1. Accounting Issues for the Pork Industry T.J. Boyle, CPA June 2014

2. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Key Items Leases Revenue Recognition Private company options PEDV – Inventory values – Audit Implications

3. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Leases Very slow moving forward Basics – All leases become capital leases – Major changes to the balance sheet, income statement and cash flows – Major implications on debt covenants

4. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Revenue Recognition Expected to complete in the next year Major changes to many industries Reason for issuing – many different standards for all different industries Will add more disclosures

5. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Revenue Recognition (cont.) General Principles – Identify contract with customer – Performance obligation in the contract – Determine transaction price – Allocate to the obligations in the contract – Recognize the revenue when (or as) performance obligation is satisfied

6. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Private Company Considerations Private Company Council Goodwill Interest Rate Swaps Variable Interest Entities AICPA – Reporting for Small and Medium Sized Entities

7. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Goodwill option – Amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate – This is optional for private companies and is not required

8. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Interest Rate Swaps Allows the use of the simplified hedge approach for swaps that are entered into to convert a variable-rate borrowing into a fixed- rate borrowing Private Company option Only for “plain vanilla swaps”

9. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Variable Interest Entities a private company lessee (the reporting entity) to elect an alternative not to apply VIE guidance to a lessor entity if – (a) the private company lessee and the lessor entity are under common control, – (b) the private company lessee has a lease arrangement with the lessor entity, – (c) substantially all of the activities between the private company lessee and the lessor entity are related to leasing activities (including supporting leasing activities) between those two entities, and – (d) if the private company lessee explicitly guarantees or provides collateral for any obligation of the lessor entity related to the asset leased by the private company,

10. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com AICPA Reporting for SME’s To be a more usable framework for small business owners and their users Potential Benefits – – Cost beneficial – Stable framework – Designed for SME’s – Concepts based

11. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com AICPA Reporting for SME’s Similar to GAAP, but not considered GAAP Would need approval from lenders May not be necessary based on changes from the Private Company Council for US GAAP

12. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Impact of PEDV Inventory Valuations Hedging Not considered extraordinary item – Will be reported as a part of operations Consider additional disclosures

13. Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com Impact of PEDV (cont.) Audit implications – Many banks are currently suspending onsite reviews – Potential impacts – Additional alternative procedures – best for contract growers Additional shipping document review Smaller onsite samples Others

14. Comments, Thoughts or Items to Share? Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com

15. T.J.Boyle, CPA FROST, PLLC TBOYLE@FROSTPLLC.COM 501.376.9241 TBOYLE@FROSTPLLC.COM Frost, PLLC | 425 West Capitol Avenue, Suite 3300 | Little Rock, AR 72201 | 501.376.9241 | www.frostpllc.com