DOLE FOOD CO INC

NOTE 5—DISCONTINUED OPERATIONS

During the fourth quarter of 2012, Dole concluded that Dole Asia met the requirements to be presented as assets and liabilities held-for-sale and discontinued operations. Accordingly, the results of operations for Asia Fresh and Packaged Foods have been reclassified to discontinued operations for all periods presented.

Included in discontinued operations are interest expense and debt-related costs associated with Dole’s debentures, secured notes, revolving credit facility and its term loans that were outstanding through the close of the date of the sale transaction for all historical periods presented. The interest expense and related costs associated with these debt instruments have been reclassified to discontinued operations because these instruments were repaid upon consummation of the sale of Dole Asia, as required by their terms. In addition, for all historical periods presented, had the sale of Dole Asia been previously consummated, the terms of the then outstanding debentures, secured notes, revolving credit facility and the term loans would have required that they be repaid in their entirety. These costs have been included in the “Financing Related Items” column in the table, below.

During 2006 Dole entered into an interest rate swap to synthetically convert $320 million of its term loans into yen denominated debt (“cross currency swap”). The cross currency swap did not qualify for hedge accounting and was marked to market each accounting period. In addition, during 2006, Dole also entered into an interest rate swap to synthetically convert $320 million of variable-rate term loans into fixed-rate debt. During 2011 Dole refinanced its liability under the cross currency swap by entering into long-term Japanese yen hedges, and obtained hedge accounting for these hedges. Due to the fact that the cross currency swap and the interest rate swap were linked to the term loans of Dole, all of the income statement activity associated with these instruments has been presented within discontinued operations for all periods presented. In addition, since the long-term Japanese yen hedges were designated to hedge Dole’s yen-denominated revenue stream generated from the Dole Asia business, the income statement activity associated with the long-term Japanese yen hedges has been presented within discontinued operations for all periods presented. On March 8, 2013, Dole entered into an agreement to settle the long-term Japanese yen hedges for $25.1 million, which was settled on March 27, 2013. All amounts associated with these instruments have been presented in the “Financing Related Items” column in the table, below.

In connection with the sale transaction, Dole entered into several contractual agreements with ITOCHU to facilitate the sale that will result in an exchange of cash over the term of these agreements. These agreements primarily consist of a supply agreement, a ship usage agreement, a transition services agreement and an occupancy agreement.

The initial term of the supply agreement runs through December 31, 2015, except for certain items with a 5 year term, and can be renewed indefinitely with the agreement of both parties. The term of the ship usage agreement is for 12 months from the closing date of the sale and renews automatically for additional 12 month terms until Dole Asia elects not to renew; the maximum term under the transition services agreement is for 12 months from the closing date of the sale; and the maximum term for the occupancy agreement is 2.5 years.

To date, Dole sold and acquired $13.6 million and $0.9 million of inventory and operating supplies under the supply agreement, respectively. The net amount of the cash to be received, net of costs to be incurred under the ship usage agreement, the transition services agreement and the occupancy agreement will not be material.

The cash inflows and outflows from these contractual arrangements represent a continuation of cash inflows and outflows between Dole and Dole Asia. Dole has evaluated the significance of the cash inflows and outflows and determined that they are not significant. In addition, Dole evaluated whether the contractual arrangements with ITOCHU provide the ability to exert significant influence over Dole Asia’s operating and financial policies and has concluded that the contractual arrangements are not significant to the overall operations of Dole Asia and do not give Dole the ability to exert significant influence over Dole Asia’s operating and financial policies.

During the second quarter of 2008, Dole approved and committed to a formal plan to divest the fresh-cut flowers business. During the first quarter of 2009, the operations and the majority of the related assets of this business were sold.

The operating results of Dole Asia and fresh-cut flowers are reported in the following table: