair value.
Hedged Transactions
In 2001, Sunkist adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by Statement of Financial Accounting Standards No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities" ("SFAS 138"). SFAS 133 and SFAS 138 provide a comprehensive framework for accounting and reporting for derivative instruments and hedging activities, which includes recognizing all derivative instruments as either assets or liabilities at fair value in the statements of financial position. The adoption of SFAS 133 did not have a material impact on the Company's financial statements.
In connection with certain sales of frozen concentrated orange juice, the Company, at times, enters into commodity forward contracts to reduce the risk of future price fluctuations. As of October 31, 2002, the Company had 75 contracts outstanding, with a total contract value of $1.1 million. As of October 31, 2001, the Company had 260 contracts outstanding, with a total contract value of $3.5 million. A net loss of $136,000 was recognized on hedging activities in 2002, compared to a net gain of $3.1 million in 2001.
 |
