UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

~~FORM 10-Q~~

x ~~(Mark One)~~



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the quarterly period ended March 31, 2018~~


	For the quarterly period ended March 31, 2019
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission ~~File Number: 1-7183~~file number: 1-07183



	~~TEJON RANCH CO.~~
	~~(Exact name of Registrant~~TEJON RANCH CO. (Exact name of registrant as specified in its charter)



Delaware		77-0196136
(State or other jurisdiction of incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)

~~P.O. Box 1000, Tejon Ranch, California 93243~~



P.O. Box 1000, Tejon Ranch, California 93243		(661) 248-3000
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

~~Registrant’s telephone number, including area code: (661) 248-3000~~

~~____________________________________________________~~

~~Indicate by check mark whether the registrant (1) has filed all reports required~~Securities registered pursuant to ~~be filed by~~ Section ~~13 or 15(d)~~12(b) of the Act:



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~Yes~~ x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): ~~Large accelerated filer~~ ¨ ~~Accelerated filer~~ x ~~Non-accelerated filer~~ ¨ ~~(Do not check if a smaller reporting company)~~ ~~Smaller reporting company~~ ¨ ~~Emerging growth company~~ ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	¨	Accelerated filer	x
	Non-accelerated filer	¨	Smaller reporting company	x
			Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of the Company’s outstanding shares of Common Stock on April 30, ~~2018~~2019 was ~~25,950,242.~~25,949,799.

TEJON RANCH CO. AND SUBSIDIARIES

TABLE OF CONTENTS



		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	3

	Unaudited Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	4

	Consolidated Balance Sheets as of March 31, ~~2018~~2019 (unaudited) and December 31, ~~2017~~2018	5

	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	6

	Unaudited Consolidated Statement of Changes in Equity and Noncontrolling Interests for the Three Months Ended March 31, 2019 and March 31, 2018	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3235

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5355

Item 4.	Controls and Procedures	5658

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	5658

Item 1A.	Risk Factors	5658

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5658

Item 3.	Defaults Upon Senior Securities	5658

Item 4.	Mine Safety Disclosures	5658

Item 5.	Other Information	5658

Item 6.	Exhibits	5759

SIGNATURES		6163

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TEJON RANCH CO. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Revenues:
Real estate - commercial/industrial	$	2,154		$	2,189		$	2,826		$	2,154
Mineral resources	9,131			2,001			6,132			9,131
Farming	1,195			431			815			1,195
Ranch operations	989			1,081			889			989
Total revenues	13,469			5,702			10,662			13,469
Costs and Expenses:
Real estate - commercial/industrial	1,319			1,743			1,792			1,319
Real estate - resort/residential	415			630			648			415
Mineral resources	4,231			1,324			3,832			4,231
Farming	1,838			1,323			1,598			1,838
Ranch operations	1,389			1,493			1,350			1,389
Corporate expenses	2,732			2,751			2,474			2,732
Total expenses	11,924			9,264			11,694			11,924
Operating income (loss)	1,545			(3,562		)
Operating (loss) income							(1,032		)	1,545
Other Income:
Investment income	283			103			349			283
Other income, net	(14		)	(14		)
Other income (loss), net							26			(14		)
Total other income	269			89			375			269
Income (loss) from operations before equity in earnings of unconsolidated joint ventures	1,814			(3,473		)
(Loss) income from operations before equity in earnings of unconsolidated joint ventures							(657		)	1,814
Equity in earnings of unconsolidated joint ventures, net	167			228			876			167
Income (loss) before income tax expense	1,981			(3,245		)
Income tax expense (benefit)	526			(1,332		)
Net income (loss)	1,455			(1,913		)
Net loss attributable to non-controlling interest	(2		)	(11		)
Net income (loss) attributable to common stockholders	$	1,457		$	(1,902	)
Net income (loss) per share attributable to common stockholders, basic	$	0.06		$	(0.09	)
Net income (loss) per share attributable to common stockholders, diluted	$	0.06		$	(0.09	)
Income before income tax expense							219			1,981
Income tax expense							95			526
Net income							124			1,455
Net income (loss) attributable to non-controlling interest							5			(2		)
Net income attributable to common stockholders							$	119		$	1,457
Net income per share attributable to common stockholders, basic							$	—		$	0.06
Net income per share attributable to common stockholders, diluted							$	—		$	0.06

See accompanying notes.

TEJON RANCH CO. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

(In thousands)

Three Months Ended March 31,
2018 2017
Net income (loss) $ 1,455
$ (1,913 )
Other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities (302 ) 38
Unrealized gain on interest rate swap 1,328
374
Other comprehensive income before taxes 1,026
412
Provision from income taxes related to other comprehensive income (loss) items (216 ) (162 )
Other comprehensive income 810
250
Comprehensive income (loss) 2,265
(1,663 )
Comprehensive loss attributable to non-controlling interests (2 ) (11 )
Comprehensive income (loss) attributable to common stockholders $ 2,267
$ (1,652 )



	Three Months Ended March 31,
	2019			2018
Net income	$	124		$	1,455
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities	202			(302		)
Unrealized (loss) gain on interest rate swap	(733		)	1,328
Other comprehensive (loss) income before taxes	(531		)	1,026
Benefit (provision) for income taxes related to other comprehensive income items	112			(216		)
Other comprehensive (loss) income	(419		)	810
Comprehensive (loss) income	(295		)	2,265
Comprehensive income (loss) attributable to non-controlling interests	5			(2		)
Comprehensive (loss) income attributable to common stockholders	$	(300	)	$	2,267

See accompanying notes.

TEJON RANCH CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(unaudited)						(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	19,479		$	20,107		$	7,904		$	15,908
Marketable securities - available-for-sale	71,109			70,868			60,270			63,749
Accounts receivable	4,175			7,608			9,655			10,876
Inventories	4,750			2,469			5,179			2,618
Prepaid expenses and other current assets	2,475			2,849			3,654			3,348
Total current assets	101,988			103,901			86,662			96,499
Real estate and improvements - held for lease, net	19,022			19,115			18,859			18,953
Real estate development (includes $92,194 at March 31, 2018 and $94,271 at December 31, 2017, attributable to Centennial Founders, LLC, Note 15)	270,064			267,336
Real estate development (includes $101,331 at March 31, 2019 and $100,311 at December 31, 2018, attributable to Centennial Founders, LLC, Note 15)							287,444			283,385
Property and equipment, net	45,383			45,332			46,915			46,086
Investments in unconsolidated joint ventures	30,098			30,031			29,503			28,602
Net investment in water assets	49,478			47,130			54,993			51,832
Deferred tax assets	1,346			1,562			1,341			1,229
Other assets	3,230			3,792			2,249			2,462
TOTAL ASSETS	$	520,609		$	518,199		$	527,966		$	529,048

LIABILITIES AND EQUITY
Current Liabilities:
Trade accounts payable	$	4,274		$	3,545		$	6,610		$	6,037
Accrued liabilities and other	3,261			1,810			3,218			3,575
Deferred income	1,617			1,118			1,997			2,863
Revolving line of credit	—			—
Current maturities of long-term debt	3,990			4,004			4,048			4,018
Total current liabilities	13,142			10,477			15,873			16,493
Long-term debt, less current portion	64,849			65,816			60,749			61,780
Long-term deferred gains	3,405			3,405			3,405			3,405
Other liabilities	10,006			11,691			13,245			12,698
Total liabilities	91,402			91,389			93,272			94,376
Commitments and contingencies
Equity:
Tejon Ranch Co. Stockholders’ Equity
Common stock, $.50 par value per share:
Authorized shares - 30,000,000
Issued and outstanding shares - 25,949,822 at March 31, 2018 and 25,894,773 at December 31, 2017	12,971			12,947
Issued and outstanding shares - 26,020,953 at March 31, 2019 and 25,972,080 at December 31, 2018							13,010			12,986
Additional paid-in capital	320,275			320,167			336,813			336,520
Accumulated other comprehensive loss	(4,454		)	(5,264		)	(5,276		)	(4,857		)
Retained earnings	71,849			70,392			74,766			74,647
Total Tejon Ranch Co. Stockholders’ Equity	400,641			398,242			419,313			419,296
Non-controlling interest	28,566			28,568			15,381			15,376
Total equity	429,207			426,810			434,694			434,672
TOTAL LIABILITIES AND EQUITY	$	520,609		$	518,199		$	527,966		$	529,048

See accompanying notes.

TEJON RANCH CO. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
Operating Activities
Net income (loss)	$	1,455		$	(1,913	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Net income							$	124		$	1,455
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	1,071			1,150			1,089			1,071
Amortization of premium/discount of marketable securities	35			86			(21		)	35
Equity in earnings of unconsolidated joint ventures	(167		)	(228		)
Equity in earnings of unconsolidated joint ventures, net							(876		)	(167		)
Non-cash retirement plan expense	41			255			77			41
Gain on sale of real estate/assets	36			—
Loss on sale of property plant and equipment							—			36
Stock compensation expense	948			811			813			948
Excess tax benefit from stock-based compensation	22			142			46			22
Changes in operating assets and liabilities:
Receivables, inventories and other assets, net	2,001			(1,175		)
Current liabilities	1,527			302
Net cash provided (used) by operating activities	6,969			(570		)
Receivables, inventories, prepaids and other assets, net							(1,385		)	2,001
Current liabilities, net							(1,078		)	1,527
Net cash (used in) provided by operating activities							(1,211		)	6,969
Investing Activities
Maturities and sales of marketable securities	10,942			2,671			14,567			10,942
Funds invested in marketable securities	(11,520		)	(255		)	(10,865		)	(11,520		)
Real estate and equipment expenditures	(3,779		)	(4,247		)	(5,112		)	(3,779		)
Communities Facilities District and other reimbursements	1,385			—
Reimbursement proceeds from Community Facilities District							—			1,385
Investment in unconsolidated joint ventures	—			(20		)	(100		)	—
Distribution of equity from unconsolidated joint ventures	181			2,087			41			181
Investments in long-term water assets	(2,659		)	(4,276		)	(3,502		)	(2,659		)
Net cash used in investing activities	(5,450		)	(4,040		)	(4,971		)	(5,450		)
Financing Activities
Borrowings of short-term debt	—			8,300
Repayments of long-term debt	(985		)	(938		)	(1,007		)	(985		)
Rights offering costs	(166		)	—			—			(166		)
Taxes on vested stock grants	(996		)	(514		)	(815		)	(996		)
Net cash (used) provided by financing activities	(2,147		)	6,848
Decrease (increase) in cash and cash equivalents	(628		)	2,238
Net cash used in financing activities							(1,822		)	(2,147		)
Decrease in cash and cash equivalents							(8,004		)	(628		)
Cash and cash equivalents at beginning of period	20,107			1,258			15,908			20,107
Cash and cash equivalents at end of period	$	19,479		$	3,496		$	7,904		$	19,479
Supplemental cash flow information
Accrued capital expenditures included in current liabilities	$	673		$	744		$	292		$	673
Non cash capital contribution to unconsolidated joint venture	$	—		$	1,339

See accompanying notes.

TEJON RANCH CO. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

(In thousands, except shares outstanding)


																							Common Stock Shares Outstanding		Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance, December 31, 2018																							25,972,080		$	12,986		$	336,520		$	(4,857	)	$	74,647	$	419,296		$	15,376		$	434,672
Net income																							—		—			—			—			119		119			5			124
Other comprehensive loss																							—		—			—			(419		)	—		(419		)	—			(419		)
Restricted stock issuance																							91,478		46			(46		)	—			—		—			—			—
Stock compensation																							—		—			1,132			—			—		1,132			—			1,132
Shares withheld for taxes and tax benefit of vested shares																							(42,605	)	(22		)	(793		)	—			—		(815		)	—			(815		)
Balance, March 31, 2019																							26,020,953		$	13,010		$	336,813		$	(5,276	)	$	74,766	$	419,313		$	15,381		$	434,694
	Common Stock Shares Outstanding		Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance, December 31, 2017	25,894,773		$	12,947		$	320,167		$	(5,264	)	$	70,392	$	398,242		$	28,568		$	426,810		25,894,773		$	12,947		$	320,167		$	(5,264	)	$	70,392	$	398,242		$	28,568		$	426,810
Net income (loss)	—		—			—			—			1,457		1,457			(2		)	1,455			—		—			—			—			1,457		1,457			(2		)	1,455
Other comprehensive income	—		—			—			810			—		810			—			810			—		—			—			810			—		810			—			810
Rights offering costs						(166		)						(166		)				(166		)						(166		)						(166		)				(166		)
Restricted stock issuance	89,480		45			(45		)	—			—		—			—			—			89,480		45			(45		)	—			—		—			—			—
Stock compensation	—		—			1,294			—			—		1,294			—			1,294			—		—			1,294			—			—		1,294			—			1,294
Shares withheld for taxes and tax benefit of vested shares	(42,773	)	(21		)	(975		)	—			—		(996		)	—			(996		)	(42,773	)	(21		)	(975		)	—			—		(996		)	—			(996		)
Balance March 31, 2018	25,941,480		$	12,971		$	320,275		$	(4,454	)	$	71,849	$	400,641		$	28,566		$	429,207
Balance, March 31, 2018																							25,941,480		$	12,971		$	320,275		$	(4,454	)	$	71,849	$	400,641		$	28,566		$	429,207

See accompanying notes.

TEJON RANCH CO. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The summarized information of Tejon Ranch Co. and its subsidiaries (the Company, Tejon, we, us and our), ~~furnished~~provided pursuant to Part I, Item 1 of Form 10-Q, is unaudited and reflects all adjustments which are, in the opinion of the Company’s management, necessary for a fair statement of the results for the interim period. All such adjustments are of a normal recurring nature. We have evaluated subsequent events through the date of issuance of our consolidated financial statements.

The periods ending March 31, ~~2018~~2019 and ~~2017~~2018 include the consolidation of Centennial Founders, LLC’s statement of operations within the resort/residential real estate development segment and statements of cash flows. The Company’s March 31, ~~2018~~2019 and December 31, ~~2017~~2018 balance sheets and statements of changes in equity and noncontrolling interests are presented on a consolidated basis, including the consolidation of Centennial Founders, LLC.

The Company has identified five reportable segments: commercial/industrial real estate development, resort/residential real estate development, mineral resources, farming, and ranch operations. Information for the Company’s reportable segments are presented in its Consolidated Statements of Operations. The Company’s reportable segments follow the same accounting policies used for the Company’s consolidated financial statements. We use segment profit or loss, along with equity in earnings of unconsolidated joint ventures, as the primary measure of profitability to evaluate operating performance and to allocate capital resources.

The results of the period reported herein are not indicative of the results to be expected for the full year due to the seasonal nature of the Company’s agricultural activities, water activities, and the timing of real estate sales and leasing activities. Historically, the Company’s largest percentages of farming revenues are recognized during the third and fourth quarters of the fiscal year.

For further information and a summary of significant accounting policies, refer to the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Recent Accounting Pronouncements

~~Lease Accounting~~Allowance for Credit Losses

In ~~February~~June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-13, "Financial Instruments — Credit Losses (Topic 326)," changing the impairment model for most financial instruments by requiring companies to recognize an allowance for expected losses, rather than incurred losses as required currently by the other-than-temporary impairment model. The ASU will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, available-for-sale and held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. The ASU is effective for the Company on January 1, 2020, and will be applied as a cumulative adjustment to retained earnings as of the effective date.

The Company is currently in the process of evaluating the impact of the adoption of this ASU on its consolidated financial statements. The Company's implementation efforts include, but are not limited to, identifying key interpretive issues, assessing its policies and processes, and evaluating related control activities to determine if modifications or enhancements may be required. The Company's accounts receivable balance is primarily composed of crop receivables. Based on historical experience with our current customers and periodic credit evaluations of our customers' financial conditions, we believe our credit risk is minimal. With regards to the marketable securities, as the Company limits its investment to securities with investment grade rating from Moody's or Standard and Poor's, and it generally does not sell securities before recovery of their amortized cost basis, we do not expect this ASU to have any material impact on its accounting of marketable securities.

Fair Value of Financial Instruments

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement". This ASU removes certain disclosure requirements related to the fair value hierarchy, such as disclosure of amounts and reasons for transfers between Level 1 and Level 2, and adds new disclosure requirements, such as disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement. For the Company, the new standard will be effective on January 1, 2020. The Company does not expect this ASU to have any material impact on its consolidated financial statements, as the Company does not have financial instruments classified as Level 3.

Retirement Benefits

In August 2018, the FASB issued ASU No. 2018-14, "Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU removes certain disclosure requirements, including the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the amount and timing of plan assets expected to be returned to the employer. This ASU also requires additional disclosures for the weighted average interest crediting rates for cash balance plans and explanations for significant gains and losses related to changes in the benefit plan obligation. This ASU is effective for fiscal years beginning after December 15, 2020. The Company is currently assessing the impact of this ASU on its consolidated financial statements and related disclosures.

Newly Adopted Accounting Pronouncements

Lease Accounting

In February 2016, the FASB issued ASU No. 2016-02, "Leases." From the lessee's perspective, the new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. ~~A lease will~~Entities are prohibited from using a full retrospective transition approach to adopt this guidance, and a modified retrospective approach is required to be ~~treated as a sale if it transfers~~used for all leases that exist at or commence after the beginning of the ~~risks and rewards, as well as control~~earliest comparative period presented. Entities are permitted to elect a package of expedients where an entity need not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases.

In January 2018, the FASB issued ASU No. 2018-01, "Land Easement Practical Expedient for Transition to Topic 842," which permits entities to elect a transition practical expedient to not assess land easements that exist or expired before the adoption of the ~~underlying asset,~~new standard in order to reduce the costs and complexity of complying with the transition provisions. If this practical expedient is elected, entities are effectively allowed to grandfather the accounting for easements entered into prior to the ~~lessee. If risks and rewards are conveyed without~~adoption of the ~~transfer of control,~~new standards.

In July 2018, the ~~lease is treated as~~FASB issued ASU No. 2018-11, "Targeted Improvements to Leases (Topic 842)," which allows entities to not apply the new leases standard in the comparative periods they present in their financial statements. Under this transition option, entities can continue to apply the legacy guidance in the comparative periods presented in the year they adopt the new standard. ASU No. 2018-11 also provides a ~~financing lease. If~~practical expedient for lessors to combine the ~~lessor doesn’t convey risks and rewards or control, an operating lease results.~~

~~The ASU is effective no later than January 1, 2019, with early adoption permitted. The ASU requires the identification of~~ lease and non-lease components ~~of a lease agreement. This ASU will govern the recognition of revenue for lease components. Revenue related~~under certain circumstances to ~~non-lease components under our lease agreements will be subject to~~simplify lessor's implementation of the new ~~revenue recognition standard~~guidance.

The Accounting Standards Codification Topic 842: Leases, or ASC 842, became effective ~~upon adoption of the new~~

~~lease accounting standard.~~on January 1, 2019. The Company adopted the new standards using the modified retrospective method on January 1, 2019. The optional transition method was elected during this transition, and comparative information is not restated and will continue to be reported under the legacy guidance. The Company also elected the package of practical expedients and will account for its existing leases under the new guidance without reassessing its prior conclusions of lease identification, lease classification and initial direct costs.

Lessee Impact:

The Company currently leases several office copiers under 48-month lease terms. On January 1, 2019, an operating lease ROU asset and an operating lease liability were recorded on the consolidated balance sheets, both in the ~~process~~amount of ~~evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.~~

~~Newly Adopted Accounting Pronouncements~~

~~Postretirement Benefits~~

In March 2017, the FASB issued ASU 2017-07 "Compensation - Retirement Benefits (Topic 715)", which requires employers who offer defined benefit pension plans or other post-retirement benefit plans to report the service cost component within the same income statement caption$52,000, as other compensation costs arising from services rendered by employees during the period. The ASU also requires the other components of net periodic benefit cost to be presented separately from the service cost component, in a caption outside of a subtotal of income from operations. Additionally, the ASU provides that only the service cost component is eligible for capitalization. As a result of adopting the ~~adoption,~~new guidance. The $52,000 was determined by calculating the ~~Company reclassified $194,000 from Corporate expenses to Other income, net for the three months ended March 31, 2017.~~

~~Other Income~~

In February 2017, the FASB issued ASU 2017-05 "Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)", effective for the annual reporting period beginning after the December 15, 2017, including the interim reporting period within that period. This update provides guidance on the recognition of gains and losses on transfers of nonfinancial assets and in substance nonfinancial assets to counterparties that are not customers.

~~As of January 1, 2018, the Company began accounting for the sale of real estate properties under Subtopic 610-20 which provides for revenue recognition based on transfer of ownership.~~

~~The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as~~present value of the ~~date~~future annual cash lease payments using a discount rate of ~~adoption.~~4.11%. The ~~Company selected~~4.11% discount rate represents the ~~modified retrospective transition method. The adoption of the standard did not result in a cumulative adjustment recognized~~Company's incremental borrowing rate as of January 1, ~~2018 and~~2019. The implementation of the ~~standard~~new standards did not have any impact on the ~~Company’s prior period financial statements. During~~consolidated statements of operations or the ~~quarter ended March 31, 2018,~~opening balance of retained earnings on the consolidated statements of equity.

Lessor Impact:

The Company elected the land easement practical expedient upon adoption of the new guidance and is thus permitted to continue its current accounting policy for land easements that exist or expired before the effective date of the adoption. The Company will evaluate new or modified land easements under ASC 842 beginning on the adoption date of the new guidance.

Additionally, the Company ~~had~~elected the lessor's practical expedient and combined the lease and non-lease components due to the following criteria being met: (i) the timing and pattern of recognizing revenue for the lease components are the same as its associated non-lease components, (ii) the lease component, if accounted for separately, would be classified as an operating lease, and (iii) the lease component is the predominant component within the contract. The Company believes that combining the lease component, which is the lease revenue, and non-lease components such as common area maintenance revenue and provisions of real estate taxes and insurance, will provide more meaningful information as it is more reflective of the predominant component in the lease contracts.

We expect no ~~sales or transfers~~significant differences in the timing and pattern of ~~nonfinancial assets~~revenue recognition under the new lease guidance for all our existing leases from the lessor's perspective. For new leases originated after the adoption date, we expect to ~~customers.~~capitalize less initial direct cost, as the definition of initial direct cost is narrower under the new guidance. Certain costs, such as legal costs incurred, were eligible for capitalization under the legacy guidance, but are no longer eligible for capitalization under the new standards. The amounts capitalized as legal costs have been de minimis in the past and would not have a material impact to our results of operations.

~~Financial Instruments~~Derivatives and Hedging

In ~~January 2016,~~August 2017, the FASB issued ASU ~~2016-01, "Financial Statements - Overall (Subtopic 825-10)~~No. 2017-12, "Derivatives and Hedging (Topic 815): ~~Recognition and Measurement of Financial Assets and Financial Liabilities,~~Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting model and allows entities to better portray the economics of their risk management activities in their financial statements. This guidance eliminates the requirement to separately measure and report hedge ineffectiveness and requires ~~equity investments~~the entire change in ~~unconsolidated entities (other than those accounted for using~~ the ~~equity method~~fair value of ~~accounting)~~a hedging instrument to be ~~measured at fair value~~presented in the same income statement line as hedged item. The Company adopted ASU No. 2017-12 on January 1, 2019 using a modified retrospective approach. The Company utilizes an interest rate swap to hedge its exposure to variable interest rate associated with ~~changes in fair value~~borrowings based on London Interbank Offered Rate (LIBOR). The interest rate swap is designated as a cash flow hedge, and the hedge has been highly effective since inception. Therefore, no cumulative effective adjustment of previously recognized ~~in net income. There will no longer~~ineffectiveness was required to be recorded as a result of adopting this new guidance. The adoption of this guidance did not have an ~~available-for-sale classification for equity securities with readily determinable fair values.~~impact on the Company's consolidated financial statements.

~~We adopted~~In October 2018, the ~~new~~FASB issued ASU ~~during the first quarter of 2018. The ASU requires the use~~No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the ~~modified retrospective transition method, under~~Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes". This ASU identified SOFR as the preferred reference rate alternative to LIBOR. The Company adopted this new guidance on January 1, 2019, and the adoption did not have an impact on the Company's consolidated financial statements. For a more detailed discussion of the benchmark interest rate, see Part I, Item 1A, "Risk Factors" included in the Annual Report on Form 10-K for the year ended December 31, 2018.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which ~~cumulative unrealized gains and losses related to equity investments with readily determinable fair values will be reclassified~~allows a reclassification from accumulated other comprehensive income, or AOCI, to retained earnings for stranded tax effects resulting from the U.S. government’s comprehensive tax legislation enacted in December 2017, commonly referred to as U.S. Tax Reform. The guidance became effective for the Company on January 1, ~~2018 upon adoption~~2019, and the Company adopted the provisions of ~~this ASU. The~~the guidance ~~related to equity investments without readily determinable fair values will be applied prospectively to all investments that exist~~ as of the ~~date of adoption.~~effective date. The ~~adoption of this new ASU~~Company did not ~~impact~~make an election to reclassify the ~~Company's investment portfolio as it is comprised of fixed~~ income ~~investments and not equity investments.~~

~~Revenue Recognition~~

~~In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance.~~

~~The guidance introduces a five-step model to achieve its core principal~~tax effects of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.

~~In March 2016, the FASB issued ASU 2016-08, "Revenue~~U.S Tax Reform from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)." ASU 2016-08 provides specific guidance to determine whether an entity is providing a specified good or service itself or is arranging for the good or service to be provided by another party.

Entities can use either a full retrospective or modified retrospective method to adopt this ASU. Under the full retrospective method, all periods presented will be restated upon adoption to conform to the new standard and a cumulative adjustment for effects on periods prior to 2016 will be recordedAOCI to retained earnings as of January 1, 2016. Under the modified retrospective approach, prior periods are not restated to conform to the new standard. Instead, a cumulative adjustment for effects of applying the new standard to periods prior to 2018 is recorded to retained earnings as of January 1, 2018. Additionally, incremental footnote disclosures are required to present the 2018 revenues under the prior standard. Under the modified retrospective method, an entity may also elect to apply the standard to either (i) all contracts as of January 1, 2018, or (ii) only to contracts that are not completed as of January 1, 2018. During the first quarter of 2018, we adopted the revenue recognition ASU using the full retrospective method.

Based on our evaluation of all contracts within scope, under previous accounting standards, and under the new revenue recognition ASU, we noted no significant differences in the amounts recognized or the pattern of recognition. Management however noted that the application of Topic 606 impacts the accounting for land sales where the Company has continued involvement or performance obligations that are essential to the land sale. Previous guidance required the Company to recognize revenue from land sales with continued involvement using a percentage completion method based on the total cost of the performance obligations. After adopting Topic 606, the Company was required to allocate the transaction price, on land sales with multiple performance obligations, to the performance obligations in proportion to their standalone selling prices (i.e., on a relative standalone selling price basis) and not total costs.

During 2016, the Company sold a land parcel to a third party. Under the terms of the purchase and sale agreement, the Company was obligated to complete specific infrastructure and landscaping adjacent to the land parcel that were deemed essential to the third party. When applying the guidance under Topic 606, the purchase price allocated to the multiple performance obligations yielded a different result than when applying the current guidance.

Under the previous guidance, during the second quarter of 2017, the Company recognized $475,000 and $411,000 of revenues and profit from sale of land, respectively. Under Topic 606, the Company, during the second quarter, will recognize $73,000 and $9,000 of revenues and profit from sale of land, respectively.

~~No other differences were noted during our evaluation.~~earnings.

Please also refer to ~~Item 2.~~ Critical Accounting Policies in Part I, Item 2 of this report for discussion on changes to critical accounting policies.

2. EQUITY

Earnings Per Share (EPS)

Basic net income per share attributable to common stockholders is based upon the weighted average number of shares of common stock outstanding during the year. Diluted net income per share attributable to common stockholders is based upon the ~~weighted-average~~weighted average number of shares of common stock outstanding and the weighted average number of shares outstanding assuming the vesting of restricted stock grants per ASC 260, “Earnings Per Share.”


	Three Months Ended March 31,		Three Months Ended March 31,
	2018	2017	2019	2018
Weighted average number of shares outstanding:
Common stock	25,912,819	20,827,993	25,992,374	25,912,819
Common stock equivalents-stock options, grants	28,509	47,052
Common stock equivalents			17,707	28,509
Diluted shares outstanding	25,941,328	20,875,045	26,010,081	25,941,328

3. MARKETABLE SECURITIES

ASC 320, “Investments – Debt and Equity Securities” requires that an enterprise classify all debt securities as either held-to-maturity, trading or available-for-sale. The Company has elected to classify its securities as available-for-sale and therefore is required to adjust securities to fair value at each reporting date. All costs and both realized and unrealized gains and losses on securities are determined on a specific identification basis. The following is a summary of available-for-sale securities at:


($ in thousands)		March 31, 2018				December 31, 2017					March 31, 2019				December 31, 2018
Marketable Securities:	Fair Value Hierarchy	Cost		Fair Value		Cost		Fair Value		Fair Value Hierarchy	Cost		Fair Value		Cost		Fair Value
Certificates of deposit
with unrecognized losses for less than 12 months		$	7,368	$	7,315	$	6,238	$	6,222		$	—	$	—	$	250	$	248
with unrecognized losses for more than 12 months		101		100		102		100			4,012		3,991		3,861		3,812
with unrecognized gains		296		296		2,088		2,089			—		—		—		—
Total Certificates of deposit	Level 1	7,765		7,711		8,428		8,411		Level 1	4,012		3,991		4,111		4,060
U.S. Treasury and agency notes
with unrecognized losses for less than 12 months		29,940		29,757		29,741		29,669			4,064		4,058		3,112		3,105
with unrecognized losses for more than 12 months		136		135		137		135			19,472		19,391		23,564		23,415
with unrecognized gains		2		3		152		153			2		3		3		4
Total U.S. Treasury and agency notes	Level 2	30,078		29,895		30,030		29,957		Level 2	23,538		23,452		26,679		26,524
Corporate notes
with unrecognized losses for less than 12 months		22,624		22,425		18,230		18,159			14,780		14,760		13,696		13,665
with unrecognized losses for more than 12 months		2,535		2,511		2,804		2,788			9,383		9,334		12,542		12,431
with unrecognized gains		—		—		—		—			1,795		1,797		—		—
Total Corporate notes	Level 2	25,159		24,936		21,034		20,947		Level 2	25,958		25,891		26,238		26,096
Municipal notes
with unrecognized losses for less than 12 months		7,401		7,372		10,298		10,288			—		—		2,994		2,982
with unrecognized losses for more than 12 months		1,054		1,041		999		987			6,949		6,936		4,116		4,087
with unrecognized gains		152		154		277		278			—		—		—		—
Total Municipal notes	Level 2	8,607		8,567		11,574		11,553		Level 2	6,949		6,936		7,110		7,069
		$	71,609	$	71,109	$	71,066	$	70,868		$	60,457	$	60,270	$	64,138	$	63,749

We evaluate our securities for other-than-temporary impairment based on the specific facts and circumstances surrounding each security valued below its cost. Factors considered include the length of time the securities have been valued below cost, the financial condition of the issuer, industry reports related to the issuer, the severity of any decline, our intention not to sell the security, and our assessment as to whether it is not more likely than not that we will be required to sell the security before a recovery of its amortized cost basis. We then segregate the loss between the amounts representing a decrease in cash flows expected to be collected, or the credit loss, which is recognized through earnings, and the balance of the loss, which is recognized through other comprehensive income. At March 31, ~~2018,~~2019, the fair market value of investment securities was ~~$500,000 less than~~$187,000 below their cost basis.

As of March 31, 2018, the adjustment to accumulated other comprehensive loss in consolidated equity for the temporary change in the value of securities reflected an increase in the market value of available-for-sale securities of $302,000, which includes estimated taxes of $64,000. As of March 31, 2018, the The Company’s gross unrealized holding gains equaled $3,000 and gross unrealized holding losses equaled ~~$503,000.~~$190,000. The Company has determined that any unrealized losses in the portfolio were temporary as of March 31, 2019. As of March 31, 2019, the adjustment to accumulated other comprehensive loss reflected an improvement in market value of $202,000, including estimated taxes of $42,000.

The following tables summarize the maturities, at par, of marketable securities as of:


	March 31, 2018										March 31, 2019
($ in thousands)	2018		2019		2020		2021		Total		2019		2020		2021		Total
Certificates of deposit	$	3,647	$	2,311	$	1,799	$	—	$	7,757	$	2,212	$	1,799	$	—	$	4,011
U.S. Treasury and agency notes	6,176		14,849		9,174		—		30,199		13,414		10,173		—		23,587
Corporate notes	9,482		7,985		7,150		400		25,017		11,871		13,700		400		25,971
Municipal notes	1,443		5,157		2,000		—		8,600		4,951		2,000		—		6,951
	$	20,748	$	30,302	$	20,123	$	400	$	71,573	$	32,448	$	27,672	$	400	$	60,520


	December 31, 2017										December 31, 2018
($ in thousands)	2018		2019		2020		2021		Total		2019		2020		2021		Total
Certificates of deposit	$	4,306	$	2,311	$	1,799	—		$	8,416	$	2,311	$	1,799	$	—	$	4,110
U.S. Treasury and agency notes	6,399		14,599		9,171		—		30,169		17,574		9,174		—		26,748
Corporate notes	7,954		6,430		6,450		—		20,834		18,671		7,150		400		26,221
Municipal notes	1,568		6,957		3,003		—		11,528		5,111		2,000		—		7,111
	$	20,227	$	30,297	$	20,423	$	—	$	70,947	$	43,667	$	20,123	$	400	$	64,190

The Company’s investments in corporate notes are with companies that have an investment grade rating from Standard & Poor’s.

4. REAL ESTATE


($ in thousands)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Real estate development
Mountain Village	$	133,794		$	132,034		$	138,521		$	137,571
Centennial	95,161			94,271			101,331			100,311
Grapevine	28,723			28,139			31,896			31,175
Tejon Ranch Commerce Center	12,386			12,892			15,696			14,328
Real estate development	270,064			267,336			287,444			283,385

Real estate and improvements - held for lease
Tejon Ranch Commerce Center	21,123			21,123			21,328			21,327
Real estate and improvements - held for lease	21,123			21,123
Less accumulated depreciation	(2,101		)	(2,008		)	(2,469		)	(2,374		)
Real estate and improvements - held for lease, net	$	19,022		$	19,115		$	18,859		$	18,953

5. LONG-TERM WATER ASSETS

Long-term water assets consist of water and water contracts held for future use or sale. The water is held at cost, which includes the price paid for the water and the cost to pump and deliver the water from the California aqueduct into the water bank. Water is currently held in a water bank on Company land in southern Kern County. Company-banked water costs also include costs related to the right to receive additional acre-feet of water in the future from the Antelope Valley East Kern Water Agency, or AVEK. The Company has also banked water within an ~~AVEK owned~~AVEK-owned water bank.

We have also been purchasing water for future use or sale. In 2008, we purchased8,393 acre-feet of transferable water and in 2009 we purchased an additional 6,393 acre-feet of transferable ~~wate~~r,water, all of which is ~~currently held on our behalf by AVEK or has been placed~~now stored in the Company's water bank. We also have secured State Water Project, or SWP, entitlement under long-term SWP water contracts within the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water District, totaling 3,444 acre-feet of SWP entitlement annually, subject to SWP allocations. These contracts extend through 2035 and have been transferred to AVEK for our use in the Antelope Valley. In 2013, the Company acquired a contract to purchase water that obligates the Company to purchase 6,693 ~~acre feet~~acre-feet of water each year from the Nickel Family, LLC, or Nickel, a California limited liability company that is located in Kern County.

The initial term of the water purchase agreement with Nickel runs to 2044 and includes a Company option to extend the contract for an additional 35 years. The purchase cost of water in ~~2018~~2019 is ~~$738~~$769 per acre-foot. The purchase cost is subject to annual cost increases based on the greater of the consumer price index or 3%.

The water purchased above will ultimately be used in the development of the Company’s land for commercial/industrial real estate development, resort/residential real estate development, and farming. Interim uses may include the sale of portions of this water to third party users on an annual basis until this water is fully allocated to Company uses, as just described.

~~During the three months ended March 31, 2018, we sold 7,442 acre-feet of water to three different customers totaling $7,992,000 with a~~Water revenues and cost of ~~$3,679,000, which was recorded~~sales were as follows ($ in ~~the mineral resources segment on the unaudited Consolidated Statements of Operations.~~thousands):



	March 31, 2019		March 31, 2018

Acre-Feet Sold	4,445		7,442

Revenues	$	5,026	$	7,992
Cost of sales	3,194		3,679
Profit	$	1,832	$	4,313

The costs assigned to water assets held for future use were as follows ($ in thousands):


	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Banked water and water for future delivery	$	5,280	$	5,220	$	25,208	$	24,597
Transferable water	15,977		13,351		2,927		36
Total tangible water	$	21,257	$	18,571
Total water held for future use at cost					$	28,135	$	24,633

Intangible Water Assets

The Company's carrying amounts of its ~~intangible~~purchased water ~~assets~~contracts were as follows ($ in thousands):


	March 31, 2018					December 31, 2017					March 31, 2019					December 31, 2018
	Costs		Accumulated Depreciation			Costs		Accumulated Depreciation			Costs		Accumulated Depreciation			Costs		Accumulated Depreciation
Dudley Ridge water rights	$	12,203	$	(3,498	)	$	12,203	$	(3,377	)
Dudley-Ridge water rights											$	12,203	$	(3,980	)	$	12,203	$	(3,860	)
Nickel water rights	18,740		(2,838		)	18,740		(2,678		)	18,740		(3,480		)	18,740		(3,320		)
Tulare Lake Basin water rights	5,857		(2,243		)	5,857		(2,186		)	5,857		(2,482		)	5,857		(2,421		)
	$	36,800	$	(8,579	)	$	36,800	$	(8,241	)	$	36,800	$	(9,942	)	$	36,800	$	(9,601	)
Net intangible water assets	28,221					28,559
Total tangible water assets	21,257					18,571
Net cost of purchased water contracts											26,858					27,199
Total cost water held for future use											28,135					24,633
Net investments in water assets	$	49,478				$	47,130				$	54,993				$	51,832

Water contracts with the Wheeler Ridge Maricopa Water Storage District, or WRMWSD, and the Tejon-Castac Water District, or TCWD, are also in place, but were entered into with each district at inception of the contract and not purchased later from third parties, and do not have a related financial value on the

books of the Company. Therefore, there is no amortization expense related to these contracts. Total water resources, including both recurring ~~annual contract water were as follows:~~and one-time usage, are:


(in acre-feet, unaudited)	March 31, 2018	December 31, 2017	March 31, 2019	December 31, 2018
Water held for future use
AVEK water bank	13,033	13,033	13,033	13,033
Company water bank	33,111	31,497	37,316	35,793
Transferable water*	5,747	6,169
Transferable water			5,999	500
Total water held for future use	51,891	50,699	56,348	49,326
Purchased water contracts
Water Contracts (Dudley-Ridge, Nickel and Tulare)	10,137	10,137	10,137	10,137
WRMWSD - Contracts with Company	15,547	15,547	15,547	15,547
TCWD - Contracts with Company	5,749	5,749	5,749	5,749
TCWD - Banked water contracted with Company	49,184	49,184
TCWD - Banked water contracted to Company			54,351	52,547
Total purchased water contracts	80,617	80,617	85,784	83,980
Total water held for future use and purchased water contracts	132,508	131,316	142,132	133,306
*of the 5,747 acre-feet of transferable water, 349 acre-feet will be returned by AVEK to the Company at a 1.5 to 1 factor, giving the Company use of a total of 523 (349 X 1.5) acre-feet as of March 31, 2018.

~~Tejon Ranchcorp, or Ranchcorp, a wholly-owned subsidiary of Tejon Ranch Co.,~~The Company entered into a Water Supply Agreement with Pastoria Energy Facility, L.L.C., or PEF in 2015. PEF is ~~the~~our current lessee under ~~the~~a power plant lease. Pursuant to the Water Supply Agreement, PEF may purchase from ~~Ranchcorp~~the Company up to 3,500 acre-feet of water per year from January 1, 2017 through July 31, 2030, with an option to extend the term. PEF is under no obligation to purchase water from ~~Ranchcorp~~the Company in any year but is required to pay ~~Ranchcorp~~the Company an annual option payment equal to 30% of the maximum annual payment. The price of the water under the Water Supply Agreement for ~~2018~~2019 is ~~$1,088~~$1,120 per acre-foot, ~~of annual water,~~ subject to 3% annual increases over the life of the contract. The Water Supply Agreement contains other customary terms and conditions, including representations and warranties, which are typical for agreements of this type. The Company's commitments to sell water can be met through current water assets.

6. ACCRUED LIABILITIES AND OTHER

Accrued liabilities and other consists of the following:


($ in thousands)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Accrued vacation	$	822	$	824	$	790	$	761
Accrued paid personal leave	497		494		428		416
Accrued bonus	634		126		647		2,071
Property tax payable¹					1,022		—
Other	1,308		366		331		327
	$	3,261	$	1,810	$	3,218	$	3,575

¹California property taxes are paid every April and December.					¹California property taxes are paid every April and December.

7. LINE OF CREDIT AND LONG-TERM DEBT

Debt consists of the following:


($ in thousands)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Revolving line of credit	$	—		$	—
Notes payable	68,789			69,741			64,908			65,901
Other borrowings	184			218			—			14
Total short-term and long-term debt	68,973			69,959			64,908			65,915
Less: line-of-credit and current maturities of long-term debt	(3,990		)	(4,004		)	(4,048		)	(4,018		)
Less: deferred loan costs	(134		)	(139		)	(111		)	(117		)
Long-term debt, less current portion	$	64,849		$	65,816		$	60,749		$	61,780

On October 13, 2014, the Company as borrower entered into an Amended and Restated Credit Agreement, a Term Note and a Revolving Line of Credit Note ~~or collectively~~(collectively, the Credit ~~Facility,~~Facility) with Wells Fargo. The Credit Facility added a $70,000,000 term loan, or Term Loan, to the existing $30,000,000 revolving line of credit, or RLC. Funds from the Term Loan were used to finance the Company's purchase of DMB TMV LLC’s interest in TMV ~~LLC.~~ LLC in 2014.

The Term Loan had outstanding balances of $61,561,000 and $62,483,000 as of March 31, 2019 and December 31, 2018, respectively. The interest rate per annum applicable to the Term Loan is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the term of the Term Note has been fixed through the use of an interest rate swap at a rate of 4.11%. The Term Loan requires monthly amortization payments pursuant to a schedule set forth in the Term Note, with the final outstanding principal amount due October 5, 2024. The Company may make voluntary prepayments on the Term Loan at any time without penalty (excluding any applicable LIBOR or interest rate swap breakage costs). Each optional prepayment will be applied to reduce the most remote principal payment then unpaid. The Credit Facility is secured by the Company's farmland and farm assets, which include equipment, crops and crop receivables; the PEF power plant lease and lease site; and related accounts and other rights to payment and inventory.

The RLC had no outstanding balance as of March 31, 2019 and December 31, 2018. At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term of this RLC (which matures in September 2019), we can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary. We anticipate renewing the RLC in September 2019 at similar terms as the expiring terms.

Any future borrowings under the RLC will be used for ongoing working capital requirements and other general corporate purposes. To maintain availability of funds under the RLC, undrawn amounts under the RLC will accrue a commitment fee of 10 basis points per annum. The Company's ability to borrow additional funds in the future under the RLC is subject to compliance with certain financial covenants and making certain representations and ~~warranties.~~

Aswarranties, which are typical in this type of March 31, 2018 and December 31, 2017, the RLC had no outstanding balance. At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR average or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term of the Credit Facility (which matures in September 2019), we can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary.

The Term Loan had outstanding balances of $65,162,000 and $66,046,000 as of March 31, 2018 and December 31, 2017, respectively. The interest rate per annum applicable to the Term Loan is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the term of the Term Loan has been fixed through the use of an interest rate swap at a rate of 4.11%. The Term Loan required interest-only payments for the first two years of the term and thereafter requires monthly amortization payments pursuant to a schedule set forth in the Term Note, with the final outstanding principal amount due October 5, 2024. The Company may make voluntary prepayments on the Term Loan at any time without penalty (excluding any applicable LIBOR or interest rate swap breakage costs). Each optional prepayment will be applied to reduce the most remote principal payment then unpaid. The Credit Facility

is secured by the Company's farmland and farm assets, which include equipment, crops and crop receivables, the power plant lease and lease site, and related accounts and other rights to payment and inventory.borrowing arrangement.

The Credit Facility requires compliance with three financial covenants: ~~(a)~~(i) total liabilities divided by tangible net worth not greater than 0.75 to 1.0 at each quarter end; ~~(b)~~(ii) a debt service coverage ratio not less than 1.25 to 1.00 as of each quarter end on a rolling four quarter basis; and ~~(c)~~(iii) maintain liquid assets equal to or greater than ~~$20,000,000.~~$20,000,000, including availability on RLC. At March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we were in compliance with all financial covenants.

The Credit Facility also contains customary negative covenants that limit the ability of the Company to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain assets sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, or incur liens on any assets.

The Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Credit Facility; bankruptcy and insolvency; and a change in control without consent of the bank (which consent will not be unreasonably withheld). The Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.

In 2013, we entered into a promissory note agreement, secured by real estate, with CMFG Life Insurance Company to pay a principal amount of $4,750,000 with principal and interest due monthly starting on October 1, 2013. The interest rate on this promissory note is 4.25% per annum, with monthly principal and interest payments of ~~$102,700~~$36,000 ending on September 1, 2028. The proceeds from this promissory note were used to eliminate debt that had been previously used to provide long-term financing for a building being leased to Starbucks and provide additional working capital for future investment. The current balance on the ~~promissory~~ note ~~is $3,627,000.~~was $3,347,000 on March 31, 2019. The balance of this long-term debt instrument included in "Notes payable" above approximates the fair value of the instrument.

8. OTHER LIABILITIES

Other liabilities consist of the following:


($ in thousands)	March 31, 2018			December 31, 2017		March 31, 2019		December 31, 2018
Pension liability (Note 13)	$	2,241		$	2,280	$	2,133	$	2,148
Interest rate swap (asset) liability (Note 10)	(434		)	894
Interest rate swap liability (Note 10)¹						640		—
Supplemental executive retirement plan liability (Note 13)	7,682			7,759		7,709		7,750
Other	517			758
Excess joint venture distributions and other						2,763		2,800
Total	$	10,006		$	11,691	$	13,245	$	12,698

¹The Company's interest rate swap had an asset balance of $93,000 as of December 31, 2018 and is recorded under the caption Other Assets on the Consolidated Balance Sheets.						¹The Company's interest rate swap had an asset balance of $93,000 as of December 31, 2018 and is recorded under the caption Other Assets on the Consolidated Balance Sheets.

For the captions presented in the table above, please refer to the respective Notes to Unaudited Consolidated Financial Statements for further detail.

9. STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

The Company’s stock incentive plans provide for the making of awards to employees based upon a service condition or through the achievement of performance-related objectives. The Company has issued three types of stock grant awards under these plans: restricted stock with service condition vesting; performance share grants that only vest upon the achievement of specified performance conditions, such as corporate cash flow ~~goals;~~goals, or Performance Condition Grants; and performance share grants that include threshold, target, and maximum

achievement levels based on the achievement of specific performance ~~milestones.~~milestones, or Performance Milestone Grants. The Company has also granted performance share grants that contain both performance-based and market-based conditions. Compensation cost for these awards is recognized based on either the achievement of the performance-based conditions, if they are considered probable, or if they are not considered probable, on the achievement of the market-based condition. Failure to satisfy the threshold performance conditions will result in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions ~~results~~will result in a reversal of previously recognized share-based compensation expense. Forfeiture of share awards with market-based restrictions ~~does~~do not result in a reversal of previously recognized share-based compensation expense.

The following is a summary of the Company's ~~performance share grants with performance conditions for~~Performance Condition Grants as of the three months ended March 31, ~~2018:~~2019:



Performance ~~Share~~Condition Grants ~~with Performance Conditions~~
Below threshold performance	—
Threshold performance	~~179,211~~186,366
Target performance	~~407,950~~422,264
Maximum performance	~~619,512~~640,981

The following is a summary of the Company’s stock grant activity, both time and performance ~~share~~unit grants, assuming target achievement for outstanding performance ~~share~~ grants for the ~~following periods:~~three months ended March 31, 2019:

March 31, 2018 December 31, 2017
Stock grants outstanding beginning of the period at target achievement 536,860
386,171
New stock grants/additional shares due to maximum achievement 97,529
295,243
Vested grants (81,828 ) (99,769 )
Expired/forfeited grants —
(44,785 )
Stock grants outstanding end of period at target achievement 552,561
536,860



	March 31, 2019
Stock Grants Outstanding Beginning of Period at Target Achievement	538,599
New Stock Grants/Additional Shares due to Achievement in Excess of Target	115,426
Vested Grants	(82,112	)
Expired/Forfeited Grants	—
Stock Grants Outstanding End of Period at Target Achievement	571,913

The unamortized ~~costs~~cost associated with ~~nonvested~~unvested stock grants and the weighted average period over which it is expected to be recognized as of March 31, ~~2018~~2019 were ~~$6,930,000~~$5,695,000 and 2421 months, respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. Fair value of performance ~~share~~ grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant once the Company determines that it is probable that the award will vest. This fair value is expensed over the service period applicable to these grants. For performance ~~share~~ grants that contain a range of shares from zero to a maximum we determine based on historic and projected results, the probability of (1) achieving the performance objective and (2) the level of achievement. Based on this information, we determine the fair value of the award and measure the expense over the service period related to these grants. Because the ultimate vesting of all performance ~~share~~ grants is tied to the achievement of a performance condition, we estimate whether the performance condition will be met and over what period of time. Ultimately, we adjust compensation cost according to the actual outcome of the performance condition.

Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director receives his or her annual compensation in stock. The stock is granted at the end of each quarter based on the quarter end stock price.

The following table summarizes stock compensation costs for the Company's 1998 ~~Employee~~ Stock Incentive Plan, or the Employee Plan, and NDSI Plan for the following periods:


($ in thousands)	Three Months Ended March 31,				Three Months Ended March 31,
Employee Plan:	2018		2017		2019		2018
Expensed	$	761	$	630	$	666	$	761
Capitalized	346		65		319		346
	1,107		695		985		1,107
NDSI Plan - Expensed	187		181		147		187
Total Stock Compensation Costs	$	1,294	$	876	$	1,132	$	1,294

10. INTEREST RATE SWAP ~~LIABILITY~~

~~During~~In October 2014, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for the Term Note as discussed in Note 7 (Line of Credit and Long-Term Debt). ~~The ineffective portion of the change in fair value of our interest rate swap agreement is required to be recognized directly in earnings.~~ During the quarter ended March 31, ~~2018,~~2019, our interest rate swap agreement was 100% ~~effective; because of this, no hedge ineffectiveness was recognized in earnings.~~effective. Changes in fair value, including accrued interest and adjustments for non-performance risk, ~~on the effective portion of our interest rate swap agreements that are designated and~~ that qualify as cash flow hedges are classified in ~~accumulated other comprehensive income.~~AOCI. Amounts classified in ~~accumulated other comprehensive income~~AOCI are subsequently reclassified into earnings in the period during which the hedged transactions affect earnings. As of March 31, ~~2018,~~2019, the fair value of our interest rate swap agreement ~~aggregating a liability balance~~ was ~~classified in other liabilities.~~less than its cost basis and as such is recorded within Other Liabilities on the Consolidated Balance Sheets.

We had the following outstanding interest rate swap agreement designated as aan interest rate cash flow hedge ~~of interest rate risk~~ as of March 31, ~~2018~~2019 ($ in thousands):

Effective Date

Maturity Date

Fair Value Hierarchy

Weighted Average Interest Rate

Fair Value

Notional Amount

Maturity Date

Fair Value Hierarchy

Interest Rate

Fair Value

Notional Amount

October 15, 2014

October 5, 2024

Level 2

4.11%

$434

$65,162

October 5, 2024

Level 2

4.11%

$(640)

$61,561

11. INCOME TAXES

For the three months ended March 31, ~~2018,~~2019, the Company's income tax expense was ~~$526,000~~$95,000 compared to ~~income tax benefit of $1,332,000~~$526,000 for the three months ended March 31, ~~2017. These represent effective income~~2018. Effective tax rates ~~of approximately~~were 43% and 27% ~~and 41%~~ for the three months ended March 31, 2019 and 2018, ~~and, 2017,~~ respectively. The increase in effective tax rates resulted from tax shortfalls associated with stock compensation vesting. As of March 31, ~~2018, we~~2019, the Company had income tax ~~receivable~~receivables of ~~$1,060,000.~~$181,000. The Company classifies interest and penalties incurred on tax payments as income tax expense. During the three months ended March 31, ~~2018,~~2019, the Company did not make any income tax payments. The Company did not record a provisional adjustment for the three-months ended March 31, 2019.

12. COMMITMENTS AND CONTINGENCIES

The Company's land is subject to water contracts with minimum annual payments, ~~in 2018 of approximately $8,889,000, of~~for which ~~$6,124,000 was paid during the first quarter with the remainder~~$10,156,000 is expected to be paid ~~throughout~~in 2019. So far in 2019, the ~~year.~~Company has paid $7,038,000 for its water contracts. These estimated water contract payments consist of SWP, contracts with Wheeler Ridge Maricopa Water Storage District, ~~Tejon-Castac Water District, or~~ TCWD, Tulare Lake Basin Water Storage District, Dudley-Ridge Water Storage District and the Nickel water contract. The SWP contracts run through 2035 and the Nickel water contract runs through 2044, with an option to extend an additional 35 years. As discussed in Note 5 (Long-Term Water Assets), we purchased the

assignment of a contract to purchase water in late 2013. The assigned water contract is with Nickel and obligates us to purchase 6,693 acre-feet of water annually through the term of the contract. Our contractual obligation for future water payments was $253,040,000 as of March 31, 2019.

The Company is obligated to make payments of approximately $800,000 per year through 2021 to the Tejon Ranch Conservancy as prescribed in the Conservation Agreement we entered into with five major environmental organizations in 2008. Our advances to the Tejon Ranch Conservancy are dependent on the occurrence of certain events and their timing and are therefore subject to change in amount and period. These amounts ~~are recorded~~paid will be capitalized in real estate development for the Centennial, Grapevine and Mountain Village, or MV, projects.

The Company exited a consulting contract during the second quarter of 2014 related to the Grapevine Development and is obligated to pay an earned incentive fee at the time of successful receipt of litigated project entitlements and at a value measurement date five-years after litigated entitlements have been achieved for Grapevine. The final amount of the incentive fees will not be finalized until the future payment dates. The Company believes that net savings from exiting the contract over this future time period will more than offset the incentive payment costs.

The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. For the development of the Tejon Ranch Commerce Center, or TRCC, TRPFFA has created two Community Facilities Districts, or CFDs: the West CFD and the East CFD. The West CFD has placed liens on 420 acres of the Company’s land to secure payment of special taxes related to $28,620,000 of bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to $55,000,000 of bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has approximately $65,000,000 of additional bond debt authorized by TRPFFA that can be sold in the future.

In connection with the sale of bonds, there is a standby letter of credit for ~~$4,921,000~~$4,468,000 related to the issuance of East CFD bonds. The standby letter of credit is in place to provide additional credit enhancement and cover approximately two years' worth of interest on the outstanding bonds. This letter of credit will not be drawn upon unless the Company, as the largest landowner in the CFD, fails to make its property tax payments. The Company believes that the letter of credit will never be drawn upon. The letter of credit is for two years and will be renewed in two-year intervals as necessary. The annual cost related to the letter of credit is approximately ~~$83,000.~~$68,000.

The Company is obligated, as a landowner in each CFD, to pay its share of the special taxes assessed each year. The secured lands include both the TRCC-West and TRCC-East developments. Proceeds from the sale of West CFD bonds went to reimburse the Company for public infrastructure costs related to the TRCC-West development. At March 31, ~~2018~~2019 there were no additional improvement funds remaining from the West CFD ~~bonds and there~~bonds. There are ~~$6,383,000~~$4,180,000 in improvement funds within the East CFD bonds for reimbursement of public infrastructure costs during ~~2018~~2019 and future years. During ~~the second quarter of 2018,~~2019 the Company ~~will~~expects to pay approximately ~~$1,258,000~~$2,570,000 in special ~~taxes and it is estimated the company will pay $2,570,000 for the year.~~taxes. As development continues to occur at TRCC, new owners of land and new lease tenants, through triple net leases, will bear an increasing portion of the assessed special tax. This amount could change in the future based on the amount of bonds outstanding and the amount of taxes paid by others. The assessment of each individual property sold or leased is not determinable at this time because it is based on the current tax rate and the assessed value of the property at the time of sale or on its assessed value at the time it is leased to a third-party. Accordingly, the Company is not required to recognize an obligation at March 31, ~~2018.~~2019.

Tehachapi Uplands Multiple Species Habitat Conservation Plan Litigation

In July 2014, the Company received a copy of a Notice of Intent to Sue, dated July 17, 2014 indicating that the Center for Biological Diversity, or CBD, the Wishtoyo Foundation and Dee Dominguez ~~intend~~(collectively the TUMSHCP Plaintiffs) intended to initiate a lawsuit against the U.S. Fish and Wildlife Service, or USFWS, ~~under the federal Endangered Species Act~~ challenging USFWS's approval of ~~Ranchcorp's~~the Company's Tehachapi Uplands Multiple Species Habitat Conservation Plan, or TMSHCP, and USFWS's issuance of an Incidental Take Permit, ~~to Ranchcorp~~or ITP, for the take of ~~federally-listed~~federally listed species. The ~~foregoing~~TUMSHCP approval and ITP issuance by the USFWS occurred in 2013. These approvals authorize, among other things, the removal of California condor habitat associated with ~~Ranchcorp's~~the Company's potential future development of MV. ~~No lawsuit has been~~

On April 25, 2019, the TUMSHCP Plaintiffs filed atsuit against the USFWS in the U.S. District Court for the Central District of California, in Los Angeles (Case No. 2:19-CV-3322), or TUMSHCP Suit. The Company is presently not named as a party in the TUMSHCP Suit. The TUMSHCP Suit seeks to invalidate the TUMSHCP as it pertains to the protection of the California condor (an endangered species), as well as the ITP.

The primary allegations in the TUMSHCP Suit are that California condors or their habitat are “Traditional Cultural Properties” within the meaning of the National Historic Preservation Act and that the USFWS failed to adequately consult with affected Native American tribes or their representatives with respect to the impact of the TUMSHCP and ITP on these “Traditional Cultural Properties.”

Management considers the allegations in the TUMSHCP Suit to be beyond the scope of the law and regulations referenced in the TUMSHCP Suit, and believes that the issues raised by the TUMSHCP Plaintiffs were adequately addressed by the USFWS during the consultation process with Native American tribes. The Company intends to coordinate closely with the USFWS to vigorously defend this ~~time. It is~~matter. The TUMSHCP Plaintiffs raised essentially the same arguments regarding the Native American consultation process and the California condor in state court litigation. In that litigation, the California Court of Appeal rejected the TUMSHCP Plaintiffs’ arguments as lacking merit. See Center for Biological Diversity, et al.v. Kern County, 2012 WL 1417682 (Case No. F061908). That state appellate court decision was issued on April 25, 2012.

The Company believes the TUMSHCP Suit does not ~~possible~~impede on the ability to ~~predict whether any lawsuit will actually be filed~~start or ~~whether~~complete the ~~Company or Ranchcorp will incur any damages from such a lawsuit.~~development of MV development.

National Cement

The Company leases land to National Cement Company of California Inc., or National, for the purpose of manufacturing Portland cement from limestone deposits on the leased acreage. The California Regional Water Quality Control Board, or RWQCB, for the Lahontan Region issued orders in the late 1990s with respect to environmental conditions on the property currently leased to National.

The Company's former tenant Lafarge Corporation, or Lafarge, and current tenant National, continue to remediate these environmental conditions consistent with the RWQCB orders.

The Company is not aware of any failure by Lafarge or National to comply with directives of the RWQCB. Under current and prior leases, National and Lafarge are obligated to indemnify the Company for costs and liabilities arising out of their use of the leased premises. The remediation of environmental conditions is included within the scope of the National or Lafarge indemnity obligations. If the Company were required to remediate the environmental conditions at its own cost, it is unlikely that the amount of any such expenditure by the Company would be material and there is no reasonable likelihood of continuing risk from this matter.

Antelope Valley Groundwater Cases

On November 29, 2004, a conglomerate of public water suppliers filed a cross-complaint in the Los Angeles Superior Court seeking a judicial determination of the rights to groundwater within the Antelope Valley basin, including the groundwater underlying the Company’s land near the Centennial project. Four phases of a multi-phase trial have been completed. Upon completion of the third phase, the court ruled that the groundwater basin was in overdraft and established a current total sustainable yield. The fourth phase of trial occurred in the first half of 2013 and resulted in confirmation of each party’s groundwater pumping for 2011 and 2012. The fifth phase of the trial commenced in February 2014, and concerned 1) whether the United States has a federal reserved water right to basin groundwater, and 2) the rights to return flows from imported water. The court heard evidence on the federal reserved right but continued the trial on the return flow issues while most of the parties to the adjudication discussed a settlement, including rights to return flows. In February 2015, more than 140 parties representing more than 99% of the current water use within the adjudication boundary agreed to a settlement. On March 4, 2015, the settling parties, including Tejon, submitted a Stipulation for Entry of Judgment and Physical Solution to the court for approval. On December 23, 2015, the court entered ~~Judgment~~judgment approving the Stipulation for Entry of Judgment and Physical ~~Solution.~~Solution, or Judgment. The Company’s water supply plan for the Centennial project anticipated reliance on, among other sources, a certain quantity of groundwater underlying the Company’s lands in the Antelope Valley. The Company’s allocation in the Judgment is consistent with that amount. Prior to the Judgment becoming final, on February 19 and 22, 2016, several parties, including the Willis Class and Phelan Pinon Hills Community Services District, filed notices of appeal from the Judgment. The Appeal has been transferred from the Fourth Appellate District to the Fifth Appellate District.

Appellate briefing ~~will likely~~is scheduled to occur ~~during 2018.~~in 2019. Notwithstanding the appeals, the parties, with assistance from the Court have established the Watermaster Board, hired the Watermaster Engineer and Watermaster Legal Counsel, and begun administering the Physical Solution, consistent with the Judgment.

Summary and Status of Kern Water Bank Lawsuits

On June 3, 2010, the Central Delta and South Delta Water Agencies and several environmental groups, including ~~the~~ CBD, ~~(collectively,~~or collectively, Central ~~Delta),~~Delta Petitioners, filed a complaint in the Sacramento County Superior Court against the California Department of Water Resources, or DWR, Kern County Water Agency, or KCWA, and a number of “real parties in interest,” including the Company and ~~TCWD.~~TCWD, or Central Delta Action. The lawsuit challenges certain amendments to the SWP contracts that were originally approved in 1995, known as the Monterey Amendments. The Central Delta Petitioners ~~in this action~~ sought to invalidate the DWR's approval of the Monterey Amendments and also the 2010 environmental ~~documentation~~impact report, or 2010 EIR, regarding the Monterey Amendments prepared pursuant to the California Environmental Quality Act, or CEQA, pertaining to the Kern Water Bank, or KWB.

~~The original Environmental Impact Report, or EIR, for~~ Pursuant to the Monterey Amendments, ~~was determined to be insufficient~~DWR transferred approximately 20,000 acres in ~~an earlier lawsuit. The current lawsuit principally (i) challenges the adequacy of the remedial EIR that~~Kern County owned by DWR, ~~prepared as a result of the original lawsuit and (ii) challenges the validity of the Monterey Amendments on various grounds, including the transfer of the~~or KWB ~~lands, from DWR~~property, to the ~~Kern County Water Agency and in turn to the Kern Water Bank Authority,~~KCWA.

A separate but parallel lawsuit, or ~~KWBA, whose members are various Kern and Kings County interests, including TCWD, which has a 2% interest in the KWBA. A parallel lawsuit~~Central Delta II, was also filed by the Central Delta Petitioners in Kern County Superior Court on July 2, 2010, against ~~Kern County Water Agency,~~KCWA, also naming the Company and TCWD as real parties in ~~interest, which~~interest. Central Delta II challenged the validity of the transfer of the KWB property from the KCWA to the Kern Water Bank Authority, or KWBA. The petitioners in this case alleged that (i) the transfer of the KWB property by KCWA to the KWBA was an unconstitutional gift of public funds, (ii) and the consideration for the transfer of the KWB property to the KWBA was unconscionable and illusory. This case has been stayed pending the outcome of the ~~other action against DWR. The Company is named on the ground that it “controls” TCWD. This lawsuit has since been moved to the Sacramento County Superior Court. Another~~Central Delta Action.

In addition, another lawsuit was filed in Kern County Superior Court on June 3, 2010, by two districts adjacent to the KWB, namely Rosedale Rio Bravo and Buena Vista Water Storage Districts, or collectively, the Rosedale Petitioners, asserting that the ~~remedial~~2010 EIR did not adequately evaluate potential impacts arising from operations of the KWB, or Rosedale Action, but this lawsuit did not name the ~~Company,~~Company; it only named TCWD. TCWD has a contract right for water stored in the KWB and rights to recharge and withdraw water. This lawsuit ~~has since been~~was moved to the Sacramento County Superior Court.

In the Central Delta Action and Rosedale Action, the trial courts concluded that the 2010 EIR for the Monterey Amendments was insufficient with regard to the EIR's evaluation of the potential impacts of the operation of the KWB, particularly on groundwater and water quality, and ruled that DWR was required to prepare a remedial EIR (which is further described below). In the Central Delta Action, the trial court also concluded that the challenges to DWR’s 1995 approval of the Monterey Amendments were barred by statutes of limitations and laches. The Central Delta Petitioners filed an ~~initial favorable ruling on January 25, 2013,~~appeal of the ~~court,~~Sacramento County Superior Court Judgment, and certain real parties filed a cross-appeal. No party appealed the Kern County Superior Court Judgment in the Rosedale Action.

On November 24, 2014, the Sacramento County Superior Court in the Central Delta lawsuit, determined that the challenges to the validity of the Monterey Amendments, including the transfer of the KWB lands, were not timely and were barred by the statutes of limitation, the doctrine of laches, and by the annual validating statute. The substantive hearing on the challenges to the EIR was held on January 31, 2014. On March 5, 2014 the court issued a decision, rejecting all of Central Delta’s CEQA, claims, except the Rosedale claim, joined by Central Delta, that the EIR did not adequately evaluate future impacts from operation of the KWB, in particular the potential impacts on groundwater and water quality.

~~On November 24, 2014, the court~~Action issued a writ of mandate, ~~(the~~or 2014 ~~Writ)~~Writ, that required DWR to prepare a revised EIR (described herein as the 2016 EIR because it was certified in 2016) regarding the Monterey Amendments evaluating the potential operational impacts of the KWB. The 2014 Writ, authorized the continued operation of the KWB pending completion of the revised EIR subject to certain conditions, including those described in an interim operating plan negotiated between the KWBA and Rosedale. The 2014 Writ, as revised by the court, required DWR to certify the ~~revised~~2016 EIR and file the ~~return~~response to the 2014 Writ by September 28, 2016. On September 20, 2016, the Director of DWR (a) certified the ~~revised~~2016 EIR prepared by DWR, ~~or the Revised EIR,~~ as in compliance with CEQA, (b) adopted findings, a statement of overriding considerations, and a mitigation, monitoring and reporting program as required by CEQA, (c) made a new finding pertaining to carrying out the Monterey Amendments through continued use and operation of the KWB by the KWBA, and (d) caused a notice of determination to be filed with the Office of Planning and Resources of the State of California on September 22, 2016. On September 28, 2016, DWR filed with the Sacramento Superior Court its return to the 2014 ~~Writ.~~

~~On November 24, 2014, the court entered a judgment~~Writ in the Central Delta case (1) dismissing the challenges to the validity of the Monterey Amendments and the transfer of the KWB lands in their entirety and (2) granting in part and denying in part the CEQA petition for writ of mandate. Central Delta has appealed the judgment and the KWBA and certain other parties have filed a cross-appeal with regard to certain defenses to the CEQA cause of action. The appeals are pending in the California Court of Appeal.Action.

On December 3, 2014, the court entered judgment in the Rosedale case (i) in favor of Rosedale in the CEQA cause of action, and (ii) dismissing the declaratory relief cause of action. No appeal of the Rosedale judgment has been filed. Rosedale has stipulated to the discharge of the 2014 Writ.

On October 21, 2016, the Central Delta ~~petitioners~~Petitioners and a new party, the Center for Food Safety, ~~(CFS Petitioners),~~or CFS, or collectively, the CFS Petitioners, filed a new lawsuit ~~(the~~in Sacramento County Superior Court, or CFS ~~Petition)~~Action, against DWR and naming a number of real parties in interest, including KWBA and TCWD (but not including the Company). The ~~new lawsuit~~CFS Action challenges DWR’s (i) certification of the ~~Revised~~2016 EIR, (ii) compliance with the 2014 Writ and CEQA, and (iii) finding concerning the continued use and operation of the KWB by KWBA. In response to a motion filed by the CFS Petitioners, on April 7, 2017, the Superior Court denied the CFS Petitioners’ motion to stay the Superior Court proceedings on the return to the 2014 Writ and CFS petition pending appeal. The Superior Court subsequently modified the 2014 Writ to authorize the KWBA to construct an additional 190 acres of recharge ponds within the KWB pending the court's consideration of DWR's return to the 2014 Writ and the petition in CFS vs DWR. On August 18, 2017, the Sacramento County Superior Court held a hearing on the ~~return~~response to the 2014 Writ and on the CFS ~~Petition.~~petition filed in this action. On October 2, 2017, the Sacramento County Superior Court issued a ruling that the court shall deny the CFS ~~Petition~~petition and shall discharge the 2014 Writ. The CFS ~~has~~Petitioners appealed the Sacramento County Superior Court judgment denying the CFS ~~Petition. DWR has moved~~petition. The Third Appellate District of the Court of Appeal granted DWR’s motion to consolidate the CFS Action appeal for hearing with the pending appeals in the Central Delta ~~case.~~

~~To the extent there may be an adverse outcome~~Action. Briefing on all of the ~~claims still pending as described above,~~appeals and cross-appeals is now complete. At this time, we anticipate having a ruling from the ~~monetary value cannot be estimated at this time.~~Court of Appeal on these consolidated appeals of the CFS Action and the Central Delta Action sometime in 2019 or 2020.

Grapevine

On December 6, 2016, the Kern County Board of Supervisors unanimously granted entitlement approval for the Grapevine project (described below). On January 5, 2017, the CBD, and the ~~Center for Food Safety, or~~ CFS, filed an action in Kern County Superior Court pursuant to CEQA, against Kern County and the Kern County Board of Supervisors, ~~(collectively,~~or collectively, the ~~County)~~County, concerning the County’s granting of the 2016 approvals for the Grapevine project, including certification of the final EIR and related findings; approval of associated general plan amendments; adoption of associated zoning maps; adoption of Specific Plan Amendment No. 155, Map No. 500; adoption of Special Plan No. 1, Map No. 202; exclusion from Agricultural Preserve No. 19; and adoption of a development agreement, among other associated approvals.EIR. The Company ~~and its wholly-owned subsidiary, Ranchcorp, are~~is named as real parties in interest in this action.

The action alleges that the County failed to properly follow the procedures and requirements of CEQA, including failure to identify, analyze and mitigate impacts to air quality, greenhouse gas emissions, biological resources, traffic, water supply and hydrology, growth inducing impacts, failure to adequately consider project alternatives and to provide support for the County’s findings and statement of overriding considerations in adopting the EIR and failure to adequately describe the environmental setting and project description. ~~On December 6, 2017, the County served a responsive pleading answering petitioners' allegations and denying that relief should be granted.~~ Petitioners ~~seek~~sought to invalidate the ~~County's~~County’s approval of the project, the environmental approvals and require the Company and the County to revise the environmental documentation. ~~A case management conference was held on December 15, 2017, at which time~~

On July 27, 2018, the court ~~ordered~~held a hearing on the petitioners’ claims. At that hearing, the court rejected all of petitioners’ claims raised in the litigation, except petitioners’ claims that (i) the project description was inadequate and (ii) such inadequacy resulted in aspects of certain environmental impacts being improperly analyzed. As to the claims described in “(i)” and “(ii)” in the foregoing sentence, the court determined that the ~~hearing on this matter be set for July 27, 2018.~~EIR was inadequate. In that regard, the court determined the Grapevine project description contained in the EIR allowed development to occur in the time and manner determined by the real parties in interest and, as a consequence, such development flexibility could result in the project’s internal capture rate, or ICR - the percent of vehicle trips remaining within the project - actually being lower than the projected ICR levels used in the EIR and that lower ICR levels warranted supplemental traffic, air quality, greenhouse gas emissions, noise, public health and growth inducing impact analyses.

On December 11, 2018, the court ruled that portions of the EIR required corrections and supplemental environmental analysis and ordered that the County rescind the Grapevine project approvals until such supplemental environmental analysis was completed. The court issued a final judgment consistent with its ruling on February 15, 2019 and, on March 12, 2019, the County rescinded the Grapevine project approvals. Following the County’s rescission of the Grapevine project approvals, the Company has filed new applications to re-entitle the Grapevine project, or re-entitlement. The re-entitlement application involves processing project approvals that are substantively similar to the Grapevine project that was unanimously approved by the Kern County Board of Supervisors in December of 2016. As part of the re-entitlement, supplemental environmental analysis will be prepared to address the court’s ruling. Following a public comment and review period, the Kern County Planning Commission will hold a hearing to make a recommendation to the Kern County Board of Supervisors on the re-entitlement of the Grapevine project. Thereafter, the Kern County Board of Supervisors will hold a hearing to consider the supplemental environmental analysis and whether to act to approve the re-entitlement of the Grapevine project. We anticipate possible Kern County Board of Supervisors action occurring in late 2019. Following the Board of Supervisors’ action, further litigation could challenge the re-entitlement.

Proceedings Incidental to Business

From time to time, we are involved in other proceedings incidental to our business, including actions relating to employee claims, real estate disputes, contractor disputes and grievance hearings before labor regulatory agencies.

The outcome of these other proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of these other proceedings ~~after considering available defenses and any insurance coverage or indemnification rights,~~ will have a material adverse effect on our financial position, results of operations or cash flows either individually or in the aggregate.

13. RETIREMENT PLANS

The Company ~~has~~sponsors a defined benefit retirement plan, or Benefit Plan, that covers ~~many of its~~eligible employees ~~or the Benefit Plan.~~hired prior to February 1, 2007. The benefits are based on years of service and the employee’s five-year final average salary. Contributions are intended to provide for benefits attributable to service both ~~to-date~~to date and ~~expected-to-be~~expected to be provided in the future. The Company funds the ~~Benefit Plan~~plan in accordance with the Employee Retirement Income Security Act of 1974, ~~(ERISA) and the Pension Protection Act.~~or ERISA. In April 2017, the Company froze the Benefit Plan as it relates to future benefit accruals for participants. The ~~Benefit Plan was closed to new participants in February 2007. The~~ Company expects to contribute ~~$160,000~~$165,000 to the Benefit Plan during ~~2018.~~2019.

Benefit Plan assets consist of equity, debt and short-term money market investment funds. The Benefit Plan’s current investment policy ~~targets 65% equities, 25% debt~~changed during the third quarter of 2018. The new policy is an investment strategy in which the primary focus is to minimize the volatility of the funding ratio. This objective will result in a prescribed asset mix between "return seeking" assets (e.g., stocks) and ~~10% money market funds. Equity~~a bond portfolio (e.g., long duration bonds) according to a pre-determined customized investment strategy based on the Benefit Plan's funded status as the primary input. This path will be used as a reference point as to the mix of assets, which by design will de-emphasize the return seeking portion as funded status improves. At both March 31, 2019 and debt investment percentages are generally allowed to fluctuate plus or minus 20% to take advantage of market conditions. As an example, equities could fluctuate from 78% to 52% of plan assets. At MarchDecember 31, 2018, the investment mix was approximately ~~58%~~64% equity, ~~38%~~35% debt, and ~~4% money market funds. At December 31, 2017, the investment mix was approximately 57% equity, 37% debt, and 6%~~1% money market funds. Equity investments consist of a combination of individual equity securities plus value funds, growth funds, large cap funds and international stock funds. Debt investments consist of U.S. Treasury securities and investment grade corporate debt. The weighted average discount ~~rates~~rate used in determining the periodic pension cost ~~were 3.7%~~is 4.2% in 2019 and ~~3.9% in 2018 and 2017, respectively.~~2018. The expected long-term rate of return on plan assets is 7.3% and 7.5% in 2019 and 2018, ~~and 2017.~~respectively. The long-term rate of return on Benefit Plan assets is based on the historical returns within the plan and expectations for future returns.

~~The expected total~~Total pension and retirement expense for the Benefit Plan was as follows:

Three Months Ended March 31,
($ in thousands) 2018 2017
Cost components:
Service cost-benefits earned during the period $ —
$ (61 )
Interest cost on projected benefit obligation (91 ) (104 )
Expected return on plan assets 146
129
Net amortization and deferral (16 ) (50 )
Total net periodic pension cost $ 39
$ (86 )



	Three Months Ended March 31,
($ in thousands)	2019			2018
Earnings (cost) components:
Interest cost	(97		)	(91		)
Expected return on plan assets	131			146
Net amortization and deferral	(19		)	(16		)
Total net periodic pension earnings	$	15		$	39

The Company has a Supplemental Executive Retirement Plan, or SERP, to restore to executives designated by the Compensation Committee of the Board of Directors the full benefits under the pension plan that would otherwise be restricted by certain limitations now imposed under the Internal Revenue Code. The SERP is currently unfunded. The Company in April 2017 froze the SERP ~~plan~~ as it relates to the accrual of additional benefits.

The pension and retirement expense for the SERP was as follows:


	Three Months Ended March 31,						Three Months Ended March 31,
($ in thousands)	2018			2017			2019			2018
Cost components:
Interest cost on projected benefit obligation	$	(64	)	$	(76	)
Net amortization and deferral	(16		)	(93		)
Interest cost							$	(76	)	$	(64	)
Net amortization and other							(16		)	(16		)
Total net periodic pension cost	$	(80	)	$	(169	)	$	(92	)	$	(80	)

14. REPORTING SEGMENTS AND RELATED INFORMATION

We currently operate in five reporting segments: commercial/industrial real estate development, resort/residential real estate development, mineral resources, farming, and ranch operations. For further details of the revenue components within each reporting segment, see Results of Operations by Segment in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations".

Commercial ~~lease~~

Commercial revenue consists of land and building leases to tenants at our commercial retail and industrial developments, base and percentage rents from our ~~Pastoria Energy Facility~~PEF power plant lease, communication tower rents, and payments from easement leases.

The ~~revenue components of the commercial/industrial real estate development~~following table summarizes revenues, expenses and operating income from this segment ~~were as follows:~~for periods ended:

Three Months Ended March 31,
($ in thousands) 2018 2017
Pastoria Energy Facility $ 1,024
$ 844
TRCC Leasing 407
527
TRCC management fees and reimbursements 213
212
Commercial leases 160
150
Communication leases 184
207
Landscaping and other 166
249
Land sale —
—
Commercial/industrial revenues 2,154
2,189
Equity in earnings from unconsolidated joint ventures 167
228
Total commercial/industrial revenues and equity in earnings from unconsolidated joint ventures 2,321
2,417
Net operating income from commercial/industrial and unconsolidated joint ventures $ 1,002
$ 674



	Three Months Ended March 31,
($ in thousands)	2019		2018
Commercial revenues	2,826		2,154
Equity in earnings of unconsolidated joint ventures	876		167
Commercial revenues and equity in earnings of unconsolidated joint ventures	3,702		2,321
Commercial expenses	1,792		1,319
Operating results from commercial and unconsolidated joint ventures	$	1,910	$	1,002

Resort Residential

The resort/residential real estate development segment is actively involved in the land entitlement and development process internally and through a joint ~~venture.~~ventures. The segment incurs costs and expenses related to its development activities, but currently generates no revenue. The segment produced losses of ~~$415,000~~$648,000 and ~~$630,000~~$415,000 for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Mineral Resources

The mineral resources segment receives oil and mineral royalties from the exploration and development companies that extract or mine the natural resources from our land ~~in addition to periodic reimbursable costs~~and receives revenue from ~~lessors.~~water sales. The following table summarizes revenues, expenses and operating results from this segment ~~also, as opportunities arise periodically, may generate revenues through water transactions. The revenue components of the mineral resources segment were as follows:~~

for periods ended:

Three Months Ended March 31,
($ in thousands) 2018 2017
Oil and gas $ 538
$ 376
Cement 351
278
Rock aggregate 202
180
Exploration leases 26
25
Water Sales 7,992
1,108
Reimbursables and other 22
34
Total mineral resources revenues 9,131
2,001
Net operating income from mineral resources $ 4,900
$ 677



	Three Months Ended March 31,
($ in thousands)	2019		2018
Mineral resources revenues	6,132		9,131
Mineral resources expenses	$	3,832	$	4,231
Operating results from mineral resources	$	2,300	$	4,900

Farming

The farming segment produces revenues from the sale of almonds, pistachios, wine grapes, and hay. The ~~revenue components of the farming~~following table summarizes revenues, expenses and operating results from this segment ~~were as follows:~~for periods ended:

Three Months Ended March 31,
($ in thousands) 2018 2017
Almonds $ 924
$ —
Pistachios 43
256
Wine grapes —
—
Hay 87
(1 )
Other 141
176
Total farming revenues 1,195
431
Net operating income (loss) from farming $ (643 ) $ (892 )



	Three Months Ended March 31,
($ in thousands)	2019			2018
Farming revenues	815			1,195
Farming expenses	$	1,598		$	1,838
Operating results from farming	$	(783	)	$	(643	)

Ranch Operations

The ranch operations segment consists of game management revenues and ancillary land uses such as grazing ~~leases~~leases. The following table summarizes revenues, expenses and filming. Within game management we operate our High Desert Hunt Club, a premier upland bird hunting club. The High Desert Hunt Club offers over 6,400 acres and 35 hunting fields, each field providing different terrain and challenges. The hunting season runsoperating results from mid-October through March. We sell individual hunting packages as well as memberships. Ranch operations also includes Hunt at Tejon, which offers a wide variety of guided big game hunts including trophy Rocky Mountain elk, deer, turkey and wild pig. We offer guided hunts and membershipsthis segment for ~~both the Spring and Fall hunting seasons. The revenue components of the segment were as follows:~~periods ended:

Three Months Ended March 31,
($ in thousands) 2018 2017
Game management $ 296
$ 301
Grazing 406
424
High Desert Hunt Club 166
186
Filming and other 121
170
Total ranch operations revenues 989
1,081
Net operating loss from ranch operations $ (400 ) $ (412 )



	Three Months Ended March 31,
($ in thousands)	2019			2018
Ranch operations revenues	889			989
Ranch operations expenses	$	1,350		$	1,389
Operating results from ranch operations	$	(461	)	$	(400	)

15. INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES

The Company maintains investments in joint ventures. The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting unless the venture is a variable interest entity, or VIE, and meets the requirements for consolidation. The Company’s investment in its unconsolidated joint ventures atas of March 31, ~~2018~~2019 was ~~$30,098,000. The equity~~$29,503,000. Equity in ~~the income of the~~earnings from unconsolidated joint ventures was ~~$167,000~~$876,000 for the three months ended March 31, ~~2018.~~2019. The unconsolidated joint ventures have not been consolidated as of March 31, ~~2018,~~2019, because the Company does not control the investments. The Company’s current joint ventures are as follows:

Petro Travel Plaza Holdings LLC – ~~TA/Petro~~ is an unconsolidated joint venture with TravelCenters of America ~~LLC for the development~~that develops and ~~management of~~manages travel plazas, gas stations, convenience stores, and ~~convenience stores.~~fast food restaurants throughout TRCC. The Company has 50% of the voting rights ~~and shares~~but participates in 60% of ~~profit~~all profits and ~~losses in this joint venture. It houses multiple commercial eating establishments as well as diesel and gasoline operations in TRCC.~~losses. The Company does not control the investment due to ~~its~~it only having ~~only~~ 50% of the voting ~~rights, and because our~~rights. Our partner ~~in the joint venture~~ is the managing partner and performs all of the day-to-day operations and has significant decision making authority regarding key business components such as fuel inventory and pricing at the facility. ~~At March 31, 2018, the Company had an equity~~The Company's investment ~~balance of $17,955,000~~ in this joint ~~venture.~~venture was $19,548,000 as of March 31, 2019.

Majestic Realty Co. – Majestic Realty Co., or Majestic, is a privately-held developer and owner of master planned business parks inthroughout the United States. The Company ~~partnered with Majestic to form two~~formed three 50/50 joint ventures with Majestic to acquire, develop, manage, and operate industrial real estate at TRCC. The partners have equal voting rights and equally share in the profit and loss of the joint ~~venture. At March 31, 2018,~~ventures. The Company and Majestic guarantee the ~~Company's investment balance in these joint ventures was in deficit position~~performance of ~~$579,000, based on the reasons discussed below.~~all outstanding debt.

◦

In November 2018, TRC-MRC 3, LLC was formed to pursue the development, construction, leasing, and management of a 579,040 square foot industrial building on the Company's property at TRCC-East. We anticipate construction to be completed in 2019, and plan to deliver the space in the fourth quarter of 2019 to a tenant that has entered into a lease agreement to occupy 67% of this rentable space. The Company's investment in this joint venture was $100,000 as of March 31, 2019. See Note 17 Subsequent Events for further disclosures related TRC-MRC 3, LLC.

◦

TRC-MRC 2, LLC was formed to acquire, lease, and maintain a fully occupied warehouse at TRCC-West. The partnership acquired the 651,909 square foot building for $24,773,000 ~~and~~that was largely financed through a ~~$21,080,000~~ promissory note guaranteed by both partners. The promissory note was refinanced on June 1, 2018 with a $25,240,000 promissory note. The note matures ~~in September 2020~~on July 1, 2028 and currently has an outstanding principal balance of ~~$21,080,000.~~$24,877,000. Since inception, we have received excess distributions resulting in a deficit balance of ~~$576,000.~~$2,482,000. In accordance with the applicable accounting guidance, ~~these~~we reclassified excess distributions ~~are reclassified~~ to ~~the liabilities section of~~Other Liabilities within our ~~consolidated balance sheet.~~Consolidated Balance Sheets. We will continue to record ~~our~~ equity in ~~the net income~~earnings as a debit to the investment account and if it ~~becomes~~were to become positive, itwe will ~~again be shown as~~reclassify the liability to an ~~asset on our consolidated balance sheet.~~asset. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize ~~any balance classified as a~~the liability as ~~income immediately.~~income.

◦

TRC-MRC 1, LLC was formed to develop and operate ~~an approximately~~a 480,480 square foot industrial building at TRCC-East. The ~~joint venture completed construction~~facility is currently leased to Dollar General and L’Oréal USA, the largest subsidiary of ~~the building during the third quarter of 2017.~~L’Oréal. Since inception, ~~of the joint venture,~~ we have received ~~distributions of $1,952,000 representing~~ excess distributions resulting in a deficit balance of ~~$3,000.~~$275,000. In accordance with the applicable accounting guidance, ~~these~~we reclassified excess distributions ~~are reclassified~~ to ~~the liabilities section of~~Other Liabilities within our ~~consolidated balance sheet.~~Consolidated Balance Sheets. We will continue to record ~~our~~ equity in ~~the net income~~earnings as a debit to the investment account and if it ~~becomes~~were to become positive, itwe will ~~again be shown as~~reclassify the liability to an ~~asset on our consolidated balance sheet.~~asset. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will immediately recognize ~~any balance classified as a~~the liability as ~~income immediately.~~income. The joint venture ~~currently has borrowings under a $25,000,000~~refinanced its construction loan in December 2018 with a mortgage loan. The original balance of the mortgage loan was $25,030,000, of which ~~$21,080,000 has been drawn.~~$24,943,000 was outstanding as of March 31, 2019.

Rockefeller Joint Ventures – The Company has three joint ventures with Rockefeller Group Development Corporation, or Rockefeller. At March 31, ~~2018,~~2019, the Company’s combined equity investment balance in these three joint ventures was ~~$12,143,000.~~$9,855,000.

◦

Two joint ventures are for the development of buildings on approximately 91 acres of our land and are part of an agreement for the potential development of up to 500 acres of land in ~~TRCC.~~TRCC that are tied to Foreign Trade Zone designation. The Company owns a 50% interest in each of the joint ventures. Currently, the Five West Parcel LLC joint venture owns and leases a 606,000 square foot building to Dollar General, which has now been extended to ~~April~~July 2022, and includes an option ~~to extend~~ for an additional three years. For operating revenue, please see the following table. The Five West Parcel LLC joint venture currently has an outstanding term loan with a balance of ~~$9,577,000~~$9,038,000 that matures on May 5, 2022. The Company and Rockefeller guarantee the performance of the debt. The second of these joint ventures, 18-19 West LLC, was formed in August 2009 through the contribution of 61.5 acres of land by the Company, which is being held for future development. Both of these joint ventures are being accounted for under the equity method due to both members having significant participating rights in the management of the ventures.

◦

The third joint venture is the TRCC/Rock Outlet Center LLC joint venture ~~which~~that was formed ~~during the second quarter~~in of 2013 to develop, own, and manage a net leasable 326,000 ~~square-foot~~square foot outlet center on land at TRCC-East. The cost of the outlet center was approximately $87,000,000 and was funded through a construction loan for up to 60% of the costs. The remaining 40% was funded through equity contributions from the two members. The Company controls 50% of the voting interests of TRCC/Rock Outlet Center ~~LLC,~~LLC; thus, it does not control the joint venture by voting interest alone. The Company is the named managing ~~member, and as such we considered the presumption that a managing member controls the limited liability company.~~member. The managing member's responsibilities relate to the routine day-to-day activities of TRCC/Rock Outlet Center LLC. However, all operating decisions during the development period and ongoing operations, including the setting and monitoring of the budget, leasing, marketing, financing and selection of the contractor for any ~~of the project's~~ construction, are jointly made by both members of the joint venture. Therefore, the Company concluded that both members have significant participating rights that are sufficient to overcome the presumption of the Company controlling the joint venture through it being named the managing member. Therefore, the investment in TRCC/Rock Outlet Center LLC is being accounted for under the equity method. The TRCC/Rock Outlet Center LLC joint venture ~~is separate from the aforementioned agreement to potentially develop up to 500 acres of land in TRCC. During the fourth quarter of 2013, the TRCC/Rock Outlet Center LLC joint venture entered into~~has a ~~construction line of~~ credit agreement with a financial institution for $52,000,000 that, as of March 31, ~~2018,~~2019, had an outstanding balance of ~~$48,284,000.~~$46,341,000. The Company and Rockefeller guarantee the performance of the debt.

Centennial Founders, LLC – Centennial Founders, LLC, or CFL, is a joint venture that was initially formed with TRI Pointe Homes, Lewis Investment Company, or Lewis, and CalAtlantic ~~that was organized~~ to pursue the entitlement and development of land that the Company owns in Los Angeles County. Based on the Second Amended and Restated Limited Company Agreement of CFL and the change in control and funding that resulted from the amended agreement, CFL qualified as a VIE beginning in the third quarter of 2009, and the Company was determined to be the primary beneficiary. As a result, CFL ~~has been~~was consolidated into our financial statements beginning in that quarter. Our partners retained a noncontrolling interest in the joint venture. On November 30, 2016, CFL and Lewis ~~Investment Company, or Lewis,~~ entered a Redemption and Withdrawal Agreement, whereby Lewis irrevocably and unconditionally withdrew as a member of CFL, and CFL redeemed Lewis' entire interest for no consideration. As a result, our noncontrolling interest balance was reduced by $11,039,000. On December 31, 2018, CFL and CalAtlantic entered a Redemption and Withdrawal Agreement, whereby CalAtlantic irrevocably and unconditionally withdrew as a member of CFL, and CFL redeemed CalAtlantic's entire interest for no consideration. As a result, the noncontrolling interest balance was reduced by $13,172,000. At March 31, ~~2018,~~2019, the Company owned ~~90.89%~~92.32% of CFL.

The Company’s investment balance in its unconsolidated joint ventures differs from its respective capital accounts in the respective joint ventures. The differential represents the difference between the cost basis of assets contributed by the Company and the agreed upon contribution value of the assets contributed.

Unaudited condensed statement of operations for the three months ended March 31, ~~2018~~2019 and condensed balance sheet information of the Company’s unconsolidated joint ventures as of March 31, ~~2018~~2019 are as follows:


	Three Months Ended March 31,																Three Months Ended March 31,
	2018		2017		2018			2017			2018			2017			2019		2018		2019			2018			2019			2018
	Joint Venture										TRC						Joint Venture										TRC
($ in thousands)	Revenues				Earnings(Loss)						Equity in Earnings(Loss)						Revenues				Earnings(Loss)						Equity in Earnings(Loss)
Petro Travel Plaza Holdings, LLC	$	24,677	$	26,407	$	887		$	1,502		$	532		$	901		$	25,406	$	24,677	$	1,870		$	887		$	1,122		$	532
Five West Parcel, LLC	697		716		191			269			96			134			684		697		171			191			86			96
18-19 West, LLC	3		3		(27		)	(24		)	(13		)	(13		)	3		3		(28		)	(27		)	(14		)	(13		)
TRCC/Rock Outlet Center, LLC¹	1,475		2,549		(1,095		)	(1,009		)	(548		)	(505		)	1,898		1,475		(785		)	(1,095		)	(393		)	(548		)
TRC-MRC 1, LLC	—		—		(1		)	(2		)	(1		)	(1		)	736		—		(5		)	(1		)	(2		)	(1		)
TRC-MRC 2, LLC²	978		935		202			(575		)	101			(288		)	984		978		154			202			77			101
	$	27,830	$	30,610	$	157		$	161		$	167		$	228
Total																	$	29,711	$	27,830	$	1,377		$	157		$	876		$	167

Centennial Founders, LLC	$	87	$	1	$	(18	)	$	(110	)	Consolidated						$	122	$	87	$	64		$	(18	)	Consolidated

(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.4 million and $0.5 million as of March 31, 2018 and 2017, respectively.
(2) Earnings for TRC-MRC 2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $0.2 million and $1.0 million as of March 31, 2018 and 2017, respectively.
(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.5 million and $0.4 million as of March 31, 2019 and 2018, respectively.																	(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.5 million and $0.4 million as of March 31, 2019 and 2018, respectively.
(2) Earnings for TRC-MRC 2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $0.2 million as of both of March 31, 2019 and 2018.																	(2) Earnings for TRC-MRC 2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $0.2 million as of both of March 31, 2019 and 2018.


	March 31, 2018										December 31, 2017										March 31, 2019										December 31, 2018
	Joint Venture								TRC		Joint Venture								TRC		Joint Venture								TRC		Joint Venture								TRC
($ in thousands)	Assets		Debt			Equity					Assets		Debt			Equity					Assets		Debt			Equity					Assets		Debt			Equity
Petro Travel Plaza Holdings, LLC	$	68,283	$	(15,280	)	$	50,592		$	17,955	$	67,435	$	(15,280	)	$	49,705		$	17,422	$	70,441	$	(15,284	)	$	53,247		$	19,548	$	69,096	$	(15,283	)	$	51,377		$	18,426
Five West Parcel, LLC	15,922		(9,577		)	6,163			2,897		15,738		(9,711		)	5,972			2,802		15,125		(9,038		)	5,922			2,777		15,157		(9,173		)	5,751			2,691
18-19 West, LLC	4,683		—			4,678			1,769		4,704		—			4,704			1,782		4,632		—			4,626			1,769		4,654		—			4,654			1,783
TRCC/Rock Outlet Center, LLC	80,221		(48,284		)	31,081			7,477		81,610		(48,769		)	32,177			8,025		74,062		(46,341		)	26,746			5,309		75,194		(46,826		)	27,531			5,702
TRC-MRC 1, LLC	25,652		(21,080		)	4,540			—		25,380		(19,433		)	4,541			—		29,629		(24,943		)	3,998			—		29,692		(25,030		)	4,018			—
TRC-MRC 2, LLC	20,323		(21,080		)	(1,153		)	—		20,336		(21,080		)	(992		)	—		20,358		(24,877		)	(6,281		)	—		20,362		(25,014		)	(5,763		)	—
TRC-MRC 3, LLC																					$	3,866	$	—		$	200		$	100	$	—	$	—		$	—		$	—
Total	$	215,084	$	(115,301	)	$	95,901		$	30,098	$	215,203	$	(114,273	)	$	96,107		$	30,031	$	218,113	$	(120,483	)	$	88,458		$	29,503	$	214,155	$	(121,326	)	$	87,568		$	28,602

Centennial Founders, LLC	90,002		—			89,569			***		89,721		—			88,862			***		$	94,397	$	—		$	94,002		***		$	93,840	$	—		$	93,188		***

*** Centennial Founders, LLC is consolidated within the Company's financial statements.

16. RELATED PARTY TRANSACTIONS

TCWD is a not-for-profit governmental entity, organized on December 28, 1965, pursuant to Division 13 of the Water Code, State of California. TCWD is a landowner voting district, which requires an elector, or voter, to be an owner of land located within the district. TCWD was organized to provide the water needs for future municipal and industrial development. The Company is the largest landowner and taxpayer within TCWD. The Company has a water service contract with TCWD that entitles us to receive all of TCWD’s State Water Project entitlement and all of TCWD’s banked water. TCWD is also entitled to make assessments of all taxpayers within the district, to the extent funds are required to cover expenses and to charge water users within the district for the use of water. From time to time, we transact with TCWD in the ordinary course of business. ~~We believe that~~

17. SUBSEQUENT EVENTS

On April 1, 2019, the ~~terms negotiated for all transactions are no less favorable than those that could be negotiated~~Company contributed land valued at $5,800,000 to TRC-MRC 3, LLC in ~~arm's length transactions.~~accordance with the Limited Liability Company Agreement of this joint venture and recorded our investment in this joint venture at the aforementioned fair value. The land contribution meets the criteria of a land sale under ASC Topic 606, "Revenue from Contracts with Customers" as such, we recognized profit of $1,700,000 and deferred $1,700,000 of profit in accordance with ASC Topic 323, "Investment - Equity Method and Joint Ventures" on the date the land was contributed.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, including without limitation statements regarding strategic alliances, the almond, pistachio and grape industries, the future plantings of permanent crops, future yields, prices and water availability for our crops and real estate operations, future prices, production and demand for oil and other minerals, future development of our property, future revenue and income of our jointly-owned travel plaza and other joint venture operations, potential losses to the Company as a result of pending environmental proceedings, the adequacy of future cash flows to fund our operations, market value risks associated with investment and risk management activities and with respect to inventory, accounts receivable and our own outstanding indebtedness and other future events and conditions. In some cases these statements are identifiable through the use of words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “project”, “target”, “can”, “could”, “may”, “will”, “should”, “would”, “likely”,“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “will,” “should,” “would,” “likely,” and similar expressions. In addition, any statements that refer to projections of our future financial performance, our anticipated growth, and trends in our business and other characterizations of future events or circumstances are forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future performances and are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance, or achievement implied by such ~~forward- looking~~forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, weather, market and economic forces, availability of financing for land development activities, competition and success in obtaining various governmental approvals and entitlements for land development activities. No assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for a number of reasons, including those described above and in the section entitled “Risk Factors” in this report and our most recent Annual Report on Form 10-K.

OVERVIEW

We are a diversified real estate development and agribusiness company committed to responsibly using our land and resources to meet the housing, employment, and lifestyle needs of Californians and to create value for our shareholders. In support of these objectives, we have been investing in land planning and entitlement activities for new industrial and ~~master planned communities~~residential land developments and in infrastructure improvements within our active industrial development. Our prime asset is approximately 270,000 acres of contiguous, largely undeveloped land that, at its most southerly border, is 60 miles north of Los Angeles and, at its most northerly border, is 15 miles east of Bakersfield.

Business Objectives and Strategies

Our primary business objective is to maximize long-term shareholder value through the monetization of our land-based assets. A key element of our strategy is to entitle and then develop large-scale ~~mixed-use~~mixed use master planned residential and commercial/industrial real estate projects to serve the growing populations of Southern and Central California. ~~Once all entitlements are approved, our mixed-use~~Our mixed use master planned residential developments have been, or are in the process of being, approved or re-approved, to collectively ~~may~~ include up to ~~35,000~~34,783 housing units, ~~with 15,450 units currently approved,~~ and more than 35 million square feet of commercial ~~space, with 25 million square feet currently approved.~~space. We have obtained entitlements on Mountain Village at Tejon Ranch, or ~~MV, and~~MV. We are working with Kern County on re-entitlement efforts by preparing supplemental environmental documentation for Grapevine at Tejon Ranch, or ~~Grapevine, and are currently~~Grapevine. Lastly, in December 2018, the ~~entitlement process with~~Los Angeles County Board of Supervisors voted in favor of our plan to develop Centennial at Tejon Ranch, or Centennial, taking an additional step toward approving the mixed-use residential community. On April 30, 2019, the Los Angeles County Board of Supervisors gave final approval to the specific plan for Centennial. The specific plan includes 19,333 residential units and more than 10.1 million square feet of commercial space. We are currently engaged in entitlement, construction, commercial sales and leasing at our fully operational commercial/industrial center Tejon Ranch Commerce Center, or TRCC. All of these

efforts are supported by diverse revenue streams generated from other operations, including commercial real estate, farming, mineral resources, ranch operations, and our various joint ventures.

Our Business

We currently operate in five reporting segments: commercial/industrial real estate; resort/residential real estate development; mineral resources; farming; and ranch operations.

Activities within the commercial/industrial real estate segment include: entitling, planning, and permitting of land for development; construction of infrastructure; construction of pre-leased buildings; construction of buildings to be leased or sold; and the sale of land to third parties for their own development. The commercial/industrial segment generates revenues from building and land lease activities, power plant leases, communications leases, and landscape maintenance services. The primary commercial/industrial development is TRCC. TRCC includes developments east and west of Interstate 5 at TRCC-East and TRCC-West, respectively.

We are also involved in multiple joint ventures with several ~~partners:~~partners that help us expand our commercial/industrial business activities within TRCC:

Our joint venture with TravelCenters of America, or TA/Petro, owns and operates two travel and truck stop facilities, and also operates five separate gas stations with convenience stores within TRCC-West and TRCC-East.

Three joint ventures with Rockefeller Development ~~Group:~~Group, or Rockefeller:


◦	Five West Parcel LLC ~~which~~ owns a 606,000 square foot building in TRCC-West that is fully leased;


◦	18-19 West LLC ~~which~~ owns 61.5 acres of land for future development within TRCC-West;


◦	TRCC/Rock Outlet Center LLC ~~which~~ operates the Outlets at Tejon, a net leasable 326,000 square foot shopping experience ~~with 70 premiere retailers.~~in TRCC-East;

~~Two~~Three joint ventures with Majestic Realty Co., or Majestic, to develop, manage, and operate industrial buildings within TRCC:


◦	TRC-MRC 1, LLC was formed to develop and operate ~~an approximately~~a 480,480 square foot industrial building in TRCC-East, which was completed during 2017 and ~~partially~~fully leased ~~during the first quarter~~as of September 30, 2018;


◦	TRC-MRC 2, LLC ~~which~~ owns a 651,909 square foot building in TRCC-West that is fully leased;

~~These joint ventures help us to expand our commercial/industrial business activities within TRCC.~~


◦	TRC-MRC 3, LLC was formed to pursue the development, construction, leasing and management of a 579,040 square foot industrial building in TRCC-East. During the first quarter of 2019, and prior to the completion of the building, the joint venture executed a lease for 67% of the building. We anticipate construction will be completed during the fourth quarter of 2019.

The resort/residential real estate development segment is actively involved in the land entitlement and development process internally and through ~~wholly-owned subsidiaries and~~ a joint venture. Our active developments within resort/residential are ~~Mountain Village at Tejon Ranch, or~~ MV, Centennial, ~~at Tejon Ranch, or Centennial,~~ and ~~Grapevine at Tejon Ranch, or~~ Grapevine.

MV encompasses a total of 26,417 acres, ~~with only~~of which 5,082 acres ~~being~~will be used for the ~~mixed use~~mixed-use development that will include housing, retail, and commercial components. MV is entitled for 3,450 homes, 160,000 square feet of commercial development, 750 hotel keys, and more than 21,335 acres of open ~~space.~~space, and is approved for tentative tract map for the first four phases of residential development.

The Centennial development is a ~~mixed use~~mixed-use master planned community development encompassing 12,323 acres of our land within Los Angeles County. Upon completion of Centennial, it is estimated that the community will include approximately 19,333 homes and 10.1 million square feet of commercial development.

Grapevine is an 8,010-acre potential development area located on the San Joaquin Valley floor area of our lands, adjacent to TRCC. Upon completion of Grapevine, ~~has received approval for~~the community will include 12,000 homes, 5.1 million square feet for commercial development, and more than 3,367 acres of open space and parks.

Please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, for a more detailed description of our active developments within the resort/residential segment.

Our mineral resources segment generates revenues from oil and gas royalty leases, rock and aggregate mining leases, a lease with National Cement Company of California Inc., and ~~water sales.~~sales of water.

The farming segment produces revenues from the sale of wine grapes, almonds, ~~pistachios,~~ and ~~hay.~~pistachios.

~~Our~~Lastly, the ranch operations segment consists of game management revenues and ancillary land uses such as grazing leases and filming. Ranch operations is charged with the upkeep, maintenance, and security of all 270,000 acres of land. Within game management we operate High Desert Hunt Club, an upland bird hunting club, along with various game hunting memberships.

For the first three months of ~~2018~~2019 we had a net income attributable to common stockholders of ~~$1,457,000~~$119,000 compared to ~~net loss attributable to common stockholders of $1,902,000~~$1,457,000 for the first three months of ~~2017. Through the first three months of 2018 the primary~~2018. The leading driver ~~of net income was an increase in revenues from~~for this decline is a $2,999,000 decrease for our mineral resources ~~segment~~revenue resulting from fewer water sale opportunities in 2019. This decrease was partially offset by higher equity in earnings of ~~$7,130,000 when compared to~~unconsolidated joint ventures of $709,000, resulting from the ~~same three-month period last year,~~increase in our share of earnings from the TA/Petro joint venture, and improved commercial revenue of $672,000, which was primarily ~~as a result of increased water sales.~~driven by higher lease revenue from the Pastoria Energy Facility.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations provides a narrative discussion of our results of operations. It contains the results of operations for each reporting segment of the business and is followed by a discussion of our financial position. It is useful to read the reporting segment information in conjunction with Note 14 (Reporting Segments and Related Information) of the Notes to Unaudited Consolidated Financial Statements.

Critical Accounting Policies

The preparation of our interim financial statements in accordance with generally accepted accounting principles in the United States, or GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical ifif: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimates that are likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. On an ~~on-going~~ongoing basis, we evaluate our estimates, including those related to revenue recognition, impairment of long-lived assets, capitalization of costs, ~~profit recognition~~allocation of costs related to land sales and leases, stock compensation, our future ability to utilize deferred tax assets, and ~~our~~ defined benefit retirement plan. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, ~~2018, other than the following,~~2019, our critical accounting policies have not changed since the filing of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. Please refer to that filing for a description of our critical accounting policies. Please also refer to Note 1 (Basis of Presentation) in the Notes to Unaudited Consolidated Financial Statements in this report for newly adopted accounting principles.

The accounting policy change is attributable to the adoption of the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (the “new revenue standard” or Accounting Standards Codification 606, (“ASC 606”)) on January 1,

2018. These revenue recognition policy updates are applied retrospectively in our financial statements from December 1, 2017 forward. Reported financial information for the historical comparable period was revised and reported under the new accounting standard in effect.

~~Revenue Recognition~~

~~Leases subject to ASC 840~~

~~Commercial Leases:~~ Rental income from leases is recognized on a straight-line basis over the respective lease terms. We classify amounts currently recognized as income, and amounts expected to be received in later years, as an asset in deferred rent in the accompanying consolidated balance sheets. Amounts received currently, but recognized as income in future years, are classified in accounts payable, accrued expenses, and tenant security deposits in the accompanying consolidated balance sheets. We commence recognition of rental income at the date the property is ready for its intended use and the client tenant takes possession of or controls the physical use of the property. During the term of each lease, we monitor the credit quality of our tenants by (i) reviewing the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the client tenants that are publicly available or that are required to be delivered to us pursuant to the applicable lease, (iii) monitoring news reports regarding our tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments. We have employees who are assigned the responsibility for assessing and monitoring the credit quality of our tenants and any material changes in credit quality. The Company’s commercial sales, or land sales, are non-reoccurring in nature, however, for any new land sale, we apply the concepts of this new accounting standard, as amended.

~~Production Leases:~~ The Company leases land to third parties and recognizes contingent revenue based on the royalty rate that is tied to production for oil and minerals. Royalty revenues are contractually defined as to the percentage of royalty and are tied to production and market prices. The Company’s royalty arrangements generally require payment on a monthly basis with the payment based on the previous month’s activity. The Company accrues monthly royalty revenues based upon estimates and adjusts to actual as the Company receives payments. Productions leases included the following: Oil and gas, cement, and rock aggregate, refer to Note 14, Reporting Segments and Related Information, for further discussion.

~~Grazing:~~ ~~The Company leases land to third parties for grazing of cattle. Under the terms the lease, we recognize revenue based on the number of cattle the grazing land will support, calculated in arrears.~~

~~Revenue from Contracts with Customers subject to ASC 606:~~

A portion of the Company’s revenues result from the sale of goods or services and reflect the consideration to which the Company expects to be entitled. The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ASC 606. For its customer contracts, the Company identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when (or as) the customer obtains control of that good or service. The majority of the Company’s revenues are recorded at a point in time from the sale of tangible products.

~~Farming~~

~~Almonds and Pistachios:~~ Almond and pistachio revenues are based upon the contract settlement price or estimated selling price. Estimated prices for almonds and pistachios are based upon the quoted estimate of what the final market price established by processors. These market price estimates are updated through the crop installment payments as new information is received as to the final settlement price for the crop sold. This method of recognizing revenues on the sale of orchard crops is a standard practice within the agribusiness community. Adjustments for differences between original estimates and actual revenues received are recorded during the period

~~in which such amounts become known. Revenue for almonds and pistachios is recognized based on market price estimates when delivered to buyers.~~

~~Wine grapes:~~ ~~The Company sells wine grapes based on contracts with third parties. Wine grapes revenue is recognized based on the contract selling price when delivered to buyers.~~

~~Hay:~~ ~~Hay sales are recognized at a point in time when the related transaction is completed.~~

~~Water sales~~

~~Water sales are recognized at a point in time when the related transaction is completed.~~

~~Other~~

~~Game Management:~~ The Company provides memberships for hunting seasons both on an annual and seasonal basis. Revenue from memberships are recognized over the passage of time, generally this corresponds to the hunting season. Revenues from individual non-member hunts are recognized when the related transaction is completed.

~~Equestrian Center:~~ ~~The Company recognizes revenue from monthly rental fees charged for boarding facilities.~~

~~Filming:~~ ~~Tejon Ranch provides access for on-site filming of commercials, movies and photo opportunities, revenues are recognized at a point in time when the related transaction, or access, is provided.~~

~~Landscaping:~~ ~~Tejon Ranch provides landscaping services to third parties, revenues are recognized at a point in time when the related transaction, or service, is provided.~~

~~Management Fees:~~ ~~Management fees are generally recognized at the end of each month based on the contractual amounts agreed upon by third parties and the Company.~~

~~For disaggregated revenue information on the aforementioned, refer to Note 14, Reporting Segments and Related Information, for further discussion.~~

~~The Company does not offer volume rebates, product returns, discounts and allowances as such, no variable consideration impacts the recording of revenue.~~

The Company’s revenues can be generated from contracts with multiple performance obligations. When a sales agreement involves multiple performance obligations, each obligation is separately identified, and the transaction price is allocated based on the amount of consideration the Company expects to be entitled to in exchange for transferring the promised good or service to the customer.

For performance obligations that the Company satisfies over time, revenue is recognized by consistently applying a method of measuring progress toward complete satisfaction of that performance obligation. The Company utilizes the method that most accurately depicts the progress toward completion of the performance obligation.

Contract assets or liabilities result from transactions with revenue recorded over time. If the measure of remaining rights exceeds the measure of the remaining performance obligations the Company records a contract asset. Conversely, if the measure of the remaining performance obligations exceeds the measure of the remaining rights, the Company records a contract liability.

~~The adoption of ASC 606 did not have an impact on our accounts receivables. Accounts receivables resulting from contracts with customers are as follows:~~

March 31, 2018 December 31, 2017
Subject to AC 606
Farming 2,472
5,745
Management Fees 466
744
Ranch Operations 258
209
Total Subject to ASC 606 3,196
6,698

Not Subject to ASC 606
Leases 951
885
Other 28
25
Total Not Subject to ASC 606 979
910
Total Accounts Receivable 4,175
7,608

Results of Operations by Segment

~~Comparison~~We evaluate the performance of ~~three months ended March 31, 2018~~our reporting segments separately to ~~three months ended March 31, 2017~~

~~Total revenues for~~monitor the ~~first three months~~different factors affecting financial results. Each reporting segment is subject to review and evaluation as we monitor current market conditions, market opportunities, and available resources. The performance of ~~2018 were $13,469,000 compared to $5,702,000 for the first three months of 2017, representing an increase of $7,767,000, or 136%. The increase~~each reporting segment is ~~attributed to increased mineral resource revenues of $7,130,000 resulting from Kern County's moderate drought conditions allowing for water sales opportunities during the first quarter of 2018.~~discussed below:

Real Estate – Commercial/~~Industrial~~Industrial:



	Three Months Ended March 31,				Change
($ in thousands)	2019		2018		$		%
Commercial revenues
Pastoria Energy Facility	$	1,465	$	1,024	$	441	43	%
TRCC Leasing	452		407		45		11	%
TRCC management fees and reimbursements	235		213		22		10	%
Commercial leases	167		160		7		4	%
Communication leases	246		184		62		34	%
Landscaping and other	261		166		95		57	%
Total commercial revenues	$	2,826	$	2,154	$	672	31	%
Total commercial expenses	$	1,792	$	1,319	$	473	36	%
Operating income from commercial/industrial	$	1,034	$	835	$	199	24	%

Commercial/industrial real estate segment revenues were ~~$2,154,000~~$2,826,000 for the first three months of ~~2018, a decrease~~2019, an increase of ~~$35,000,~~$672,000, or 2%31%, from ~~$2,189,000 when compared to~~$2,154,000 during the first three months of ~~2017.~~2018. The ~~decrease~~increase is primarily attributed to revenue increases from the ~~timing~~Pastoria Energy Facility of ~~billings for tenant recoveries. During 2017 the Company reconciled the tenant recoveries during the first quarter, whereas in~~$441,000, or 43%, resulting from higher than expected 2018 ~~this occurred in the second quarter.~~spark spread estimates. The spark spread represents contingent rent based on power generation.

Commercial/industrial real estate segment expenses were $1,792,000 during the first three months of 2019, an increase of $473,000, or 36%, from $1,319,000 during the first three months of ~~2018, a decrease of $424,000, or 24%, from $1,743,000 when compared to the same period in 2017.~~2018. This ~~decrease is attributed to reduced payroll and overhead of $301,000 and stock compensation of $50,000.~~

~~Real Estate – Resort/Residential:~~

Resort/residential real estate segment expenses were $415,000 during the first three months of 2018, a decrease of $215,000, or 34%. The decrease is attributed to reduced professional expenses of $198,000.

~~Mineral Resources:~~

Mineral resources segment revenues were $9,131,000 for the first three months of 2018, an increase of $7,130,000, or 356%, from $2,001,000 when compared to the same period in 2017. During the first quarter, Kern County was under moderate drought conditions increasing water sales opportunities. Comparatively, we sold 7,442 acre-feet and 939 acre-feet as of March 31, 2018 and 2017, respectively. We have entered into a contract with a third-party to sell 7,000 acre-feet of water over the next two years.

Mineral resources segment expenses were $4,231,000 for the first three months of 2018, an increase of $2,907,000, or 220%, compared to the same period in 2017. The increase in costs is related to the increased water sales discussed above.

~~Farming:~~

~~Farming segment revenues were $1,195,000 for the first three months of 2018, an increase of $764,000, or 177%, from $431,000 when compared to the same period in 2017. The $764,000~~ increase is primarily attributable to a $924,000 increase in almond sales. Comparatively we sold 330,000 pounds and zero pounds as of March 31, 2018 and 2017, respectively. Sales of carry forward almond inventory were deferred from the first quarter of 2017 until the second quarter of 2017 primarily due to the timing of sales. This was offset by reduced pistachio revenues of $213,000.

Farming segment expenses were $1,838,000 for the first three months of 2018, an increase of $515,000, or 39%, from $1,323,000 when compared to the same period in 2017. During this period, we saw an increase in almond cost of sales for the reasons discussed above.

~~Ranch Operations:~~

Ranch operations revenues were $989,000 for the first three months of 2018, a decrease of $92,000, or 9%, from $1,081,000 for the same period in 2017. The changes are in line with our current business environment.

Ranch operations expenses were $1,389,000 for the first three months of 2018, a decrease of $104,000, or 7%, from $1,493,000 for the same period in 2017. The drivers of this decrease include reduced repairs and maintenance and payroll costs.

~~Corporate and Other:~~

~~Corporate general and administrative costs were $2,732,000, a decrease of $19,000, or 1%, from $2,751,000 for the same period in 2017. This is~~ attributed to ~~reduced payroll~~increases in Tejon-Castac Water District, or TCWD, fixed water assessments of $214,000 and ~~overhead~~bad debt reserve of ~~329,000 offset by increased stock compensation costs of $222,000.~~$93,000.

~~Joint Ventures:~~

Our share of earnings from our joint ventures for the first three months of 2018 was $167,000, a decrease of $61,000, or 27%, from $228,000 for the same period in 2017. The primary drivers include the following:

~~There was a $369,000~~decrease in our share of earnings from our TA/Petro joint venture. The decline is driven by reduced fuel margins as a result of increased gasoline and diesel costs. Comparatively diesel margins were 17 cents and 27 cents per gallon as of March 31, 2018 and 2017, respectively. Comparatively gasoline margins were 45 cents and 63 cents per gallon as of March 31, 2018 and 2017, respectively. Diesel sales volume was 3.8 million and 4.2 million gallons as of March 31, 2018 and 2017, respectively. Gasoline sales volume was 3.0 million and 2.8 million gallons as of March 31, 2018 and 2017, respectively.

Our TRC-MRC 2 joint venture saw improvements of $389,000 resulting in positive net income for the quarter. Throughout 2017, TRC-MRC 2 incurred significant non-cash GAAP accounting losses that did not reoccur in 2018. Please refer to "Non-GAAP Measures" for further financial discussion on our joint ventures.

~~General Outlook~~

The operations of the Company are seasonal and future results of operations cannot be predicted based on quarterly results. Historically, the Company's largest percentages of farming revenues are recognized during the third and fourth quarters of the fiscal year. Real estate activity and leasing activities are dependent on market circumstances and specific opportunities and therefore are difficult to predict from period to period.

~~Commercial~~

For the three months ended March 31, ~~2018~~2019, we had no leases that expired, nor did we have any material lease renewals.

The logistics operators currently located within ~~our Commerce Center~~TRCC have demonstrated success in serving all of California and the western region of the United States, and we are building from their success in our marketing efforts. We will continue to focus our marketing strategy for TRCC-East and TRCC-West on the significant labor and logistical benefits of our site, the pro-business approach of Kern County, and the demonstrated success of the current tenants and owners within our development. Our strategy fits within the logistics model that many companies are using, which favors large, centralized distribution facilities which have been strategically located to maximize the balance of inbound and outbound efficiencies, rather than a number of decentralized smaller distribution centers. The world class logistics operators located within TRCC have demonstrated success through utilization of this model. With access to markets of over 40 million people for next-day delivery service, they are also demonstrating success with e-commerce fulfillment.

~~During 2017 approval for expansion of the~~

Our Foreign Trade Zone (FTZ) ~~was granted by the U.S. Department of Commerce. The expanded FTZ now covers all the industrial sites within TRCC, an area totaling 1,094 acres. The FTZ~~ designation allows ~~the user~~businesses to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of the zone. This FTZ designation is further supplemented by the Economic Development Incentive Policy, or EDIP, adopted by the Kern County Board of Supervisors. EDIP is aimed to expand and enhance the County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses. ~~The~~ EDIP provides incentives such as assistance in obtaining tax ~~breaks,~~incentives, building supporting infrastructure, orand workforce development.

We believe that the FTZ and EDIP, along with our ability to provide fully-entitled, shovel-ready land parcels to support buildings of any size, especially buildings 1.0 million square feet or larger, can provide us with a potential marketing advantage in the future. We are also expanding our marketing efforts to include industrial ~~space~~ users in the Santa Clarita Valley of northern Los Angeles County, and the northern part of the San Fernando Valley due to the limited availability of new product and high real estate costs in these locations. Tenants in these geographic areas are typically users of relatively smaller facilities. In pursuit of such opportunities, the Company ~~partnered~~is in process of constructing a 579,040 square foot distribution facility with Majestic. The Company and Majestic ~~Realty Co.~~have successfully leased 67% of this distribution facility prior to its completion, with the tenant taking occupancy in the ~~development~~fourth quarter of 2019. This new construction is building on the success in 2018 of fully leasing a 480,000 square foot ~~state-of-the-art~~building to Dollar General and to SalonCentric, L’Oréal USA’s professional salon distribution ~~facility that was completed~~operation, in ~~the third quarter of 2017. Currently, half the building is leased~~a partnership with ~~the other half being aggressively marketed for lease.~~Majestic.

A potential disadvantage to our development strategy is our distance from the ports of Los Angeles and Long Beach in comparison to the warehouse/distribution centers located in the Inland Empire, a large industrial area located east of Los Angeles, which continues its expansion eastward beyond Riverside and San Bernardino, to include Perris, Moreno Valley, and Beaumont. As development in the Inland Empire continues to move east and farther away from the ports, our potential disadvantage of our distance from the ports is being mitigated. Strong demand for large distribution facilities is driving development farther east in a search for large entitled parcels.

During the quarter ended March 31, ~~2018,~~2019, vacancy rates in the Inland Empire ~~increased from~~fell 20 basis points to 3.7%, the lowest rate on record. Construction completions totaled only 4.4 million square feet in the quarter ended March 31, 2019, which is below the five-year quarterly average. The low vacancy rates have led to ~~end at 4.4% when compared to December 31, 2017, primarily due to continued strong industrial demand that has surpassed construction completions.~~a year-over-year increase in lease rates of 12.1% within the Inland Empire. As lease rates increase in the Inland Empire, ~~and northern Los Angeles County,~~ we may begin to have a greater pricing ~~advantage~~advantages due to our ~~low~~lower land basis.

During the quarter ended March 31, ~~2018,~~2019, vacancy rates in the northern Los Angeles industrial market, which includes the San Fernando Valley and Santa Clarita Valley, ~~increased 30~~dropped 10 basis points ~~from 1.7%~~ to ~~end~~1.4%. Rents have been increasing for the past six years and will likely continue to rise in future years as the vacancy rate is at 2.0% when compared to December 31, 2018. The northern Los Angeles industrial market continues to see available supply remain at extremely low levels, and with limited new construction, this will result in vacancy remaining at all-timehistoric lows and ~~rental~~quality industrial space remains hard to find. Average asking rents increased 10.1% year over year, which have surpassed the historical peak which was seen in late 2007. Industrial demand remains high and infill industrial demand remains higher still. Future quarters will likely see greater construction activity as rents hit new highs and vacancy rates ~~anticipated to continue to increase.~~are at historic lows. Demand for industrial space in this market will also continue to be driven by domestic and global consumption levels. As industrial vacancy rates are at historic lows, industrial users seeking larger spaces are having to go further north into neighboring Kern County and particularly, TRCC, which has attracted increased attention as market conditions continue to tighten.

We expect ~~that~~ the commercial/industrial ~~real estate~~ segment ~~will~~to continue to ~~incur~~experience costs, ~~at current levels,~~ net of amounts capitalized, primarily related to professional service fees, marketing costs, commissions, planning costs, and staffing costs as we continue ~~forward~~to pursue development opportunities. These costs are expected to remain consistent with current levels of expense with any variability in the future tied to specific absorption transactions in any given year.

The actual timing and completion of development is difficult to predict due to the uncertainties of the market. Infrastructure development and marketing activities and costs could continue over several years as we develop our land holdings. We will also continue to evaluate land resources to determine the highest and best uses for our land holdings. Future sales of land are dependent on market circumstances and specific opportunities. Our goal in the future is to increase land value and create future revenue growth through planning and development ~~plans.~~of commercial and industrial properties.

~~Resort Residential~~Real Estate – Resort/Residential:

We are in the preliminary stages of development; hence, no revenues or profits are attributed to this segment.

Resort/residential real estate segment expenses were $648,000 during the first three months of 2019, an increase of $233,000, or 56%, from $415,000 during the first three months of 2018. The increase is primarily attributed to higher professional services of $252,000 incurred during the first three months of 2019. We expect to see a continual increase in professional services throughout the remainder of the year.

Most of the expenditures and capital investment to be incurred within our resort/residential real estate segment will ~~be focused~~continue to focus on the following:

For Grapevine, we are working with Kern County to defend litigation related to the approved EIR. The entire litigation and permitting process for Grapevine will take several years and the investment of several million dollars to successfully complete.

~~For~~ Centennial, ~~we are working with~~ the Los Angeles County ~~Department~~Board of ~~Regional Planning~~Supervisors gave final approval to ~~prepare~~ the ~~release~~specific plan on April 30, 2019. The specific plan for Centennial includes 19,333 residential units and more than 10.1 million square feet of commercial space.

For Grapevine, the court ruled that portions of the ~~Final Environmental Impact Report~~EIR required corrections and ordered that ~~will be considered first by~~ the ~~Los Angeles~~ County ~~Regional Planning Commission tentatively scheduled for~~rescind the ~~second quarter of 2018, and later by~~Grapevine project approvals until such supplemental environmental analysis was completed in December 2018. The Company is working on filing new applications to re-entitle the ~~Board of Supervisors.~~Grapevine project in 2019.

For MV, we have a fully ~~permitted and~~ entitled project and received approval of Tentative Tract Map 1 for our first ~~three~~four phases of development. The timing of the MV development in the coming years will be dependent on the strength of both the economy and the real estate market, including both primary and second home markets. In moving the project forward, we will focus on the preparation of engineering leading to the final map for the first phases of MV, consumer and market research studies and fine tuning of development business plans, as well as defining the

possible capital funding sources for this development. ~~We also obtained approval on~~Over the ~~Farm Village commercial site plan~~next several years, we expect to explore funding opportunities for the future development of MV. Such funding opportunities could come from ~~Kern County. Farm Village will serve~~a variety of sources, such as joint ventures with financial partners, debt financing, or the ~~“front door” to MV. Farm Village will include fresh culinary offerings, artisan markets, boutique lodging,~~Company’s issuance of additional common stock.

Mineral Resources:



	Three Months Ended March 31,				Change
($ in thousands)	2019		2018		$			%
Mineral resources revenues
Oil and gas	$	555	$	538	$	17		3	%
Cement	296		351		(55		)	(16	)%
Rock aggregate	208		202		6			3	%
Exploration leases	26		26		—			—	%
Water Sales	5,026		7,992		(2,966		)	(37	)%
Reimbursables and other	21		22		(1		)	(5	)%
Total mineral resources revenues	6,132		9,131		(2,999		)	(33	)%
Total mineral resources expenses	3,832		4,231		(399		)	(9	)%
Operating income from mineral resources	$	2,300	$	4,900	$	(2,600	)	(53	)%

Mineral resources segment revenues were $6,132,000 for the first three months of 2019, a decrease of $2,999,000, or 33%, from $9,131,000 during the same period in 2018. In contrast with the first quarter of 2018, strong winter rainfall during the first quarter of 2019, resulted in fewer water sales opportunities. Comparatively, the Company sold 4,445 acre feet and ~~an array~~7,442 acre feet of ~~trails, gardens,~~water as of March 31, 2019 and ~~agriculture that will be intertwined to create~~2018, respectively.

Mineral resources segment expenses were $3,832,000 for the ~~most unique, relaxing and “edu-taining” experience while fulfilling the needs~~first three months of ~~residents~~2019, a decrease of ~~Mountain Village.~~

~~Farming~~

Freezing temperatures experienced in February may impact production within California's almond industry but that has not been determined at this time. Our almond crops did not experience any significant level of frost damage; however the suboptimal weather conditions may have prevented bees from adequately pollinating our almonds. It is, however, still too early in the growing season to determine what our almond, pistachio and wine grape yields will be and the impact of any adverse weather conditions. Due to our exposure$399,000, or 9%, when compared to the ~~commodity markets, we are unable~~same period in 2018. The decrease in expenses is primarily associated with decreased cost of sales for water of $485,000 related to accurately predict revenue and we cannot pass on to our customers any cost increases caused by general inflation, except to the extent such inflation is reflected in market conditions and commodity prices. Additionally, we are unable to predict the outcome of ongoing trade discussions with foreign nations nor are we able to predict the resulting impact over crop demand. All of our crops are sensitive to the size of each year’s world crop. Large crops in California and abroad can rapidly depress prices. Thus far in 2018, prices for almonds and pistachios have remained consistent with pricingfewer 2019 water sales opportunities as ~~of December 31, 2017.~~discussed above.

~~Mineral Resources~~

As anticipated changes come in the future related to groundwater management within California, such as limited pumping in the over drafted groundwater basins outside of our lands, we believe that water banking operations, ground water recharge programs, and access to water contracts as we have purchased in the past will become even more important and valuable in servicing our projects. The 2018 moderate drought conditions have led to water sales opportunities, including multi-year agreements which we have had in the past. It is difficult to predict whether we will have additional waterWater sales opportunities for the remainder of ~~the year. A large determining factor to this,~~2019 will be limited based on winter rain and snow levels as well as the ~~final~~California State Water Project, ~~allocation.~~or SWP, water allocations being at a 70% level.

We do not expect increased oil production in 2019 if prices remain at current levels. We currently expect our largest tenant, California Resources Corporation, or CRC, to continue its program of producing from current active wells at lower levels with no near-term intent to begin new drilling programs until oil prices reach higher levels. CRC has approved permits and drill sites on our land and has delayed the start of drilling as it evaluates the market. A positive aspect of our lease with CRC is that the approved drill sites are in an area of the ranch where the development and production costs are moderate due to the depths being drilled.

Farming:



	Three Months Ended March 31,						Change
($ in thousands)	2019			2018			$			%
Farming revenues
Almonds	$	376		$	924		$	(548	)	(59	)%
Pistachios	254			43			211			491	%
Hay	122			87			35			40	%
Other	63			141			(78		)	(55	)%
Total farming revenues	$	815		$	1,195		$	(380	)	(32	)%
Total farming expenses	$	1,598		$	1,838		$	(240	)	(13	)%
Operating loss from farming	$	(783	)	$	(643	)	$	(140	)	22	%

Farming segment revenues were $815,000 for the first three months of 2019, a decrease of $380,000, or 32%, from $1,195,000 when compared to the same period in 2018. The changes are primarily attributed to:

◦

Almond revenues decreased $548,000 resulting from fewer prior year crop carryforward units being sold. By comparison the Company sold 170,000 and 330,000 pounds of prior year carryover crop as of March 31, 2019 and 2018, respectively. Additionally, we reduced estimated almond revenues on our prior year crop by $89,000 to reflect current market pricing. As of March 31, 2019, the Company had 155,000 pounds of unsold carryover almond inventory.


◦	2018 pistachio crop yields exceeded 4,000,000 pounds, representing a record high for the Company. The Company carried over 558,000 pounds of inventory into 2019 and has since sold 140,000 pounds, resulting in a $211,000 increase in revenues over prior year.

Farming segment expenses were $1,598,000 for the first three months of 2019, a decrease of $240,000, or 13%, from $1,838,000 when compared to the same period in 2018. The reduction in farming expenses is attributed to the following:


◦	The Company recorded $108,000 in bad debt reserve during the first three months of 2018, which did not repeat during the same period of 2019.


◦	The Company experienced decreases in hulling costs and irrigation costs of $82,000 and $72,000, respectively, in the first quarter of 2019.


◦	The above reductions were partially offset by higher fixed water costs with Wheeler Ridge Maricopa Water Storage District of $182,000.

Our almond, pistachio, and wine grape crop sales are highly seasonal with a majority of our sales occurring during the third and fourth quarters. Nut and grape crop markets are particularly sensitive to the size of each year’s world crop and the demand for those crops. Large crops in California and abroad can rapidly depress prices. Crop prices, especially almonds, are also adversely affected by a strong U.S. dollar, which makes U.S. exports more expensive and decreases demand for the products we produce. The low value of the U.S. dollar in prior years has helped to maintain strong almond prices in overseas markets. Thus far in 2019, when compared to 2018, the U.S. dollar has weakened against the Chinese Yuan whereas the Euro remains consistent. The full potential impact of an increasing U.S. dollar to our pricing and revenue is not known at this time. Additionally, increased tariffs from China and India which are major customers of almonds and pistachios, can make American products less competitive and push customers to switch to another producing country.

Weather conditions can impact the number of tree and vine dormant hours, which are integral to tree and vine growth. We will not know the impact of current weather conditions on 2019 production until the early summer of 2019. Thus far, we have experienced extended heavier rain fall and colder temperatures during the almond bloom period when compared to the 2017-2018 winter, which could negatively impact 2019 almond production. In addition, 2019 is the alternative bearing cycle for our pistachio trees and a lower than average crop is anticipated, following our record high yields in 2018. It is too early in the year to determine the impact of the 2019 water supplies on 2019 California crop production for almonds, pistachios, and wine grapes.

Lastly, the impact of new state ground water management laws on new plantings and continuing crop production remains unknown. Water delivery and water availability continues to be a long-term concern within California. Any limitation of delivery of SWP water and the absence of available alternatives during drought periods could potentially cause permanent damage to orchards and vineyards throughout California. While this could impact us, we believe we have sufficient water resources available to meet our requirements in 2019.

Ranch Operations:



	Three Months Ended March 31,						Change
($ in thousands)	2019			2018			$			%
Ranch Operations revenues
Game Management and other ¹	$	497		$	583		$	(86	)	(15	)%
Grazing	392			406			(14		)	(3	)%
Total Ranch Operations revenues	$	889		$	989		$	(100	)	(10	)%
Total Ranch Operations expenses	$	1,350		$	1,389		$	(39	)	(3	)%
Operating loss from Ranch Operations	$	(461	)	$	(400	)	$	(61	)	15	%
¹ Game management and other revenues consist of revenues from hunting, filming, high desert hunt club (a premier upland bird hunting club), and other ancillary activities.

Ranch operations revenues were $889,000 for the first three months of 2019, a decrease of $100,000, or 10%, from $989,000 for the same period in 2018. The decrease is primarily attributed to reduced hunting membership revenues of $78,000.

Ranch operations expenses were $1,350,000 for the first three months of 2019, a decrease of $39,000, or 3%, from $1,389,000 for the same period in 2018. The driver of this decrease was a reduction in supplies costs of $19,000.

Corporate and Other:

Corporate general and administrative costs were $2,474,000, a decrease of $258,000, or 9%, from $2,732,000 for the same period in 2018. The decrease is primarily attributed to decreases in stock compensation expense of $84,000, director expenses of $41,000, and licenses of $21,000.

Joint Ventures:



	Three Months Ended March 31,						Change
($ in thousands)	2019			2018			$			%
Equity in earnings (loss)
Petro Travel Plaza Holdings, LLC	$	1,122		$	532		$	590		111	%
Five West Parcel, LLC	86			96			(10		)	(10	)%
18-19 West, LLC	(14		)	(13		)	(1		)	8	%
TRCC/Rock Outlet Center, LLC	(393		)	(548		)	155			(28	)%
TRC-MRC 1, LLC	(2		)	(1		)	(1		)	100	%
TRC-MRC 2, LLC	77			101			(24		)	(24	)%
Total equity in earnings	$	876		$	167		$	709		425	%

There was a $590,000 increase in our share of earnings from our TA/Petro joint venture. The increase was driven by improved fuel margins. Comparatively, diesel margins were $0.36 cents and $0.17 cents per gallon as of March 31, 2019 and 2018, respectively. Comparatively, gasoline margins were $0.62 cents and $0.45 cents per gallon as of March 31, 2019 and 2018, respectively. Diesel and gasoline sales volumes stayed relatively flat when comparing the three months ended March 31, 2019 with the same period in 2018.

Our share of losses from our TRCC/Rock Outlet Center joint venture improved $155,000 resulting from improved minimum and percentage rent, partially offset by higher operating expenses.

Please refer to "Non-GAAP Financial Measures" for further financial discussion on our joint ventures.

General Outlook

For further discussion of the risks and uncertainties that could potentially adversely affect us, please refer to Part I, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, or Annual Report, and to Part I, Item 1A - "Risk Factors" of our Annual Report. We continue to be involved in various legal proceedings related to leased acreage. For a further discussion, please refer to Note 12 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements in this report.

Income Taxes

For the three months ended March 31, ~~2018,~~2019, the Company had net income tax expense of ~~$526,000~~$95,000 compared to ~~a net income tax benefit of $1,332,000~~$526,000 for the three months ended March 31, ~~2017. These represent~~2018. As such, effective tax rates ~~of approximately~~approximated 43% and 27% ~~and 41%~~ for the three months ended March 31, 2019 and 2018, ~~and, 2017,~~ respectively. The increase resulted from the Company's tax deduction for fully vested shares being less than the book expense recognized over the vesting period for the same shares, commonly referred to as tax shortfalls. As of March 31, ~~2018,~~2019, income tax receivables were ~~$1,060,000.~~$181,000. The Company classifies interest and penalties incurred on tax payments as income tax expenses.

Cash Flow and Liquidity

Our financial position allows us to pursue our strategies of land entitlement, development, and conservation. Accordingly, we have established well-defined priorities for our available cash, including investing in core ~~reporting~~operating segments to achieve profitable future growth. We have historically funded our operations with cash flows from operating activities, investment proceeds, and short-term borrowings from our bank credit facilities. In the past, we have also issued common stock and used the proceeds for capital investment activities.

To enhance shareholder value, we will continue to make investments in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, ensure adequate future water supplies, and provide funds for general land development activities. Within our farming segment, we will make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so.

~~On October 27, 2017, the Company completed a Rights Offering raising $90,000,000 in new capital.~~

Our cash, cash equivalents and marketable securities totaled ~~$90,588,000~~$68,174,000 at March 31, ~~2018,~~2019, a ~~slight~~ decrease of ~~$387,000~~$11,483,000 from ~~the corresponding amount at the end~~$79,657,000 as of ~~2017. The decrease in our cash position is attributable to a reduction in marketable securities and continued investment in development projects and water assets.~~December 31, 2018.

The following table shows our cash flow activities for the three months ended March 31,


(in thousands)	2018			2017			2019			2018
Operating activities	$	6,969		$	(570	)	$	(1,211	)	$	6,969
Investing activities	$	(5,450	)	$	(4,040	)	$	(4,971	)	$	(5,450	)
Financing activities	$	(2,147	)	$	6,848		$	(1,822	)	$	(2,147	)

Operating Activities

During the first three months of 2019, our operations used $1,211,000, the primary drivers are $2,400,000 used for agricultural activities used to grow our current year crops offset by $1,200,000 in collections of receivables. When compared to the prior year, the decrease in cash flows is attributed to reduced water sales and the timing of collections on accounts receivables.

During the first three months of 2018, our operations generated $6,969,000 in cash largely due to the water sales discussed above and collection of accounts receivables.

Investing Activities

During the first three months of ~~2017, our operations~~2019 investing activities used ~~$570,000~~$4,971,000. The company made capital expenditures, inclusive of ~~cash as a result~~capitalized interest and payroll (exclusive of ~~our net loss from operations and in order to pay for growing costs~~stock compensation), of $5,112,000 which includes predevelopment activities for our ~~crops.~~master planned communities, consisting of general planning and permitting of $856,000 for MV; expenditures relating to regulatory permits and litigation of $787,000 for Grapevine, and costs related to approval of specific plan of $1,240,000 for Centennial. At TRCC, we spent $635,000 on water treatment facility improvements, water infrastructure improvements and planning. Within our farming segment, we spent $1,298,000 developing new almond orchards and replacing machinery and equipment. Also within investing activities, we had investment security maturities of $14,567,000 of which we reinvested $10,865,000. Lastly, the Company used $3,502,000 to acquire annual water purchase contracts.

~~Investing Activities~~

During the first three months of 2018, investing activities used $5,450,000 of cash, in part, as a result of $3,779,000 in capital expenditures. Capital expenditures, inclusive of capitalized interest and payroll, include predevelopment activities for our master planned communities which amounted to $1,284,000 for MV, $603,000 for Grapevine, and $590,000 for Centennial. At TRCC East, we spent $338,000 constructing a water treatment facility. Within our farming segment, we spent $1,117,000 replacing old machinery and equipment along with developing a new almond orchard. We also purchased marketable securities and water for $10,942,000 and $2,659,000, respectively. Our capital outlays were offset by distributions from unconsolidated joint ventures of $181,000, CFD reimbursements of $1,385,000 and proceeds from maturity of marketable securities of $10,942,000. As we move forward, we will continue to use cash from operations, proceeds from the maturity of securities, and anticipated distributions from joint ventures to fund real estate project investment.

During the first three months of 2017, investing activities used $4,040,000 of cash as a result of $4,247,000 in capital expenditures. Capital expenditures include predevelopment activities for our master planned communities which amounted to $1,045,000 for MV, $870,000 for Grapevine, and $817,000 for Centennial. At TRCC East, we spent $343,000 for infrastructure projects. Within our farming segment, we spent $645,000 replacing old machinery and equipment along with developing a new almond orchard.

We spent $269,000 within our mineral resources group for new wells and water turnouts. Within ranch operations we acquired $49,000 in new machinery and equipment. Additionally, we used $4,276,000 for our purchase of water under the Nickel water contract. Our capital outlays were offset by distributions from unconsolidated joint ventures of $2,087,000 and proceeds from maturity of marketable securities of $2,671,000.

Our estimated capital investment ~~inclusive of capitalized interest and payroll,~~ for the remainder of ~~2018 will be~~2019 is primarily related to our real estate projects. ~~Estimated capital investment includes~~These estimated investments include approximately ~~$7,772,000~~$10,089,000 of infrastructure development at ~~TRCC-East. This new infrastructure is~~TRCC-East to support continued commercial retail and industrial development ~~within TRCC-East~~ and to expand water facilities to support future anticipated absorption. We also plan to invest approximately $1,918,000 to continue development of new almond orchards and replacing farm equipment. The farm investments are part of a long-term farm management program to redevelop declining orchards and vineyards to maintain and improve future farm revenues. Lastly, we expect to ~~possibly~~ invest ~~$6,026,000 in~~up to $14,421,000 for land planning, entitlement activities, litigation related to entitlement approvals, federal and state agency permitting ~~and planning~~ activities, and ~~defending~~development activities at MV, Centennial, and Grapevine during the ~~approved EIR for Grapevine, $5,514,000 for final approval~~remainder of ~~tentative tract maps and design activities related to commercial development for MV, and $3,834,000 related to the specific plan EIR, approval of EIR, and mapping activities for Centennial.~~2019.

We capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the three months ended March 31, 2019 and 2018, of $703,000 and ~~2017, of~~ $744,000, ~~and $846,000,~~ respectively, is classified in real estate development. We also capitalized payroll ~~and overhead~~ costs related to development, pre-construction, and construction projects which aggregated ~~$1,134,000~~$1,137,000 and ~~$589,000~~$1,134,000 for the three months ended March 31, 2019 and 2018, ~~and 2017,~~ respectively. ~~The increase in capitalized payroll and overhead costs is attributed to additional employees working on our real estate development projects.~~ Expenditures for repairs and maintenance are expensed as incurred.

Financing Activities

During the first three months of 2019, financing activities used $1,822,000 to service long-term debt of $1,007,000 and tax payments on vested share grants of $815,000.

During the first three months of 2018, financing activities used $2,147,000 in cash primarily for paydowns of long-term debt of $985,000 and tax payments on vested share grants of $996,000.

During the first three months of 2017, financing activities provided $6,848,000 in cash primarily through $8,300,000 in drawdowns from our line of credit. As of March 31, 2017, there was an outstanding balance of $16,000,000 on our revolving line of credit. The use of our line of credit primarily reflects the cyclical nature of cash flow in our farming segment as inventory costs build as we move into the second half of the year and the harvest season begins and to water activity during the quarter. The cash inflows were offset by paydowns of long-term debt of $938,000 and tax payments on vested share grants of $514,000.

It is difficult to accurately predict cash flows due to the nature of our ~~business segments~~businesses and fluctuating economic conditions. Our earnings and cash flows will be affected from period to period by the commodity nature of our farming and mineral operations, the timing of sales and leases of property within our development projects, and the beginning of development within our residential projects. The timing of sales and leases within our development projects is difficult to predict due to the time necessary to complete the development process and negotiate sales or lease contracts. Often, the timing aspect of land development can lead to particular years or periods having more or less earnings than comparable periods. Based on our experience, we believe we will have adequate cash flows, cash balances, and availability on our line of credit over the next twelve months to fund internal operations. As we move forward with the completion of the ~~entitlement process~~litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we will need to secure additional funding through the issuance of equity and secure other forms of financing such as joint ventures and possibly debt financing.

We continuously evaluate our short-term and long-term capital investment needs. Based on the timing of capital investments, we may supplement our current cash, marketable securities, and operational funding sources through the sale of common stock and the use of additional debt.

Capital Structure and Financial Condition

At March 31, ~~2018,~~2019, total capitalization at book value was ~~$498,180,000~~$499,602,000 consisting of ~~$68,973,000~~$64,908,000 of debt and ~~$429,207,000~~$434,694,000 of equity, resulting in a ~~long-term~~ debt-to-total-capitalization ratio of approximately ~~13.8%~~13.0%.

The Company has a Term ~~Loan~~Note and a Revolving Line of Credit Note ~~or collectively~~(collectively, the Credit ~~Facility,~~Facility) with Wells Fargo. The Credit Facility ~~consists of~~adds a $70,000,000 term ~~note,~~loan, or Term Loan, ~~and a~~to the existing $30,000,000 revolving line of credit, or RLC. Funds from the Term Loan were used to finance the Company's purchase of DMB TMV LLC's interest in MV. The Term Loan had a $61,561,000 balance as of March 31, 2019. Any future borrowings under the RLC will be used for ongoing working capital requirements and other general corporate purposes. To maintain availability of funds under the RLC, undrawn amounts under the RLC will accrue a commitment fee of 10 basis points per annum. The Company's ability to borrow additional funds in the future under the RLC is subject to compliance with certain financial covenants and making certain representations and ~~warranties.~~warranties, which is typical for this type of instrument. At the Company’s option, the interest rate on the RLC can float at 1.50% over a selected LIBOR ~~average~~rate or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term of ~~the Credit Facility~~this credit facility (which matures in September 2019), we can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary. ~~At March 31, 2018 and December 31, 2017,~~The Company expects to renew the RLC ~~had an outstanding balance of $0. The Term Loan had~~in September 2019 under similar terms. There were no outstanding balances ~~of $65,162,000 and $66,046,000~~on the RLC as of March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.

The interest rate per annum applicable to the Term Loan is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the term of the note has been fixed through the use of an interest rate swap at a rate of 4.11%. We utilize an interest rate swap agreement to hedge our exposure to variable interest rates associated with our term loan. The Term Loan ~~required interest only payments for the first two years of the term and thereafter~~ requires monthly amortization payments pursuant to a schedule set forth in the Term ~~Loan,~~Note, with the final outstanding principal amount due October 5, 2024. ~~The Company~~TRC may make voluntary prepayments on the Term Loan at any time without penalty (excluding any applicable LIBOR or interest rate swap breakage costs). Each optional prepayment will be applied to reduce the most remote principal payment then unpaid. The Credit Facility is secured by the ~~Company's~~TRC's farmland and farm assets, which include equipment, crops and crop receivables and the power plant lease and lease site, and related accounts and other rights to payment and inventory.

The Credit Facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.75 to 1.0 at each quarter end; (b) a debt service coverage ratio not less than 1.25 to 1.00 as of each quarter end on a rolling four quarter basis; and (c) maintain liquid assets equal to or greater than $20,000,000. At March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we were in compliance with ~~all~~the financial covenants.

The Credit Facility also contains customary negative covenants that limit the ability of TRC to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain assets sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, or incur liens on any assets.

The Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Credit Facility; bankruptcy and insolvency; and a change in control without consent of bank (which consent will not be unreasonably withheld). The Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.

We also have a $4,750,000 promissory note agreement ~~to pay a principal amount of $4,750,000~~ with ~~CMFG Life Insurance Company, to pay~~ principal and interest due ~~monthly.~~monthly starting on October 1, 2013. The interest rate on this promissory note is 4.25% per annum, with principal and interest payments ~~of $102,700~~ ending on September 1, 2028. The ~~current outstanding~~ balance as of March 31, 2019 is ~~$3,627,000.~~$3,347,000. The proceeds from this promissory note were used to eliminate debt that had been previously used to provide long-term financing for a building being leased to Starbucks and provide additional working capital for future investment. ~~The balance of this long-term debt instrument listed above approximates the fair value of the instrument.~~

Our current and future capital resource requirements will be provided byprimarily from current cash and marketable securities, cash flow from on-going operations, distributions from joint ventures, proceeds from the sale of developed and undeveloped parcels, potential sales of assets, ~~joint venture agreements,~~ additional use of debt or draw downs against our line-of-credit, proceeds from the reimbursement of public infrastructure costs through Community Facilities District (CFD) bond debt (described below under “Off-Balance Sheet Arrangements”), and the issuance of common stock. ~~During~~

On April ~~2016,~~25, 2019, we ~~filed a~~renewed our shelf registration statement on Form S-3 that ~~went~~we anticipate to go effective in May ~~2016.~~2019. Under the shelf registration statement, we may offer and sell in the future one or more offerings, ~~consisting of~~ common

stock, preferred stock, debt securities, warrants or any combination of the foregoing. ~~On October 27, 2017,~~The shelf registration allows for efficient and timely access to capital markets and when combined with our other potential funding sources just noted, provides us with a variety of capital funding options that can then be used and appropriately matched to the ~~Company completed a Rights Offering raising $90,000,000 in new capital.~~funding needs of the Company.

At March 31, ~~2018,~~2019, we had ~~$90,588,000~~$68,174,000 in cash and securities and had $30,000,000 available on our RLC to meet any short-term liquidity needs. See Note 3 (Marketable Securities) and Note 7 (Line of Credit and Long-Term Debt) of the Notes to Unaudited Consolidated Financial Statements for more information.

We continue to expect that substantial investments will be required in order to develop our land assets. ToIn order to meet these ~~future~~ capital requirements, we may need to secure additional debt financing and continue to renew our existing credit facilities. In addition to debt financing, we will use other capital alternatives such as joint ventures with financial partners, sales of assets, and the issuance of common stock. We will use a combination of the above funding sources to properly match funding requirements with the assets or development project being funded. There is no assurance that we can obtain financing or that we can obtain financing at favorable terms. We believe we have adequate capital resources to fund our cash needs and our capital investment requirements in the near-term as described earlier in the cash flow and liquidity discussions.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations and commercial commitments as of March 31, ~~2018,~~2019, to be paid over the next five years and thereafter:


	Payments Due by Period										Payments Due by Period
(In thousands)	Total		One Year or Less		Years 2-3		Years 4-5		Thereafter		Total		2019		2020-2021		2022-2024		Thereafter
CONTRACTUAL OBLIGATIONS:
Contractual Obligations:
Estimated water payments	$	255,873	$	2,765	$	18,218	$	18,846	$	216,044	$	253,040	$	3,118	$	18,527	$	19,175	$	212,220
Long-term debt	68,973		3,990		8,352		9,015		47,616		64,908		4,048		8,638		9,429		42,793
Interest on long-term debt	14,784		2,735		4,971		4,255		2,823		12,050		2,571		4,621		3,874		984
Revolving line of credit borrowings	—		—		—		—		—
Cash contract commitments	9,223		7,014		1,138		—		1,071		14,116		11,907		1,138		—		1,071
Defined Benefit Plan	3,608		150		546		585		2,327		3,913		206		567		646		2,494
SERP	4,845		413		979		956		2,497		5,197		395		1,042		1,022		2,738
Tejon Ranch Conservancy	3,000		600		1,600		800		—		2,200		600		1,600		—		—
Financing fees and interest	163		163		—		—		—
Financing fees											163		163		—		—		—
Total contractual obligations	$	360,469	$	17,830	$	35,804	$	34,457	$	272,378	$	355,587	$	23,008	$	36,133	$	34,146	$	262,300

The categories above include purchase obligations and other long-term liabilities reflected on our balance sheet under GAAP. A “purchase obligation” is defined in Item 303(a)(5)(ii)(D) of Regulation S-K as “an agreement to purchase goods or services that is enforceable and legally binding on the registrant that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.” Based on this definition, the table above includes only those contracts that include fixed or minimum obligations. It does not include normal purchases, which are made in the ordinary course of business.

Estimated water payments include the Nickel Family, LLC water contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with Wheeler Ridge Maricopa Water Storage District, TCWD, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water Storage District. These contracts for the supply of future water run through 2035. Please refer to Note 5 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding water assets.

Our ~~financial obligations~~cash contract commitments consist of contracts in various stages of completion related to ~~the Tejon Ranch Conservancy are prescribed~~infrastructure development within our industrial developments and entitlement costs related to our industrial and residential development projects. Also included in the ~~Conservation Agreement.~~cash contract commitments are operating lease obligations. Our ~~advances to~~operating lease obligations are for office equipment. At the ~~Tejon Ranch Conservancy are dependent on the occurrence of certain events and their timing, and are therefore subject to change in amount and period. The amounts included above are the minimum amounts~~present time, we ~~anticipate contributing through the year 2021, at which time our current contractual obligation terminates.~~

do not have any capital lease obligations or purchase obligations outstanding.

As discussed in Note 13 (Retirement Plans) of the Notes to Unaudited Consolidated Financial Statements, we have long-term liabilities for deferred employee compensation, including pension and supplemental retirement plans. Payments in the above table reflect estimates of future defined benefit plan contributions from the Company to the plan trust, estimates of payments to employees from the plan trust, and estimates of future payments to employees from the Company that are in the SERP program. We plan to contribute ~~$160,000~~$165,000 to our defined benefit plan in ~~2018.~~2019.

Our ~~cash contract commitments consist of contracts~~financial obligations to the Tejon Ranch Conservancy are prescribed in ~~various stages of completion related to infrastructure development within our industrial developments~~the Conservation Agreement, as discussed in Note 12 (Commitments and ~~entitlement costs related to our industrial and residential development projects.~~

Our operating lease obligations are for office equipment, several vehicles, and a temporary trailer providing office space and average approximately $25,000 per month. At the present time, we do not have any capital lease obligations or purchase obligations outstanding.

Estimated water payments include the Nickel water contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with Wheeler Ridge Maricopa Water Storage District, Tejon-Castac Water District, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water Storage District. These contracts for the supply of future water run through 2035. Please refer to Note 5 (Long-Term Water Assets)Contingencies) of the Notes to Unaudited Consolidated Financial ~~Statements for additional information regarding water assets.~~Statements. Our advances to the Tejon Ranch Conservancy are dependent on the occurrence of certain events and their timing, and are therefore subject to change in amount and period. The amounts included above are the minimum amounts we anticipate contributing through the year 2021, at which time our current contractual obligation terminates.

Off-Balance Sheet Arrangements

The following table shows contingent obligations we have with respect to certain bonds issued by the CFDs:


	Amount of Commitment Expiration Per Period										Amount of Commitment Expiration Per Period
($ in thousands)	Total		< 1 year		2 -3 Years		4 -5 Years		After 5 Years		Total		< 1 year		2 -3 Years		4 -5 Years		After 5 Years
OTHER COMMERCIAL COMMITMENTS:
Other Commercial Commitments:
Standby letter of credit	$	4,921	$	—	$	4,921	$	—	$	—	$	4,468	$	—	$	4,468	$	—	$	—
Total other commercial commitments	$	4,921	$	—	$	4,921	$	—	$	—	$	4,468	$	—	$	4,468	$	—	$	—

The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. TRPFFA created two CFDs, the West CFD and the East CFD. The West CFD has placed liens on 420 acres of the Company’s land to secure payment of special taxes related to $28,620,000 of bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to $55,000,000 of bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has approximately $65,000,000 of additional bond debt authorized by TRPFFA.

In connection with the sale of bonds there is a standby letter of credit for ~~$4,921,000~~$4,468,000 related to the issuance of East CFD bonds. The standby letter of credit is in place to provide additional credit enhancement and cover approximately two ~~years~~years' worth of interest on the outstanding bonds. This letter of credit will not be drawn upon unless the Company, as the largest landowner in the CFD, fails to make its property tax payments. As development occurs within TRCC-East, there is a mechanism in the bond documents to reduce the amount of the letter of credit. The Company believes that the letter of credit will never be drawn upon. This letter of credit is for a two-year period of time and will be renewed in two-year intervals as necessary. The annual cost related to the letter of credit is approximately ~~$83,000.~~$68,000. The assessment of each individual property sold or leased within each CFD is not determinable at this time because it is based on the current tax rate and the assessed value of the property at the time of sale or on its assessed value at the time it is leased to a third-party. Accordingly, the Company is not required to recognize an obligation at March 31, ~~2018.~~2019.

At March 31, ~~2018,~~2019, aggregate outstanding debt of unconsolidated joint ventures was ~~$115,301,000.~~$120,483,000. We provided a guarantee on ~~$100,021,000~~$105,199,000 of this debt, relating to our joint ventures with Rockefeller and Majestic. Because of positive cash flow generation within the Rockefeller and Majestic joint ventures, ~~with operating assets,~~ we do not expect the guarantee to ever be called upon. We do not provide a guarantee on the ~~$15,280,000~~$15,284,000 of debt related to our joint venture with TA/Petro.

Non-GAAP Financial Measures

EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of ~~performance and liquidity.~~performance. We use Adjusted EBITDA to assess the performance of our core operations, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as EBITDA, excluding stock compensation expense. We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, depreciation and amortization, and stock compensation expense. By excluding interest expense and income, EBITDA and Adjusted EBITDA allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries. We believe that excluding charges related to share-based compensation facilitates a comparison of our operations across periods and among other companies without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use. EBITDA and Adjusted EBITDA have limitations as measures of our performance. EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While EBITDA and Adjusted EBITDA are relevant and widely used measures of performance, they do not represent net income or cash flows from operations as defined by GAAP. Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.



	Three Months Ended March 31,
($ in thousands)	2019			2018
Net income	$	124		$	1,455
Net income (loss) attributable to non-controlling interest	5			(2		)
Net income attributable to common stockholders	119			1,457
Interest, net
Consolidated	(349		)	(283		)
Our share of interest expense from unconsolidated joint ventures	738			501
Total interest, net	389			218
Income taxes	95			526
Depreciation and amortization:
Consolidated	1,089			1,071
Our share of depreciation and amortization from unconsolidated joint ventures	1,109			919
Total depreciation and amortization	2,198			1,990
EBITDA	2,801			4,191
Stock compensation expense	813			948
Adjusted EBITDA	$	3,614		$	5,139

~~The following schedule reconciles Adjusted EBITDA and EBITDA to net income.~~

Three Months Ended March 31,
($ in thousands) 2018 2017
Net income $ 1,455
$ (1,913 )
Net income (loss) attributable to non-controlling interest (2 ) (11 )
Interest, net
Consolidated (283 ) (103 )
Our share of interest expense from unconsolidated joint ventures 501
404
Total interest, net 218
301
Income taxes 526
(1,332 )
Depreciation and amortization:
Consolidated 1,071
1,150
Our share of depreciation and amortization from unconsolidated joint ventures 919
1,316
Total depreciation and amortization 1,990
2,466
EBITDA 4,191
(467 )
Stock compensation expense 948
811
Adjusted EBITDA $ 5,139
$ 344

Net operating income (NOI) is a non-GAAP financial measure calculated as operating income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreciation and amortization, and gain or loss on sales of real estate. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets.


($ in thousands)	Three Months Ended March 31,		Three Months Ended March 31,
Net operating income	2018	2017	2019		2018
Pastoria Energy Facility	1,024	844	$	1,465	$	1,024
TRCC	358	451	291		358
Communication leases	174	203	234		174
Other commercial leases	158	147	157		158
Total Commercial/Industrial net operating income	1,714	1,645	$	2,147	$	1,714

Three Months Ended March 31,
($ in thousands) 2018 2017
Commercial/Industrial operating income $835 $446
Plus: Commercial/Industrial depreciation and amortization 149
162
Plus: General, administrative and other expenses 1,108
1,500
Less: Other revenues including land sales (378 ) (463 )
Total Commercial/Industrial net operating income $ 1,714
$ 1,645



	Three Months Ended March 31,
($ in thousands)	2019			2018
Commercial/Industrial operating income	$	1,034		$	835
Plus: Commercial/Industrial depreciation and amortization	144			149
Plus: General, administrative and other expenses	1,464			1,108
Less: Other revenues including land sales	(495		)	(378		)
Total Commercial/Industrial net operating income	$	2,147		$	1,714

The Company utilizes ~~net operating income (NOI)~~NOI of unconsolidated joint ventures ~~a non-GAAP financial measure,~~ as a measure of financial or operating ~~performance.~~performance that is not specifically defined by GAAP. We believe NOI of unconsolidated joint ventures provides investors with ~~useful~~additional information concerning operating performance ~~because it illustrates the profitability~~ of our unconsolidated joint ventures after taking into account operating expenses and before taking into account that interest expense and depreciation and amortization associated with our unconsolidated joint ventures, which costs may vary as a result of credit ratings and cost of capital.ventures. We also use this measure internally to monitor the operating performance of our unconsolidated joint ventures. Our computation of this non-GAAP measure may not be the same as similar measures reported by other companies. This non-GAAP financial measure should not be considered as an alternative to net income as a measure of the operating performance of our unconsolidated joint ventures or to cash flows computed in accordance with GAAP as a measure of liquidity, nor are they indicative of cash flows from operating and financial activities of our unconsolidated joint ventures.

The following schedule reconciles net income of unconsolidated joint ventures to NOI of unconsolidated joint ventures. Please refer to Note 15 (Investment in Unconsolidated and Consolidated Joint Ventures) of the Notes to Unaudited Consolidated Financial Statements for further discussion on joint ventures.


	Three Months Ended March 31,				Three Months Ended March 31,
($ in thousands)	2018		2017		2019		2018
Net income of unconsolidated joint ventures	$	157	$	161	$	1,377	$	157
Interest expense of unconsolidated joint ventures	974		786		1,442		974
Operating income of unconsolidated joint ventures	1,131		947		2,819		1,131
Depreciation and amortization of unconsolidated joint ventures	1,726		2,521		2,093		1,726
Net operating income of unconsolidated joint ventures	$	2,857	$	3,468	$	4,912	$	2,857

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial position, results of operations, or cash flows of the Company due to adverse changes in financial or commodity market prices or rates. We are exposed to market risk in the areas of interest rates and commodity prices.

Financial Market Risks

Our exposure to financial market risks includes changes to interest rates and credit risks related to marketable securities, interest rates related to our outstanding indebtedness and ~~market and credit risks related to~~ trade receivables.

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields and prudently managing risk. To achieve this objective and limit interest rate exposure, we limit our investments to securities with a maturity of less than five years and an investment grade rating from Moody’s or Standard &and Poor’s. See Note 3 (Marketable Securities) of the Notes to Unaudited Consolidated Financial Statements.

~~We do not have an~~Our current RLC has no outstanding ~~balance on our RLC. At the Company's option, the~~balance. The interest rate on the RLC can either float at 1.50% over a selected LIBOR ~~average,~~rate or can be fixed at 1.50% above LIBOR for a fixed term for a limited period of time and change only at maturity of the fixed rate portion. The floating rate and fixed rate options within our RLC help us manage our interest rate exposure on any outstanding balances.

We are exposed to interest rate risk on our long-term debt. Long-term debt consists of two term ~~loans. The first term loan~~loans, one of which is for ~~$65,162,000~~$61,561,000 and ~~has a rate that~~ is tied to LIBOR plus a margin of 1.70%. The interest rate for the term of this loan has been fixed through the use of an interest rate swap that fixed the rate at 4.11%. The outstanding balance on the second term loan ~~has an outstanding balance of $3,627,000~~is $3,347,000 and has a fixed rate of 4.25%. We believe it is prudent at times to limit the variability of floating-rate interest payments and have from ~~time-to-time~~time to time entered into interest rate swap arrangements to manage those fluctuations, as we did with the first term loan ~~mentioned above.~~(discussed here).

Market risk related to our farming inventories ultimately depends on the value of almonds, grapes, and pistachios at the time of payment or sale. ~~Market risk related to our farming inventories is discussed below in the section pertaining to commodity price exposure.~~ Credit risk related to our receivables depends upon the financial condition of our customers. Based on historical experience with our current customers and our periodic credit evaluations of our customers’ financial conditions, we believe our credit risk is minimal. Market risk related to our farming inventories is discussed below in the section pertaining to commodity price exposure.

The following tables provide information about our financial instruments that are sensitive to changes in interest rates. The tables present our debt obligations and marketable securities and their related weighted average interest rates by expected maturity dates.

Interest Rate Sensitivity Financial Market Risks

Principal Amount by Expected Maturity

At March 31, ~~2018~~2019

(In thousands except percentage data)


	2018	2019	2020	2021	2022	Thereafter	Total	Fair Value	2019	2020	2021	2022	2023	Thereafter	Total	Fair Value
Assets:
Marketable securities	$20,790	$30,316	$20,102	401	—	—	71,609	$71,109	$32,419	$27,638	$400	$—	$—	$—	60,457	$60,270
Weighted average interest rate	1.60%	1.85%	2.08%	2.51%	—	—	1.85%		2.08%	2.20%	2.51%	—%	—%	—%	2.14%
Liabilities:
Long-term debt ($4.75M note)	$209	$289	$302	$315	$328	$2,184	$3,627	$3,627	$218	$302	$315	$328	$343	$1,841	$3,347	$3,347
Weighted average interest rate	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%		4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%
Long-term debt ($70.0M note)	$2,679	$3,715	$3,881	$4,051	$4,221	$46,615	$65,162	$65,162	$2,793	$3,881	$4,051	$4,221	$4,429	$42,186	$61,561	$61,561
Weighted average interest rate	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%		4.11%	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%
Long-term debt (other)	$163	$21	$—	—	—	—	$184	$184
Weighted average interest rate	3.35%	3.35%	3.35%	—	—	—	3.35%

Interest Rate Sensitivity Financial Market Risks

Principal Amount by Expected Maturity

At December 31, ~~2017~~2018

(In thousands except percentage data)


	2018	2019	2020	2021	2022	Thereafter	Total	Fair Value	2019	2020	2021	2022	2023	Thereafter	Total	Fair Value
Assets:
Marketable securities	$20,227	$30,315	$20,420	36	68	—	$71,066	$70,868	$43,627	$20,111	$400	$—	$—	$—	$64,138	$63,749
Weighted average interest rate	1.61%	1.83%	2.02%	—	—	—	1.83%		2.02%	2.09%	2.51%	—%	—%	—%	2.04%
Liabilities:
Long-term debt ($4.75M note)	$277	$289	$302	$315	$328	$2,184	$3,695	$3,695	$289	$302	$315	$328	$343	$1,841	$3,418	$3,418
Weighted average interest rate	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%		4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%
Long-term debt ($70.0M note)	$3,563	$3,715	$3,881	$4,051	$4,221	$46,615	$66,046	$66,046	$3,715	$3,881	$4,051	$4,221	$4,429	$42,186	$62,483	$62,483
Weighted average interest rate	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%		4.11%	4.11%	4.11%	4.11%	4.11%	4.11%	4.11%
Long-term debt (other)	$163	$55	—	—	—	—	$218	$218	$14	$—	$—	$—	$—	$—	$14	$14
Weighted average interest rate	3.35%	3.35%	—	—	—	—	3.35%		3.35%	—%	—%	—%	—%	—%	3.35%

Commodity Price Exposure

As of March 31, ~~2018,~~2019, we have exposure to adverse price fluctuations associated with certain inventories and accounts receivable. Farming inventories consist of farming cultural and processing costs related to ~~2017~~2018 crop production. The farming costs inventoried are recorded at actual costs incurred. Historically, these costs have been recovered each year when that year’s crop harvest has been sold.

With respect to accounts receivable, the amount at risk relates primarily to farm crops. These receivables are recorded as estimates of the prices that ultimately will be received for the crops. The final price is generally not known for several months following the close of our fiscal year. Of the ~~$4,175,000~~$9,655,000 of accounts receivable outstanding at March 31, ~~2018, $2,053,000~~2019, $5,280,000, or ~~49%~~55%, is at risk to changing prices. Of the amount at risk to changing prices, ~~$564,000~~$4,164,000 is attributable to pistachios and ~~$1,489,000~~$1,116,000 is attributable to almonds. ~~The comparable amount of accounts receivable at risk to price changes at December 31, 2017 was $3,670,000, or 48% of the total accounts receivable of $7,608,000.~~

The price estimated for the remaining accounts receivable for pistachios recorded at March 31, ~~2018~~2019 was ~~$2.00~~$2.01 per pound, ~~compared to $2.03~~unchanged from the $2.01 per pound at December 31, ~~2017.~~2018. For each $0.01 change in the price per pound of pistachios, our receivable for pistachios increases or decreases by ~~$2,800.~~$15,000. Although the final price per pound of pistachios (and therefore the extent of the risk) is not presently known, over the last three years prices have ranged from $2.00 to ~~$2.45.~~$4.25. With respect to almonds, the ~~preliminary~~ price ~~estimate~~estimated for the remaining receivable was ~~$2.52~~$2.36 per pound, as compared to ~~$2.51~~$2.62 per pound at December 31, ~~2017.~~2018. For each $0.01 change in the price of almonds, our receivable for almonds increases or decreases by ~~$5,900.~~$4,300. The range of final prices over the last three years for almonds has ranged from $2.58 to $3.67 per pound.

ITEM 4. CONTROLS AND PROCEDURES


(a)	Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that all information required in the reports we file or submit under the Exchange Act iswas accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time period required by the rules and regulations of the SEC.


(b)	Changes in Internal Control ~~over~~Over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 12 (Commitments and Contingencies) in the Notes to Unaudited Consolidated Financial Statements in this report.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in ~~Item~~item 1A or elsewhere in our most recent Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.



Item 6. Exhibits:
3.1	Restated Certificate of Incorporation	FN 1

3.2	Amended and Restated Bylaws	FN 2

~~4.1~~	~~Form of First Additional Investment Right~~	~~FN 3~~

~~4.2~~	~~Form of Second Additional Investment Right~~	~~FN 4~~

4.3	Registration and Reimbursement Agreement	FN 5

10.1	Water Service Contract with Wheeler Ridge-Maricopa Water Storage District (without exhibits), amendments originally filed under Item 11 to Registrant's Annual Report on Form 10-K	FN 6

10.7	*Severance Agreement	FN 7

10.8	*Director Compensation Plan	FN 7

10.9	*Amended and Restated Non-Employee Director Stock Incentive Plan	FN 8



10.9(1)	*Stock Option Agreement Pursuant to the Non-Employee Director Stock Incentive Plan	FN 7

10.10	*Amended and Restated 1998 Stock Incentive Plan	FN 9

10.10(1)	*Stock Option Agreement Pursuant to the 1998 Stock Incentive Plan	FN 7

10.12	Ground Lease ~~Agreement~~ with Pastoria Energy Facility L.L.C.	FN 10

10.15	Form of Securities Purchase Agreement	FN 11

10.16	Form of Registration Rights Agreement	FN 12

10.17	*2004 Stock Incentive Program	FN 13

10.18	*Form of Restricted Stock Agreement for Directors	FN 13

10.19	*Form of Restricted Stock Unit Agreement	FN 13

10.23	Limited Liability Company Agreement of Tejon Mountain Village LLC ~~Operating Agreement~~	FN 14

10.24	Tejon Ranch Conservation and Land Use Agreement	FN 15

10.25	Second Amended and Restated Limited Liability ~~Company~~ Agreement of Centennial Founders, LLC	FN 16

10.26	*Executive Employment Agreement - Allen E. Lyda	FN 17

10.27	Limited Liability Company Agreement of TRCC/Rock Outlet Center LLC	FN 18

10.28	Warrant Agreement	FN 19

10.29	Amendments to Limited Liability Company Agreement of Tejon Mountain Village LLC	FN 20

10.30	Membership Interest Purchase Agreement - TMV LLC	FN 21

10.31	Amended and Restated Credit Agreement	FN 22



10.32	Term Note	FN 22

10.33	Revolving Line of Credit ~~Note~~	FN 22

10.34	Amendments to ~~Ground~~ Lease Agreement with Pastoria Energy Facility L.L.C.	FN 23

10.35	Water Supply Agreement with Pastoria Energy Facility L.L.C.	FN 24

~~10.36~~	*Separation Agreement - Gregory J. Tobias	~~FN 25~~

10.37	Limited Liability Company Agreement of TRC-MRC 2, LLC	FN 26

10.38	Limited Liability Company Agreement of TRC-MRC 1, LLC	FN 27

10.39	Centennial Founders LLC, Redemption and Withdrawal Agreement - Lewis Tejon Member, LLC	FN 28

10.40	First Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC	FN 29

10.41	Second Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC	FN 30
10.42	Limited Liability Company Agreement of TRC-MRC 3, LLC	FN 31
10.43	Fourth Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC	FN 32



10.44	Centennial Founders, LLC Redemption and Withdrawal Agreement - CalAtlantic	FN 33
31.1	Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS
~~101.INS~~	XBRL Instance Document.	Filed herewith
101.SCH
~~101.SCH~~	XBRL Taxonomy Extension Schema Document.	Filed herewith
101.CAL
~~101.CAL~~	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith
101.DEF
~~101.DEF~~	XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith
101.LAB
~~101.LAB~~	XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith
101.PRE
~~101.PRE~~	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith



*			Management contract, compensatory plan or arrangement.




FN 1		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) under Item 14 to our Annual Report on Form 10-K for year ended December 31, 1987, is incorporated herein by reference. This Exhibit was not filed with the Securities and Exchange Commission in an electronic format.
FN 2		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 99.1 to our Current Report on Form 8-K filed on September 20, 2017, ~~is incorporated herein by reference.~~
~~FN 3~~		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.3 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.
~~FN 4~~		~~This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.4 to our Current Report on Form 8-K filed on May 7, 2004,~~ is incorporated herein by reference.
FN 5		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.1 to our Current Report on Form 8-K filed on December 20, 2005, is incorporated herein by reference.
FN 6		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) under Item 14 to our Annual Report on Form 10-K for the year ended December 31, 1994, is incorporated herein by reference. This Exhibit was not filed with the Securities and Exchange Commission in an electronic format.
FN 7		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) under Item 14 to our Annual Report on Form 10-K ~~was filed on March 27, 1998,~~ for the year ended December 31, 1997, is incorporated herein by reference.
FN 8		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.9 to our Annual Report on Form 10-K ~~filed on March 2, 2009,~~ for the year ended December 31, 2008, is incorporated herein by reference.
FN 9		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.10 to our Annual Report on Form 10-K ~~filed on March 2, 2009,~~ for the year ended December 31, 2008, is incorporated herein by reference
FN 10		This document filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibit 10.16 to our Annual Report on Form 10-K ~~filed on April 1, 2002,~~ for the year ended December 31, 2001, is incorporated herein by reference.
FN 11		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.1 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.
FN 12		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.2 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.
FN 13		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibits 10.21-10.23 to our Annual Report on Form 10-K ~~filed on March 16, 2005,~~ for the year ended December 31, 2004, is incorporated herein by reference.
FN 14		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibit 10.24 to our Current Report on Form 8-K filed on May 24, 2006, is incorporated herein by reference.
FN 15		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.28 to our Current Report on Form 8-K filed on June 23, 2008, is incorporated herein by reference.
FN 16		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.25 to our Quarterly Report on Form 10-Q ~~filed on August 10, 2009,~~ for the period ~~ending~~ended June 30, 2009, ~~is incorporated herein by reference.~~



~~FN 17~~		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.26 to our Quarterly Report on Form 10-Q filed on May 8, 2013, for the period ending March 31, 2013, is incorporated herein by reference.
FN 18		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.27 to our Current Report on Form 8-K filed on June 4, 2013, is incorporated herein by reference.
FN 19		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.1 to our Current Report on Form 8-K filed on August 8, 2013, is incorporated herein by reference.



FN 20		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.29 to our Amended Annual Report on Form 10-K/A ~~filed March 31, 2014,~~ for the year ended December 31, 2013, is incorporated herein by reference.
FN 21		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.30 to our Current Report on Form 8-K filed on July 16, 2014, is incorporated herein by reference.
FN 22		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibits 10.31-10.33 to our Current Report on Form 8-K filed on October 17, 2014, is incorporated herein by reference.
FN 23		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.34 to our Annual Report on Form 10-K ~~filed March 16, 2015,~~ for the year ended December 31, 2014, is incorporated herein by reference.
FN 24		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.35 to our Quarterly Report on Form 10-Q ~~filed August 10, 2015,~~ for the period ~~ending~~ended June ~~30, 2015, is incorporated herein by reference.~~
~~FN 25~~		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.36 to our Quarterly Report on Form 10-Q filed November 9, 2015, for the period ending September 30, 2015, is incorporated herein by reference.
FN 26		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.37 to our Quarterly Report on Form 10-Q ~~filed August 9, 2016,~~ for the period ~~ending~~ended June 30, 2016, is incorporated herein by reference.
FN 27		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.38 to our Quarterly Report on Form 10-Q ~~filed November 8, 2016,~~ for the period ~~ending~~ended September 30, 2016, is incorporated herein by reference.
FN 28		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.39 to our Annual Report on Form 10-K ~~filed MArch 13, 2017,~~ for the year ended December 31, 2016, is incorporated herein by reference.
FN 29		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.40 to our Annual Report on Form 10-K ~~filed March 13, 2017,~~ for the year ended December 31, 2016, is incorporated herein by reference.
FN 30		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.41 to our Annual Report on Form 10-K ~~filed March 13, 2017,~~ for the year ended December 31, 2016, is incorporated herein by reference.
FN 31		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.42 to our Quarterly Report on Form 10-Q for the period ended September 30, 2018, is incorporated herein by reference.
FN 32		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.43 to our Annual Report on Form 10-K for the year ended December 31, 2018, is incorporated herein by reference.
FN 33		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.44 to our Annual Report on Form 10-K for the year ended December 31, 2018, is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Company~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly ~~authorized, on May 7, 2018.~~authorized.



		TEJON RANCH CO.
~~(The Company)~~


May 7, 2019		/s/ ~~Allen E. Lyda~~Gregory S. Bielli
~~Allen E. Lyda~~		Gregory S. Bielli
		President and Chief Executive ~~Vice President, Chief Financial~~ Officer ~~and Corporate Treasurer~~
		(~~Principle Financial~~Principal Executive Officer)

May 7, 2019		/s/ Robert D. Velasquez
		Robert D. Velasquez
		Senior Vice President of Finance and Chief ~~Accounting~~Financial Officer
		(~~Principle~~Principal Financial and Accounting Officer)

6163



	March 31, 2018		December 31, 2017
Stock grants outstanding beginning of the period at target achievement	536,860		386,171
New stock grants/additional shares due to maximum achievement	97,529		295,243
Vested grants	(81,828	)	(99,769	)
Expired/forfeited grants	—		(44,785	)
Stock grants outstanding end of period at target achievement	552,561		536,860



	March 31, 2018	December 31, 2017
Subject to AC 606
Farming	2,472	5,745
Management Fees	466	744
Ranch Operations	258	209
Total Subject to ASC 606	3,196	6,698

Not Subject to ASC 606
Leases	951	885
Other	28	25
Total Not Subject to ASC 606	979	910
Total Accounts Receivable	4,175	7,608

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.50 par value

New York Stock Exchange