Dole 03-accounting_policies_procedures.pdf

Dole Food Company, Inc. Corporate Finance Department

Accounting Policies and Procedures Updated December 2010 Approved By:

__________________________________ Yoon Hugh Vice President, Corporate Controller and Chief Accounting Office

NOTICE: This information is confidential and should not be photocopied, distributed or disclosed to anyone outside the company. Discussion inside the company should be on a “need-to-know” basis only. Federal securities laws prohibit buying or selling a security while in possession of material, non-public information.

Effective Date: Immediately

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Worldwide Accounting Policies and Procedures Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

WORLDWIDE ACCOUNTING POLICIES AND PROCEDURES ............. 10 1)

PURPOSE ......................................................................................................................... 11

2)

GENERAL INFORMATION .............................................................................................. 11 2.1) Scope ..................................................................................................................... 11 2.2) Responsible Party................................................................................................. 11 2.3) Definitions ............................................................................................................. 11

CORPORATE REPORTING PROCESS .................................................. 13 1)

CONSOLIDATED FINANCIAL STATEMENTS ............................................................... 14

2)

DIVISIONAL CONFERENCE CALLS .............................................................................. 14

3)

REPORTING TEMPLATES .............................................................................................. 14

4)

COMPLEX ACCOUNTING MATTERS ............................................................................ 15

5)

ACCOUNTING CALENDAR ............................................................................................ 15

WORLDWIDE CHART OF ACCOUNTS .................................................. 16 1)

SUMMARY OF WORLDWIDE CHART OF ACCOUNTS ................................................ 17

CONSOLIDATION PROCESS ................................................................. 19 1)

CONSOLIDATED FINANCIAL STATEMENTS ............................................................... 20

2)

ADJUSTMENT COMPANIES ........................................................................................... 20

3)

ACCOUNTING FOR INVESTMENTS IN UNCONSOLIDATED ENTITIES ..................... 21 3.1) Equity Method ....................................................................................................... 21 3.2) Cost Method .......................................................................................................... 22

4)

CONSOLIDATION OF VARIABLE INTEREST ENTITIES .............................................. 22

5)

NONCONTROLLING INTERESTS .................................................................................. 23

6)

REFERENCES.................................................................................................................. 24

7)

EXHIBITS .......................................................................................................................... 25 Exhibit 7.1 – Example of Equity Method Accounting .................................................. 25 Exhibit 7.2 – Example of Cost Method Accounting ..................................................... 25 Exhibit 7.3 – Financial Statement Presentation on Noncontrolling Interests ........... 26 Exhibit 7.4 – Examples of Changes in Noncontrolling Interests ............................... 27

Effective Date: Immediately

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Worldwide Accounting Policies and Procedures Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

CASH AND CASH EQUIVALENTS.......................................................... 28 1)

CASH AND CASH EQUIVALENTS ................................................................................. 29

2)

VALUATION METHOD..................................................................................................... 29

3)

RESTRICTED CASH ........................................................................................................ 29

4)

CASH OVERDRAFTS ...................................................................................................... 30

5)

REFERENCES.................................................................................................................. 30

TRADE, NOTES AND OTHER RECEIVABLES ....................................... 31 1)

TRADE AND NOTES RECEIVABLE ............................................................................... 32

2)

ALLOWANCES FOR DOUBTFUL ACCOUNTS ............................................................. 32

3)

SALES ALLOWANCES ................................................................................................... 32

4)

INCOME STATEMENT CLASSIFICATION ..................................................................... 32

5)

RELATED PARTY TRANSACTIONS .............................................................................. 32

6)

DISCOUNTING OF RECEIVABLES ................................................................................ 32

7)

ACCOUNTING FOR INSURANCE RECOVERIES .......................................................... 33

8)

REFERENCES.................................................................................................................. 34

GROWER LOANS AND ADVANCES ...................................................... 35 1)

GROWER LOANS AND ADVANCES .............................................................................. 36

INVENTORY ............................................................................................. 37 1)

DEFINITIONS ................................................................................................................... 38

2)

INVENTORY ..................................................................................................................... 38

3)

BASIS FOR DETERMINING INVENTORY COSTS ......................................................... 39

4)

VALUATION METHOD..................................................................................................... 40

5)

TREATMENT OF STANDARD TO ACTUAL VARIANCES ............................................ 40

6)

CROP GROWING COSTS ............................................................................................... 40

7)

SPARE PARTS INVENTORY .......................................................................................... 41

Effective Date: Immediately

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8)

SLOW MOVING INVENTORY .......................................................................................... 42

9)

CASH DISCOUNTS ON INVENTORY PURCHASES ..................................................... 42

10)

ABNORMAL COSTS ........................................................................................................ 42

11)

ELIMINATION OF INTERCOMPANY PROFIT ................................................................ 42

12)

ACCOUNTING FOR INVENTORY EXCHANGES ........................................................... 42

13)

FOREIGN CURRENCY AND FUEL HEDGE GAINS/LOSSES ....................................... 43

14)

REFERENCES.................................................................................................................. 44

15)

EXHIBITS .......................................................................................................................... 44 Exhibit 15.1 - Costs to be Included or Excluded from Inventory ............................... 44 Exhibit 15.2 - Composition of Inventory on the Balance Sheet ................................. 46 Exhibit 15.3 - Crop Growing Costs Chart ..................................................................... 46

MARKETABLE SECURITIES .................................................................. 48 1)

TYPES OF MARKETABLE SECURITIES ....................................................................... 49

2)

VALUATION METHOD..................................................................................................... 49

3)

REFERENCES.................................................................................................................. 50

PROPERTY, PLANT & EQUIPMENT....................................................... 51 1)

PROPERTY, PLANT AND EQUIPMENT ......................................................................... 52

2)

CONSTRUCTION IN PROGRESS (CIP).......................................................................... 52

3)

CAPITALIZATION OF INTEREST ON CONSTRUCTION IN PROGRESS .................... 52

4)

DEPRECIATION OF FIXED ASSETS AND USEFUL LIVES .......................................... 53

5)

GAIN/LOSS ON SALE OF ASSETS ................................................................................ 54

6)

COMPUTER SOFTWARE ................................................................................................ 54

7)

CAPITALIZATION VS. EXPENSING OF PP&E .............................................................. 54

8)

IMPAIRMENT OF LONG-LIVED ASSETS....................................................................... 55

9)

ACCOUNTING FOR ABANDONED ASSETS ................................................................. 55

10)

ASSETS HELD-FOR-SALE ............................................................................................ 56

11)

SALE LEASEBACK TRANSACTIONS ........................................................................... 57

Effective Date: Immediately

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12)

ACCOUNTING FOR PLANNED MAINTENANCE ACTIVITIES ...................................... 57

13)

ASSET RETIREMENT OBLIGATIONS............................................................................ 57

14)

PURCHASE ACCOUNTING ADJUSTMENTS TO BOOK VALUE ................................. 58

15)

REFERENCES.................................................................................................................. 59

GOODWILL AND INTANGIBLE ASSETS................................................ 60 1)

INTANGIBLE ASSETS ..................................................................................................... 61

2)

GOODWILL ...................................................................................................................... 61

3)

PURCHASE ACCOUNTING ADJUSTMENTS ................................................................ 61

4)

AMORTIZATION ............................................................................................................... 61

5)

IMPAIRMENT TESTS ....................................................................................................... 62

6)

REFERENCES.................................................................................................................. 63

LIABILITIES ............................................................................................. 64 1)

LIABILITIES ...................................................................................................................... 65 1.1) Basic Accruals ...................................................................................................... 65 1.2) Complex Accruals................................................................................................. 65 1.3) Litigation Accruals................................................................................................ 66 1.4) Specific Accruals .................................................................................................. 66

2)

DISTINCTION BETWEEN CURRENT AND NON-CURRENT ITEMS ............................ 66 2.1) Current Liabilities ................................................................................................. 66 2.2) Non-Current Liabilities ......................................................................................... 67

3)

CONTINGENCIES ............................................................................................................ 67

4)

ACCOUNTING FOR RESTRUCTURING COSTS ........................................................... 67

5)

ACCOUNTING FOR SELF-INSURANCE RESERVES ................................................... 69

6)

REFERENCES.................................................................................................................. 69

INCOME TAXES ...................................................................................... 70

Effective Date: Immediately

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Worldwide Accounting Policies and Procedures Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

REVENUE RECOGNITION AND ACCOUNTING FOR INCENTIVES AND OTHER CONSIDERATIONS .................................................................... 71 1)

REVENUE RECOGNITION – GENERAL......................................................................... 72

2)

REVENUE RECOGNITION FOR RETURNABLE MERCHANDISE ................................ 72

3)

REPORTING REVENUE GROSS AS A PRINCIPAL VERSUS NET AS AN AGENT .... 72

4)

DISTINCTION BETWEEN PRODUCT REVENUE AND SERVICE REVENUE .............. 73

5)

CONSIDERATION GIVEN BY THE COMPANY TO RETAILERS .................................. 74 5.1) Accounted For As a Reduction of Revenue ....................................................... 74 5.2) Accounted For As an Expense ............................................................................ 74

6)

CONSIDERATION GIVEN BY A SUPPLIER TO THE COMPANY ................................. 75 6.1) Accounted For As a Reduction of Cost of Goods Sold .................................... 75

7)

RECOGNITION AND MEASUREMENT OF REBATES AND OTHER INCENTIVES ..... 75

8)

REFERENCES.................................................................................................................. 75

COSTS OF PRODUCTS SOLD ................................................................ 76 1)

GENERAL ......................................................................................................................... 77

2)

PRODUCT COSTS ........................................................................................................... 77

3)

SHIPPING COSTS............................................................................................................ 77

4)

DISTRIBUTION COSTS ................................................................................................... 77

5)

RESEARCH AND DEVELOPMENT COSTS ................................................................... 78

6)

START UP COSTS ........................................................................................................... 78

7)

SHARE-BASED COMPENSATION EXPENSE ............................................................... 78

8)

REFERENCES.................................................................................................................. 79

SELLING, MARKETING, AND ADMINISTRATIVE EXPENSES .............. 80 1)

SELLING EXPENSES ...................................................................................................... 81

2)

MARKETING EXPENSES ................................................................................................ 81

3)

MARKETING EXPENSES TO BE NETTED AGAINST REVENUE ................................ 81

4)

GENERAL AND ADMINISTRATIVE EXPENSES ........................................................... 82

5)

ACCOUNTING FOR ADVERTISING EXPENSES ........................................................... 82

Effective Date: Immediately

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6)

BAD DEBT EXPENSE...................................................................................................... 83

7)

SHARE-BASED COMPENSATION EXPENSE .............................................................. 83

8)

REFERENCES.................................................................................................................. 84

FOREIGN CURRENCY TRANSLATION .................................................. 85 1)

FUNCTIONAL CURRENCY ............................................................................................. 86

2)

SOURCE OF EXCHANGE RATES USED FOR RANSLATION/REMEASUREMENT ... 86

3)

TRANSLATION OF FOREIGN CURRENCY STATEMENTS .......................................... 86

4)

FOREIGN CURRENCY TRANSACTIONS....................................................................... 86

5)

FOREIGN CURRENCY TRANSLATION OF DEBT OBLIGATIONS, NOTES PAYABLE AND INTERCOMPANY NOTES ....................................................................................... 87

6)

TRANSACTION GAINS AND LOSSES TO BE EXCLUDED FROM NET INCOME ...... 87

7)

INTERCOMPANY ADVANCES TO FOREIGN ENTITY .................................................. 87

8)

HEDGING ......................................................................................................................... 88

9)

REFERENCES.................................................................................................................. 88

10)

EXHIBITS .......................................................................................................................... 88 Exhibit 10.1 - Accounts to be Remeasured Using Historical Exchange Rates for Translation from Local Currency into Functional Currency ...................................... 88

ACCOUNTING FOR LEASES .................................................................. 89 1)

OVERVIEW ....................................................................................................................... 90

2)

CAPITAL LEASES ........................................................................................................... 90

3)

OPERATING LEASES ..................................................................................................... 90

4)

LAND LEASES ................................................................................................................. 90

5)

ACCOUNTING FOR CAPITAL LEASES ......................................................................... 90

6)

ACCOUNTING FOR OPERATING LEASES ................................................................... 91

7)

RENT HOLIDAYS ............................................................................................................. 91

8)

LANDLORD/TENANT INCENTIVES ................................................................................ 91

9)

DETERMINING LEASE TERM ......................................................................................... 92

Effective Date: Immediately

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10)

DEPRECIATION OF LEASEHOLD IMPROVEMENTS ................................................... 92

11)

REFERENCES.................................................................................................................. 93

PENSION AND OTHER POSTRETIREMENT BENEFIT OBLIGATIONS 94 1)

OVERVIEW ....................................................................................................................... 95

2)

METHODOLOGY.............................................................................................................. 95

3)

MEASUREMENT DATE ................................................................................................... 95

4)

PROCESS TO DETERMINE KEY ASSUMPTIONS FOR DOMESTIC PLANS .............. 96

5)

PROCESS TO DETERMINE KEY ASSUMPTIONS FOR INTERNATIONAL PLANS .... 96

6)

RECORDING PENSION EXPENSE ................................................................................. 97

7)

REFERENCES.................................................................................................................. 98

ACCOUNTING FOR GUARANTEES ....................................................... 99 1)

OVERVIEW ..................................................................................................................... 100

2)

TYPES OF GUARANTEES ............................................................................................ 100

3)

ACCOUNTING FOR GUARANTEES ............................................................................. 100

4)

REFERENCES................................................................................................................ 102

ACCOUNTING FOR DERIVATIVES ...................................................... 103 1)

OVERVIEW ..................................................................................................................... 104

2)

ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES .............................. 104

3)

FAIR VALUE MEASUREMENTS ................................................................................... 105

4)

REFERENCES................................................................................................................ 105

ACCOUNTING FOR BUSINESS COMBINATIONS ............................... 106 1)

OVERVIEW ..................................................................................................................... 107

2)

MEASURING FAIR VALUE OF THE ACQUIREE ......................................................... 107

3)

DETERMINING FAIR VALUE ........................................................................................ 107

4)

ASSETS ACQUIRED AND LIABILITIES ASSUMED .................................................... 108

Effective Date: Immediately

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5)

ACQUISITION COSTS ................................................................................................... 110

6)

RESTRUCTURING COSTS ........................................................................................... 110

7)

CONTINGENT CONSIDERATION ................................................................................. 110

8)

CONTINGENCIES .......................................................................................................... 110

9)

REFERENCES................................................................................................................ 111

TOPIC INDEX ......................................................................................... 112

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Worldwide Accounting Policies and Procedures Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

WORLDWIDE ACCOUNTING POLICIES AND PROCEDURES __________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Effective Date: Immediately

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Worldwide Accounting Policies and Procedures Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) PURPOSE The purpose of the Accounting Policies and Procedures manual is to provide guidance to ensure that significant accounting and financial reporting matters are uniformly applied across Dole Food Company, Inc. (―Dole‖ or the ―Company‖). The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (―U.S. GAAP‖). U.S. GAAP is continuously changing. While it is not feasible to include every aspect of U.S. GAAP in this manual, the document includes those significant accounting policies currently applicable to the Company. Any revisions to the Company’s accounting policies and procedures must be approved by Dole’s Chief Accounting Officer and Chief Financial Officer.

2) GENERAL INFORMATION 2.1) Scope i)

The Accounting Policies and Procedures apply worldwide to all divisions and subsidiaries of Dole Food Company, Inc.

2.2) Responsible Party i)

The parties responsible for these Policies are the Corporate Controller and Corporate CFO. Any questions or comments regarding these Policies should be directed to the aforementioned parties.

2.3) Definitions i)

For the purposes of the Accounting Policies and Procedures, the following definitions shall apply:

ii)

―Company‖ shall mean Dole Food Company, Inc. and its consolidated subsidiaries.

iii) ―Corporate‖ shall mean the corporate offices of Dole Food Company, Inc. located in Westlake Village, California. iv) ―Corporate Controller‖ shall mean the Chief Accounting Officer of Dole Food Company, Inc. v) ―Corporate CFO‖ shall mean the Chief Financial Officer of Dole Food Company, Inc. vi)

―Divisions‖ shall mean the operating divisions of Dole Food Company, Inc. listed below: (a) (b) (c) (d) (e) (f) (g) (h)

Asia Chile Corporate Europe Fresh Vegetables Latin America (including Dole Ocean Cargo Express) North America Fresh Fruit Worldwide Packaged Foods (including related foreign operations and Hawaii)

vii) ―Investment‖ shall mean any entity in which Dole Food Company, Inc., directly or indirectly, has less than a 50% ownership interest.

Effective Date: Immediately

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viii) ―Subsidiary‖ shall mean any entity in which Dole Food Company, Inc., directly or indirectly, has a 50% or greater ownership interest, or has the capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of the entity so as to enable that other entity to operate with it in pursuing the Company’s objectives." ix) ―U.S. GAAP‖ shall mean the Generally Accepted Accounting Principles of the United States per the Financial Accounting Standards Board (―FASB‖) Accounting Standards Codification (―ASC‖). x) ―WWCOA‖ shall mean the Worldwide Chart of Accounts of Dole Food Company, Inc

Reference: 1.1

Effective Date: Immediately

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

CORPORATE REPORTING PROCESS _______________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 1.1

Effective Date: Immediately

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) CONSOLIDATED FINANCIAL STATEMENTS a) In order to provide management with the appropriate financial information required to assess the Company’s performance and current financial position, consolidated financial statements are prepared at the end of each fiscal period. The consolidated financial statements are prepared based on the data submitted by all of the divisions using the Company’s worldwide consolidation system – Hyperion Financial Management (―HFM‖). The divisions are required to submit a data extract which is uploaded into HFM and mapped to the appropriate accounts as defined in the company’s Worldwide Chart of Accounts. b) Divisions are also required to submit balance sheet and income statement variance explanations each fiscal period and/or quarter based on the following thresholds established by the Corporate Controller’s Organization: i)

Balance Sheet – All fluctuations >$2.5M and a 5% change; or for all fluctuations >$5M.

ii)

Income Statement – If a component of gross margin, then all fluctuations >$1M and a 5% change; or for all fluctuations >$5M. If a component below gross margin then all fluctuations >$500K and a 5% change; or for all fluctuations >$5M.

iii) Separate balance sheet variance explanations are required for (1) current period versus prior year end, (2) current quarter versus prior quarter (quarter close only) and (3) current quarter versus current year prior quarter (quarter close only). iv) Separate income statement variance explanations required for (1) current year-to-date period versus prior year-to-date period, (2) current quarter versus prior year quarter (quarter close only) and (3) current quarter versus current year prior quarter (quarter close only).

2) DIVISIONAL CONFERENCE CALLS a) Prior to the quarter/annual close, each division is required to participate in a conference call with Corporate Reporting. The purpose of this call is to discuss current business developments, significant non-routine transactions, changes to reporting templates and new accounting guidance.

3) REPORTING TEMPLATES a) In order to capture all of the financial information currently required for the Company’s quarterly and annual SEC filings, quarterly and year-end reporting templates are provided to each division based on an evaluation of existing accounting guidance, SEC requirements and various other factors. Divisions are instructed to use the updated templates posted to the Dole Corporate Reporting web portal each quarter and not to roll forward or use prior quarter templates. b) Prior to the quarter/annual close date, the updated templates and schedule of corresponding due dates are posted to the Dole Corporate Reporting web portal. c) All reporting templates require Division Controller sign-off. Certain templates that involve items that require critical judgments to be made also require Division CFO sign-off. It is essential that both the Division Controller and/or Division CFO maintain copies of all correspondence as evidence of their review of the completed templates. d) The following is a list of reporting templates that are currently required to be submitted to Corporate Reporting on a quarterly and/or annual basis and the appropriate level of divisional review/sign-off:

Reference: 1.1

Effective Date: Immediately

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

Schedule Cash and Cash Equivalents Schedule Revenue & EBIT Driver Analysis * Hedge Gain (Loss) Detail Pension and OPRB Schedule Assets Held-For–Sale Debt Summary Summary of Contingent Liabilities Recurring Earnings Analysis Other income (expense) Cash Flows Schedule Aging of Trade Receivables Asset Allowances Other Assets and Liability Detail Derivatives Questionnaire Inventory Exchanges Checklist – Variable Interest Entities Summary – Asset Retirement Obligations Related Party Transactions CIP Analysis Detail CTA Detail Template Review Checklist Segment Reporting Detail Rollforward of Grower Advances Land and Other Facilities Template Operating Leases and Other Commitments Equity Method Investment Details Significant Accounting Policies and Divisional Disclosure Checklist Deloitte & Touche Fees Asset Useful Lives Business Section Templates * - Applicable to international divisions only

Quarterly (Q)/ Annually (A) Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A Q/A A A A A A A

Divisional Sign-off Controller Controller/CFO Controller/CFO Controller/CFO Controller Controller Controller/CFO Controller/CFO Controller/CFO Controller Controller Controller Controller Controller/CFO Controller/CFO Controller/CFO Controller/CFO Controller/CFO Controller Controller/CFO Controller/CFO Controller Controller Controller/CFO Controller/CFO Controller/CFO Controller/CFO

A A A

Controller Controller Controller/CFO

4) COMPLEX ACCOUNTING MATTERS Complex accounting matters that arise at the divisional level should be discussed with the Corporate Controller’s Organization to ensure that the proper U.S. GAAP accounting treatment is applied and that the accounting is consistent with the Company’s accounting policies. For complex accounting matters, documentation must be prepared which addresses the complex accounting issue and supports the rationale for the accounting methodology adopted.

5) ACCOUNTING CALENDAR a) b) c) d)

The Company’s fiscal year ends on the Saturday closest to December 31. The Company’s fiscal calendar includes 13 periods, each 4 weeks in duration. The Company operates under a 52/53 week year. The Company’s first, second and fourth quarters are 12 weeks in duration and the third quarter is 16 weeks in duration.

Reference: 1.1

Effective Date: Immediately

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

WORLDWIDE CHART OF ACCOUNTS __________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 1.1

Effective Date: Immediately

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) SUMMARY OF WORLDWIDE CHART OF ACCOUNTS As a reference, the Worldwide Chart of Accounts can be summarized in the following categories: Matrix of WWCOA Account Range 100000 - 299999 101000 - 105000 107000 - 109000 110000 - 118000 120000 - 128000 130000 - 139000 140000 - 163000 165000 - 168500 169500 - 169900 170000 171000 173000 - 173300 175000 -178500 000900 - 000907, 000914, 000916 000908 - 000913, 000915, 000917 180000 220000 260000 - 264000 270000 - 278000 280000 - 283500 290000 290100 - 291500 293000 294000 298000 300000 - 387000 300100 - 302000 304000 - 306000 310000 - 312500 313000 - 350000 349800 351000 - 353000 354000 - 355000 356000 - 361000 362000 - 367000 369000 - 371000 372000 - 386000 387000

Account Description Assets Cash & Short Term Investments - Cash - Short Term Investments Trade Receivables Short Term Grower Advances Notes & Other Receivables Inventories Prepaid Expenses Current Deferred Taxes Other Current Assets Assets Held-for-Sale Income Tax Refunds Investments Property, Plant & Equipment - Gross PPE - Activity Accounts - Acc. Depreciation - Activity Accounts - Gross PPE - Detail Accounts - Acc. Depreciation - Detail Accounts Long Term Grower Advances Long Term Notes & Other Receivables Intangible Assets Deferred Tax Asset Deferred Charges Other Non Current Assets Assets Held-for-Sale – Long Term Allocation of Regional Prod. & Distr. Liabilities Notes Payable Long Term Debt -Current Portion Accounts Payable Accrued Liabilities Liabilities Related to Assets Held-For-Sale Income Tax Payable Deferred Income Taxes - Current Portion Intercompany Balance Sheet Long Term Debt Deferred Income Taxes Deferred Credits Minority Interest

Reference: 1.1

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Worldwide Chart of Accounts Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

390000 - 399999 391000 - 394000 395000 395500 395700 396000 - 399999 395800 400000 - 999999 401000 - 440000 441000 501000 - 895500, 906000 - 908800 901000 - 910900 (Except 903000) 903000 911000 – 913000, 916000 914000 - 931000 950000 - 970000 980000 - 983000 985000

Equity Paid in Capital Cumulative Foreign Currency Trans. Adj. Minimum Pension Liability Unrealized Gain/Loss on Hedges Retained Earnings Noncontrolling Interests P&L Accounts Net Outside Revenue Intercompany Revenue Expense * Other Income & Expense ** Intercompany Dividends Interest Income Interest Expense Income Tax Expense Special Charge ** Net Income Noncontrolling Interests

*Expense accounts are classified as "Gray" and "Non-Gray" Accounts Gray accounts are those accounts that can be classified as any of the following expense types: Product Cost, Distribution Cost, Shipping Cost, Marketing Expense, Selling Expense, or G&A Expense. The expense classification is defined by the category code 18 (CC18) or expense type used in the specific JDE business unit. For example, account 545000 - Regular Salaries could be classified as any of the above mentioned expense types, depending on the CC18 used in JDE. Non-Gray accounts are those that only have one specific expense type. For example, account 850000 - Sales Brokerage is always considered "Selling Expense", regardless of the CC18 used in JDE. ** Miscellaneous other income/expense (account 910000) and the special charge accounts can only be used with approval of the Corporate Controller’s Organization. For a comprehensive list of accounts and account descriptions, refer to the “Worldwide Chart of Accounts” file, on the Intranet “Policies and Procedures” Portal under DFC – Worldwide Finance folder.

Reference: 1.2

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Consolidation Process Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

CONSOLIDATION PROCESS _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 1.2

Effective Date: Immediately

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Consolidation Process Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) CONSOLIDATED FINANCIAL STATEMENTS a) The consolidated financial statements of Dole include all entities (including corporations, limited liability companies and partnerships) both foreign and domestic, in which the company owns, directly or indirectly, more than 50 percent of the voting stock and/or there is evidence of control as defined in ASC Topic 323, “Investments – Equity Method and Joint Ventures”. Indicators of control include the ability to exercise significant influence over operating and financial policies (including representation on the Board of Directors, participation in policy making processes, material intercompany transactions, interchange of managerial personnel, or technological dependency). b) Since the consolidated statements are based on the assumption that they represent the financial position and operating results of a single business enterprise, the following guidelines apply in consolidation: i)

All assets, liabilities, equity, sales, costs, and other income (expense) are combined and all intercompany accounts are eliminated.

ii)

Intercompany profit or loss on activities between divisions is eliminated.

c) Dole’s WWCOA includes several accounts specifically identified as ―intercompany‖. Divisions use these accounts combined with an intercompany partner (or entity number) to record transactions with other Dole entities. The Company’s worldwide financial reporting consolidation software automatically matches the balances recorded in the intercompany accounts and reclassifies any difference to intercompany difference accounts (specifically identified within the system for this purpose). These accounts are monitored every period by Corporate Consolidations to ensure that all intercompany balances are properly eliminated.

2) ADJUSTMENT COMPANIES a) Adjustment companies are used to record accounting transactions that cannot be recorded on an entity’s statutory books. The following are types of accounting entries recorded in adjustment companies: i)

Elimination of consolidated investments and related equity balances,

ii)

Elimination of intercompany transactions, and impact of noncontrolling interests (previously minority interests);

iii) Purchase accounting adjustments; iv) Adjustments to convert statutory financial records from local GAAP to U.S. GAAP; v) Adjustments to statutory books for events, transactions or corrections that were not recorded as a result of timing issues. These adjustments are to be reversed from the adjustment company and pushed down to the appropriate legal entity in the next accounting period. vi) Allocations by market or product b) Under no circumstances should adjustment companies be used to ―alter‖ or ―manage‖ the financial results of an entity or division. Examples of inappropriate journal entries include the following: i)

Adjustments to increase revenues or decrease costs

Reference: 1.2

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ii)

Mask diversion of funds

iii) Improper adjustments to segment reporting iv) Improper reversal of purchase accounting reserves v) Improper write-offs of uncollectible accounts receivable to purchase accounting reserve accounts and intercompany accounts, thereby not reducing income vi) Understate payables through the recording of post-closing journal entries to increase various revenue accounts vii) Improper decrease of accounts payable and expenses viii) Improper capitalization of costs as fixed assets, construction in progress or any other type of asset, instead of expensing those costs as incurred ix) Improper recording of allowances or reserves

3) ACCOUNTING FOR INVESTMENTS IN UNCONSOLIDATED ENTITIES a) The financial statements of entities in which Dole owns less than 50% and/or are not controlled by Dole are not to be consolidated. Investments in these entities are accounted for under either the equity method or cost method. b) Investments in entities in which Dole’s ownership is 20% - 50% are recorded under the equity method, provided the company has the ability to exercise significant influence. c) Investments in entities in which Dole’s ownership is less than 20% are recorded under the cost method (the lower of cost or fair market value).

3.1)

Equity Method

a) Dole (as an investor) initially records an investment in the stock of an investee at cost (see Exhibit 1 for example). b) The carrying amount of the investment is to be adjusted each period based on Dole’s ownership percentage of the investee’s earnings or losses (see Exhibit 1). c) If the investee has other comprehensive income (reported as a component of equity), Dole (as an investor) would record its proportionate share as an increase or decrease to its investment with a corresponding increase or decrease to other comprehensive income in its own equity section of the financial statements. d) Any dividends received should reduce the carrying amount of the investment (see Exhibit 1). e) Dole’s investment is based on its ownership percentage and the investment is adjusted to reflect any changes in the investee's capital. f)

If an investee experiences a series of operating losses, this could indicate a decrease in the value of Dole’s investment which is other than temporary. In this case, a write-down of the investment is to be recorded. Examples of other than temporary declines include: i)

Absence of an ability to recover the carrying amount of the investment;

Reference: 1.2

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ii)

Inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment

g) If the share of losses equal or exceed the carrying amount of the investment, the equity method would no longer apply and the investment would be reduced to zero. No additional losses are to be recorded unless Dole has guaranteed the obligations of the investee or has committed to provide further financial support for the investee. h) If the investee subsequently reports net income, Dole would resume applying the equity method only after its share of the net income equals the share of net losses not recognized during the period the equity method was suspended. i)

If the financial statements of a company accounted for under the equity method are not provided on a timely basis, the most recent available financial statements should be used to record the best estimate of Dole’s share of equity earnings. This lag in reporting should be consistent from period to period.

j)

If an investment is made in a company whose financial statements are not prepared based under U.S. GAAP, the reporting division is responsible for ensuring that the necessary U.S. GAAP adjustments are recorded as part of the periodic financial close process.

3.2)

Cost Method

a) Dole (as an investor) initially records an investment in the stock of an investee at cost (see Exhibit 2 for example). Dividends received are recognized as other income (see Exhibit 2). b) Any dividends that are received which are in excess of earnings are considered a return of investment and are to be recorded as a reduction of the cost of the investment. c) A series of operating losses of an investee or other factors may indicate a decrease in value of Dole’s investment which is other than temporary and should be recognized immediately.

4) CONSOLIDATION OF VARIABLE INTEREST ENTITIES a) As part of every financial period closing process, all divisions should evaluate whether or not they have any unconsolidated entities that may qualify as a variable interest entity which are required to be consolidated under ASC Topic 810, “Consolidation”. Although an entity may not control the voting stock of a company, it may have the power, as a result of the entity’s purpose and design through other transactions and ownership structures, to direct the activities of the entity that most significantly impact the entity’s economic performance. In evaluating whether control exists, divisions should consider both qualitative and quantitative factors such as whether Dole has an interest in the cash flows or operating results of an entity, or whether an entity exists solely for Dole’s benefit. The following discussion includes examples of entities that need to be evaluated for consolidation under ASC 810: i)

Interest in the Cash Flows or Results of Operations of Entities (a) Entities in which Dole has no ownership interest (with either nothing recorded in the general ledger or for which no legal ownership exists) but for which Dole receives profits or absorbs losses, i.e. Dole funds the operations of the entity. (b) Entities in which Dole receives a disproportionate amount of profits or absorbs losses in comparison with Dole’s ownership interest.

Reference: 1.2

Effective Date: Immediately

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(c) Entity in which Dole has made an advance and for which no other party has contributed capital or equity at risk. Also included are loan arrangements for which Dole is named in the bank agreement as the borrower or takes primary responsibility with the bank for the receipt and payment of loan funds. (d) Arrangements with vendors or customers in which Dole makes advances and is responsible for funding losses and/or receives benefit or amounts based on profits of the other entity. These could include grower agreements whereby Dole takes ownership of a farm upon the occurrence of certain events. ii)

Interest in Entities Established Solely for the Benefit of Dole (a) Entities in which Dole has a minority ownership interest or for which Dole has no ownership interest (with either nothing recorded in the general ledger or for which no legal ownership exists), but which are formed for the benefit of Dole and for which Dole controls the underlying assets of the entity. (b) Any trust or similar arrangements in which Dole is the beneficiary or Dole functions as the trustee.

iii) Entities Not Currently Consolidated but Controlled by Dole (a) Entities in which Dole has a majority ownership interest (common stock of the entity) or exercises control but are not consolidated. b) If an entity is identified by a division that meets the characteristics of a variable interest entity as described above, the facts and circumstances should be reported and discussed with the Corporate Controller’s Organization for further evaluation.

5) NONCONTROLLING INTERESTS a) A noncontrolling interest, previously referred to as minority interest, is the portion of a subsidiary’s equity not attributable, directly or indirectly, to a Dole consolidated entity. Typically, noncontrolling interests own less than 50% of an entity. For example, 80 percent of a subsidiary's ownership interests are held by the subsidiary's parent, and 20 percent of a subsidiary's ownership interests are held by other owners. The ownership interests in the subsidiary that are held by owners other than the parent is a noncontrolling interest. i)

The noncontrolling interest shall be reported in the consolidated balance sheet within equity, but separately from the parent's equity, and titled ―noncontrolling interest in subsidiaries‖ (account #395800 ―Noncontrolling Interests‖). See Exhibit 3 for an example of this presentation.

ii)

Consolidated net income, net income attributable to wholly owned Dole entities and net income attributable to noncontrolling interests should be presented separately on the face of the consolidated income statement (See Exhibit 3). Net income from noncontrolling interests is to be recorded to account #985000 ―Net Income Noncontrolling Interests‖ for the portion of income (loss) related to the external shareholders’ corresponding interest.

b) An entity should allocate losses to the noncontrolling interest even if that allocation results in a negative (debit) noncontrolling interest balance. Losses are not to be limited to the carrying amount of the noncontrolling interest. c) Changes in Ownership

Reference: 1.2

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i)

Control to Control (a) Additional purchases and sales of a subsidiary’s stock, when an entity already has control of a subsidiary and will retain control after the transaction, are to be recorded as equity transactions. Any difference between the consideration paid to acquire additional interest and the book value of those interests is to be recorded to additional paid-incapital.

ii)

Control to Non-Control (a) When a parent company loses controlling ownership in a subsidiary, a gain or loss is to be recognized in the income statement. The gain or loss is to be calculated as the difference between (1) the proceeds plus the fair value of the former parent’s retained noncontrolling interest, if any, at the date the control was lost and (2) the book value for the former parent’s interest in the former subsidiary immediately before control was lost.

iii) Non-Control to Control (a) When a parent company acquires control of a subsidiary (regardless of whether the parent acquires 51% or 100%), it should include 100% of the fair value of all of the acquired company’s assets and liabilities in its consolidated financial statements. (b) ―Step-acquisitions‖ occur when control of a business is obtained after the acquirer already owns a noncontrolling interest in the acquiree’s equity. In a step acquisition, the acquirer’s preexisting interest in the acquiree is remeasured to fair value with a resulting gain or loss recorded in the income statement. After remeasuring it to fair value, the existing interest is then included in the fair value of the entire business acquired. Noncontrolling interest in the acquired business will be measured initially as its share in the fair value of the identifiable assets acquired and liabilities assumes, plus its share of goodwill.

Refer to Exhibit 4 for examples and journal entries related to the three types of changes in control mentioned above.

6) REFERENCES a) ASC 323-10, Investments – Equity Method and Joint Ventures (Accounting Principles Board Opinion No. 18 – Equity Method of Accounting for Investments in Common Stock) b) ASC 810-10, Consolidation (Financial Interpretation No. 46(R) – Consolidation of Variable Interest Entities, an interpretation of ARB No. 51) (Financial Accounting Standard No. 167 – Amendments to FASB Interpretation No. 46 (R)) (Financial Interpretation No. 46(R) – Consolidation of Variable Interest Entities, an interpretation of ARB No. 51) c) ASC 810-10-65, Consolidation (Financial Accounting Standard No. 160 – Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51)

Reference: 1.2

Effective Date: Immediately

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7) EXHIBITS Exhibit 7.1 – Example of Equity Method Accounting On October 10, 20XX Dole acquired a 40% interest (40,000 shares) in NEWCO for $100,000. NEWCO generated income of $10,000 from October 10 - December 31, 20XX. On December 15, 20XX, NEWCO declared and paid a dividend of $.25 per share. 1.

Record initial investment in NEWCO DR.

CR. 2.

Cash

$100,000

Record Dole's 40% share of earnings generated by NEWCO DR. CR.

3.

Investment in non-consolidated subsidiaries (#177500.906) $100,000

Investment in non-consolidated subsidiaries (#177500.906) $4,000 Equity Earnings $4,000 (#901000)

Record dividend paid by NEWCO (40,000 shares at $.25) DR. CR.

Cash $10,000 Investment in nonconsolidated subsidiaries $10,000 (#177500.951)

Exhibit 7.2 – Example of Cost Method Accounting On October 10, 20XX Dole acquired a 10% interest (2000 shares) in NEWVEST for $50,000. On December 15, 20XX, NEWVEST declared and paid a dividend of $1 per share. 1.

Record initial investment in NEWVEST DR.

CR. 2.

Investment in non-consolidated subsidiaries $50,000 (#178500.906) Cash $50,000

Record dividend paid by NEWVEST DR. CR.

Cash $2,000 Dividends from investment $2,000

Reference: 1.2

Effective Date: Immediately

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Exhibit 7.3 – Financial Statement Presentation on Noncontrolling Interests CONDENSED CONSOLIDATED BALANCE SHEETS June 14, December 29, 2008 2007 (In thousands, except share data) ASSETS Total assets ................................................................................................................................ $ 4,757,797 $ 4,642,884 LIABILITIES AND EQUITY Total current liabilities ................................................................................................................. 1,594,590 1,152,732 Total long-term liabilities ............................................................................................................ 2,644,570 3,135,266 Shareholders’ equity Common stock — $0.001 par value; 1,000 shares authorized, issued — and outstanding............................................................................................................................ — Additional paid-in capital .............................................................................................................. 409,907 409,907 Retained earnings (deficit) ........................................................................................................... 66,926 (84,883) Accumulated other comprehensive income (loss) ....................................................................... 11,939 (16) Equity attributable to Dole Food Company, Inc. .......................................................................... 488,772 325,008 Equity attributable to noncontrolling interests .............................................................................. 29,865 29,878 Total shareholders’ equity .......................................................................................................... 518,637 354,886 Total liabilities and shareholders’ equity .................................................................................... $ 4,757,797 $ 4,642,884 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended June 14, 2008 June 16, 2007 2008 Income from continuing operations before income taxes and equity earnings ..................................................................................................... Income taxes .......................................................................................... Equity in earnings of unconsolidated subsidiaries .................................. Income from continuing operations ................................................................ Income (loss) from discontinued operations, net of income taxes .................. Net income ............................................................................................... Less: Net income attributable to noncontrolling interests, net of income taxes ........................................................................................ Net income attributable to Dole Food Company, Inc. ........................... $

105,181 69,577 2,333 177,091 4,318 181,409

45,906 7,086 904 53,896 (4,020) 49,876

(655) 180,754

(821) 49,055

$

Reference: 1.2

Effective Date: Immediately

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Exhibit 7.4 – Examples of Changes in Noncontrolling Interests Control to Control - Company A owns 80% of its subsidiary, which it has on its books for a net of $100. Assume the noncontrolling interest in the subsidiary is $20 and the controlling interest is $80. Company A buys the remaining 20 percent of the subsidiary for $30. When this transaction occurs, noncontrolling interest (a component of equity) is reduced by $20 to zero and the equity of Company A is reduced by $10. There are no changes to consolidated assets or liabilities except for the $30 cash paid for the additional interest. DR. Noncontrolling interest in subsidiary DR. Company A – APIC CR Cash

$20 $10 $30

Control to Noncontrolling - Company A owns 80% of its subsidiary with a book value $100. Assume the book values of the noncontrolling interest and Company A are $20 and $80, respectively. Company A reduces its interest in the former subsidiary to 10% (from 80%) by selling stock for $105. Assume that fair value of 100% of the subsidiary is $150 and that fair value of 10% is $15. The gain on the sale would be computed as follows: DR. Cash DR. Investment in former subsidiary DR. Noncontrolling interest in former subsidiary CR. Net assets of former subsidiary CR. Gain on sale

$105 $15 $20 $100 $40

Noncontrolling to Control - Company A purchases a 35% interest in Company B for $2,000 on January 1, 2006. Company A uses the equity method to account for its 35% interest in Company B. Assume that Company A’s equity in the income of Company B for 2007 is $500 so that the book value of Company A in Company B at December 31, 2007 is $2,500. On December 31, 2007, Company A purchases an additional 40% of Company B for $4,000. Assume that on December 31, 2007, the fair value of all of Company B is $10,000 and that the fair value of 35% of Company B equals $3,500. On December 31, 2007, Company A’s existing 35% interest in Company B is remeasured to $3,500, resulting in a gain of $1,000 ($3,500 less the $2,500 book value) in the income statement. On December 31, 2007, Company A would then account for the acquisition of control of Company B as a business combination where the fair value of 100% of Company B is $10,000.

(1) To record the initial purchase of 35% in Company B and 2007 earnings DR. Investment in Company B (35%) CR. Equity Earnings CR. Cash

$2,500 $500 $2,000

(2) To adjust the original investment in Company B for the purchase of the additional 40% DR. Investment in Company B (35%) CR. Gain on acquisition

$1,000 $1,000

3) To record the purchase of the additional 40% in Company B DR. Net Assets Company B $10,000 CR. Cash $4,000 CR. Investment in Company B $3,500 CR. Noncontrolling interests $2,500

Reference: 2.0

Effective Date: Immediately

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Cash and Cash Equivalents Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

CASH AND CASH EQUIVALENTS _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 2.0

Effective Date: Immediately

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Cash and Cash Equivalents Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) CASH AND CASH EQUIVALENTS a) Cash is defined as currency on hand, demand deposits with banks or other financial institutions, undeposited checks, money orders and drafts that are available on demand. Cash equivalents are short-term, highly liquid investments which are both: i)

readily convertible to known amounts of cash and

ii)

so near their maturity that they present insignificant risk of changes in value because of changes in interest rates

b) Generally, only those investments with original maturities of 3 months or less qualify as cash equivalents. Examples of cash equivalents include treasury bills, commercial paper, money market funds and certificates of deposits. i)

Original maturity means original maturity to the entity holding the investment. For example, both a three-month U.S. Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. (a) Highly liquid securities that have long-term stated maturities, (i.e. Auction Rate Securities) do not meet the definition of a cash equivalent and are to be accounted for as debt securities. Refer to Section 5 ―Marketable Securities‖ of this policy for further detail.

2) VALUATION METHOD a) Cash and cash equivalents are initially recorded at cost. At the end of each reporting period, cash and cash equivalents are to be recorded at their fair market value. In the case of cash and cash equivalents denominated in foreign currencies, they are to be converted based on the applicable foreign exchange closing rates provided by Corporate Treasury at the end of each fiscal period. i)

Fair value is defined as the amount at which the asset could be bought or sold in a current transaction between willing parties other than in a forced or liquidation sale (i.e. quoted market prices in active markets).

3) RESTRICTED CASH a) Cash and cash equivalent balances that are legally restricted as to their withdrawal or their use should be reported separately from unrestricted cash (account #105000 ―Cash and Cash Equivalents Restricted‖). Legally restricted balances may be classified as current or noncurrent based on the terms or classification of the underlying borrowing arrangements. b) Restrictions may arise under the following conditions: i)

The restrictions are placed by a third party (e.g. banks and government agencies) in which the funds are not accessible on demand by the Company, except for ―uncollected funds‖ held by banks during the normal course of business;

ii)

Funds that are maintained in the bank as collateral for a letter of credit or a loan;

iii) Funds that are designated specifically for restricted use, such as deposits in escrow;

Reference: 2.0

Effective Date: Immediately

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iv) Contracts entered into with others. c) Restricted cash equivalents may include money market funds, time deposits, commercial paper and certificates of deposit.

4) CASH OVERDRAFTS a) Cash overdrafts balances which cannot be offset by other positive cash accounts balances are to be recorded in the cash overdraft reclassification account #312500 ―Cash Overdraft Reclassification,‖ which is reported as accounts payable for financial statement purposes. i)

The right of offset exists when negative and positive cash accounts are held at the same banking institution within the same country and can be used to offset each other.

b) All cash overdraft reclassification entries for U.S. domestic entities are to be recorded on a quarterly basis by Corporate Financial Reporting only. Foreign entities are to record overdraft reclassifications on a quarterly basis provided the right of offset does not exist.

5) REFERENCES a) ASC 210-10-45-4, Comprehensive Income (Accounting Research Bulletin No. 43 – Restatement and Revision of Accounting Research Bulletins, Chapter 3A, paragraph 6) b) ASC 230, Statement of Cash Flows (Financial Accounting Standard No. 95 – Statement of Cash Flows)

Reference: 3.0

Effective Date: Immediately

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Trade, Notes and Other Receivables Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

TRADE, NOTES AND OTHER RECEIVABLES _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 3.0

Effective Date: Immediately

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1) TRADE AND NOTES RECEIVABLE a) Trade receivables represent amounts that are due within one year on receivables that arise from the sale of products in the normal course of business to outside third parties, net of allowances for doubtful accounts and sales allowances. b) Short-term notes and other receivables (account #130000 ―Notes and Other Receivables – Net‖) represent amounts that are due within one year and include promissory notes and the related interest from third parties as well as claims, employee and government agency receivables. Longterm notes and other receivables represent amounts due after one year and are to be recorded to account #270000 ―Long-Term Notes and Other Receivables - Net.‖

2) ALLOWANCES FOR DOUBTFUL ACCOUNTS a) An allowance for trade and notes receivables is to be established based on specific knowledge of a customer’s financial condition and/or historical loss experience. An allowance is to be recorded and charged to bad debt expense when a trade or notes receivable is deemed to be uncollectible. Allowances are to be reviewed at least quarterly for appropriateness. Recoveries of trade or notes receivables that were previously reserved for are to be credited to income through the bad debt expense account. b) For specific guidance related to allowance thresholds and approval authority for note and trade receivables, refer to the Dole Food Company “Worldwide Allowance and Accrual Policy” on the Intranet Policies and Procedures Portal under DFC – Worldwide Finance folder..

3) SALES ALLOWANCES a) A sales allowance is to be recorded for specific claims for product quality, cash discounts or other concessions.

4) INCOME STATEMENT CLASSIFICATION a) Bad Debt Expense should be recorded as a component of Selling, General and Administrative Expense (account #840000 ―Bad Debt Expense‖). Any exception to this policy should be discussed with the Corporate Controller and Corporate CFO.

5) RELATED PARTY TRANSACTIONS a) ASC 850 (FAS No. 57, ―Related Party Disclosures‖) requires that financial statements disclose material related party transactions. As a result, any trade and notes receivable balances from officers, employees, or affiliates are to be reported under specific ―other‖ receivable accounts (account #136000 ―Employee Receivables,‖ account #136500 ―Affiliate Receivables,‖ account #276000 ―Employee Receivables (long-term)‖ and account #276500 ―Affiliate Receivables (longterm).‖

6) DISCOUNTING OF RECEIVABLES a) When the Company receives a long-term note receivable in exchange for property, goods, or service in a bargained transaction entered into at arm's length, it is assumed that the rate of interest stipulated by the parties to the transaction represents fair and adequate compensation to the Company for the use of the related funds. This assumption would not apply if (1) interest is not stated, or (2) the stated interest rate is unreasonable or (3) the stated face amount of the note

Reference: 3.0

Effective Date: Immediately

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is materially different from the current cash sales price for the same or similar items or from the market value of the note at the date of the transaction. Please contact the Corporate Controller’s Organization to discuss the appropriate accounting for receivables of this type.

7) ACCOUNTING FOR INSURANCE RECOVERIES a) Involuntary conversions of nonmonetary assets to monetary assets may result from the loss of an asset due to some uncontrollable event (e.g., destruction due to a natural disaster, government condemnation and expropriation). Some of these events are insurable, thus resulting in an insurance recovery. Gains or losses on the retirement of assets should consider whether an insurance recovery is to be received. A gain results from the receipt of an insurance recovery in excess of the net book value of the retired assets. If no recovery is received, or the recovery is less than the net book value of the asset, a loss will result. b) An entity that incurs a loss to due an impairment of an asset or incurrence of a liability, and expects to recover all or a portion of that loss through insurance claims, should record an asset for the amount considered probable of recovery from the insurance claim, not to exceed the amount of the total losses incurred (net book value of assets written-off plus incremental costs incurred). Subsequent recording of amounts in excess of an amount initially deemed probable of recovery from an insurance claim should only be those amounts considered probably of recovery but, in all cases, limited to actual additional covered losses or direct, incremental costs incurred to obtain the insurance recovery. Any recovery expected in excess of covered losses or direct, incremental costs incurred to obtain the insurance recovery represent a gain contingency. i)

Insurance proceeds that will result in a gain generally should be recognized when they are realized. Insurance proceeds are considered to be realized when the insurance carrier settles the claim and the insurance settlement is finalized and agreed to by all parties. Payment alone does not mean the realization has occurred if such payment is made under protest or is subject to refund. Thus, recognition of the proceeds is appropriate when both of the following conditions are met: (1) The entity has either received the proceeds or an acknowledgement from the insurance carrier of coverage and the related amounts and (2) The proceeds received or the acknowledged coverage amount is not refundable and cannot be offset against amounts to the insurance carrier.

ii)

Gains on insurance settlements should be booked against the same account originally used to record the related expenses. This gain and loss should be included as a component of cost of products sold.

c) Entities may also incur losses relating to the disruption of business operations, which may be covered by business interruption insurance. Business interruption insurance often covers both fixed costs incurred by the insured entity during the period of interruption, and lost revenue, profit or margin. Certain fixed costs incurred during the interruption period may be the same as losses from property damage, and it may be appropriate to record a receivable (not to exceed the amount of costs incurred) for amounts considered probably of recovery. Lost revenues or profit margin is considered a gain contingency and should be recognized only when earned and realized. Due to the complex and uncertain nature of the settlement negotiation process, this generally occurs at the time of final settlement or when non-refundable cash advances are made. Business interruption reimbursements should be included as a component of cost of products sold.

Reference: 3.0

Effective Date: Immediately

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d) Insurance recovery receivables generally should not be offset against the related liability in the balance sheet.

8) REFERENCES a) ASC 310-10-45-13, Receivables (Accounting Research Bulletin No. 43 – Restatement and Revision of Accounting Research Bulletins, Chapter 1A, paragraph 5) b) ASC 410-30, Asset Retirement and Environmental Obligations (AICPA Statement of Position 961 – Environmental Remediation Liabilities) c) ASC 835-30, Interest (Accounting Principles Board Opinion No. 21 – Interest on Receivables and Payables) d) ASC 850, Related Party Disclosures (Financial Accounting Standard No. 57 – Related Party Disclosures)

Reference: 3.1

Effective Date: Immediately

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Grower Loans and Advances Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

GROWER LOANS AND ADVANCES _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 3.1

Effective Date: Immediately

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Grower Loans and Advances Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) GROWER LOANS AND ADVANCES a) The Company makes advances, both cash advances and material advances, to third party growers for various production needs on the farms including labor, fertilizers, irrigation, pruning and harvesting costs. Some of these advances are secured with property or other collateral owned by the growers. b) Grower advances are categorized as follows: i)

Working Capital Advances (a) Working capital advances are made during a normal growing cycle for operating costs and other subsistence allowances to the farmers. These advances are shortterm in nature and are intended to be repaid with the excess cash proceeds from the current crop harvest. (b) Short-term grower advances, which will be repaid in less than one year from the balance sheet date, should be booked to account #121500 ―Grower Loans and Advances Secured‖ or account #123000 ―Grower Loans and Advances Unsecured Net.‖ (i) Secured advances are those that are covered by a lien on crops to be harvested or otherwise secured by property or other assets. (c) Long-Term grower advances, which will be repaid beyond one year from the balance sheet date, should be booked to account #262000 ―Long-Term Allowance for Grower Loans Secured‖ and account #263500 ―Long-Term Grower Loans and Advances Unsecured.‖ (d) Short-term grower loans and advances, whether secured or unsecured are classified as accounts receivable. Long-term grower loans and advances, whether secured or unsecured are classified as other assets.

ii)

Term advances (a) Term advances are made to allow the grower to make capital improvements to the land or prepare it for development. These advances are long-term in nature and may or may not bear interest. They usually do not have defined repayment terms but are payable over the term of the supply agreement with the excess cash proceeds from the crop harvest after payment of any outstanding working capital advances. The term of the supply agreement is generally 5 to 10 years. Term advances are classified as other assets on the balance sheet. (b) Grower advances are to be reviewed at least quarterly and an allowance is to be established based on estimates of the grower’s ability to repay advances and the fair value of the collateral. For specific guidance related to approval authority and allowances for grower loans and advances, refer to the Dole Food Company “Worldwide Allowance and Accrual Policy” on the Intranet Policies and Procedures Portal under DFC – Worldwide Finance folder..

Reference: 4.0

Effective Date: Immediately

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Inventory Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

INVENTORY _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

Reference: 4.0

Effective Date: Immediately

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Inventory Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) DEFINITIONS For the purposes of this Policy, the following definitions shall apply: a) ―Free on Board Shipping‖ shall mean title passes to the customer when the goods leave the seller’s location. b) ―Free on Board Destination‖ shall mean title passes to the customer when he receives the goods. c) ―Recurring land development costs‖ shall mean costs that do not result in permanent or long-term improvements to land, for example, maintenance costs that occur annually or periodically. d) ―Land development costs‖ shall mean improvements to bring the land into a suitable condition for general agricultural use and to maintain its productive condition. i)

ii)

Permanent land development costs include the cost of initial land surveys, titles, initial clearing, initial leveling, terracing, and construction of earthen dams; they involve changes to the grade and contour of the ground and generally have an indefinite life if they are properly maintained. Limited-life land development costs are those that will lose value as time passes or as the land and its improvements are used. Costs identified as limited-life improvements include water distribution systems, fencing and drainage tile. The useful lives of those improvements are reasonable and determinable.

e) ―Intermediate Life Plants‖ shall mean plants that have growth cycles of more than one year but less than those of trees and vines. f)

―Groves‖ shall mean fruit or nut trees planted in geometric patterns to economically facilitate care of the trees and harvest of the fruits or nuts.

2) INVENTORY a) The term inventory is used to designate the aggregate of those items of tangible personal property (refer to Exhibit 13.2 for detail regarding the composition of the following types of inventory): i) Held for sale in the ordinary course of business (finished goods) ii) Goods in the course of production (work in progress) iii) Goods to be consumed directly or indirectly in production (raw materials and supplies) b) Excludes long-term assets subject to depreciation accounting c) Inventories should include items that are: i) ii) iii) iv) v)

Physically on hand; In transit to the company with free on board shipping point terms; Held by a vendor when significant risk of ownership has passed to the company; Held by others for storage, processing and shipment; Held by a customer when the significant risks of ownership have not yet passed to the customer.

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3) BASIS FOR DETERMINING INVENTORY COSTS a) Inventories are to be recorded at lower-of-cost or market. i)

Cost includes acquisition and production costs: (b) Costs may include payments for fruit, freight in costs, import duties, vendor rebates and discounts, wages of employees directly engaged in the production process and overhead allocations (see Exhibit 13.1 for overhead costs to be included/excluded from inventory) (c) When there is evidence that goods will be sold at less than cost due to deterioration, obsolescence, changes in price levels or other factors, the difference between cost and market should be recognized as a loss in the current period. (d) Estimated losses on purchase commitments must be factored in the lower-of-cost or market analysis. If the company is unable to recover the losses on the purchase commitments with increased selling prices of the finished product, an accrued liability and expense for the losses should be recorded in the current period. (e) Unallocated overhead costs are to be recognized in the period in which they are incurred. (f) Abnormal freight, handling and spoilage (wasted materials) costs are to be recognized as current period charges. Refer to the Revenue Recognition and Accounting for Incentives and other considerations- Abnormal Costs in Section 10 of this policy for further detail. (g) General and administrative expenses are to be recognized as current period charges unless they are clearly related to production and thus constitute a part of inventory costs. (h) Selling and marketing expenses are not inventory costs and are to be expensed as incurred. (i) Lower of Cost or Market Assessment- At least on a quarterly basis, divisions are required to assess whether their inventories are recorded at the lower of cost or market. Depending on the character and composition of the inventory, the rule of lower of cost or market may be applied directly to each item or to the total of the inventory. In order to determine the market value, the following criteria should be used:

ii)

Market = Current replacement cost (a) Upper limit of Market = Net Realizable Value (―NRV‖) (b) Lower limit of Market = NRV - Normal Profit Margin (c) NRV = Estimated Selling Price - Cost of Completion and Disposal

iii) If Current Replacement Cost > NRV, then NRV is Market. iv) If Current Replacement Cost < (NRV - Normal Profit Margin), then (NRV – Normal Profit Margin) is Market.

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4) VALUATION METHOD a) Inventory (excluding certain packing materials and operating supplies) is to be valued on a weighted-average basis or on a first-in, first-out basis. b) Certain packing materials and operating supplies are to be valued using specific identification and average costing methods.

5) TREATMENT OF STANDARD TO ACTUAL VARIANCES a) Standard to actual variances are capitalized into inventory and are recorded into cost of products sold upon sale of inventory.

6) CROP GROWING COSTS a) Crop growing costs are considered to be costs incurred up to the time crops are produced in commercial quantities, including the costs of land preparation, plants, planting, fertilization, grafting, pruning, equipment use and irrigation. Differences may exist in the accounting treatment for crop growing costs, due to the nature of the crops, farming methodology differences, etc. The following is a brief summary of the accounting methodology adopted for some of Dole’s significant crop inventories: i)

Bananas (Regular & Organic) – Recurring Growing Costs (a) All recurring direct and indirect costs of growing should be charged to cost of goods sold (―COGS‖) as incurred. (b) Recurring costs incurred after harvest to overcome a common physical or toxic condition, such as special tillage, chopping or burning, should be estimated and accrued as part of inventory costs.

ii)

Bananas (Regular & Organic) – Land Development Costs (New Farms/Farm Rejuvenation/Relay Cropping) (a) Permanent land development costs should be capitalized into PP&E – Land (account #000900 ―Land‖) and should not be depreciated or amortized, since they have an indefinite useful life. (b) Limited-life land development costs should be capitalized into PP&E – Land Improvements (account #000901 ―Improvements – Land and Agricultural‖) during the development period and depreciated over the estimated useful life of the plant. (c) Under relay cropping, which requires the replanting of bananas each year, all costs should be deferred and capitalized into inventory until harvest.

iii) Pineapples – Recurring Growing Costs (a) All recurring direct and indirect costs of growing should be charged to cost of products sold as incurred.

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(b) Recurring costs incurred after harvest to overcome a common physical or toxic condition, such as special tillage, chopping or burning, should be estimated and accrued as part of inventory costs. iv) Pineapples – Land Development Costs (New Farms) (a) Permanent land development costs should be capitalized into PP&E – Land (account #000900 ―Land‖) and should not be depreciated or amortized, since they have an indefinite useful life. (b) Limited-life land development costs should be capitalized into PP&E – Land Improvements (account #000901 ―Improvements – Land and Agricultural‖) during the development period and depreciated over the estimated useful life of the land development. v) Other Crops (including deciduous fruit, vegetables, citrus, other fresh fruit) – Recurring Growing Costs (a) All recurring direct and indirect costs of growing crops should be accumulated into inventory (account #159000 ―Growing Crop Cost Inventories – Net‖) and reported at lower of cost or market and expensed into COGS during the harvest period. (b) Recurring costs incurred after harvest to overcome a common physical or toxic condition, such as special tillage, chopping or burning, should be estimated and accrued as part of inventory costs. vi) Other Crops (including deciduous fruit, vegetables, citrus, other fresh fruit) – Land Development Costs (a) Permanent land development costs should be capitalized into PP&E – Land (account #000900 ―Land‖) and should not be depreciated or amortized, since they have an indefinite useful life. (b) Direct and indirect costs of groves, vineyards and intermediate life plants should be capitalized into PP&E – Land Improvements during the development period and depreciated over the estimated useful life of the land development.

7) SPARE PARTS INVENTORY i)

Spare parts held by a division which will be used to replace broken parts on its production equipment should be classified as ―Other Current Assets‖ (account #170000 ―Other Current Assets‖) if it is probable that the parts will be used within the division’s operating cycle. If the parts will not be used within the division’s operating cycle, the parts should be classified as ―Other Non-Current Assets‖ (account #293000 ―Other Non-Current Assets‖) and amortized over their estimated useful life.

a) The useful life of the asset begins when it is operational within the machine rather than when it is acquired. It would, therefore, be amortized over the period starting when it is brought into use and continuing over the lesser of its useful life and the remaining expected useful life of the asset to which it relates. If the asset to which it relates will be replaced at the end of its useful life and the motor is expected to be used or usable for the replacement asset, a longer amortization period may be appropriate.

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8) SLOW MOVING INVENTORY a)

Inventory not reasonably expected to be realized into cash during a division’s normal operating cycle should be classified as a long-term asset in the balance sheet. A one-year time period should be used if there clearly is no defined operating cycle.

9) CASH DISCOUNTS ON INVENTORY PURCHASES a) Cash discounts received from a vendor (including early payment discounts) should be recorded as a reduction of inventory costs.

10) ABNORMAL COSTS a) Abnormal idle facility expense, freight, handling costs and wasted material (excessive spoilage) should be expensed in the current period rather than capitalized as inventory costs.

11) ELIMINATION OF INTERCOMPANY PROFIT a) Divisions may purchase inventory from other Dole divisions (―seller‖) as part of its normal operations. In these instances, the ending inventory balances reported by the seller in each period close must be on a GAAP basis. As a result, intercompany profit that is embedded in the seller’s inventory balances must be eliminated.

12) ACCOUNTING FOR INVENTORY EXCHANGES a) Some entities sell inventory to another party from which they also acquire inventory in the same line of business. For example, a division that produces and sells fresh cut pineapples, may grow the pineapples locally, but enters into an agreement with an outside vendor to cut and package the pineapple prior to the outside vendor returning the packaged pineapple to the Company for sale to the end customer. Indicators of inventory exchanges may include the following: (1) there is a specific legal right by both parties to offset their payment and receivable obligations to each other; (2) inventory purchases and sales between the counterparties are simultaneous; (3) inventory purchases and sales between the counterparties are at off-market prices; and (4) there is a strong likelihood that the counterparties will engage in reciprocal inventory transactions. b) The nature of these transactions is pursuant to an arrangement between the Company and an outside vendor to sell inventory in a work-in-process form and subsequently repurchase the inventory as finished goods. The inventory sale and purchase transactions described above should be viewed as a single transaction. i. The initial sale of work-in-process inventory to the vendor should not be recognized as a sale. Revenue should only be recognized upon the sale of the inventory to the end customer. ii. Once inventory is transferred back to the Company as a finished good, the inventory should continue to be valued at cost, plus the incremental cost of the services provided by the outside vendor. c) Example – Division A grows pineapples locally and sells fresh cut pineapples to various grocery stores. Upon harvest of the pineapples, Division A enters into an agreement with Company Z to cut and package the pineapples. Company Z subsequently returns the packaged fresh cut pineapple to Division A for eventual sale to the end customer.

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i. Facts: Division A harvests pineapple locally at a cost of $100 Division A transfers the harvested pineapple to Company Z for $105 to process the fruit, with Division A maintaining risk of loss for the transferred inventory Upon packaging of the pineapples, Company Z returns the packaged fresh cut pineapple back to Division A for $115 Division A ultimately sells the packaged fresh cut pineapple to a grocery store for $120 ii. Division A should ultimately record the final inventory cost at $110, thus representing the original cost of $100, plus the incremental cost of $10 for Company Z to cut and package the pineapple. Division A should recognize revenues of $120 only upon the sale of the inventory to the grocery store (i.e., the end customer), with the transfer of inventory between Division A and Company Z treated as a non-monetary exchange of assets in accordance with ASC Topic 845-10, “Nonmonetary Transactions”. iii. Although there are several different methods in which to achieve the proper accounting entries, the following sample journal entries show one way to account for the inventory exchanges discussed in Example 1: Entry 1 – Harvested pineapple with a cost of $100 is transferred by Division A to Company Z for $105 Dr. Cash $105 Dr. Cost of Goods sold $100 Cr. Revenues $105 Cr. Inventory $100 Entry 2 – Company Z returns the packaged pineapple back to Division A for $115 Dr. Inventory $115 Cr. Cash $115 Entry 3 – Eliminate sales transaction between Division A and Company Z Dr. Revenues $105 Cr. Cost of Goods Sold $105 Entry 4 – Division A sells inventory to the grocery store for $120 Dr. Dr. Cr. Cr.

Accounts Receivable Cost of Sales Revenues Inventory

$120 $115 $120 $115

13) FOREIGN CURRENCY AND FUEL HEDGE GAINS/LOSSES a) ASC Topic 815, “Derivatives and Hedging” requires all gains or losses on derivative instruments not designated as hedges to be recognized in the income statement. Divisions that enter into foreign currency and fuel hedge derivative transactions should not include the unrealized/realized gains or losses as part of their ending inventory balances. All derivative related gains or losses should be recorded to cost of products sold – miscellaneous (account #908400 ―Foreign Currency Hedging Realized‖, account #908500 ―Foreign Currency Hedging Unrealized‖, account #908700 ―Fuel Hedging Realized‖, and account #908800 ― Fuel Hedging Unrealized‖) and not included in the calculation of the ending inventory balance.

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14) REFERENCES a) ASC 330-10, Inventory (Accounting Research Bulletin No. 43 – Chapter 4, Inventory Pricing) (Accounting Research Bulletin No. 43 – Chapter 4, Inventory Pricing) (Financial Accounting Standard No. 151 - Inventory Costs) b) ASC 815, Derivatives and Hedging (Financial Accounting Standard No. 133 – Accounting for Derivative and Hedging Activities, as amended) c) ASC 835, Interest (FASB Statement No. 34, Capitalization of Interest Cost) d) ASC 845-10, Nonmonetary Transactions (EITF 04-13 - Accounting for Purchases and Sales of Inventory with the Same Counterparty) (Financial Accounting Standard No. 153 - Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29) e) ASC 905, Agriculture (Statement of Position 85-3 – Accounting by Agricultural Producers and Agricultural Cooperatives) (AICPA Auditing and Accounting Guide, Agricultural Producers and Agricultural Cooperatives)

15) EXHIBITS Exhibit 15.1 - Costs to be Included or Excluded from Inventory The following table lists examples of costs that generally should be included in inventory (Inventoriable Costs) and excluded from inventory (Noninventoriable Costs):

Description

Inventoriable Costs

Noninventoriable Costs

Repairs and maintenance of production equipment

X

Utilities of production area

X

Rents related to production area

X

Indirect labor and production supervisory wages, including base pay, overtime pay, vacation and holiday pay, illness pay, shift differential, payroll taxes, and contributions to a supplemental unemployment benefit plan

X

Indirect materials and supplies

X

Production tools and equipment not capitalized

X

Costs of quality control and inspection

X

Distribution and warehousing costs (finished goods)

(1)

(1)

Transportation expenses

(2)

(2)

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General and administrative expenses attributable to business activities as a whole

X

Executives' salaries related to business activity as a whole

X

Pension costs for manufacturing employees (3)

X

Other employee benefit costs, including workmen's compensation expenses; amounts includable in income of an employee under nonqualified pension, profit-sharing, and stock bonus plans; premiums on life and health insurance; and miscellaneous employee benefits (3)

X

Depreciation on production related assets

X

Plant administrative expenses

X

Abnormal costs attributable to rework labor, scrap, and spoilage Insurance incident to purchasing, production, and warehousing

X X

Marketing, advertising, and selling expenses

X

Research and development expenses

X

Royalties

(4)

Losses from casualty or theft

X

Purchasing

(5)

Data processing

(6)

Income taxes attributable to income received on sale of inventory

X

Interest expense

(7)

Notes: (1) To the extent that warehousing or distribution center costs are incurred for activities such as receiving, marking, processing, temporary storage, picking, and repackaging (including that necessary for shipment to an entity's retail location), such costs are capitalizable to inventory. However, selling expenses would not be includable in inventory. (2) Costs of transportation activities for the movement of goods for resale from a retail entity's warehouse or distribution center to its retail stores are capitalizable. Unreimbursed costs of shipments to customers are expensed. Costs related to the movement of goods from one retail store to another should be expensed in the current period. (3) Applies to employees’ incident to, or necessary for, production or manufacturing operations. (4) Costs generally are not included in inventory, but are charged to cost of sales at time of sale. If royalty was based on manufacture of an item rather than sale of the item, costs could be included in inventory. (5) Costs are includable in inventory to the extent that they directly relate to the acquisition of raw materials and supplies by manufacturers, or the acquisition of goods for resale by wholesalers and retailers.

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(6)

(7)

Costs are includable in inventory to the extent that data processing support is provided for purchasing, warehousing, or shipping by a retail entity from its distribution center to its retail stores, or the recording of the receipt of goods. ASC Topic 835, Interest, indicates that interest expense is included in inventory for "assets intended for sale or lease that are constructed or otherwise produced as discrete projects (e.g., ships or real estate developments)."

Exhibit 15.2 - Composition of Inventory on the Balance Sheet Inventory on the balance sheet consists of the following four categories: 1) finished products, 2) raw materials and work in progress, 3) crop growing costs and 4) operating supplies and other. Refer to the ―Worldwide Chart of Accounts‖ file on the Intranet Policy Portal under DFC – Worldwide Finance for definitions of these categories.

Exhibit 15.3 - Crop Growing Costs Chart General Cost Categories Land Development Costs (1) New Farms

Plant Costs (i.e. Seeds, Trees, Vines, Stems)

Preproduction Costs (2)

Recurring Growing Costs (3)

Bananas

Capitalized (PPE)

Capitalized (PPE)

Capitalized (PPE)

Expensed as Incurred

Bananas Utilizing Relay Cropping

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Pineapples

Capitalized (PPE)

Expensed as Incurred

Expensed as Incurred

Expensed as Incurred

Grapes, Stone & Deciduous Fruit

Capitalized (PPE)

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Papaya

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Asparagus

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Peaches

Capitalized (PPE)

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Lettuce, Broccoli, Cauliflower & Celery

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Oranges, Minneolas & Tangerines

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Strawberries

Capitalized (PPE)

Capitalized (Inventory)

Capitalized (Inventory)

Capitalized (Inventory)

Examples of Crops

1) Land development generally includes improvements to bring the land into a suitable condition for general agricultural use and to maintain its productive condition. Some improvements are permanent and some have a limited-life. Permanent land development costs may include clearing, initial leveling, terracing, construction of dams, changes to the grade and contour of the ground and have an indefinite life if they are properly maintained. Limited-life development costs may include such items as water distribution systems, fencing, wells, levees, ponds drain tile, ditches and greenhouses.

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Permanent land development costs should be capitalized into PP&E and should not be depreciated or amortized since they have indefinite useful lives. Limited-life development costs should be capitalized during the development period into PP&E and be depreciated over the estimated useful life of the tree, vine or plant. (2) Includes land preparation costs (i.e. land clearing, plowing, insect control, bedding, rock and waste clearing, leveling), preplanting (i.e. weed control, chemicals and herbicides), planting (i.e. seed pick and removal, seed selection and treatment, pruning, fertilizers, plant costs) and preproduction costs (i.e. fertilizers, compost, pruning, cleaning and pest control costs). (3) Once the preproduction period ends, recurring growing costs are incurred. These costs include pruning, watering, chemical treatments (fertilizers, herbicides and pesticides), farm labor and overhead costs.

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Marketable Securities Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

MARKETABLE SECURITIES _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) TYPES OF MARKETABLE SECURITIES a) Investments include marketable securities which can be classified as either short term or long term. Short-term marketable securities are investments in equity or debt securities that are intended to be held for a period up to one year from the balance sheet date and can be readily bought or sold. Long term marketable securities are investments in equity or debt securities that are intended to be held for a period longer than one year from the balance sheet date. However, long term bonds are never classified as current even if the intent is to sell them in the near term. b) Examples of marketable securities include investments in commercial paper, government and municipal securities, corporate and government bonds and investments in common or preferred stock of corporations. c) Other short-term investments include all other unrestricted or restricted (e.g. pledged as collateral on a line of credit) investments that are intended to be held for a period no longer than one year from the balance sheet date.

2) VALUATION METHOD a) Investments are initially recorded at cost. At the end of each reporting period, investments are to be valued at their fair market value, and in the case of items denominated in foreign currencies, are to be converted based on the applicable foreign exchange closing rate provided by Corporate Treasury at the end of each reporting period. Fair market value is defined as the amount at which an asset could be bought or sold in a current transaction between willing parties other than in a forced or liquidation sale (i.e. quoted market prices in active markets). b) For investments in debt and equity securities, ASC 320-10, “Investments – Debt and Equity Securities" provides the following accounting guidance: Held-to-maturity Definition

Trading securities

Available-for-sale

Debt securities with the

Debt and equity

Debt and equity securities

intent and ability to hold

securities bought and

not classified as held-to-

to maturity

held for only a short

maturity or trading

period of time Valuation Method

Premium or discount is

Fair value

Fair value

Unrealized holding

Unrealized holding gains and

gains and losses

losses are excluded from

included in current

earnings and reported in

period earnings

other comprehensive income

amortized over term of debt security Accounting Treatment

Not Applicable

(component of shareholders’ equity)

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c) When the fair value of individual securities (classified as available-for-sale or trading securities) declines below cost, the reporting division must determine if the decline is temporary or permanent. If the decline is considered not to be temporary (usually after a 6 month-decline), the following standards apply: i)

The cost basis of the individual security is written down to the current fair value, which will then be the new cost basis,

ii)

The amount of the write-down is included in current period earnings as a realized loss,

iii) The new cost basis is not changed for subsequent recoveries in fair value. d) Subsequent increases in the fair value of available-for-sale securities are included in other comprehensive income; any subsequent decreases in fair value, if temporary, are also included in other comprehensive income.

3) REFERENCES a) ASC 320-10, Investments – Debt and Equity Securities (Financial Accounting Standard No. 115 – Accounting for Certain Investments in Debt and Equity Securities)

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Property, Plant & Equipment Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

PROPERTY, PLANT & EQUIPMENT ________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) PROPERTY, PLANT AND EQUIPMENT a) Property, plant and equipment (PP&E) generally have the following characteristics: i)

They are acquired for use in operations and enter into the revenue-generating stream indirectly; ii) They are held primarily for use and not for sale; iii) They have relatively long useful lives. b) PP&E is to be recorded at cost and includes all expenditures related to preparing the asset for its intended use. PP&E is also recorded at cost in the appropriate general ledger account based on the nature or function of the asset. Refer to the “Worldwide Chart of Accounts” file on the Intranet Policies and Procedures Portal under DFC – Worldwide Finance folder, for a detailed listing and description of the various PP&E accounts.

2) CONSTRUCTION IN PROGRESS (CIP) a) CIP includes all costs incurred for the construction of assets not yet placed in service. When the Company constructs a depreciable asset for its own use, the following costs must be considered: i) ii)

All direct costs included in the total cost of the asset; Fixed overhead costs are not included unless they are increased by the construction of the asset; and iii) Once the asset is ready for its intended use, it is to be transferred to the corresponding PP&E account and depreciated over its estimated useful life.

3) CAPITALIZATION OF INTEREST ON CONSTRUCTION IN PROGRESS a) ASC Topic 835-20, “Interest”, requires interest to be capitalized for assets that require a period of time in order to get them ready for their intended use. However, interest cost shall not be capitalized for inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis. In addition, interest shall not be capitalized for the following types of assets: i) ii) iii) iv) v) vi)

Assets that are in use or ready for their intended use in the earning activities of the enterprise; Assets that are not being used in the earning activities of the enterprise and that are not undergoing the activities necessary to get them ready for use; Assets that are not included in the consolidated balance sheet of the parent company and consolidated subsidiaries; Investments accounted for by the equity method after the planned principal operations of the investee begin; Investments in regulated investees that are capitalizing both the cost of debt and equity capital; Assets acquired with gifts and grants that are restricted by the donor or grantor to acquisition of those assets to the extent that funds are available from such gifts and grants. Interest earned from temporary investment of those funds that is similarly restricted shall be considered an addition to the gift or grant for this purpose.

b) The Company’s policy is that any individual project costing more than $2.5 million or resulting in more than $250,000 of capitalized interest requires the capitalization of interest for the asset. Amounts below this threshold are not considered material and therefore no capitalized interest would be required.

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c) The amount of interest to be capitalized is determined by applying an interest rate to the average amount of accumulated expenditures for the asset during the period. The Company’s weighted average borrowing rate associated with its revolving credit facilities and/or term loan facilities should be used. Contact the Corporate Controller’s Organization to obtain the appropriate borrowing rate. d) Capitalized interest is treated like any other component of the asset’s cost and is to be depreciated using the same method and useful life.

4) DEPRECIATION OF FIXED ASSETS AND USEFUL LIVES a) PP&E (excluding land) is to be depreciated based upon the asset’s estimated useful life. b) Although an asset’s estimated life may differ from one division to another, the estimated useful life should always be based on the nature of the underlying asset and the division’s experience with similar assets and its intended use. Estimated useful lives and recoverability of each asset (or group of assets) must be reviewed quarterly to ensure appropriateness. c) The cost of PP&E (excluding land) should be depreciated using the straight line method. Typically, PP&E less a residual or salvage value should be depreciated. d) When an asset is placed into service during the year, depreciation expense is to be recorded only for the remaining portion of the year that the asset is used. e) Any revision of an asset’s estimated useful life is accounted for prospectively (current and future periods) and no adjustment will be made to historical depreciation expense. f)

Divisions are responsible for determining the useful lives of the assets. However, a reasonable range of useful lives by asset category is as follows: i) ii) iii) iv) v) vi) vii) viii)

Land Improvements Buildings Leasehold Improvements Machinery & Equipment Software Vessels Containers Vessels and Equipment Under Capital Lease

5 to 40 years 5 to 40 years Shorter of lease term or useful life 2 to 25 years 2 to 10 years 20 to 25 years 10 to 15 years Shorter of lease term or useful life

g) Any significant deviations to the range of useful lives must be discussed with the Corporate Controller’s Organization.

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5) GAIN/LOSS ON SALE OF ASSETS a) Realized gains or losses on the sale of operating assets (i.e. productive fixed assets, investments, other assets and intangibles) are to be recorded in account #754000 ―(Gain) Loss on Sale of Assets‖ and reported as a component of cost of products sold. If non-productive assets are sold (i.e. idle land or property unrelated to the Company’s core business such as a golf course), the gain or loss generated on the sale should be recorded in account #754000 ―(Gain) Loss on Sale of Assets‖ and reported as a component of selling, marketing and general and administrative expenses. In rare circumstances, the Company may realize gains or losses on the sale of nonoperating assets (i.e. the sale of artwork or the sale of an investment in marketable securities). Consultation with the Corporate Controller’s Organization is required when recording sales of such non-operating assets.

6) COMPUTER SOFTWARE a) ASC Topic 350-40, “Intangibles – Goodwill and Other” allows software to be capitalized if the software is acquired, internally developed or modified solely to meet an entity’s internal needs. b) Once computer software development has reached the application development stage, then both internal and external costs incurred should be capitalized. In addition, software costs that allow for access or conversion of old data by new systems also should be capitalized. i) Costs for upgrades and enhancements are capitalized only if it is probable that these expenditures will result in additional software functionality. c) Capitalization of costs should begin when both of the following occur: i) The preliminary project stage is complete and ii)

Management authorizes funding of the project, and it is probable that the project will be completed and the software will be used to perform the function intended.

d) Capitalization must end when the software project is substantially complete and ready for its intended use. e) Costs eligible for capitalization include: i) External direct costs of materials and services consumed in developing or obtaining the software; ii)

Payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use computer software project, to the extent of time spent directly on the project; and

iii) Interest costs incurred while developing internal-use computer software. f)

G&A costs and overhead costs are not to be capitalized.

g) Internal and external training costs as well as maintenance costs should always be expensed.

7) CAPITALIZATION VS. EXPENSING OF PP&E a) The Company has established a capitalization threshold that requires any capital expenditure of $5,000 or more to be capitalized. Refer to Dole Food Company’s “Worldwide Capital Policy” on the Intranet Policies and Procedures Portal under DFC – Worldwide Finance folder for additional guidance.

Reference: 6.0

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8) IMPAIRMENT OF LONG-LIVED ASSETS a) ASC Topic 360-10, “Property, Plant and Equipment” (―ASC 360-10‖) identifies certain indicators of impairment: i) A significant decrease in the market price of the asset; or ii)

A significant adverse change in the extent or manner in which the asset is being used, or its physical condition; or

iii) A significant adverse change in the business climate that could affect the value of the asset; or iv) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; or v) A current period operating or cash flow loss, combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the asset. b) Long lived assets are to be tested for potential impairment when any of these indicators have been met. In addition, if there are indicators that a division’s goodwill balance may be impaired then its long-lived assets should also be tested for recoverability. c) In order to determine whether or not potential impairment exists, the Division must create an undiscounted cash flow model which compares an undiscounted cash flow value to the net book value of the long-lived asset(s). For Dole, the undiscounted cash flow value is the sum of operating profits (losses) plus depreciation and amortization over the average remaining useful life of the long-lived asset(s). For example, if the remaining useful life of an asset being tested is 10 years, the undiscounted cash flow model would include 10 years of financial results. An acceptable methodology for developing undiscounted cash flows is to use the first three years of undiscounted cash flows on the most recent three year plan data while years 4 and 5 are based on estimated growth rate factors. The undiscounted cash flows for years 6 and beyond remain fixed at the year 5 value. d) If the undiscounted cash flows are less than the net book value, the long-lived assets are considered impaired. The impairment is calculated based on the excess of net book value over the fair value. Fair value is defined as the amount that the asset could be sold for in a current transaction between willing parties. Impairment losses are to be recognized as a component of operating income in account #754000 ―Gain (loss) on sale of assets.‖ The adjusted carrying amount of the asset becomes the new cost basis and is depreciated over its remaining useful life.

9) ACCOUNTING FOR ABANDONED ASSETS a) An asset is considered to be abandoned when it ceases to be used. b) Depreciation expense should continue to be recorded through the date of actual abandonment. c) If a division commits to a plan to abandon an asset before the end of its previously estimated useful life, depreciation estimates should be revised to reflect the use of the asset over its shortened useful life. This will accelerate the depreciation expense over the remaining periods prior to the date of abandonment. d) Assets that are planned to be abandoned are tested for impairment under the held for use concept discussed under section #8 above.

Reference: 6.0

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10) ASSETS HELD-FOR-SALE a) ASC 360-10 also provides guidance related to accounting for assets-held-for sale. A long-lived asset to be sold shall be classified as held-for-sale in the period in which all of the following criteria are met: i)

Management, having the authority to approve the action, commits to a plan to sell the asset; and

ii)

The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; and

iii) An active program to locate a buyer and other actions required to complete the plan to sell the asset has been initiated; and iv) The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; and v) The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and vi) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. b) If at any time the above criteria is no longer met, a long-lived asset classified as held–for-sale shall be reclassified as held and used in PP&E. c) Assets classified as held-for-sale should be recorded at the lower of their carrying amount or fair value less costs to sell. A loss should be recognized for any write-down to fair value less cost to sell and should be recorded as a component of cost of products sold (productive assets) or SMG&A (idle assets). i)

Costs to sell include brokerage commissions, legal fees, title transfer fees, and other closing costs that must be incurred prior to transfer of legal title to assets.

ii)

An entity may not accrue expected future losses associated with the asset. Costs associated with the disposal (i.e. costs of consolidating or closing facilities) are to be recognized when the actual costs are incurred.

d) Asset classified as held-for-sale should be reclassified from the appropriate balance sheet account into a separate balance sheet account #171000 ―Assets Held-For-Sale.‖ PP&E that is classified as assets held-for-sale is not to be depreciated. Deferred crop costs and other inventory related items that are held-for-sale should continue to be amortized until the assets are sold. Intangible assets, including customer relationships, should also continue to be amortized until the assets are sold. There may be instances when a business or a division is being sold. As a result, both current and long-term liabilities need to be reclassified to liabilities related to assets held-for-sale (account #349800 ―Liabilities Related to Assets Held-For-Sale‖). e) The Corporate Controller’s Organization must approve all reclassifications to the assets held-forsale and liabilities related to assets held-for-sale accounts.

Reference: 6.0

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11) SALE LEASEBACK TRANSACTIONS a) A Division may sell an asset and simultaneously enter into a lease with that purchaser to leaseback a portion or the entire asset that was sold. i)

Any gains associated with a sale leaseback transaction are to be deferred and amortized over the term of the lease.

ii)

If the gain is considered to be immaterial, there should be no deferral of the gain.

iii) The lease must be evaluated to determine whether the lease is to be accounted for as a capital or operating lease.

12) ACCOUNTING FOR PLANNED MAINTENANCE ACTIVITIES a) ASC Topic 908-360, ―Airlines” (―ASC 908-360‖) allows for three different methods which can be used to account for planned maintenance activities: i)

Direct expensing method - Actual costs are expensed as incurred.

ii)

Built-in overhaul method - The cost of components subject to overhaul are segregated at purchase. These are amortized to the date of the initial overhaul. The process repeats thereafter.

iii) Deferral method - Actual costs are capitalized and amortized through the next overhaul. b) Currently, Dole’s most significant planned maintenance activities include dry dock maintenance for Dole’s vessels and maintenance for Dole’s cannery operations. Since the adoption of ASC 908-360, the Company’s policy related to planned maintenance activities is as follows: i)

The deferral method should be used for dry dock maintenance. A deferred asset account (account #291000 ―Deferred Rent‖) should be recorded for the cash paid and amortized over future periods prior to the next planned dry dock. Any variation of this policy should be discussed with the Corporate Controller’s Organization.

ii)

The direct expensing method is used for cannery maintenance activities.

iii) For any other significant maintenance activities and their related accounting, the division should consult with the Corporate Controller’s Organization.

13) ASSET RETIREMENT OBLIGATIONS a) An asset retirement obligation exists when a division has a legal or contractual obligation that it must comply with upon the retirement of an asset or at the end of a lease term. b) A division should recognize a liability for the fair value of an asset retirement obligation in the period it is incurred, if the fair value can be reasonably estimated. The fair value of an asset retirement obligation would be reasonably estimable if: i)

The fair value of the obligation is embodied in the acquisition price of the asset

ii)

An active market exists for the transfer of the obligation

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iii) Sufficient information exists to apply an expected present value technique c) Upon initial recognition of a liability for an asset retirement obligation, an entity shall capitalize an asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount as the liability. An entity shall subsequently allocate that asset retirement cost to expense using a systematic and rational method over its useful life. d) Asset retirement obligations do not include restructuring costs. e) The Company’s policy is that any individual asset retirement obligation resulting in more than $250,000 of liability requires the recognition of the fair value of the asset retirement obligation. Amounts below this threshold are not considered material and therefore no asset retirement obligation would be required to be recorded. f)

The following illustrates examples of asset retirement obligations: i)

Company Y enters into a lease for office space and makes leasehold improvements. The lease requires the company to return the leased property to its original condition (i.e., remove the leasehold improvements). However, the lessor has not historically enforced this condition of the lease. The company is uncertain as to whether it will be required to perform the asset retirement activity. The company estimates that the expected cost to settle the asset retirement obligation will be $5,000,000. In order to calculate the asset retirement obligation, the company assigns an 80 percent probability of not performing the retirement activity (80% × $0 retirement costs = $0) and a 20 percent probability of performing the retirement activity (20% × $5,000,000 retirement costs = $1,000,000). As a result, the company books an ARO liability for $1,000,000.

ii)

Company ABC has a new long-lived asset with an estimated useful life of 15 years. The asset retirement obligation is calculated at acquisition and the undiscounted cash flows in year 15 are determined to be $75,000. The present value of the asset retirement obligation at acquisition is $22,060 based on a discount rate of 8.5 percent, which is the risk-free rate adjusted for Company ABC's credit standing. What is the journal entry to record the initial measurement of the asset retirement obligation? DR. PP&E

$22,060

CR. ARO Liability (PV of obligation at acquisition)

$22,060

Over the 15-year useful life, the liability will be accreted each year using the rate of 8.5 percent determined at acquisition. This will result in a debit to operating expense (i.e., accretion expense) and a credit to the asset retirement obligation. After 15 years, provided there are no changes to Company ABC's initial assumptions, the total liability should be reflected at $75,000. In addition, the addition to fixed assets will also be depreciated over the life of the asset.

14) PURCHASE ACCOUNTING ADJUSTMENTS TO BOOK VALUE a) As a result of business combinations and business acquisitions, fixed assets of the newly acquired entities will often require a fair market value evaluation. This fair market value evaluation may require the Company to write-up or write-down certain assets. Typically, these adjustments will be pushed-down to the newly acquired entity. These adjustments should be recorded in the local currency of the newly acquired entity, and not in the functional currency of the consolidating

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region or the reporting currency of the Company. If for example, the local currency of the newly acquired entity is British Pound Sterling (―GBP‖), the write-up or write-down of assets should be recorded in GBP, not in EUR or USD. Every period the change in the value of the asset due to currency fluctuations should be recorded in the ―Cumulative Translation Adjustment‖ account. b) This fair value adjustment resulting from purchase accounting should be depreciated over the remaining useful life of the asset.

15) REFERENCES a) ASC 350-40, Intangibles – Goodwill and Other (Statement of Position No. 98-1 – Accounting for Costs of Computer Software Developed or Obtained for Internal Use) b) ASC 360-10, Property, Plant and Equipment (Financial Accounting Standard No. 144 – Accounting for the Impairment or Disposal of Long Lived Assets) c) ASC 360-10-50, Property, Plant and Equipment (Accounting Principles Board Opinion No. 12 – Disclosure of Depreciable Assets and Depreciation) d) ASC 410-20, Asset Retirement and Environmental Obligations (Financial Accounting Standard No. 143 - Accounting for Asset Retirement Obligations) e) ASC 835-20, Interest (Financial Accounting Standard No. 34 - Capitalization of Interest Cost) f)

ASC 908-360, Airlines (Staff Position No. AUG AIR-1 - Accounting for Planned Major Maintenance Activities)

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Goodwill and Intangible Assets Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

GOODWILL AND INTANGIBLE ASSETS _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) INTANGIBLE ASSETS a) Intangible assets are costs associated with the acquisition or development of long-lived assets. Examples of intangible assets include copyrights, patents, trademarks and licenses. b) Intangible assets may be purchased or developed internally or acquired through individual transactions or business combinations. c) Intangible assets are to be recorded at the acquisition cost, which is measured by: i) The amount of cash disbursed or the fair value of other assets distributed, ii) The present value of amounts to be paid for liabilities incurred, iii) The fair value of consideration received for stock issued. d) The costs of intangible assets that are developed internally, as well as the costs of maintaining or restoring intangible assets that have indeterminate lives or that are inherent in a continuing business and related to the entity as a whole, are to be expensed as incurred. e) The costs of maintaining or restoring intangible assets that have a finite useful life are capitalized or expensed under the same conditions as those described for fixed assets.

2) GOODWILL a) Goodwill is defined as the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. Additionally, an acquired intangible asset that does not arise from contractual or other legal rights shall be included in the amount recognized as goodwill.

3) PURCHASE ACCOUNTING ADJUSTMENTS a) As a result of business combinations and business acquisitions, goodwill and intangibles asset balances will likely be recorded. Typically, these adjustments will be pushed-down to the newly acquired entity through a purchase accounting adjustment company. i)

Intangible assets are to be recorded in the currency of the newly acquired entity. For example, if newly acquired entity is EUR based, the intangible assets should be booked in EUR and translated to USD through the ―Cumulative Translation Adjustment‖ account each period.

4) AMORTIZATION There are two categories of intangible assets. a) Category 1 – Assets with finite lives i)

The life of these assets, such as patents, copyrights and most franchises, is usually established by law or by contract. ii) Intangible assets with finite useful lives are amortized over these lives. The basis for amortization is the cost less the residual value, if any. iii) Periodically, the remaining amortization period should be reviewed to determine: (a) If the useful life assumption is still valid - if it is valid, the amortization should be continued over the original useful life;

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(b) If the useful life assumption is no longer valid the amortization should be computed prospectively over the revised useful life. b) Category 2 – Assets with indefinite useful lives i) ii)

The expected period of benefit for these assets, such as trademarks or goodwill, is indefinite at the date of acquisition. Intangibles with indefinite useful lives are not amortized until their useful life is determined to no longer be indefinite.

c) At each reporting period, the nature of the intangible asset should be reviewed: i)

If the assumption of the indefinite life is still valid, there is no change;

ii)

If the assumption of indefinite life is no longer valid, the asset should be amortized over its remaining useful life.

d) The following should be considered when determining the useful lives of an intangible asset: i) ii) iii) iv) v) vi)

The expected use of the asset by the entity The expected useful life of another asset or group of assets to which the useful life of the asset in question may relate Legal, regulatory or contractual provisions that may limit the asset’s useful life Legal, regulatory or contractual provisions that enable renewal or extension of the useful life without significant cost The effects of obsolescence, demand, competition and other economic factors The level of maintenance expenditures required to obtain the expected future cash flows from the asset.

e) All intangible assets are to be reviewed periodically to determine that the estimated useful lives and classifications are appropriate. Any change in the estimated useful life of an intangible asset is to be accounted for prospectively.

5) IMPAIRMENT TESTS Under the accounting guidance, there are two main categories of impairment tests: a) ASC Topic 350, “Intangibles – Goodwill and Other” (―ASC 350‖) i)

ASC 350 requires a comparison of the intangible asset’s fair value with its carrying amount.

ii)

The fair value of an intangible asset is the amount that the asset would sell for in a transaction between willing parties (i.e. other than in a forced or liquidation sale).

iii) If the asset’s fair value is below its carrying amount, the intangible asset is to be written down to its fair value. After such a loss is recognized, the adjusted carrying amount of the asset is the new cost basis. Subsequent reversal of a previously recognized impairment loss is prohibited. iv) All intangible assets not subject to amortization should be tested for impairment annually or more frequently if events and circumstances indicate that the asset may be impaired. v) For goodwill, the impairment tests are carried out at the reporting unit level. A reporting unit is defined as an operating segment or one level below (referred to as a component). A

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component is a reporting unit if it constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. vi) The first step in testing goodwill for impairment is to determine the fair value of the reporting unit (i.e. the amount at which the reporting unit as a whole could be bought or sold in a current transaction between willing parties) based on (in order of applicability) quoted market prices, estimates of fair value based on the best information available, or through the use of present value techniques. Dole utilizes a discounted cash flow model to test for goodwill impairment at the reporting unit level. The discounted cash flow model includes earnings projections from the latest 3 year plan, income tax payment projections, a corporate overhead allocation and a discount rate based on a calculated weighted average cost of capital. vii) Under the first step, the fair value of a reporting unit is compared with its net book value including goodwill. If the fair value exceeds its carrying amount, then goodwill of that reporting unit is not considered to be impaired. viii) If the carrying amount exceeds the fair value then the second step of the goodwill impairment test is required to be performed. Under this step, the implied fair value of the reporting unit goodwill is compared to the carrying amount of goodwill. The implied fair value of goodwill is determined in the same manner as goodwill is determined in the purchase price allocation. The fair value of the reporting unit is allocated to all assets and liabilities, as if the reporting unit has just been acquired in a business combination and the fair value of the reporting unit is the price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. An impairment loss is recognized if the implied fair value of goodwill exceeds its carrying amount. ix) Consultation with the Corporate Controller’s Organization is required when performing an impairment test of goodwill and intangibles with indefinite useful lives. b) Impairment of long-lived assets i)

For impairment of long-lived assets (including amortized intangible assets), refer to the guidance in ―Impairment of Long-Lived Assets‖ in the Property, Plant and Equipment in Section 6 of this policy.

6) REFERENCES a) ASC 350, Intangibles – Goodwill and Other (Financial Accounting Standard No. 142 – Impairment of Goodwill and Intangibles with Indefinite Useful Lives) b) ASC 360-10, Property, Plant and Equipment (Financial Accounting Standard No. 144 – Accounting for the Impairment or Disposal of Long Lived Assets) c) ASC 805, Business Combinations (Financial Accounting Standard No. 141 – Business Combinations)

Reference: 8.0

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LIABILITIES _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) LIABILITIES a) Liabilities are to be recorded when the two following conditions are met as of the balance sheet date: i) ii)

It is probable that a liability has been incurred and, The amount of the liability can be reasonably estimated.

b) When both conditions are met, the liability should be accrued at a reasonable estimated value. Payables and accrued liabilities can be grouped into four major categories: i) ii) iii) iv)

Basic accruals, Complex accruals, Legal accruals, and Special accruals

1.1) Basic Accruals a) Basic accruals are those that are recurring, operational, frequent and involve simple estimation methods. They primarily result from the timing difference between the recording of a liability and the related receipts of invoices or payments to third parties. These accruals include: i) ii) iii) iv) v) vi)

Accounts payable – Not vouchered, Grower Payables Accrued freight and handling, shipping, materials and supplies, Accrued wages, payroll taxes, other payroll costs, vacation, sick leave, holiday pay, Dividends payable and Accrued interest and taxes other than income taxes.

b) Sick leave, holiday pay and vacation time are to be accrued as earned and not as paid. The accrual should be recorded at least quarterly based on the best estimate of attainment. c) Related to unclaimed funds, the liability is relieved when funds are escheated to the appropriate government agency.

1.2) Complex Accruals a) Complex accruals are those that may be recurring but also involve an additional degree of judgment in estimation compared with basic accruals. These accruals include: i) Accrued marketing and advertising (coupon) expenses, ii) Accrued bonuses and incentives iii) Accrued pension liabilities and other post-retirement benefits b) In certain cases, the methods to quantify the liability are governed by specific generally accepted accounting principles and may be based in part on the information obtained from experts such as actuaries. c) Bonuses and incentives are to be accrued as earned and not as paid. The accrual should be recorded at least quarterly based on the best estimate of attainment. d) Coupon accruals related to free standing newspaper or magazine inserts, or in-store coupons, are based on estimated expenses and allowances. When the coupon ―drops‖ (printed and issued), costs are matched against the sale of the product and the accrual is relieved.

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e) Marketing accruals should be based on the estimated number of customers that will ultimately earn and claim rebates or refunds under the marketing plan. Divisions should update estimates every quarter to ensure amounts are based on the most current volumes and assumptions.

1.3) Litigation Accruals a) Litigation accruals are for pending or threatened litigation, as well as unasserted claims probable of assertion and reasonably estimable. b) Litigation accruals require significant judgment regarding both the probability and estimated amount of the loss. Any litigation accrual greater than $500K requires approval of both the Corporate General Counsel and the Corporate Controller. c) Legal fees are generally expensed as incurred. In certain instances, legal fees are accrued for anticipated legal costs as a component of an ASC 450, “Liabilities” legal contingency when it is probable that a loss has been incurred and the amount can be reasonably estimated.

1.4) Specific Accruals a) Specific accruals are for events or transactions which are infrequent or non-recurring in nature. Specific accruals include: i) ii) iii) iv) v) vi)

Accrued environmental reserves Accrued natural disaster reserves Accrued master casualty reserves Accrued other insurance reserves Unearned income, and Miscellaneous deferred credits and long-term liabilities

2) DISTINCTION BETWEEN CURRENT AND NON-CURRENT ITEMS 2.1) Current Liabilities a) Current liabilities are defined as obligations for which repayment is expected to occur within one year of the balance sheet date. Current liabilities include the following: i)

Payables from operations: items that have entered the operating cycle (trade payables and accrued liabilities), ii) Debt maturities: amounts expected to be liquidated during the coming year (short-term notes and current portion of long-term debt), iii) Revenue received in advance: collections received in advance for services; these items are typically liquidated by means other than payment in cash, iv) Other accruals: estimates of accrued amounts that are expected to be required to cover expenditures within the year for known obligations.

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2.2) Non-Current Liabilities a) Non-current liabilities, also referred to as long-term liabilities, are obligations that will not be satisfied in the next year or operating cycle, whichever is longer. Examples of long term liabilities include the following: i) Long-term debt, ii) Pension obligations, and iii) Capital lease obligations

3) CONTINGENCIES a) A contingency is an existing condition, situation, or set of circumstances involving uncertainty as to a possible loss to the company that will be resolved when one or more future events occur or fail to occur. b) An accrual for a loss contingency is to be recorded when both of the following conditions are met: i)

Information available prior to issuance of the financial statements indicate that it is probable that an asset has been impaired or a liability has been incurred as of the date of the end of the fiscal period. ii) The amount of the loss can be reasonably estimated. iii) Examples of loss contingencies include collectability of receivables, obligations related to product warranties, risk of loss or damage of property by fire or other hazards, pending or threatened litigation, expropriation of assets, actual or possible claims and assessments, obligations under standby letters of credit, repurchase agreements and guarantees of indebtedness of others.

4) ACCOUNTING FOR RESTRUCTURING COSTS a) Restructuring costs are those costs associated with an exit or disposal activity. They primarily include: i)

One-time termination benefits (i.e. termination benefits provided to current employees that are involuntarily terminated under the terms of a benefit arrangement that, in substance, is not an on-going benefit arrangement or an individual deferred compensation contract), ii) Costs to terminate a contract that is not a capital lease, iii) Other associated costs, such as costs to consolidate facilities or relocate employees. b) A liability for a cost associated with an exit or disposal activity shall be recognized and measured initially at its fair value in the period in which the liability is incurred, except for one-time termination benefits. If the fair value cannot be reasonably estimated, the liability shall be recognized initially in the period in which fair value can be reasonably estimated. c) Restructuring costs should be recorded in the same expense account that charges associated with the restructuring activity are booked. For example, if the Company incurs restructuring costs related to employee severances, the restructuring costs would be booked to general and administrative expenses. d) One-time termination benefits exist at the date when the plan meets all of the following criteria and has been communicated to employees: i)

Management commits to a plan of termination;

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ii)

The plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and the expected completion date; iii) The plan establishes the terms of the benefit arrangement, in sufficient detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated; iv) Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn e) The timing of recognition and related measurement of a liability for one-time termination benefits depends on whether, in order to receive the termination benefits, employees are required to render service until they are terminated and, if so, whether employees will be retained to render service beyond a minimum retention period: Situation

Recognition

Employees not required to render

Employees required to render service

service beyond retention period

until

or termination date

termination date

Fully

recognized

at

the

communication date. However if

termination

Recognition

ratably

or

over

beyond

the

future

service period

there is an established severance policy in place, the recording of the accrual can actually precede the communication of the arrangement to the employees Measurement

At fair value on the communication

Initial

Measurement

at

the

date

communication date based on the fair value of the liability as of the termination date Subsequent adjustments due to revision of either the timing or the amount of estimated cash flows over the future service period

f)

For contract termination costs: i)

ii)

A liability for costs to terminate a contract before the end of its term shall be recognized and measured based on the amount the division expects to pay when a division terminates the contract, in accordance with the contract terms; A liability for costs that will continue to be incurred under the contract for its remaining term without economic benefit to the entity shall be recognized and measured based on the amount the division expects to pay when the entity ceases using the right conveyed by the contract.

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Liabilities Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

5) ACCOUNTING FOR SELF-INSURANCE RESERVES a) The Company is self-insured for most domestic workers compensation, medical and dental claims. b) For workers compensation, Divisions are required to establish reserves to cover all claim related costs (i.e. indemnity, medical, etc.). At a minimum, reserves must be established for open cases plus an estimate for incurred but not reported claims (―IBNR‖). i)

A determination should be made based on the magnitude of the IBNR as to whether a third party actuary should be used to assist in the valuation of the IBNR. ii) If outstanding claims are greater than one year, the IBNR should be discounted using the Company’s risk-free interest rate which matches the average duration of the IBNR. Discounting is appropriate only when both the timing and amounts of future cash flows are fixed or determinable based on objective and verifiable information (typically historical data). iii) IBNR is to be classified as short-term or long-term, depending upon the nature of the reserve. c) For property claims, the Company utilizes a Dole captive insurance company up to a specified amount that is determined annually. Divisions should account for a covered claim with Dole’s captive insurance company as follows: i)

The property loss should be recorded as an expense and the related net book value of property should be written off. Simultaneously, a receivable should be recorded and the property loss expense is reversed. ii) The Company’s captive insurance company records the impact of the property loss by recording an expense and accounts payable. iii) The necessary information is provided by Corporate Accounting and the respective Division to Corporate Consolidations to ensure that the insurance receivable and payable balances are properly eliminated in the consolidation process.

6) REFERENCES a) ASC 420-10, Exit or Disposal Cost Obligations (Financial Accounting Standard No. 146 – Accounting for Costs Associated with Exit or Disposal Activities) b) ASC 450, Contingencies (Financial Accounting Standard No. 5 – Accounting for Contingencies) c) ASC 450-20, Contingencies (Financial Interpretation No. 14 – Reasonable Estimation of the Amount of a Loss) d) Worldwide Allowance and Accrual Policy e) Corporate Legal Reserve Policy

Reference: 9.0

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Income Taxes Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

INCOME TAXES ______________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

REFER TO ACCOUNTING POLICY INCOME TAXES FINAL POSTED SEPARATELY IN THE PORTAL

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Revenue Recognition and Accounting for Incentives and Other Considerations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

REVENUE RECOGNITION AND ACCOUNTING FOR INCENTIVES AND OTHER CONSIDERATIONS _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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Revenue Recognition and Accounting for Incentives and Other Considerations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) REVENUE RECOGNITION – GENERAL a) Revenue is realized or realizable and earned when all of the following criteria are met: i) ii) iii) iv)

Persuasive evidence of an arrangement exists Delivery has occurred or services have been rendered The price to the customer is fixed or determinable, and Collection is reasonably assured

b) Revenue is to be recorded net of any sales allowances (account #412000 ―Product Sales Allowances‖), promotions (account #411000 ―Product Sales Promotions‖) and sales incentives (account #414100 ―Product Sales Incentives‖), which include coupons, rebates, time/volume incentives, cooperative advertising, buydowns and slotting fees. c) FOB Destination: Revenue is to be recorded when the goods are delivered to a designated location. Delivery is not considered to have occurred until the customer has taken title and assumed the risks and rewards of ownership. d) FOB Shipping Point: Revenue is to be recorded when the product is shipped to the customer. e) Synthetic Destination: In situations where the Company ships goods FOB shipping point but continues to bear the risk of loss or damage during transit, revenue cannot be recognized until the customer has taken title of the inventory and has assumed the risks and rewards of ownership.

2) REVENUE RECOGNITION FOR RETURNABLE MERCHANDISE a) Revenue from sales in which a right of return exists is recognized at the time of sale only if all of the following conditions are met: i) ii) iii) iv) v) vi)

The price between the seller and the buyer is substantially fixed, or determinable The seller has received full payment, or the buyer is indebted to the seller and the indebtedness is not contingent on the resale of the merchandise. Physical destruction, damage or theft of the merchandise would not change the buyer’s obligation to the seller. The buyer has economic substance and is not a conduit that exists solely for the benefit of the seller. No significant obligations exist for the seller to help the buyer resell the merchandise A reasonable estimate of future returns can be made.

b) If all of the above conditions are met, revenue is recognized on sales for which a right of return exists, provided that an appropriate provision is made for costs or losses that may occur in connection with the return of the merchandise from the buyer. c) If any of these conditions is not met, revenues are to be deferred and recorded as ―Unearned Revenues‖ (account #385000 ―Deferred Income‖).

3) REPORTING REVENUE GROSS AS A PRINCIPAL VERSUS NET AS AN AGENT a) Revenue can be recorded based on the gross amount billed to a customer if the following criteria are met: i)

Seller is acting as a principal in the transaction,

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Revenue Recognition and Accounting for Incentives and Other Considerations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

ii) Seller takes title to the merchandise, iii) Seller has the risks and rewards of ownership, such as risk of loss for collection, delivery or returns. b) However, if none of the above conditions are met (i.e. the Seller is simply acting as an agent or a broker) and the Seller is compensated by a commission or fee, then only the net revenue earned on the sale (amount billed to customer less amount owed to the supplier) can be recorded. c) The following factors should be considered in determining the method of revenue recognition: i)

Indicators of Gross Revenue Reporting: (a) Seller is primarily responsible for providing product or service (b) Seller has general inventory risk (c) Seller has latitude in establishing the price (d) Seller changes the product or performs part of the service (e) Seller has discretion in selecting the supplier (f) Seller is involved in determining product or service specifications (g) Seller has physical loss inventory risk (h) Seller assumes credit risk

ii)

Indicators of Net Revenue Reporting: (a) Supplier is primarily responsible for providing product or service (b) Amount earned by the seller is fixed (c) Supplier assumes credit risk

4) DISTINCTION BETWEEN PRODUCT REVENUE AND SERVICE REVENUE a) Product and service revenue should be reported separately. b) Product revenue is defined as revenue from third parties from the sale of core business products and any related surcharge and other revenue included on the invoice to customers, net of all related sales promotions and allowances. Surcharges and other revenue mainly include charges for cooling, warehousing, fuel, containerization, handling and palletization. c) Core business products are associated with the company’s activities related to production and marketing of fresh fruit, vegetables and packaged foods. d) Service revenue is defined as revenue earned from third parties derived from non-core business activities, such as: i) ii) iii) iv) v) vi) vii)

Vessel revenue earned for leasing a vessel or available space within a vessel, Commercial cargo revenue earned for providing commercial cargo services involving the handling and transportation of containerized cargo on vessels, Service revenue such as packing service revenue, farm management revenue, cooling service revenue, product processing revenue and storage service revenue Inland freight revenue for providing the service of arranging air or land transportation of the customers product to their destination, Commission revenue from arrangements where the company does not assume product or market risk, Royalty revenue from arrangements involving the use of one or more company trademarks, Other revenue (e.g. management fees, documentation fees).

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Revenue Recognition and Accounting for Incentives and Other Considerations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

5) CONSIDERATION GIVEN BY THE COMPANY TO RETAILERS 5.1) Accounted For As a Reduction of Revenue a) Any consideration that is given to a retailer is considered a reduction of sales and is to be recorded as a reduction of revenue rather than as a component of cost of products sold. i) Examples of consideration include sales promotions, sales allowances, coupons, rebates, free products, slotting fees, cooperative advertising and buy downs. b) Sales Promotions are defined as temporary price reductions on third party sales which are both: i) Unrelated to customer performance criteria, ii) Generally are included on the original customer invoice. c) Sales Allowances are defined as adjustments to third party revenue including claims and cash discounts allowed for prompt payment and product returns. d) Slotting fees are defined as fees paid to a retailer for shelf space for the company’s products. The company may or may not receive stated rights for those fees. Slotting fees might be incurred either: i) Before selling any of the products to the retailer, ii) On a regular schedule to maintain a shelf space allocation or to continue being a regular vendor or, iii) Periodically as negotiated. e) Cooperative advertising arrangements are those in which the company refunds a retailer for a portion of the costs incurred to advertise the company’s products. f)

Buy downs are arrangement in which the company would refund a retailer up to a specified amount for shortfalls in the sales price received by the retailer over a specified time period (promotion period for a product).

5.2) Accounted For As an Expense a) Consideration given by the company to a retailer is to be reported as a cost if the company receives a benefit that meets the following conditions: i) In return for the consideration, the company receives an identifiable benefit from the retailer in the form of goods or services. The benefit should be one for which the company would have entered into an exchange transaction with a third party that is separate from its sales of goods and services. ii) The fair value of the benefit can be reasonable estimated. Any excess of consideration over the fair value of the benefit should be deducted from revenue. b) The following are examples of consideration to be reported as an expense and recognized upon payment of the consideration given: i) Gift from the company to a retailer, ii) Free airline tickets to be honored by an unrelated entity, iii) Other non cash consideration in the form of equity or purchases to be applied against further purchases from the company, iv) Free products or services delivered when a retailer purchases another product or service, v) Cumulative shortfall of revenue from doing business with a retailer if the reduction of cumulative revenue earned since the inception of the customer relationship will result in a shortfall.

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Revenue Recognition and Accounting for Incentives and Other Considerations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

6) CONSIDERATION GIVEN BY A SUPPLIER TO THE COMPANY 6.1) Accounted For As a Reduction of Cost of Goods Sold a) Temporary price reductions, claims and cash discounts that are granted by a supplier are to be deducted from the corresponding operating expense account and are not to be reported as a component of ―Other Revenue‖.

7) RECOGNITION AND MEASUREMENT OF REBATES AND OTHER INCENTIVES a) Revenues should be reduced based on a systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed. b) Measurement should be based on the estimated number of customers that will ultimately earn and claim rebates or refunds under the offer. Divisions should update estimates every quarter to ensure amounts are based on the most current volumes and assumptions. c) If the number cannot be reasonably estimated, a liability should be recognized for the maximum potential amount of the refund or rebate.

8) REFERENCES a) ASC 605-15, Revenue Recognition (Financial Accounting Standard No. 48 – Revenue Recognition When Right of Return Exists) b) ASC 605-45, Revenue Recognition (Emerging Issues Task Force No. 99-19 – Reporting Revenue Gross as a Principal versus net as an Agent) c) ASC 605-50, Revenue Recognition (Emerging Issues Task Force No. 01-09 – Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products)) d) ASC 605-10-S99, Revenue Recognition (Staff Accounting Bulletin No. 101 – Revenue Recognition in Financial Statements)

Reference: 11.0

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Costs of Products Sold Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

COSTS OF PRODUCTS SOLD _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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Costs of Products Sold Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) GENERAL a) Cost of products sold includes costs associated with the production or purchasing of inventory, packaging materials, labor, depreciation, overhead, transportation and other distribution costs, including handling costs incurred to deliver products to the customer. b) Shipping and distribution costs represent all costs incurred by the Company to ship product from the sourcing locations to the end consumer.

2) PRODUCT COSTS a) Product costs are defined as all costs incurred to bring finished products to the ―Dole‖ warehouse including: i) ii) iii) iv) v) vi)

Production materials and growing costs, Cost of purchased products, net of recoveries, Inventory adjustments, Contractual costs due to growers, either fixed or based upon share of product revenue, Freight, handling and duties related to the products purchased, Production payroll costs, including wages, bonuses, commissions, insurance and other employee benefits, vii) Quality inspection costs, viii) Foreign currency exchange gains or losses, ix) Other production related costs.

3) SHIPPING COSTS a) Shipping costs are defined as all costs incurred to transport finished goods to the warehouse including: i) Ocean, inland and air freight transportation expenses, ii) Personnel related costs for employees in shipping and related administrative functions, iii) Other shipping related costs. b) Amounts billed to third party customers in a sale transactions related to shipping and handling represent revenues earned for the goods provided and are to be classified as a component of revenue. c) Shipping and handling costs incurred are to be classified as a component of cost of goods sold as they represent costs incurred by the Company to ship product from the sourcing/production location to the customer.

4) DISTRIBUTION COSTS a) Distribution costs are defined as all costs incurred to bring the finished products from the warehouse or distribution center to the end customer. These costs include expenses related to the packaging, warehousing and distribution processes, including: i) ii)

Inland and air freight transportation expenses Customs duties and license costs incurred for the importation of products imposed by a government agency (these may also include the costs for the right to import or export product to certain markets),

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Costs of Products Sold Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

iii) Personnel related costs for employees in packaging, warehousing and distribution and related administrative functions, iv) Other costs related to personnel, such as communication and travel expenses, v) Rental expenses on facility and warehouse equipment leases, vi) Maintenance & repair, spare parts, supplies related to warehousing and trucking, vii) Packaging materials and supplies, viii) Storage and warehousing expenses, ix) Quality inspection costs related to outgoing product.

5) RESEARCH AND DEVELOPMENT COSTS a) Research is aimed at the discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service or a new process or technique or in bringing about a significant improvement to an existing product or process. b) Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. i)

ii)

R&D does not include routine or periodic alterations to existing products, production lines, manufacturing processes, and other on-going operations even though those alterations may represent improvements R&D does not include market research or market testing activities.

c) All research and development costs should be charged to expense when incurred.

6) START UP COSTS a) Start-up activities and organization costs are to be expensed as incurred. b) Start-up activities are considered to be one-time activities related to: i) ii) iii) iv) v) vi) vii)

Opening a new facility, Introducing a new product or service, Conducting business in a new territory, Conducting business with a new class of customer or beneficiary, Initiating a new process in an existing facility, Commencing some new operation, Organizing a new entity (commonly referred to as organization costs).

7) SHARE-BASED COMPENSATION EXPENSE a) Refer to the share-based compensation guidance in section 12 (selling, marketing and administrative expenses) for further information related to share-based compensation.

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Costs of Products Sold Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

8) REFERENCES b) ASC 605-50, Revenue Recognition (Emerging Issues Task Force No. 01-09 – Accounting for Consideration Given by a Vendor to a Customer) c) ASC 720-15, Other Expenses (Statement of Position 98-5 - Reporting on the Costs of Start-Up Activities) d) ASC 730, Research and Development (Financial Accounting Standard No. 2 – Accounting for Research and Development Costs)

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Selling, Marketing, General and Administrative Expenses Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

SELLING, MARKETING, AND ADMINISTRATIVE EXPENSES _________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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Selling, Marketing, General and Administrative Expenses Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

GENERALLY, SELLING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES ARE EXPENSED AS INCURRED UNLESS OTHERWISE NOTED IN U.S. GAAP.

1) SELLING EXPENSES a) Selling expenses are defined as all costs related to selling agreements with customers as well as costs related to sales collection and include the following: i)

Sales brokerage and commission expenses paid to outside agents for negotiating product sales on behalf of the company ii) Personnel related costs for employees in selling and related administrative functions iii) Bad debt reserve adjustments iv) Other selling costs related to personnel, such as communication and travel expenses

2) MARKETING EXPENSES a) Marketing expenses are defined as all costs incurred to organize and optimize the promotion of finished products to retailers and consumers and include the following: i) ii) iii)

iv) v) vi)

Advertising expenses, including creating advertisements and buying advertising space or time Merchandising expenses to procure and ship merchandising materials to customers Sponsored marketing events such as conventions, conferences, fairs or other marketing events sponsored by the company. Employee costs of travel to or while at these events are included in marketing travel and entertainment expense. Market studies and surveys Personnel related costs for employees in marketing and related administrative functions Other marketing costs related to personnel, such as communication and travel expenses.

b) Marketing costs related to sales incentives labeled as discounts, coupons, rebates, free products and slotting fees should be booked as a reduction of revenues and not as a marketing expense. c) In limited circumstances, the Company may capitalize payments related to the right to stock products in customer outlets or to provide funding for various merchandising programs over a specified contractual period. In such cases, the Company should amortize the costs over the life of the underlying contract. The amortization of these costs, as well as other marketing and advertising costs that relate to discounts, rebates and certain sales incentives should be recorded as a reduction to revenues and not as marketing expense.

3) MARKETING EXPENSES TO BE NETTED AGAINST REVENUE a) Consideration given by a division to a retailer is considered a reduction of prices and is to be recorded as a reduction of revenue, not a marketing expense. Such is the case for discounts, coupons, rebates, free products, slotting fees, cooperative advertising arrangements, buy-downs or other arrangements. i)

Amounts paid upon the signing of a contract such as a signing bonus or a slotting fee should be recorded as a prepaid asset and amortized as a contra-revenue over the life of the contract, as long as the money is refundable to Dole in the event of a breach of contract by the customer. If the amount is non-refundable, the entire payment should immediately be charged to contra-revenue.

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b) Consideration given by a division to a retailer is to be reported as an expense only if the division receives a benefit that meets the following conditions: i)

In return for the consideration, the division receives an identifiable benefit from the retailer in the form of goods or services. The benefit should be one for which the division would have entered into an exchange transaction with a third party that is separate from its sales of goods and services.

ii)

The fair value of the benefit can be reasonably estimated. Any excess of consideration over the fair value of the benefit should be deducted from revenue.

4) GENERAL AND ADMINISTRATIVE EXPENSES a) General and administrative expenses are all operating costs not included as selling or marketing expenses and include the following: i) ii) iii) iv) v) vi) vii) viii)

Personnel related costs for employees in general and administrative functions, including general management, IT, finance, accounting, legal, tax, office services, etc. Other G&A costs related to personnel, such as communication and travel expenses. IT allocation, IT equipment and supplies Outside professional services such as consultants, auditors, attorneys and tax advisors Bank fees Rents on office facility and equipment leases, and/or depreciation Office supplies Other overhead costs

5) ACCOUNTING FOR ADVERTISING EXPENSES a) Advertising costs are generally expensed as incurred or at the time the advertisement appears. There are two general types of advertising costs: i) ii)

The costs of producing advertisements The costs of communicating advertisements. These costs should not be expensed until the advertisement has been distributed. As an example, the costs of purchasing media time should not be expensed until the advertisement is aired.

b) One exception to immediate expense recognition is if it is considered direct-response advertising. Direct-response advertising must result in probable future economic benefits. c) Expenditures for advertising costs that are made subsequent to the recognition of revenues related to those costs are to be capitalized and charged to expense when the related revenues are recognized. i)

For instance, some entities may enter into an arrangement whereby they are responsible for refunding part or all of their customers’ advertising costs. In most cases, the related revenues are earned before the refunds are made. The entity responsible for refunding advertising expenditures would recognize a liability and the related advertising expense concurrently with the recognition of revenue.

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6) BAD DEBT EXPENSE a) Bad debt expense related to trade receivables should be recorded as a selling expense (account #SEL840000 ―Bad Debt Expense‖) regardless of whether or not the division is a sourcing or selling location. Bad debt expense related to grower advances should be recorded as product cost (account #PRD840000 ―Bad Debt Expense‖).

7) SHARE-BASED COMPENSATION EXPENSE a) Stock Options expense is derived as follows: i) The fair value of share-based payments is derived using the Black-Scholes-Merton optionpricing model at the option grant date. (1) Exercise price –The exercise price at the date of the grant. (2) Market price – The stock price on the date of the grant. (3) Volatility – Derived from the implied volatilities of the stock price for a basket of Dole’s competitors for a period matching the term of the options at date of grant. (4) Risk free interest rate – Based on the U.S. Treasury constant maturity yield curve for the period matching the expected term of the options at the time of grant. (5) Dividend yield – Calculated on the Company’s stock at the time of the grant. (6) Term – Based on the shortcut method per ASC 718 ―Compensation – Stock Compensation” (7) Forfeiture rate – Based on historical forfeitures and other forward looking expectations. ii) All share-based compensation is amortized ratably over the vesting term of the grant. iii) Share-based compensation expense for share-based grants will only be reversed for those shares that have not yet vested at the time of cancellation/forfeiture. b) Restricted stock awards and units expense is derived as follows: i) The fair value of Dole’s restricted stock awards are estimated at the date of grant. The grant date fair value will be the stock price on the date of grant. ii) All share-based compensation is amortized ratably over the vesting term of the grant. iii) Share-based compensation expense for share-based grants will only be reversed for those shares that have not yet vested at the time of cancellation/forfeiture. c) Performance based awards expense is derived as follows: i) The fair value of performance awards are estimated at the date of grant. The grant date fair value will be the stock price on the date of grant. ii) The fair value to be recognized over the term of the grant is dependent on the probability of the performance targets being met. At the grant date the probability of the performance targets being met is estimated and this percentage is multiplied by the fair value of the grant. This estimated compensation will be amortized over the term of the option. iii) On a quarterly basis the probability of the performance targets being met is evaluated and the estimated compensation to be amortized is updated accordingly. The expense to be recognized ratably is updated and a true-up entry is booked, if required.

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8) REFERENCES a) ASC 718, Compensation – Stock Compensation (Financial Accounting Standard No. 123(R) – Share-based Payment) b) ASC 605-45-45, Revenue Recognition (Emerging Issues Task Force No. 00-10 – Accounting for Shipping and Handling Fees and Costs) c) ASC 605-50, Revenue Recognition (Emerging Issues Task Force No. 01-09 – Accounting for Consideration Given by a Vendor to a Customer) d) ASC 720-35, Other Expenses (Statement of Position No. 93-7 – Reporting on Advertising Costs)

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Foreign Currency Translation Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

FOREIGN CURRENCY TRANSLATION _____________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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Foreign Currency Translation Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

1) FUNCTIONAL CURRENCY a) An entity’s functional currency is the currency of the primary economic environment in which the entity operates; normally that is the currency of the environment in which an entity primarily generates and expends cash. Any change in the functional currency needs to be approved by the Corporate Controller’s Organization. b) If an entity’s books are not maintained in its functional currency, remeasurement into the functional currency is required. This remeasurement is required before translation into the reporting currency ($USD). The remeasurement process should produce the same results as if the entity’s books had been initially recorded in the functional currency. When translating from a local currency to a functional currency, the impact of changes in foreign currency exchange rates on monetary assets is adjusted through the income statement. i)

To translate from an entity’s local currency into its functional currency, historical exchange rates should be used for the accounts listed in Exhibit 1. For all other accounts, the current exchange rate should be used.

2) SOURCE OF EXCHANGE RATES USED FOR RANSLATION/REMEASUREMENT a) At the end of each fiscal period, Corporate Treasury posts to the Dole portal under the ―Treasury Community‖ a foreign currency schedule that lists the period end and average exchange rates for the reporting period. These rates are based on the last Thursday (prior to the end of the fiscal period) exchange rates as published by Bloomberg. These rates should be used to translate and remeasure non-USD local and functional currency ledgers.

3) TRANSLATION OF FOREIGN CURRENCY STATEMENTS a) If an entity’s functional currency is a foreign currency, translation adjustments result from the process of translating that entity’s financial statements into the reporting currency ($USD). To convert the functional currency to the reporting currency, balances will need to be translated as follows: i) ii)

For assets and liabilities, the exchange rate at the balance sheet date should be used. For revenues, expenses, gains and losses, an average exchange rate for the period should be used. iii) Equity accounts are translated at historical rates. b) Translation adjustments are not to be included in the determination of net income but are reported in the equity section of the balance sheet as a component of other comprehensive income (―OCI‖) in the Cumulative Translation Adjustment (―CTA‖) account #395000 ―Cumulative Foreign Currency Translation Adjustment.‖

4) FOREIGN CURRENCY TRANSACTIONS a) Foreign currency transactions are transactions denominated in a currency other than the entity’s functional currency. i)

Transactions may include forward exchange contracts, intercompany transactions (excluding intercompany notes payable), billings on export sales, purchases of imported goods or taxes imposed by foreign jurisdictions.

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ii)

At the date of the transaction, the balance should be measured and recorded in the functional currency using the exchange rate in effect at that date. iii) At each balance sheet date (which is the end of each fiscal period), the balances are adjusted to reflect the current exchange rate. b) A change in exchange rates between the functional currency and the currency that the transaction is denominated increases or decreases the expected amount of cash flows at settlement. c) This increase or decrease is a foreign currency transaction gain or loss that is recorded in the income statement as a Transaction Gain/Loss in account #907000 ―Foreign Currency (Gain) Loss - Translation‖ for the period in which there is a change in foreign currency exchange rates. d) A transaction gain or loss (measured from the transaction date or most recent balance sheet, whichever is later) realized upon settlement will be included in account #908000 ―Foreign Currency (Gain) Loss - Transaction‖ for the period in which the transaction is settled.

5) FOREIGN CURRENCY TRANSLATION OF DEBT OBLIGATIONS, NOTES PAYABLE AND INTERCOMPANY NOTES a) Divisions may enter into transactions where they borrow money in a currency different than their own functional currency. Since the translation of these transactions is financing related and not due to true operational activities, the income statement impact should be excluded from operating income. For entities that have notes payable, long-term or short-term debt, capital leases and/or intercompany notes payable that are not in their own functional currency (i.e. Corporate EURO borrowing and functional currency is USD), the translation gain or loss should be recorded to account #910000 ―Miscellaneous (Income) Expense.‖

6) TRANSACTION GAINS AND LOSSES TO BE EXCLUDED FROM NET INCOME a) The following is a list of foreign currency transactions that should be reported as part of OCI (a component of Shareholders’ Equity), not through the income statement: (1) Foreign currency exchange transactions that are designated as, and effective as, economic hedges of a net investment in a foreign entity, under ASC Topic 815, “Derivatives and Hedging” (―ASC 815‖). (2) Intercompany foreign currency exchange transactions that are of a long-term investment nature (settlement is not planned or anticipated in the foreseeable future).

7) INTERCOMPANY ADVANCES TO FOREIGN ENTITY a) Divisions are required to document the nature of the intercompany advance at inception. If the advance is not long-term in nature, then foreign exchange currency gains or losses are recorded to the income statement (account #910000 ―Other (Income) Expense - Miscellaneous‖). b) If an intercompany advance is partially settled and the remaining advance continues to be of a long-term nature, future gains or losses are recognized as OCI. Amounts previously recognized as OCI remain in OCI until the investment in foreign entity is sold or liquidated. c) Upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, amounts advanced to that entity and accumulated in OCI are reversed and included in the calculation of the gain or loss on the sale.

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Foreign Currency Translation Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

8) HEDGING a) Hedging gains/losses are incurred either: (1) Upon the settlement of hedging contracts for hedges that are deemed to be ―effective‖ hedges and qualify for hedge accounting, (2) At the end of the fiscal period for all other hedges which do not qualify for hedge accounting treatment under ASC 815 and that are marked-to-market at the end of each fiscal period. b) Realized hedge gains or losses are to be recorded as a component of cost of products sold (account #908400 ―Foreign Currency Hedging Realized and account #908500 Foreign Currency Hedging Unrealized‖). Refer to the Accounting for Derivatives guidance in section 10 for further information related to derivatives and hedging.

9) REFERENCES a) ASC 815, Derivatives and Hedging (Financial Accounting Standard No. 133 – Accounting for Derivative Instruments and Hedging Activities, as amended) b) ASC 830, Foreign Currency Matters (Financial Accounting Standard No. 52 – Foreign Currency Translation)

10) EXHIBITS Exhibit 10.1 - Accounts to be Remeasured Using Historical Exchange Rates for Translation from Local Currency into Functional Currency i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) xiii) xiv) xv) xvi) xvii) xviii)

Marketable securities carried at cost Equity securities Debt securities not intended to be held until maturity Inventories carried at cost Prepaid expenses such as insurance, advertising, and rent Property, plant and equipment Accumulated depreciation on property, plant and equipment Patent, trademarks, licenses and formulas Goodwill Other intangible assets Deferred charges and credits Deferred income Common stock Preferred stock carried at issuance price Cost of goods sold Depreciation of property, plant and equipment Amortization of intangible items such as patents, licenses, etc. Amortization of deferred charges

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Accounting For Leases Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

ACCOUNTING FOR LEASES _____________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) OVERVIEW a) Leased assets used in the Company’s operations are to be classified as either capital or operating leases depending on the criteria established in ASC Topic 840. “Leases” (―ASC 840‖). b) Prior to executing a lease, Divisions are required to perform a capital lease vs. operating lease analysis. In addition, Divisions must determine the appropriate lease term at the inception of the lease.

2) CAPITAL LEASES a) A leases is to be accounted for as a capital lease if at least one of the criteria per ASC 840-1025-1 is met. The four criteria are as follows: i) the lease transfers ownership of the property to the lessee by the end of the lease term, ii) the lease contains a bargain purchase option, iii) the lease term is equal to 75 percent or more of the estimated economic life of the leased property, iv) the present value at the beginning of the lease term of the minimum lease payments, excluding the portion of the payments representing executory costs, equals or exceeds 90 percent of the excess of the fair value of the leased property. Note that minimum lease payments include any residual value guarantees.

3) OPERATING LEASES a) If a lease does not meet any of the four criteria defined above for capital leases ASC 840-10-251, then the lease is to be accounted for as an operating lease.

4) LAND LEASES a) If land is the sole item of property leased and the criterion in 2) a) i) and 2) a) ii) are met, the lessee shall account for the lease as a capital lease; otherwise, as an operating lease. b) If a land lease includes the use of equipment or a building, the lease components for each fixed asset type will need to be separated and tested independently.

5) ACCOUNTING FOR CAPITAL LEASES a) Capital leases are recorded as an asset and a liability at the lower of (1) the fair value of the leased property at the lease inception date or (2) the present value of the minimum lease payments at the beginning of the lease term. Minimum lease payments are to exclude any payments made by the lessor such as insurance, maintenance, and taxes (i.e. executory costs) including profit on those costs. b) Capital leases are to be amortized based on the Company’s depreciation policy for owned assets (i.e. useful life) if the criteria specified in 2)a) i) and 2a) ii) are met. However, if the criteria are not met then the leased asset is to be amortized over the lease term. c) During the lease term, each minimum lease payment is allocated between a reduction of the lease liability and interest expense to produce a constant periodic interest rate on the remaining balance of the lease liability. If a lease contains a residual guarantee by the lessee of a penalty for failure to renew the lease at the end of the lease term, the lease liability at the end of the lease term must equal the amount of the guarantee of the penalty.

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d) Amendments to lease provisions or renewals, extensions or terminations prior to the expiration of the lease term are subject to the following accounting treatment: i)

If a new lease agreement changes the amount of the remaining minimum lease payments or guarantee or penalty at the end of the lease period and the lease continues to be a capital lease then the current balance of the lease assets and lease liability are to be adjusted by the difference of the present value of the future minimum lease payments and the current lease liability balance. ii) If a new lease agreement results in the lease being an operating lease, a gain or loss is recorded for the difference between the leased asset and lease liability. iii) If only the renewal or extension is classified as an operating lease, the existing lease is accounted for as a capital lease through the end of the original lease term. iv) If the lease is terminated, a gain or loss is recorded for the difference between the lease asset and lease liability.

6) ACCOUNTING FOR OPERATING LEASES a) Non-cancelable rental payments (including scheduled rent increases) for operating leases are to be recorded as rent expense on a straight-line basis over the lease term. i)

Scheduled rent increases, or rent escalation clauses, are those that are fixed in the lease agreement (e.g. rent increases 3% per year). (a) For example, if a division entered into a 10 year lease with scheduled monthly payments of $1,000 for years 1 – 5 and scheduled monthly payments of $2,000 for years 6 – 10, monthly rent expense of $1,500 should be recorded (60 months x $1,000 + 60 months x $2,000 divided by 120 months).

ii)

Rent increases linked to an index (i.e. CPI or other inflationary index) are not to be straightlined over the life of the lease and are to be expensed as incurred.

iii) Refer to Liabilities section 8 in this policy regarding the accounting for contract termination costs (leases, etc.).

7) RENT HOLIDAYS a) A lease may contain a period of time during which the lessee has the right to occupy the space but pays no rent or a reduced rate of rent. b) Rent expense should be recognized straight-line over the lease term, including any rent holiday period. i)

For example, a lessee has a 120 month lease for $10,000 per month. As an incentive to sign the lease agreement, the first 6 of those months are rent free. The lessee should recognize rent expense of $9,500 per month ($10,000* 114 months/120month lease term) for 120 months, which is on a straight-line basis.

8) LANDLORD/TENANT INCENTIVES a) A lease agreement may contain landlord/tenant incentives whereby the landlord would pay the lessee an amount that is intended to reimburse the lessee for the cost, or portion of the cost, of leasehold improvements.

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b) The accounting for landlord/tenant incentives is as follows: i)

ii)

Improvements made by a lessee that are funded by the lessor are to be recorded by the lessee as leasehold improvements and amortized over the shorter of the economic useful life of the leasehold improvement or the lease term; Funds received are to be recorded as a deferred rent liability and amortized as a reduction to rent expense over the lease term (they should not be netted against the leasehold improvements). (a) For example, a lessee enters in to an operating lease in which the landlord offers an incentive allowance towards the cost of the lessee making leasehold improvements. The leasehold improvements cost $1 million, and the incentive allowance totals $500,000. The $500,000 allowance should be reported by the lessee as a liability and amortized straight line over the lease term as a reduction of rent expense. The depreciation of the leasehold improvements should be based on the $1 million of leasehold improvements.

9) DETERMINING LEASE TERM a) One of the more critical factors in determining the appropriate accounting for a lease (i.e. capital versus operating) is to determine the term of a lease. ASC 840-10-20 provides guidance in determining the fixed noncancelable term of a lease. Some of the factors that need to be considered include: i) ii)

If the lease contains a bargain renewal option which allows the lessee to rent the property for an amount that is lower than the expected rental for an equivalent property; An economic detriment may be incurred as a result of the following: (a) Uniqueness/location of the property; (b) Availability of comparable replacement property; (c) Importance or significance of the property to the lessee in operating its business; (d) Leasehold improvements or other assets may be impaired if lessee vacates or discontinues use of leased property; (e) Ability or willingness of lessee to bear the costs related to relocation or replacement.

b) In the factors identified above, the lease term would include the renewal option periods. c) For accounting purposes, a lease term includes all periods in which a lessee has access to and control over the leased space, even if those periods precede the fixed non-cancelable term stated in the lease agreement.

10) DEPRECIATION OF LEASEHOLD IMPROVEMENTS a) If a division (―lessee‖) has leasehold improvements that are placed into service at the inception of an operating lease, the lessee is required to depreciate the leasehold improvements over the shorter of the useful life of the improvements or the term of the lease. b) If a division (―lessee‖) has leasehold improvements that are acquired and placed into service significantly after the inception of the lease, the lessee is required to depreciate the leasehold

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improvements over the shorter of the useful life of the leasehold improvements or a term that includes required lease period and renewals that are reasonably assured at the date the leaseholds are acquired.

11) REFERENCES a) ASC 840, Leases (Financial Accounting Standard No. 13 – Accounting for Leases) b) ASC 840-10-35, Leases (Emerging Issues Tasks Force No. 05-06 – Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination) c) ASC 840-20, Leases (FASB Technical Bulletin No. 88-1 – Issues Relating to Accounting for Leases) d) ASC 840-20-25-2, Leases (FASB Technical Bulletin No. 85-3 – Accounting for Operating Leases with Scheduled Rent Increases) e) AICPA Technical Practice Aid – Lease Accounting

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Pension and Other Postretirement Benefit Obligations Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

PENSION AND OTHER POSTRETIREMENT BENEFIT OBLIGATIONS ___________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) OVERVIEW Dole sponsors a number of defined benefit pension plans covering certain employees worldwide. Benefits under these plans are generally based on each employee’s eligible compensation and years of service, except for hourly plans, which are based on negotiated benefits. In addition to pension plans, the Company has other postretirement benefit (―OPRB‖) plans that provide certain health care and life insurance benefits for eligible retired employees. Covered employees become eligible for such benefits if they fulfill established requirements upon reaching retirement age. For U.S. pension plans, the Company’s general policy is to fund the normal cost plus a 15-year amortization of the unfunded liability, but not less than minimum legal requirements. Most of the Company’s international pension plans and all of the OPRB plans are unfunded. During 2001, the Company’s U.S. salaried pension plans and a portion of its international pension plans were frozen. Effective January 1, 2002, no new salaried pension benefits will accrue, with the exception of a transition benefit for long-term employees which may accrue for up to five years.

2) METHODOLOGY a) Three key amounts are required to be determined for the Company’s pension and other postretirement benefit plans: (a) the value of assets and liabilities used in the year-end financial statements; (b) the annual benefit expense reflected in the profit and loss statement, and (c) the amount of cash required to be contributed to the funded pension plans. The annual benefit expense is based on the prior year’s financial statement liabilities and assets. Expense is not changed during the year unless there is a significant event, such as a plan amendment or curtailment, which requires a new measurement of liabilities. b) These key amounts are based on (a) the provisions of the benefit plans, (b) the demographics of the participants covered by the plans, and (c) actuarial assumptions and methods used in the actual calculations of these amounts. c) These three items are reviewed each year. Amendments or other changes to plan provisions are reviewed and any economic impact is reflected in the calculations. A census of participant data is obtained each year for all plans. Assumptions for the domestic plans are selected and approved by the Corporate Controller and Corporate CFO in consultation with the Company’s Human Resource staff. Assumptions for funding purposes for the U.S. plan are selected by the enrolled actuary. Assumptions for international pension plans are determined by the local divisions in consultation with their local actuary. Assumptions for both domestic and international plans are reviewed by the Company’s external actuaries for reasonableness. d) Calculations are performed and reviewed by qualified actuaries and comply with both generally accepted accounting principles and applicable legal requirements.

3) MEASUREMENT DATE a) The measurement date used by the Company to determine the value of its plan assets and benefit obligations is the last business day of the calendar year.

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4) PROCESS TO DETERMINE KEY ASSUMPTIONS FOR DOMESTIC PLANS a) Some of the key assumptions used in the employee benefit plan process are discount rates, expected return of plan assets, mortality rates, salary rate increase and health care cost trend rates. The specific rates selected are based upon a combination of standard rates and tables and, where relevant, actual Company historical experience. Assumptions are reviewed by the external actuaries for reasonableness and for compliance with actuarial guidelines. b) The discount rate reflects the rate at which Dole’s pension and OPRB obligations could effectively be settled. The discount rate is based on a review of selected benchmark rates, such as Moody’s bond indices, and the rate derived from a yield curve based on high quality corporate bonds. The discount rate is selected as of the measurement date so that the pension and OPRB obligations at year end accurately reflect current economic trends. c) The expected return on plan assets reflects the average rate of earnings expected on the assets invested in the plan to provide for future plan benefits. It is based on historical returns of various asset classes, expected future long term returns of those classes, expected rate of inflation, and the asset allocation of plan assets. Absent a fundamental and permanent change in market condition or asset mix, the Company’s long-term expected return on plan assets should not fluctuate significantly from year to year. d) The mortality assumption is based on a standard mortality rate table that reflects recent national experience. The table is updated periodically, if necessary, to reflect improving longevity e) Salary assumptions are not applicable to the U.S. plans due to the fact the Company’s U.S. salaried pension plans were frozen in 2001. A few active participants accrue benefits related to pay but are covered under a collective bargaining agreement which provides for negotiated increases in wages. The salary rate increase assumption is based on the pay increases contained in the collective bargaining agreement. f)

The health care cost trend represents the rate at which the Company expects covered retiree health care benefits to increase. The rates are based on estimates of future increases in national healthcare costs and anticipated Dole experience.

5) PROCESS TO DETERMINE KEY ASSUMPTIONS FOR INTERNATIONAL PLANS a) All of the assumptions are selected by the local divisions in consultation with the local actuary. The local actuary will have experience and data that are generally relevant to local conditions and may modify those general assumptions with company specific experience if such experience is meaningful. b) Discount rates reflect the interest rate environment for the applicable country and may reflect the duration of benefits for plans that are significant. c) Salary rate increases are selected by the local divisions in consultation with management and the local actuary. The selection is ultimately based on historical salary increases and expected future salary trends. d) Demographic assumptions may also reflect the experience of the local workforce to the extent that there is sufficient data to be statistically sound. Mortality assumptions will generally be based on national experience.

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6) RECORDING PENSION EXPENSE a) Domestic Divisions i)

Corporate Accounting and Corporate Human Resources receive total domestic pension expense amounts directly from the outside actuary. Corporate Accounting allocates pension expense to the divisions based on predetermined ratios. The division records the entry in their statutory books. Divisions debit pension expense and credit an accrued liability for their allocated portion of total pension expense. At the end of the year, the divisions reverse the liability and transfer the balance to Corporate via an intercompany account.

b) International Plans i)

International pension expense is determined at the divisional level by the division’s respective actuary. International pension expense is recorded in a similar manner to domestic pension expense. However, foreign divisions do not transfer the related liability to Corporate at the end of the year.

c) The following accounts should be used to record pension expense and pension liability (401K and profit sharing expenses should NOT be booked to accounts below): i)

ii)

iii)

iv)

v)

vi) vii) viii) ix)

552000.553000.5535000 Pension Costs - Corporate Controlled Qualified - This account should be used to book US dollar Corporate allocated benefit plan expense as defined under ASC 715, ―Compensation – Nonretirement Postemployment Benefits” (“ASC 715”) and in accordance with actuarial assumptions. Only divisions (both foreign and domestic) that receive a transfer of U.S pension expense from Corporate related to Plan 9, Plan 29 and Plan 32 should book expense into this account. The U.S. plans that should be booked into this account include Plan 9, Plan 29 and Plan 32. 552000.553000.554000 Pension Costs - Corporate Controlled Non-Qualified - This account should be used to book US dollar Corporate allocated benefit plan expense as defined under ASC 715 and in accordance with actuarial assumptions. Only divisions (both foreign and domestic) that receive a transfer of U.S pension expense from Corporate related to Plan 98 and the ERISA Excess Plan should book expense into this account. The U.S. plans that should be booked into this account include Plan 98 and the ERISA Excess Plan. 552000.555000.555500 Pension Costs - Local Controlled Qualified - This account should not be used as all pension expense will be booked in the Corporate Controlled accounts or the Local Controlled Non-Qualified account. 552000.555000.556000 Pension Costs - Local Controlled Non-Qualified - This account should be used to book Divisional benefit plan expense as defined under ASC 715 and in accordance with actuarial assumptions. Foreign benefit plans that are valued under ASC 715 by local actuaries (Hewitt, Mercer, PricewaterhouseCoopers, etc.) should book expense into this account. Other domestic and foreign plans that are pension related but not valued under ASC 715 (such as social security programs, multiemployer pension plan, union related costs and/or mandatory government retirement plan contributions) should also be booked into this account. 561000 Postretirement Benefit Costs - Costs incurred for postretirement health care and other benefits for retired employees (including medical and life insurance costs). The cost is calculated in accordance with ASC 715-60. Other domestic and foreign plans that have related postretirement benefit costs but are not valued under ASC 715-60 (such as social security programs, union related payments and/or mandatory government retirement plan contributions) should also be booked into this account. Pension Liability (Short Term) - #327000 Pension Liability (Long-Term) - #374000 Postretirement Liability (Short-Term) - #334000 Postretirement Liability (Long-Term) - #375000

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7) REFERENCES a) ASC 715, Compensation – Nonretirement Postemployment Benefits (Financial Accounting Standard No. 87 – Employers’ Accounting for Pensions) (Financial Accounting Standard No. 158 – Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132R) b) ASC 715-20-50, Compensation – Nonretirement Postemployment Benefits (Financial Accounting Standard No. 132R – Employers’ Disclosures about Pension and Other Postretirement Benefits) c) ASC 715-30-15, Compensation – Nonretirement Postemployment Benefits (Financial Accounting Standard No. 88 – Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans for the Termination Benefits) d) ASC 715-60, Compensation – Nonretirement Postemployment Benefits (Financial Accounting Standard No. 106 – Employers’ Accounting for Postretirement Benefits Other than Pensions)

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Accounting for Guarantees Only the Intranet Policy Portal has the current version. Verify the hard copy against the Policy Portal before use.

ACCOUNTING FOR GUARANTEES __________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) OVERVIEW a) As part of the Company’s business activities, it is a guarantor of indebtedness of some of its key fruit suppliers and other entities integral to its operations. In addition, the Company and its subsidiaries provide guarantees to various regulatory authorities in order to comply with foreign regulations. The Company also provides various guarantees to support the borrowings, leases and other obligations of its subsidiaries.

2) TYPES OF GUARANTEES a) One type of guarantee is one that is contingent upon a change in a specified interest rate, security or commodity price, foreign currency exchange rate, index of prices or any other variable. The occurrence or non-occurrence of a specified event also may be a factor. Examples of this type of guarantee are: i) ii) iii) iv)

Financial standby letter of credit Market value guarantee of an asset (financial or non financial) Guarantee of the guaranteed party’s common stock Guarantee of a special-purpose entity’s assets’ scheduled cash flows

b) Another type of guarantee is a performance guarantee. These involve the guarantor making payments to the guaranteed party based another entity’s failure to perform. Examples include a performance standby letter of credit. c) Another type of guarantee is a residual value guarantee. A lessor may obtain a residual value guarantee from the lessee, from an independent third party, or from both. In some lease arrangements, the lessee may be required to guarantee the residual value of the leased property and provide a third party guarantee of the residual value. Alternatively, some leases require the lessee to reimburse the lessor for the cost of obtaining a third party guarantee of the residual value. d) Guarantees also include indemnification agreements which contingently require the guarantor to make payments to the indemnified party for such items as an adverse judgment in a lawsuit or additional taxes as a result of a change in tax law. e) The final type of guarantee is an indirect guarantee of indebtedness of others. Examples include agreements to advance funds if a second entity’s net income, coverage of fixed charges or working capital falls below a minimum threshold.

3) ACCOUNTING FOR GUARANTEES a) At the inception of a new guarantee, the guarantor is required to recognize a liability equal to the fair value of the guarantee. The fair value of the guarantee is generally determined by calculating a probability weighted average present value of expected cash flows. Subsequently, the liability is reduced ratably over the term of the guarantee. b) The offsetting entry depends upon the specific facts and circumstances. c) If the guarantee was issued in a stand-alone transaction for a premium then the offset would be cash or accounts receivable. d) If the guarantee was issued in conjunction with the sale of assets, product or a business then the proceeds (cash or receivables) would be allocated between consideration remitted to guarantor and proceeds from the sale.

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e) If the guarantee was issued in conjunction with formation of business accounted for under the equity method then the offset would be to the investment. f)

If a residual value is provided by a lessee/guarantor when entering into an operating lease, then the offset is recorded to prepaid rent.

g) If the guarantee was issued to an unrelated party for no consideration and there are no other transactions, then the offset is to expense. h) Consultation with the Corporate Controller’s Organization is required when accounting for guarantees. i)

The following is an example of adjusting a guarantee subsequent to the initial issuance of a guarantee: i)

Company A enters into a lease agreement on December 31, 2005 to lease equipment used in its operations. The lease is accounted for as an operating lease, and expires on December 31, 2010. As noted in the lease agreement, Company A has agreed to pay any deficiency between the sales proceeds of the equipment at the end of the lease term and $1,000,000 (this is considered to be a residual value guarantee).

ii)

At the inception of the lease, Company A estimates that there is a 75% probability that the equipment will be sold for $1,000,000 at the end of the lease term and a 25% probability that the equipment will be sold for $800,000 based upon current market data. Accordingly, on December 31, 2005, Company A would record the following entries which represent the fair value of the residual value guarantee included in the lease: Dr. Prepaid Rent $25,000 Cr. Lease Liability ($25,000 = ((1,000,000-800,000) * 25%) (To record the residual value guarantee)

$25,000

(Note: To simplify the example, the value of the guarantee has not been discounted. Under ASC 460-10, “Guarantees”, the lease liability should be discounted to reflect the present value of the guarantee) iii) On December 31, 2006, the Company would re-evaluate the residual value guarantee (this should be done at the end of each reporting period) and would amortize the prepaid rent over the lease term. On December 31, 2006, Company A determines that there is a 90% chance that the value of the equipment at the end of the lease would be $1,000,000 and a 10% chance that the value of the equipment will be $900,000 at the end of the lease term. Accordingly, Company A would record the following entries on December 31, 2006: Dr. Rent Expense $5,000 Cr. Prepaid Rent ($5,000 = 25,000/5) $5,000 (To amortize pre-paid rent over the 5 year lease term) Dr. Lease Liability ($15,000 = $25,000 – ((1,000,000 – 900,000) * 10%)) Cr. Prepaid Rent $15,000 (To adjust the lease liability based upon updated estimates)

$15,000

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4) REFERENCES a) ASC 460-10, Guarantees (FASB Interpretation No. 45 – Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others) b) ASC 815-10-15, Derivatives and Hedging (Emerging Issues Task Force No. 01-12- The Impact of the Requirements of FASB Statement No. 133 on Residual Value Guarantees in Connection with a Lease)

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ACCOUNTING FOR DERIVATIVES __________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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THIS POLICY DISCUSSION PROVIDES ONLY GENERAL ACCOUNTING GUIDELINES FOR CERTAIN DERIVATIVES COMMONLY EXECUTED BY DOLE. CONSULTATION WITH THE CORPORATE CONTROLLER’S ORGANIZATION AND THE CORPORATE TREASURY DEPARTMENT IS REQUIRED WHEN EXECUTING AND ACCOUNTING FOR NEW DERIVATIVES.

1) OVERVIEW a) During the normal course of business, the Company may be exposed to foreign currency exchange rate fluctuations, bunker fuel price fluctuations and interest rate changes. As part of its risk management strategy, the Company uses derivative instruments to hedge certain foreign currency, bunker fuel and interest rate exposures. The Company’s objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them in order to reduce volatility of earnings. The Company does not hold or issue derivative financial instruments for trading or speculative purposes.

2) ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES a) ASC Topic 815, “Derivatives and Hedging” (―ASC 815‖), ―Accounting for Derivative and Hedging Activities, as amended‖), states that derivatives are assets or liabilities and are to be recorded on the balance sheet at fair value. Fair value is considered to be the liquidation value of the contract. b) ASC 815 states that an entity may qualify for hedge accounting if specific criteria are met which a company must formally document at inception of the hedging relationship. The appropriate documentation must consist of the following: i) ii) iii) iv) v) vi) vii) viii)

Identification of hedged item Identification of the hedge instrument Risk management objective and strategy Probability of transaction Nature of the risk being hedged Hedge effectiveness assessment – testing at inception Hedge effectiveness assessment – retrospective and prospective testing Measurement of ineffectiveness

c) For those instruments that qualify for hedge accounting as cash flow hedges, any unrealized gains or losses are included in accumulated other comprehensive income (account #395700 ―Unrealized Gain/Loss on Hedges‖), a component of shareholders’ equity, with an offsetting asset or liability recorded on the balance sheet in other receivables or accrued liabilities. d) If new contracts are entered into that are appropriately designated and qualify for hedge accounting treatment under the requirements of ASC 815, any portion of a cash flow hedge that is deemed to be ineffective is recognized into current period earnings and is recorded consistent with the underlying in the same income statement line item. When the transaction underlying the hedge is recognized into earnings, the related other comprehensive income (loss) is reclassified into current period earnings. The effective portion of the hedge is recorded to the balance sheet as accumulated other comprehensive income as noted in 2).c).i) above. e) For contracts that are not designated by Corporate Treasury at inception as effective hedges under ASC 815, any unrealized gain or loss is to be recorded as a component of cost of products sold (account #908500 ―Foreign Currency Hedging Unrealized‖). These unrealized gains or losses should not be reclassified into ending inventory balances and should remain as a component of cost of products sold.

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f)

Realized foreign currency exchange gains and losses associated with hedges are to be recorded as a component of cost of products sold (account #908400 ―Foreign Currency Hedging Realized‖).

g) Realized gains and losses related to interest rate swaps are recorded as a component of interest expense in the consolidated statement of income. Note if an interest rate swap is associated with a debt instrument that is extinguished prior to maturity, any realized gain or loss associated with the early settlement of the interest rate swap is recorded as a component of other income (expense).

3) FAIR VALUE MEASUREMENTS Certain financial instruments are required to be measured at fair value under ASC Topic 820-10, ―Fair Value and Disclosures” (―ASC 820-10‖). i)

Fair value is defined as ―the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.‖ The transaction to sell the asset or transfer the liability is a hypothetical transaction as of the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. Therefore, the definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).

b) For Dole, these instruments consist of hedging instruments, including foreign currency and bunker fuel hedges, a cross currency swap and an interest rate swap. The Company uses a ―Bloomberg model‖ to determine the mark-to-market (―MTM‖) adjustment associated with these financial instruments. The MTM adjustment is based on the current notional value of the instrument and also factors in interest rate yield curves, forward foreign currency exchange rates and bunker fuel futures. i)

ii)

The primary change to the valuation model is that under ASC 820-10 a credit valuation adjustment must be layered on top of the standard MTM adjustment for all assets and liabilities. The credit valuation adjustment factors in company specific credit risk as well as counterparty credit risk. Additionally, inputs to the valuation technique should take into account assumptions market participants would use in pricing the derivative, which may include risk adjustments for uncertainty in the pricing model or inputs.

These adjustments are calculated by Corporate Treasury. If an adjustment to the normal mark-tomarket entry is needed, Corporate Treasury will notify the division of any adjustments that need to be recorded. ASC 820-10 credit valuation adjustments related to the cross currency and interest rate swaps are to be recorded to other income (expense), net and interest expense, respectively.

4) REFERENCES a) ASC 815, Derivatives and Hedging (Financial Accounting Standard No. 133 – Accounting for Derivative and Hedging Activities, as amended) b) ASC 820-10, Fair Value and Disclosures (Financial Accounting Standard No. 157 – Fair Value Measurements

Reference: 18.0

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ACCOUNTING FOR BUSINESS COMBINATIONS __________________________________________

Dole Food Company, Inc. Corporate Finance Department One Dole Drive Westlake Village, CA 91362

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1) OVERVIEW a) Business combinations involving unrelated entities (i.e., those not under common control), are required to be accounted for using the purchase method of accounting. Under this method, the acquirer records all the acquired assets and assumed liabilities at their fair values (not the acquired entity’s book values). If the actual cost exceeds the fair values of tangible and identifiable intangible net assets acquired, this excess is recorded as goodwill. i)

Business combinations occur whenever an acquirer obtains control of one or more businesses. Control may be obtained in several ways: (1) acquiring greater than 50% interest of a business, (2) purchasing a group of assets and liabilities that constitute a business, (3) by means other than acquiring a majority of voting stock (i.e. the acquirer controls the Board), and (4) without an acquirer (the acquiree repurchases enough of its own shares).

2) MEASURING FAIR VALUE OF THE ACQUIREE a) Generally, the fair value of the consideration paid is considered to be the most representative of the fair value of the acquiree when 100% is acquired. i)

A bargain purchase occurs in rare circumstances when the fair value of the consideration paid is less than the fair value of the business or portion of the business acquired. A bargain purchase may occur if the acquired entity is purchased in a distress sale, for example.

b) For acquisitions where less than 100% ownership is obtained, the fair value of the acquired entity may not always be determined by extrapolating the fair value of the consideration paid based on the percentage acquired. For example, if 80% of an entity is acquired for $80, 100% of the acquiree’s fair value may not necessarily be $100. This could be due to a premium that the acquirer paid because it believes it will gain synergies once the entities are combined. In these cases, other data may need to be considered when calculating the fair value of the business (i.e. third party valuation reports).

3) DETERMINING FAIR VALUE a) The purchase method requires that a determination be made of the fair value of each of the acquired company’s identifiable tangible and intangible assets and each of its liabilities, as of the date of combination. The list below indicates how this is to be accomplished for various assets and liabilities: Marketable securities – Fair values for trading and available-for-sale securities are already reflected in the acquiree’s balance sheet. ii) Receivables – Present values of amounts to be received determined by using current interest rates, less allowances for uncollectible accounts and collections costs, if applicable iii) Inventories (1) Finished goods – Estimated selling prices less the sum of costs of disposal and a normal profit (2) Work in progress – Estimated selling prices less the sum of the costs of completions, costs of disposal, and a normal profit (3) Raw materials – Current replacement cost iv) Property, plant and equipment (1) If expected to be used in operations – Current replacement costs for similar capacity unless the expected future use of the assets indicates a lower value to the acquirer i)

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(2) If expected to be sold – Fair value less costs to sell v) Identifiable intangible assets and other assets (such as land, natural resources and nonmarketable securities) – Appraised fair value (1) Acquired intangible assets are separately recognized if the benefit conferred is obtained though contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so. (2) Intangible assets include consumer- or market-based assets (customer lists, newspaper mastheads, and trademarked brand names); contract-based assets (covenants not to compete, broadcast rights); artistic-based assets (plays, other literary works, musical compositions); and technology-based assets (databases, computer software). (3) In-process research and development should be capitalized at fair value. vi) Liabilities (such as notes and accounts payable, long-term debt, warranties, claims payable) – Present value of amounts to be paid determined at appropriate current interest rates. vii) Defined benefit pension and postretirement plans – Liabilities for a projected benefit obligation (―PBO‖) in excess of the fair value of plan assets (or, conversely, assets representing the fair value the plan assets in excess of the PBO) are to be determined pursuant to ASC Topic 715, “Compensation – Retirement Benefits” (―ASC 715‖) for pensions benefits and ASC 715-60 for non-pension post retirement benefits. Note: ASC Topic 820-10, “Fair Value Measurement and Disclosures” (“ASC 820-10”) provides guidance on the criteria to be employed in determining fair values in a variety of applications, including business combinations.

4) ASSETS ACQUIRED AND LIABILITIES ASSUMED a) A division is to record 100% of fair value of the net assets even if less than 100% is acquired. The noncontrolling interests share of the fair value of the assets is also recorded, including its share of the goodwill. For example, if the fair value of the acquired business’s net assets was $100 and the acquirer purchased 80% of it, the acquirer will consolidate $100 worth of net assets in its financial statements. The fair value of the minority share should be evaluated under the fair value provisions of ASC 820-10. i)

The acquirer shall recognize goodwill as of the acquisition date, measured as the excess of the fair value of the acquiree over the fair value of assets acquired and liabilities assumed. Goodwill will represent goodwill of the entire acquired entity. If less than 100% of a business is acquired, a portion of the goodwill will be attributable to the noncontrolling interest. (1) Goodwill allocated to the controlling interest is measured as the excess of the fair value of controlling interest’s portion of the business acquired over the controlling interest’s percentage share of the fair value of net assets acquired. (2) Goodwill allocated to the noncontrolling interests is measured as the difference between all the goodwill of the acquired business and the goodwill allocated to the controlling interest.

ii)

If the fair value of the consideration is less than the fair value of the business, goodwill is first reduced by the amount of the excess (if applicable). If goodwill is reduced to zero, any further excess is recorded as a gain in the income statement as of the acquisition date.

b) The acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) should recognize the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values. In a business combination

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achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in earnings.

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5) ACQUISITION COSTS a) Acquisition related costs of the acquirer are to be accounted for separately from the business combination and are to be expensed as incurred. Acquisition costs are NOT to be capitalized as part of the business combination. (1) Examples include investment banking fees, legal fees, accounting fees, valuation fees, and other processional or consulting services or fees. b) Payments made to the acquiree’s employees or former owners for past services or payments made to settle certain preexisting relationships should also be expensed as incurred.

6) RESTRUCTURING COSTS a) Restructuring costs generally will not be included in the business combination accounting and recorded as a liability on the acquisition date unless the costs meet the recognition criteria in ASC Topic 420-10, “Exit and Disposal Obligations” (―ASC 4210-10‖) as of the acquisition date. For example, costs an acquirer expects to incur in the future relating to the plans to exit an activity, involuntarily terminate employees, or relocate employees of an acquiree will not be assumed liabilities of the acquiree. However, if the acquiree had plans in place to exit an activity, involuntarily terminate employees, or relocate employees, such amounts will be considered liabilities assumed if the criteria in ASC 420-10 are met.

7) CONTINGENT CONSIDERATION a) Contingent consideration represents obligations of the acquirer to transfer additional assets (i.e. cash) or equity interest if specified future events occur or conditions are met. The fair value of all contingent consideration is to be recorded in the financial statements on the acquisition date. Depending on the nature of the contingent consideration (whether it is a liability or equity), it will be remeasured to fair value at the end of each reporting period until settlement. i) ii)

Contingent consideration that is classified as a liability is to be remeasured to fair value subsequent to the acquisition date through the income statement. Contingent consideration classified as equity will not be remeasured. Additionally, if the target is not met, the amount recorded in equity for the contingent consideration would not be reversed.

8) CONTINGENCIES a) Contractual Contingencies – The acquirer shall recognize as of the acquisition date all of the assets acquired and liabilities assumed that arise from contingencies related to contracts measured at their acquisition-date fair values. The guidance in ASC Topic 450, “Liabilities” (―ASC 450‖) does not apply in determining which assets or liabilities arising from contingencies to recognize as of the acquisition date. b) Noncontractual contingencies – Noncontractual contingent assets and liabilities that exist at the acquisition date are to be recorded at estimated fair value if it is more likely than not that they meet the definition of an asset or a liability. If that criterion is not met at the acquisition date, the acquirer instead accounts for a noncontractual contingency in accordance with other applicable generally accepted accounting principles, as appropriate. The guidance in ASC 450 does not

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apply in determining which assets or liabilities arising from contingencies to recognize as of the acquisition date c) Subsequent Measurement i) ii)

A liability shall be measured at the higher of its acquisition-date fair value or the amount that would be recognized if applying ASC 450. An asset shall be measured at the lower of its acquisition-date fair value or the best estimate of its future settlement amount.

d) The acquirer shall derecognize an asset or a liability arising from a contingency only when the contingency is resolved, for example, when the acquirer collects the asset, sells it, or otherwise loses the right to it or when the acquirer settles the liability, or its obligation to settle it is cancelled or expires.

9) REFERENCES a) ASC 420-10, Exit and Disposal Obligations, (Financial Accounting Standard No.146 – Accounting for Costs Associated with Exit or Disposal Activities) b) ASC 450, Contingencies ( Financial Accounting Standard No.5 – Accounting for Contingencies) c) ASC 715, Compensation – Retirement Benefits ( Financial Accounting Standard No.87 – Employers’ Accounting for Pensions) d) ASC 715-30-15, Compensation – Nonretirement Postemployment Benefits (Financial Accounting Standard No. 88 – Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans for the Termination Benefits) e) ASC 715-60. Compensation – Retirement Benefits ( Financial Accounting Standard No.106 – Employers' Accounting for Postretirement Benefits Other Than Pensions) f)

ASC 805, Business Combinations (Financial Accounting Standard No. 141(R) – Business Combinations)

g) ASC 820-10 (Financial Accounting Standard No. 157 – Fair Value Measurements)

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Topic Index ABANDONED ASSETS .................................................. 55 ABNORMAL COSTS ...................................................... 42 ACCOUNTING CALENDAR ......................................... 15 ADVERTISING EXPENSES ........................................... 82 ALLOWANCES FOR DOUBTFUL ACCOUNTS .......... 32 AMORTIZATION ............................................................ 61 ASSET RETIREMENT OBLIGATIONS ........................ 57 ASSETS HELD-FOR-SALE ............................................ 56 BAD DEBT EXPENSE .............................................. 32, 83 BASIC ACCRUALS ........................................................ 65 BUSINESS COMBINATIONS ...................................... 107 CAPITAL LEASES .......................................................... 90 CAPITALIZATION VS. EXPENSING OF PP&E .......... 54 CAPITALIZED INTEREST ............................................. 52 CASH AND CASH EQUIVALENTS .............................. 29 CASH OVERDRAFTS..................................................... 30 CHART OF ACCOUNTS ................................................ 17 COMPLEX ACCRUALS ................................................. 65 COMPUTER SOFTWARE .............................................. 54 CONSIDERATION GIVEN BY A SUPPLIER TO THE COMPANY .................................................................. 75 CONSIDERATION GIVEN BY THE COMPANY TO RETAILERS ................................................................ 74 CONSTRUCTION IN PROGRESS ................................. 52 CONTINGENCIES .................................................. 67, 110 COST METHOD ........................................................ 22, 25 CROP GROWING COSTS .............................................. 40 CURRENT LIABILITIES ................................................ 66 DEPRECIATION ....................................................... 53, 92 DERIVATIVES .............................................................. 104 DISTRIBUTION COSTS ................................................. 77 EQUITY METHOD ................................................... 21, 25 FAIR VALUE MEASUREMENTS ............................... 105 FOREIGN CURRENCY AND FUEL HEDGE GAINS/LOSSES .......................................................... 43 FOREIGN CURRENCY TRANSLATION ...................... 87 FUNCTIONAL CURRENCY .......................................... 86 GAIN/LOSS ON SALE OF ASSETS............................... 54 GENERAL AND ADMINISTRATIVE EXPENSES ....... 82 GOODWILL ..................................................................... 61 GROWER LOANS AND ADVANCES ........................... 36 GUARANTEES .............................................................. 100 IMPAIRMENT ........................................................... 55, 62

INSURANCE RECOVERIES ......................................... 33 INTANGIBLE ASSETS .................................................. 61 INTERCOMPANY ADVANCES.................................... 87 INTERCOMPANY PROFIT ........................................... 42 INVENTORY .................................................................. 38 INVENTORY EXCHANGES.......................................... 42 INVESTMENTS IN UNCONSOLIDATED ENTITIES . 21 LAND DEVELOPMENT COSTS ............................. 40, 41 LAND LEASES ............................................................... 90 LANDLORD/TENANT INCENTIVES........................... 91 LEASE TERM ................................................................. 92 LEASEHOLD IMPROVEMENTS .................................. 92 LITIGATION ACCRUALS ............................................. 66 LOWER OF COST OR MARKET ............................ 39, 41 MARKETABLE SECURITIES ....................................... 49 MARKETING EXPENSES ............................................. 81 NONCONTROLLING INTERESTS ............................... 23 NON-CURRENT LIABILITIES...................................... 67 OPERATING LEASES.............................................. 90, 91 PENSION EXPENSE ...................................................... 97 PENSION PLANS ........................................................... 95 PLANNED MAINTENANCE ......................................... 57 PRODUCT COSTS .......................................................... 77 PROPERTY, PLANT AND EQUIPMENT ..................... 52 PURCHASE ACCOUNTING .................................... 58, 61 REBATES AND OTHER INCENTIVES ........................ 75 RECURRING GROWING COSTS ........................... 40, 41 RELATED PARTY TRANSACTIONS .......................... 32 REMEASUREMENT ...................................................... 86 RENT HOLIDAYS .......................................................... 91 RESEARCH AND DEVELOPMENT COSTS ................ 78 RESTRICTED CASH ...................................................... 29 RESTRUCTURING COSTS ................................... 67, 110 REVENUE RECOGNITION ........................................... 72 SALE LEASEBACK ....................................................... 57 SELF-INSURANCE RESERVES.................................... 69 SELLING EXPENSES .................................................... 81 SERVICE REVENUE...................................................... 73 SHIPPING COSTS .......................................................... 77 SPARE PARTS INVENTORY ........................................ 41 START UP COSTS.......................................................... 78 TRADE AND NOTES RECEIVABLE ........................... 32 VARIABLE INTEREST ENTITIES................................ 22