LIMONEIRA COMPANY

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

FOR THE QUARTERLY PERIOD ENDED ~~APRIL 30, 2019~~JANUARY 31, 2020



¨	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: 001-34755

LIMONEIRA COMPANY

(Exact name of Registrant as Specified in its Charter)



Delaware	77-0260692
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)



1141 Cummings Road, Santa Paula, CA	93060
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (805) 525-5541



Not Applicable (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol (s)	Name of Each Exchange of Which Registered
Common Stock, $0.01 par value	LMNR	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

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. ý Yes ¨ No

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). ý Yes ¨ 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	ý Accelerated filer	¨ Emerging growth company
¨ Non-accelerated filer	¨ Smaller reporting 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 ý No

As of ~~May 31, 2019,~~February 29, 2020, there were ~~17,772,753~~17,857,707 shares outstanding of the registrant’s common stock.

LIMONEIRA COMPANY

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION		4

Item 1.	Financial Statements	4

Consolidated Balance Sheets – ~~April 30, 2019~~January 31, 2020 and October 31, ~~2018~~2019		4

Consolidated Statements of Operations – three ~~and six~~ months ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~		5

Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss – three ~~and six~~ months ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~		6

Consolidated Statements of Stockholders' Equity and Temporary Equity – ~~six~~three months ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~		7

Consolidated Statements of Cash Flows – ~~six~~three months ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~		8

Notes to Consolidated Financial Statements		10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5242

Item 4.	Controls and Procedures	5242

PART II. OTHER INFORMATION		5343

Item 1.	Legal Proceedings	5343

Item 1A.	Risk Factors	5343

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5343

Item 3.	Defaults Upon Senior Securities	5343

Item 4.	Mine Safety Disclosures	5343

Item 5.	Other Information	5343

Item 6.	Exhibits	5444

SIGNATURES		5646

Cautionary Note on Forward-Looking Statements.

This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond the Company’s control. The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied include:

changes in laws, regulations, rules, quotas, tariff, and import laws;

adverse weather conditions, natural disasters and other adverse natural conditions, including freezes, rains, fires and droughts that affect the production, transportation, storage, import and export of fresh produce;

market responses to industry volume pressures;

increased pressure from disease, insects and other pests;

disruption of water supplies or changes in water allocations;

product and raw materials supplies and pricing;

energy supply and pricing;

changes in interest and currency exchange rates;

availability of financing for development activities;

general economic conditions for residential and commercial real estate development;

political changes and economic ~~crisis;~~crises;

international conflict;

acts of terrorism;

labor disruptions, strikes, shortages or work stoppages;

potential negative impacts related to COVID-19;

loss of important intellectual property rights; and

other factors disclosed in our public filings with the Securities and Exchange Commission (the "SEC").

The Company’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which the Company is not currently aware or which the Company currently deems immaterial could also cause the Company’s actual results to differ, including those discussed in the section entitled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018.~~2019. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

The terms the “Company,” “Limoneira”, “we,” “our” and “us” as used throughout this Quarterly Report on Form 10-Q refer to Limoneira Company and its consolidated subsidiaries, unless otherwise indicated.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIMONEIRA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($ in thousands, except share amounts)


	April 30, 2019			October 31, 2018		January 31, 2020			October 31, 2019
Assets
Current assets:
Cash	$	1,491		$	609	$	874		$	616
Accounts receivable, net	19,960			14,116		26,524			18,099
Cultural costs	2,821			5,413		3,455			7,223
Prepaid expenses and other current assets	11,808			10,528		11,681			8,153
Income taxes receivable	—			378		979			979
Total current assets	36,080			31,044		43,513			35,070

Property, plant and equipment, net	230,592			225,681		248,193			248,114
Real estate development	16,156			107,162		17,515			17,602
Equity in investments	57,470			18,698		60,785			58,223
Investment in Calavo Growers, Inc.	23,953			24,250		15,322			17,346
Goodwill						1,839			1,839
Intangible assets, net						12,122			12,407
Other assets	19,034			14,504		9,359			9,266
Total assets	$	383,285		$	421,339	$	408,648		$	399,867

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,002		$	6,134	$	8,193		$	4,974
Growers payable	17,029			10,089		9,400			14,500
Accrued liabilities	4,828			7,724		10,271			9,167
Current portion of long-term debt	2,915			3,127		2,998			3,023
Total current liabilities	34,774			27,074		30,862			31,664
Long-term liabilities:
Long-term debt, less current portion	93,744			76,966		126,604			105,892
Deferred income taxes	24,751			25,372		21,328			24,346
Other long-term liabilities	3,347			3,647		6,227			5,467
Sale-leaseback deferral	—			58,330
Total liabilities	156,616			191,389		185,021			167,369
Commitments and contingencies (See Note 16)
Commitments and contingencies (See Note 18)

Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at April 30, 2019 and October 31, 2018) (8.75% coupon rate)	1,479			1,479
Series B-2 Convertible Preferred Stock – $100.00 par value (10,000 shares authorized: 9,300 shares issued and outstanding at April 30, 2019 and October 31, 2018) (4% dividend rate on liquidation value of $1,000 per share)	9,331			9,331
Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at January 31, 2020 and October 31, 2019) (8.75% coupon rate)						1,479			1,479
Series B-2 Convertible Preferred Stock – $100.00 par value (10,000 shares authorized: 9,300 shares issued and outstanding at January 31, 2020 and October 31, 2019) (4% dividend rate on liquidation value of $1,000 per share)						9,331			9,331

Stockholders’ equity:
Series A Junior Participating Preferred Stock – $0.01 par value (20,000 shares authorized: zero issued or outstanding at April 30, 2019 and October 31, 2018)	—			—
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,772,753 and 17,647,135 shares issued and outstanding at April 30, 2019 and October 31, 2018, respectively)	178			176
Series A Junior Participating Preferred Stock – $0.01 par value (20,000 shares authorized: zero issued or outstanding at January 31, 2020 and October 31, 2019)						—			—
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,857,707 and 17,756,180 shares issued and outstanding at January 31, 2020 and October 31, 2019, respectively)						179			178
Additional paid-in capital	159,992			159,071		160,869			160,254
Retained earnings	59,757			50,354		45,199			53,089
Accumulated other comprehensive (loss) income	(4,643		)	8,965
Accumulated other comprehensive loss						(8,387		)	(7,255		)
Noncontrolling interest	575			574		14,957			15,422
Total stockholders’ equity	215,859			219,140		212,817			221,688
Total liabilities and stockholders’ equity	$	383,285		$	421,339	$	408,648		$	399,867

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

($ in thousands, except share amounts)

Three Months Ended
April 30, Six Months Ended
April 30,
2019 2018 2019 2018
Net revenues:

Agribusiness $ 40,823
$ 41,865
$ 81,623
$ 72,198
Rental operations 1,212
1,270
2,430
2,530
Real estate development —
—
—
—
Total net revenues 42,035
43,135
84,053
74,728
Costs and expenses:

Agribusiness 37,078
28,798
75,994
56,960
Rental operations 1,095
976
2,174
2,041
Real estate development 24
39
52
69
Selling, general and administrative 4,843
3,942
9,858
8,016
Total costs and expenses 43,040
33,755
88,078
67,086
Operating (loss) income (1,005 ) 9,380
(4,025 ) 7,642
Other income (expense):

Interest expense (686 ) (284 ) (539 ) (794 )
Equity in earnings of investments 1,927
(126 ) 1,969
(83 )
Unrealized gain (loss) on stock in Calavo Growers, Inc. 3,612
—
(298 ) —
Other income, net 56
16
360
257
Total other income (expense) 4,909
(394 ) 1,492
(620 )

Income (loss) before income tax (provision) benefit 3,904
8,986
(2,533 ) 7,022
Income tax (provision) benefit (1,084 ) (2,380 ) 677
8,207
Net income (loss) 2,820
6,606
(1,856 ) 15,229
Net income attributable to noncontrolling interest (5 ) (7 ) (22 ) (5 )
Net income (loss) attributable to Limoneira Company 2,815
6,599
(1,878 ) 15,224
Preferred dividends (126 ) (126 ) (251 ) (251 )
Net income (loss) attributable to common stock $ 2,689
$ 6,473
$ (2,129 ) $ 14,973

Basic net income (loss) per common share $ 0.15
$ 0.45
$ (0.12 ) $ 1.04

Diluted net income (loss) per common share $ 0.15
$ 0.44
$ (0.12 ) $ 1.02

Weighted-average common shares outstanding-basic 17,554,000
14,379,000
17,516,000
14,341,000
Weighted-average common shares outstanding-diluted 18,225,000
15,023,000
17,516,000
14,986,000



	Three Months Ended January 31,
	2020			2019
Net revenues:
Agribusiness	$	40,483		$	40,800
Other	1,173			1,218
Total net revenues	41,656			42,018
Costs and expenses:
Agribusiness	42,543			38,916
Other operations	1,269			1,107
Selling, general and administrative	6,310			5,015
Total costs and expenses	50,122			45,038
Operating loss	(8,466		)	(3,020		)
Other expense:
Interest income, net	55			147
Equity in (loss) earnings of investments	(120		)	42
Unrealized loss on stock in Calavo Growers, Inc.	(2,024		)	(3,910		)
Other income, net	515			304
Total other expense	(1,574		)	(3,417		)

Loss before income tax benefit	(10,040		)	(6,437		)
Income tax benefit	3,136			1,761
Net loss	(6,904		)	(4,676		)
Net loss (income) attributable to noncontrolling interest	477			(17		)
Net loss attributable to Limoneira Company	(6,427		)	(4,693		)
Preferred dividends	(125		)	(125		)
Net loss attributable to common stock	$	(6,552	)	$	(4,818	)

Basic net loss per common share	$	(0.37	)	$	(0.28	)

Diluted net loss per common share	$	(0.37	)	$	(0.28	)

Weighted-average common shares outstanding-basic	17,579,000			17,488,000
Weighted-average common shares outstanding-diluted	17,579,000			17,488,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

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

(In thousands)

Three Months Ended April 30, Six Months Ended
April 30,
2019 2018 2019 2018
Net income (loss) $ 2,820
$ 6,606
$ (1,856 ) $ 15,229
Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments (452 ) 50
443
293
Minimum pension liability adjustment, net of tax of $28, $52, $55 and $103 for the three and six months ended April 30, 2019 and 2018, respectively. 72
123
146
247
Unrealized holding gains on security available-for-sale, net of tax of $0, $589, $0 and $1,758 for the three and six months ended April 30, 2019 and 2018, respectively. —
1,421
—
4,242
Unrealized gains from derivative instrument, net of tax of $0, $25, $0 and $67 for the three and six months ended April 30, 2019 and 2018, respectively. —
58
—
161
Total other comprehensive (loss) income, net of tax (380 ) 1,652
589
4,943
Comprehensive income (loss) 2,440
8,258
(1,267 ) 20,172
Comprehensive (income) loss attributable to noncontrolling interest 13
13
1
36
Comprehensive income (loss) attributable to Limoneira Company $ 2,453
$ 8,271
$ (1,266 ) $ 20,208



	Three Months Ended January 31,
	2020			2019
Net loss	$	(6,904	)	$	(4,676	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(1,267		)	895
Minimum pension liability adjustment, net of tax of $50 and $27 for the three months ended January 31, 2020 and 2019, respectively.	135			74
Total other comprehensive (loss) income, net of tax	(1,132		)	969
Comprehensive loss	(8,036		)	(3,707		)
Comprehensive loss (income) attributable to noncontrolling interest	465			(12		)
Comprehensive loss attributable to Limoneira Company	$	(7,571	)	$	(3,719	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY

($ in thousands)

Stockholders’ Equity Temporary Equity
Common Stock Additional
Paid-In Retained Accumulated
Other
Comprehensive Noncontrolling Series B
Preferred Series B-2
Preferred
Shares Amount Capital Earnings Income (Loss) Interest Total Stock Stock
Balance at October 31, 2018 17,647,135
$ 176
$ 159,071
$ 50,354
$ 8,965
$ 574
$ 219,140
$ 1,479
$ 9,331
Dividends Common ($0.075 per share) —
—
—
(1,332 ) —
—
(1,332 ) —
—
Dividends Series B ($2.19 per share) —
—
—
(32 ) —
—
(32 ) —
—
Dividends Series B-2 ($10 per share) —
—
—
(93 ) —
—
(93 ) —
—
Stock compensation 145,737
2
789
—
—
—
791
—
—
Exchange of common stock (20,119 ) —
(305 ) —
—
—
(305 ) —
—
Net (loss) income —
—
—
(4,693 ) —
17
(4,676 ) —
—
Other comprehensive income, net of tax 969
(12 ) 957
—
—
Reclassification of unrealized gain on marketable securities upon adoption of ASU 2016-01 —
—
—
15,921
(15,921 ) —
—
—
—
Reclassification upon adoption of ASU 2018-02 —
—
—
(1,724 ) 1,724
—
—
—
—
Balance at January 31, 2019 17,772,753 178
159,555
58,401
(4,263 ) 579
214,450
1,479
9,331
Dividends Common ($0.075 per share) —
—
—
(1,333 ) —
—
(1,333 ) —
—
Dividends Series B ($2.19 per share) —
—
—
(33 ) —
—
(33 ) —
—
Dividends Series B-2 ($10 per share) —
—
—
(93 ) —
—
(93 ) —
—
Stock compensation —
—
437
—
—
—
437
—
—
Net (loss) income —
—
—
2,815
—
5
2,820
—
—
Other comprehensive income, net of tax —
—
—
—
(380 ) (9 ) (389 ) —
—
Balance at April 30, 2019 17,772,753 $ 178
$ 159,992
$ 59,757
$ (4,643 ) $ 575
$ 215,859
$ 1,479
$ 9,331

Stockholders’ Equity Temporary Equity
Common Stock Additional
Paid-In Retained Accumulated
Other
Comprehensive Noncontrolling Series B
Preferred Series B-2
Preferred
Shares Amount Capital Earnings Income (Loss) Interest Total Stock Stock
Balance at October 31, 2017 14,405,031
$ 144
$ 94,294
$ 34,692
$ 7,076
$ 587
$ 136,793
$ 1,479
$ 9,331
Dividends Common Stock ($0.0625 per share) —
—
—
(908 ) —
—
(908 ) —
—
Dividends Series B ($2.19 per share) —
—
—
(32 ) —
—
(32 ) —
—
Dividends Series B-2 ($10 per share) —
—
—
(93 ) —
—
(93 ) —
—
Stock compensation 145,441
1
708
—
—
—
709
—
—
Exchange of common stock (17,520 ) —
(401 ) —
—
—
(401 ) —
—
Net income —
—
—
8,625
—
(2 ) 8,623
—
—
Other comprehensive income, net of tax —
—
—
—
3,291
25
3,316
—
—
Balance at January 31, 2018 14,532,952
145
94,601
42,284
10,367
610
148,007
1,479
9,331
Dividends Common Stock ($0.0625 per share) —
—
—
(908 ) —
—
(908 ) —
—
Dividends Series B ($2.19 per share) —
—
—
(33 ) —
—
(33 ) —
—
Dividends Series B-2 ($10 per share) —
—
—
(93 ) —
—
(93 ) —
—
Stock compensation —
—
230
—
—
—
230
—
—
Net income —
—
—
6,599
—
7
6,606
—
—
Other comprehensive income, net of tax —
—
—
—
1,652
6
1,658
—
—
Balance at April 30, 2018 14,532,952 $ 145
$ 94,831
$ 47,849
$ 12,019
$ 623
$ 155,467
$ 1,479
$ 9,331



	Stockholders’ Equity																			Temporary Equity
	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Noncontrolling						Series B Preferred		Series B-2 Preferred
	Shares		Amount		Capital			Earnings			Income (Loss)			Interest			Total			Stock		Stock
Balance at October 31, 2019	17,756,180		$	178	$	160,254		$	53,089		$	(7,255	)	$	15,422		$	221,688		$	1,479	$	9,331
Dividends Common ($0.075 per share)	—		—		—			(1,338		)	—			—			(1,338		)	—		—
Dividends Series B ($2.19 per share)	—		—		—			(32		)	—			—			(32		)	—		—
Dividends Series B-2 ($10 per share)	—		—		—			(93		)	—			—			(93		)	—		—
Stock compensation	112,841		1		828			—			—			—			829			—		—
Exchange of common stock	(11,314	)	—		(213		)	—			—			—			(213		)	—		—
Net loss	—		—		—			(6,427		)	—			(477		)	(6,904		)	—		—
Other comprehensive (loss) income, net of tax											(1,132		)	12			(1,120		)	—		—
Balance at January 31, 2020	17,857,707		$	179	$	160,869		$	45,199		$	(8,387	)	$	14,957		$	212,817		$	1,479	$	9,331



	Stockholders’ Equity																			Temporary Equity
	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Noncontrolling						Series B Preferred		Series B-2 Preferred
	Shares		Amount		Capital			Earnings			Income (Loss)			Interest			Total			Stock		Stock
Balance at October 31, 2018	17,647,135		$	176	$	159,071		$	50,354		$	8,965		$	574		$	219,140		$	1,479	$	9,331
Dividends Common ($0.075 per share)	—		—		—			(1,332		)	—			—			(1,332		)	—		—
Dividends Series B ($2.19 per share)	—		—		—			(32		)	—			—			(32		)	—		—
Dividends Series B-2 ($10 per share)	—		—		—			(93		)	—			—			(93		)	—		—
Stock compensation	145,737		2		787			—			—			—			789			—		—
Exchange of common stock	(20,119	)	—		(305		)	—			—			—			(305		)	—		—
Net (loss) income	—		—		—			(4,693		)	—			17			(4,676		)	—		—
Other comprehensive income (loss), net of tax											969			(12		)	957			—		—
Reclassification of unrealized gain on marketable securities upon adoption of ASU 2016-01	—		—		—			15,921			(15,921		)	—			—			—		—
Reclassification upon adoption of ASU 2018-02	—		—		—			(1,724		)	1,724			—			—			—		—
Balance at January 31, 2019	17,772,753		$	178	$	159,553		$	58,401		$	(4,263	)	$	579		$	214,448		$	1,479	$	9,331

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Six Months Ended April 30,						Three Months Ended January 31,
	2019			2018			2020			2019
Operating activities
Net (loss) income	$	(1,856	)	$	15,229
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net loss							$	(6,904	)	$	(4,676	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,247			3,434			2,565			2,126
(Gain) loss on disposals of assets	(11		)	193
Gain on sales of real estate development assets	—			(25		)
Gain on disposals of assets							(250		)	(22		)
Stock compensation expense	1,228			939			829			789
Equity in earnings of investments	(1,969		)	83			120			(42		)
Cash distributions from equity investments	282			—
Deferred income taxes	(642		)	(10,781		)	(3,136		)	(1,434		)
Amortization of deferred financing costs							20			8
Accrued interest on notes receivable	(92		)	(83		)	(6		)	(39		)
Unrealized loss on stock in Calavo Growers, Inc.	298			—			2,024			3,910
Changes in operating assets and liabilities:
Accounts receivable	(5,838		)	(6,284		)	(8,433		)	(4,983		)
Cultural costs	2,608			2,112			3,746			2,914
Prepaid expenses and other current assets	(1,409		)	(1,052		)	(513		)	(2,491		)
Income taxes receivable	378			—			—			(13		)
Other assets	(130		)	25			139			90
Accounts payable and growers payable	9,947			2,244			(2,314		)	2,421
Accrued liabilities	(2,927		)	1,000			(267		)	(3,003		)
Other long-term liabilities	(96		)	49			171			(48		)
Net cash provided by operating activities	4,018			7,083

Net cash used in operating activities							(12,209		)	(4,493		)
Investing activities
Capital expenditures	(8,151		)	(5,420		)	(3,672		)	(5,098		)
Purchase of real estate development parcel	—			(1,444		)
Net proceeds from sales of real estate development assets	—			1,543
Agriculture property acquisition	(397		)	—
Payments to FGF Trapani (See Note 19)	(4,000		)	—
Agriculture property acquisitions							—			(397		)
Collections of installments on note receivable	150			—			—			150
Equity investment contributions	(4,000		)	(3,500		)	(2,800		)	(4,000		)
Investments in mutual water companies	(16		)	(16		)	(43		)	(460		)
Net cash used in investing activities	(16,414		)	(8,837		)	(6,515		)	(9,805		)

Financing activities
Borrowings of long-term debt	58,340			41,801			36,631			35,970
Repayments of long-term debt	(41,844		)	(37,564		)	(15,895		)	(19,262		)
Dividends paid – common	(2,665		)	(1,816		)	(1,338		)	(1,332		)
Dividends paid – preferred	(251		)	(251		)	(125		)	(125		)
Exchange of common stock	(305		)	(401		)	(213		)	(305		)
Net cash provided by financing activities	13,275			1,769			19,060			14,946
Effect of exchange rate changes on cash	3			(14		)	(78		)	23
Net increase in cash	882			1			258			671
Cash at beginning of period	609			492			616			609
Cash at end of period	$	1,491		$	493		$	874		$	1,280

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

(In thousands)


	Six Months Ended April 30,						Three Months Ended January 31,
	2019			2018			2020		2019
Supplemental disclosures of cash flow information
Cash paid during the period for interest (net of amounts capitalized)	$	1,327		$	1,150		$	1,078	$	900
Cash paid during the period for income taxes, net of (refunds)	$	130		$	100
Non-cash investing and financing activities:
Unrealized holding gain on Calavo investment	$	—		$	(6,000	)
(Decrease) increase in real estate development and sale-leaseback deferral	$	(58,330	)	$	8,425
Decrease in real estate development and sale-leaseback deferral							$	—	$	(58,330	)
Reclassification from real estate development to equity in investments	$	(33,353	)	$	—		$	—	$	(33,353	)
Increase in equity in investments and other long-term liabilities	$	—		$	750
Non-cash issuance of note receivable	$	—		$	3,000
Non-cash reduction of note receivable	$	—		$	68
Capital expenditures accrued but not paid at period-end	$	400		$	299		$	119	$	233
Accrued contribution obligation of investment in water company	$	450		$	315		$	450	$	450
Accrued Series B-2 Convertible Preferred Stock dividends	$	31		$	31		$	31	$	31
Non-cash issuance of note payable	$	—		$	1,435

In December 2018, the Company terminated its lease agreement with the Joint Venture (as defined herein) that is developing the East Area I real estate development project. As a result, the Company reduced its sale ~~lease-back~~leaseback deferral and corresponding real estate development by $58,330,000 and reclassified $33,353,000 of the Company’s basis in the Joint Venture from real estate development to equity in investments as further described in Note 7 - Real Estate Development and Note 8 - Equity in Investments of the ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

In February ~~2013,~~2020, the Company ~~entered into~~received an ~~option agreement for~~annual patronage dividend of $966,000 from Farm Credit West, FLCA ("Farm Credit West"). This dividend was accrued at January 31, 2020, of which $667,000 was recorded as a reduction in interest expense and $299,000 reduced the ~~purchase of a 7-acre parcel adjacent to its East Area II~~Company's real estate development ~~project. In February 2018, the Company exercised its option and purchased the property for $3,145,000, by making a cash payment of $1,444,000 and issuing a note payable for $1,435,000.~~

In November 2017, the holder of the note receivable from a 2004 sale of property completed the drilling of a water well at the Company’s La Campana Ranch. The fair value of the well drilling services was $68,000 and the Company recorded a non-cash reduction of the note receivable.

In October 2017, the Company entered an agreement to sell its Centennial Square (“Centennial”) real estate development property for $3,250,000. This transaction closed in December 2017 with the Company receiving net proceeds of $179,000 and receiving a $3,000,000 promissory note secured by the property for the balance of the purchase price. assets.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Basis of Presentation

Business

Limoneira Company (together with its consolidated subsidiaries, the “Company”) engages primarily in growing citrus and avocados, picking and hauling citrus, and packing, marketing and selling lemons. The Company is also engaged in residential rentals and other rental operations and real estate development activities.

The Company markets and sells lemons directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Europe and other international markets. The Company is a member of Sunkist Growers, Inc. (“Sunkist”), an agricultural marketing cooperative, and sells its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

The Company sells ~~all~~the majority of its avocado production to Calavo Growers, Inc. (“Calavo”), a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW. Calavo’s customers include many of the largest retail and food service companies in the United States and Canada. ~~The~~Calavo packs the Company’s avocados, ~~are packed by Calavo,~~ which are then sold and distributed under Calavo brands to its customers.

Basis of Presentation and Preparation

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest ~~is held by the Company.~~. Intercompany accounts and transactions have been eliminated. In the opinion of the Company, the unaudited interim consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited interim consolidated financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Because the consolidated financial statements do not include all of the information and notes required by GAAP for a complete set of consolidated financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies

~~Revenue Recognition~~Changes in Accounting Policies

On November 1, ~~2018,~~2019, the Company adopted Financial Accounting Standards Board ~~(“FASB”~~("FASB") - – Accounting Standards Update ~~(“ASU”~~("ASU") ~~ASU 2014-09, Revenue from Contracts with Customers (Topic 606),~~2016-02, Leases (as amended, "ASU 2016-02" or the "New Lease Standard"). A lease is defined as a contract that ~~amends~~conveys the ~~guidance~~right to control the use of an identified asset for ~~the recognition~~a period of ~~revenue from contracts with customers.~~time in exchange for consideration. The ~~results for the reporting period beginning after November 1, 2018 are presented in accordance with the new standard which was adopted using the modified-retrospective method and applied to those~~Company enters into contracts that ~~were not completed~~are, or contain, leases as both a lessee and a lessor. The following accounting policies have been updated as part of ~~November 1, 2018. There was no net effect~~the adoption of ~~applying~~ the ~~standard and therefore no cumulative adjustment to retained earnings was necessary at the date of initial application.~~New Lease Standard.

AsLeases

Accounting for Operating Leases as a ~~result comparative information has not been restated~~Lessee- In its ordinary course of business, the Company enters into leases as a lessee generally for agricultural land and packinghouse equipment. The Company determines if an arrangement is a lease or contains a lease at inception. Operating leases are included in other assets, accrued liabilities and other long-term liabilities on its consolidated balance sheets. Operating lease right-of-use (“ROU”) assets represent the ~~results~~right to use an underlying asset for the ~~reporting periods before November 1, 2018 continue~~lease term and lease liabilities represent the obligation to ~~be reported under~~make lease payments arising from the ~~accounting standards~~lease, measured on a discounted basis. Operating lease ROU assets and ~~policies~~operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As none of the Company’s leases provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in ~~effect for those periods.~~determining the present value of future payments.

~~The core principle~~Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the ~~guidance is that an entity should~~balance sheet as the Company has elected to recognize ~~revenue to depict~~lease expense for these leases on a straight-line basis over the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

~~Identify the contract(s) with a customer.~~

~~Identify the performance obligations in the contract.~~

~~Determine the transaction price.~~

~~Allocate the transaction price to the performance obligations in the contract.~~

~~Recognize revenue when (or as) the entity satisfies a performance obligation.~~

lease term. The Company ~~determined the appropriate method by~~has material leases with related parties which it recognizes revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with its customers. The Company accountsare further described in Note 15 - Related-Party Transactions.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2. Summary of Significant Accounting Policies (continued)

~~Revenue Recognition~~Leases (continued)

~~for a contract when it has approval and commitment from both parties, the rights~~Certain of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A contract's transaction price is allocated to each distinct good or service (i.e., performance obligation) identified in the contract and each performance obligation is valuedCompany’s agricultural land agreements contain variable costs based on ~~its estimated relative standalone selling price.~~

~~The Company recognizes the majority of its revenue at~~ a ~~point in time when it satisfies a performance obligation and transfers control~~percentage of the ~~product to~~operating results of the ~~respective customer. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of~~leased property. Such variable ~~consideration~~lease costs are expensed as incurred. These land agreements also contain costs for non-lease components, such as allowances for estimated customer discounts or concessions, where applicable. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.

~~Upon adoption,~~water usage, which the Company ~~changed~~accounts for separately from the ~~accounting of certain brokered fruit sales. Under previous guidance,~~lease components. For all other agreements, the Company ~~was considered an agent~~generally combines lease and ~~recorded revenues~~non-lease components in calculating the ROU assets and lease liabilities. See Note 13 - Leases for certain brokered fruit sales and the costs of such fruit on a net basis in its consolidated statement of operations. Under the new revenue recognition standard, the Company is considered a principal in the transaction and revenues are recorded on a gross basis in the Company’s consolidated statement of operations with the related cost of such fruit included in agribusiness costs and expenses.

~~This change resulted in the recognition of~~ additional agribusiness revenue and agribusiness costs and expenses of $162,000 and $168,000, respectively, during the three months ended April 30, 2019 and $456,000 and $420,000, respectively, during the six months ended April 30, 2019. Had it used the previous revenue recognition guidance, the Company would have recorded insignificant net agribusiness revenue for the three and six months ended April 30, 2019. No cumulative adjustment to retained earnings was necessary as there is no net effect of applying the standard.information.

~~Agribusiness revenue -~~Accounting for Leases as a Lessor ~~Revenue from lemon sales is generally recognized at a point~~- The Company’s leases in ~~time when~~which it acts as the ~~customer takes control~~lessor includes land, residential and commercial units and are all classified as operating leases. Certain of the ~~fruit from~~Company’s contracts contain variable income based on a percentage of the operating results of the leased asset. Certain of the Company’s ~~packinghouse, which aligns with the transfer of title to the customer.~~contracts contain non-lease components such as water, utilities and common area services. The Company has elected to ~~treat any shipping~~not separate lease and ~~handling costs incurred after control~~non-lease components for its lessor arrangements and the combined component is accounted for entirely under Accounting Standards Codification ("ASC") 842, Leases. The underlying asset in an operating lease arrangement is carried at depreciated cost within property, plant, and equipment, net on the consolidated balance sheets. Depreciation is calculated using the straight-line method over the useful life of the ~~goods has been transferred~~underlying asset. The Company recognizes operating lease revenue on a straight-line basis over the lease term.

Comprehensive (Loss) Income

Comprehensive (loss) income represents all changes in a company’s net assets, except changes resulting from transactions with shareholders, and is reported as a component of the Company’s stockholders’ equity. As of January 31, 2020, the components of accumulated other comprehensive loss, net of tax, consist of foreign currency translation items of $3,629,000, pension liability items of $4,618,000 and security available for sale items of $140,000. As of October 31, 2019, accumulated other comprehensive loss consists of foreign currency translation items of $2,362,000, pension liability items of $4,753,000 and security available for sale items of $140,000.

Recent Accounting Pronouncements

FASB ASU 2016-02, Leases (Topic 842) and related ASUs, including ASU 2018-11, Leases (Topic 842): Targeted Improvements

In February 2016, the FASB issued ASU 2016-02, which requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the ~~customer as agribusiness costs.~~financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11. Among other things, ASU 2018-11 provides administrative relief by allowing entities to implement the lease standard on a modified retrospective basis (the "Optional Transition Method"). Effectively, the Optional Transition Method permits companies to adopt the lease standard through a cumulative effect adjustment to their opening balance sheet on the date of adoption and report under the New Lease Standard on a post-adoption basis.

The ~~Company’s avocados, oranges, specialty citrus and other specialty crops are packed and sold by Calavo and other third-party packinghouses.~~Company adopted ASU 2016-02 effective November 1, 2019 using the Optional Transition Method. The Company ~~delivers all~~elected the package of ~~its avocado production from its orchards to Calavo. These avocados are then packed by Calavo at its packinghouse and sold and distributed~~practical expedients permitted under ~~Calavo brands to its customers primarily in~~ the United States and Canada. The Company’s arrangements with other third-party packinghouses related to its oranges, specialty citrus and other specialty crops are similar to its arrangement with Calavo. The Company’s arrangements with its third-party packinghouses are such thattransition guidance, which allows the Company to carry forward its historical lease classification, its assessment of whether a contract is ~~the producer~~or contains a lease, and ~~supplier~~its initial direct costs for any leases that existed prior to adoption of the ~~product and the third-party packinghouses are the Company’s customers.~~

The revenues the Company recognizes related to the fruits sold to the third-party packinghouses are based on the volume and quality of the fruits delivered, the market price for such fruit, less the packinghouses’ charges to pack and market the fruit. Such packinghouse charges include the grading, sizing, packing, cooling, ripening and marketing of the related fruit.New Lease Standard. The Company ~~controls~~elected the ~~product until it is delivered~~hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of ROU assets. The Company did not elect to combine lease and non-lease components for land leases but elected to combine lease and non-lease components for all other asset classes. The Company also elected to keep leases with an initial term of 12 months or less off the ~~third-party packinghouses at which time control of~~balance sheet and recognize the product is transferred to the third-party packinghouses and revenue is recognized. Such third-party packinghouse charges are recorded as a reduction of revenue as they are not for distinct services. The identifiable benefit the Company receives from the third-party packinghouses for packaging and marketing services cannot be sufficiently separated from the third-party packinghouses’ purchase of the Company’s products. In addition, the Company is not able to reasonably estimate the fair value of the benefit received from the third-party packinghouses for such services and as such, these costs are characterized as a reduction of revenueassociated lease payments in the ~~Company’s~~ consolidated statements of ~~operations.~~operations on a straight-line basis over the lease term. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company updated its accounting policies, processes and internal controls in order to meet the New Lease Standard's reporting and disclosure requirements.

Revenue from the sales of certain of the Company’s agricultural products is recorded based on estimated proceeds provided by certain of the Company’s sales and marketing partners (Calavo and other third-party packinghouses) due to the time between when the product is delivered by the Company and the closing of the pools for such fruits at the end of each month or harvest period. Calavo and other third-party packinghouses are agricultural cooperatives or function in a similar manner as an agricultural cooperative. The Company

estimates the variable consideration using the most likely amount method, with the most likely amount being the quantities actually shipped extended by the prices reported by Calavo and other third-party packinghouses. Revenue is recognized at time of delivery to

~~the packinghouses relating to fruits that are in pools that have not yet closed at month end if: (a) the related fruits have been delivered~~

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

~~2. Summary of Significant Accounting Policies (continued)~~

~~Revenue Recognition (continued)~~

to and accepted by Calavo and other third-party packinghouses (i.e., Calavo and other third-party packinghouses obtain control) and (b) sales price information has been provided by Calavo and other third-party packinghouses (based on the marketplace activity for the related fruit) to estimate with reasonable certainty the final selling price for the fruit upon the closing of the pools. In such instances the Company has the present right to payment and Calavo and other third-party packinghouses have the present right to direct the use of, and obtain substantially all of the remaining benefits from, the delivered fruit. The Company does not expect that there is a high likelihood that a significant reversal in the amount of cumulative revenue recognized in the early periods of the pool will occur once the final pool prices have been reported by the packinghouses. Historically, the revenue that is recorded based on the sales price information provided to the Company by Calavo and other third-party packinghouses at the time of delivery, have not materially differed from the actual amounts that are paid after the monthly or harvest period pools are closed.

The Company has entered into brokerage arrangements with third-party international packinghouses. In certain of these arrangements, the Company has the exclusive ability to direct the use of and obtains substantially all of the remaining benefits from the fruit, and is therefore acting as a principal. As such, the Company records the related revenue and costs of the fruit gross in the consolidated statement of operations.

~~Revenue from crop insurance proceeds is recorded when the amount can be reasonably determined and upon establishment of the present right to payment.~~

~~Rental Revenue -~~ Minimum rental revenues are generally recognized on a straight-line basis over the respective initial lease term. Contingent rental revenues are contractually defined as to the percentage of rent received by the Company and are based on fees collected by the lessee. Such revenues are recognized when actual results, based on collected fees reported by the tenant, are received. The Company's rental arrangements generally require payment on a monthly or quarterly basis.

~~Real Estate Development Revenue -~~ The Company recognizes revenue on real estate development projects with customers at a point in time (i.e., the closing) when the Company satisfies the single performance obligation and transfers control of such real estate to a buyer. The transaction price, which is the amount of consideration the Company receives upon delivery of the completed real estate to the buyer, is allocated to this single obligation and is received at closing. Real estate development projects with non-customers are accounted for in accordance with Accounting Standards Code (“ASC”) 610-20, ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets~~.

~~Recent Accounting Pronouncements~~

~~FASB ASU 2016-01, Financial Instruments Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~

The amendments in ASU 2016-01, among other things, require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e., securities or loans and receivables). Eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost.

ASU 2016-01 is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company’s adoption of this ASU on November 1, 2018 resulted in a cumulative-effect adjustment to the statement of financial position, with the Company reclassifying unrealized holding gains of $15,921,000, net of taxes, in Calavo common stock to retained earnings from accumulated other comprehensive income ("AOCI") at the date of adoption. In addition, the change in the fair value of Calavo common stock has been disclosed as a separate line item in the statement of operations subsequent to the adoption of ASU 2016-01.

~~FASB ASU 2016-02, Leases (Topic 842)~~

~~Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:~~

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

2. Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

AThe adoption of ASU 2016-02 had a material impact on its consolidated balance sheets, but did not have a material impact on its consolidated statements of operations or its consolidated statements of cash flows. Upon adoption as of November 1, 2019, the Company recorded ROU assets of $2.4 million and lease ~~liability,~~liabilities of $2.5 million for operating leases in which the Company is a ~~lessee’s obligation to make lease payments arising~~lessee. The adoption also included an immaterial reclassification of accrued rent liabilities against the ROU asset balance. As of November 1, 2019, there were no material finance leases for which the Company was a lessee. The adoption of ASU 2016-02 did not change the Company’s accounting for its operating leases in which it acts as the lessor. See Note 13 - Leases for additional information about the Company’s leases from a ~~lease, measured on a discounted basis;~~lessor and

~~A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.~~ lessee perspective.

~~Under~~FASB ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related ASUs

This amendment requires the ~~new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made~~measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to ~~align, where necessary, lessor accounting with~~better inform their credit loss estimates. Many of the ~~lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified~~loss estimation techniques applied today will still be permitted, although the ~~accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees~~inputs to those techniques will ~~no longer be provided with a source~~change to reflect the full amount of ~~off-balance sheet financing.~~expected credit losses.

ASU ~~2016-02~~2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2018, including~~2019. Early application is permitted for fiscal years, and interim periods within those fiscal years. Early application is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered intoyears, beginning after the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The ASU will be effective for the Company beginning in the first quarter of its fiscal year ending October 31, 2020.December 15, 2018. The Company is evaluating the effect this ASU may have on its consolidated financial statements, however it expects to apply the practical expedients provided in the ASU. Note 20 – Commitments and Contingencies of the notes to consolidated financial statements included in the Company's 2018 Annual Report on Form 10-K describes its operating lease arrangements as of October 31, 2018.

~~FASB ASU 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~

The amendment requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.

The amendment is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company’s adoption of this ASU during the first quarter of fiscal year 2019 had no material impact on its consolidated financial statements.

~~FASB ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

This amendment provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 (the "2017 Act") (or portion thereof) is recorded.

The amendment is effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendment either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the 2017 Act is recognized. The Company early adopted this ASU on November 1, 2018, and as a result recorded a cumulative-effect reclassification in the statement of financial position to retained earnings from AOCI at the date of adoption of $1,724,000 related to the investment in Calavo and pension liability.

FASB ASU 2018-14, ~~Compensation—~~Compensation - Retirement ~~Benefits—~~Benefits - Defined Benefit ~~Plans—~~Plans - General (Subtopic 715-20): Disclosure ~~Framework—~~Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

This amendment adds, removes and clarifies the disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans.

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~2. Summary of Significant Accounting Policies (continued)~~

~~Recent Accounting Pronouncements (continued)~~

For public business entities, the amendments are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is evaluating the effect this ASU may have on its consolidated financial statements.

~~SEC Amendments~~FASB ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

This amendment removes specific exceptions to ~~Certain Disclosure Requirements~~the general principles in Topic 740 in GAAP. It eliminates the need for an organization to analyze whether certain exceptions apply in a given period. The amendment also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP under certain situations.

In August 2018, the SEC adopted amendments to certain disclosure requirements for a number of SEC rules, including Rule 3-04 of Regulation S-X. Rule 3-04 requires that a public registrant’s Form 10-Q include a reconciliation of changes in stockholders’ equity for each period for which a statement of comprehensive incomeASU 2019-12 is ~~required to be filed. These amendments are~~ effective for public business entities, for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. An entity that elects early adoption in an interim period should reflect any adjustments as of the beginning ~~after~~of the annual period that includes that interim period. Additionally, an entity that elects early adoption should adopt all the amendments in the same period. The Company early adopted this ASU as of November ~~5, 2018, therefore~~1, 2019 and the ~~Company has included~~adoption did not have a ~~separate statement of stockholders’ equity and temporary equity in this Quarterly Report~~material impact on ~~Form 10-Q.~~its consolidated financial statements.

3. Acquisitions

Agriculture Property Acquisition

In January 2019, the Company purchased land for use as a citrus orchard for a cash purchase price of $397,000. The acquisition was for 26 acres of agricultural property adjacent to the Company’s orchards in Lindsay, California. This agriculture property acquisition is included in property, plant and equipment, net on the Company’s consolidated balance ~~sheet.~~sheets.

~~San Pablo~~

On July 18, 2018, the Company completed the acquisition of San Pablo ranch and related assets in La Serena, Chile, for $13,000,000. The San Pablo ranch consists of 3,317 acres on two parcels, including 247 acres producing lemons, 61 acres producing oranges, the opportunity to immediately plant 120 acres for lemon production, as well as the potential for approximately 500 acres of avocado production. This acquisition was accounted for as an asset purchase and is included in property, plant and equipment in the Company’s consolidated balance sheet. In addition, transaction costs of $111,000 were capitalized as part of total acquisition costs.

~~Below is a summary of the fair value of the net assets acquired on the acquisition date based on a third-party valuation (in thousands):~~

Cultural costs $ 579
Land and land improvements 9,114
Buildings and equipment 207
Orchards 2,058
Water rights 1,153
Total assets acquired $ 13,111

The unaudited, pro forma consolidated statement of operations as if San Pablo had been included in the consolidated results of the Company for the year ended October 31, 2018 results in revenue of $130,262,000 and net income of $18,785,000.

~~Business Combinations~~

~~Oxnard Lemon~~

On July 24, 2018, the Company and Oxnard Lemon Associates, Ltd., a California limited partnership (“Seller”), entered into an Asset Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, on July 26, 2018 (the “Initial Closing Date”), the Company acquired certain tangible assets of seller, including a packinghouse and related land (“Oxnard Lemon”), for a purchase price of $24,750,000 (the “Initial Acquisition”). Pursuant to the Purchase Agreement, the closing on the purchase and sale of the intangible assets of Seller, including Seller’s trade names, trademarks and copyrights, took place on October 31, 2018 (the “Final Closing Date”), at which point an additional $250,000 in purchase price was paid to Seller by the Company. The aggregate purchase price for the tangible assets and the intangible assets provided in the Purchase Agreement was $25,000,000. Additionally, the Purchase

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3. Acquisitions ~~(continued)~~

Business Combinations

~~Agreement provided that Seller lease back the tangible assets from~~Trapani Fresh

On May 30, 2019, the Company ~~until~~acquired a 51% interest in a joint venture, Trapani Fresh, formed with FGF Trapani (“FGF”), a multi-generational, family-owned citrus operation in Argentina. To consummate the ~~Final Closing Date, pursuant to~~transaction, the Company formed a ~~lease executed on~~subsidiary under the ~~Initial Closing Date. Transaction~~name Limoneira Argentina S.A.U. (“Limoneira Argentina”) as the managing partner and acquired a 51% interest in an Argentine Trust that holds a 75% interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons. Trapani Fresh controls the trust and grows, packs, markets and sells fresh citrus. Total consideration paid for the Company’s interest in Trapani Fresh was $15,000,000 and transaction costs of ~~$142,000~~approximately $654,000 were included in selling, general and administrative ~~expense.~~expense during the fiscal year ended October 31, 2019.

Below is a summary of the preliminary fair value of the net assets acquired on the acquisition date based on a third-party valuation, which was updated during the fourth quarter of fiscal year 2019 due to changes in the enacted tax rates in Argentina that increased the customer relationships, trademarks and non-competition agreement and decreased goodwill (in thousands):


Cultural costs			$	3,270
Land and land improvements	$	7,294	9,520
Buildings and equipment	14,866
Customer relationships and trade names	2,270
Buildings and improvements			870
Orchards			8,410
Customer relationships, trademarks and non-competition agreement (10-year useful life)			6,920
Goodwill	570		420
Total assets acquired	$	25,000	29,410
Noncontrolling interest			(14,410		)
Net cash paid			$	15,000

Preliminary goodwill of $420,000 relates to synergies of the operations, has been allocated to the fresh lemons segment and is currently not expected to be deductible for tax purposes. Revenue of $14,651,000 and net income of $999,000 of Trapani Fresh were included in the Company’s consolidated statement of operations from the acquisition date to the period ended October 31, 2019. The unaudited, pro forma consolidated statement of operations as if ~~Oxnard Lemon~~Trapani Fresh had been included in the consolidated results of the Company for the ~~year~~years ended October 31, 2019 and 2018 would have resulted in ~~revenue~~revenues of ~~$142,253,000~~$177,625,000 and $153,033,000, respectively, and net (loss) income of ~~$19,728,000.~~$(6,092,000) and $21,942,000, respectively.

4. Fair Value Measurements

Under the FASB ASC 820, Fair Value Measurement and Disclosures, a fair value measurement is determined based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

The following table sets forth the Company’s financial assets and liabilities as of ~~April 30, 2019~~January 31, 2020 and October 31, ~~2018,~~2019, which are measured on a recurring basis during the period, segregated by level within the fair value hierarchy (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

April 30, 2019 Level 1 Level 2 Level 3 Total
Assets at fair value:

Equity securities $ 23,953
$ —
$ —
$ 23,953

4. Fair Value Measurements (continued)


October 31, 2018	Level 1		Level 2		Level 3		Total
January 31, 2020									Level 1		Level 2		Level 3		Total
Assets at fair value:
Equity securities	$	24,250	$	—	$	—	$	24,250	$	15,322	$	—	$	—	$	15,322



October 31, 2019	Level 1		Level 2		Level 3		Total
Assets at fair value:
Equity securities	$	17,346	$	—	$	—	$	17,346

Equity securities consist of marketable securities in Calavo common stock. At ~~April 30, 2019~~January 31, 2020 and October 31, ~~2018,~~2019, the Company owned ~~250,000~~200,000 shares, respectively, representing approximately ~~1.4%~~1.1% of Calavo’s outstanding common stock. These securities are measured at fair value by quoted market prices and changes in fair value are included in the statement of ~~operations subsequent to the adoption of ASU 2016-01.~~operations.

~~With~~In fiscal year 2019, the ~~adoption~~Company sold 50,000 shares of ~~FASB ASU 2016-01 on November 1, 2018, changes~~Calavo common stock for a total of $4,786,000 recognizing a loss of $63,000. This loss is included in other (expense) income in the ~~fair value~~consolidated statement of ~~the marketable securities result in gains or losses recognized in net income.~~ operations.

The Company recorded an unrealized ~~gains (losses)~~loss of ~~$3,612,000 and $(298,000)~~$2,024,000 during the three ~~and six~~ months ended ~~April 30, 2019, respectively,~~January 31, 2020, which is included in other ~~income (expense)~~expense in the consolidated statements of operations. The Company recorded an unrealized ~~holding gains~~loss of ~~$2,010,000 ($1,421,000 net of tax) and $6,000,000 ($4,242,000 net of tax),~~$3,910,000 during the three ~~and six~~ months ended ~~April 30, 2018,~~January 31, 2019, which ~~were~~is included in ~~AOCI~~other expense in the consolidated ~~balance sheet.~~statements of operations.

Calavo’s stock price at ~~April 30, 2019~~January 31, 2020 and October 31, ~~2018~~2019 was ~~$95.81~~$76.61 and ~~$97.00~~$86.73 per share, respectively. ~~Prior to the adoption of ASU 2016-01, these equity securities were classified as available-for-sale securities and changes in fair value were recorded in AOCI net of tax.~~

~~LIMONEIRA COMPANY~~

5. Concentrations and Geographic Information

Lemons procured from third-party growers were 55% and 59% ~~and 43%~~ of the Company's lemon supply in the three months ended ~~April 30,~~January 31, 2020 and 2019, ~~and 2018,~~ respectively. Lemons procured from third-party growers were 59% and 47% of lemon supply in the six months ended April 30, 2019 and 2018, respectively, of which one third-party grower was 10% of lemon supply at April 30, 2019. The Company sells ~~all~~the majority of its avocado production to Calavo and the majority of its oranges and specialty citrus to a third-party ~~packing house.~~ packinghouse.

One individual customer represented 11% of accounts receivable, net as of January 31, 2020. Concentrations of credit risk with respect to trade receivables are limited due to a large, diverse customer base.

During the three months ended January 31, 2020, the Company had approximately $539,000 of lemon and orange sales in Chile by PDA and San Pablo and $199,000 of lemon and orange sales in Argentina by Trapani Fresh. During the three months ended January 31, 2019, the Company had approximately $638,000 of lemon and orange sales in Chile by PDA and San Pablo.

6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

April 30,
2019 October 31, 2018
Prepaid insurance $ 779
$ 647
Prepaid supplies 1,165
1,196
Lemon supplier advances 508
170
Note receivable, net 2,552
2,797
Real estate development held for sale 5,024
5,024
Water assessment fees and other 1,780
694
$ 11,808
$ 10,528



	January 31, 2020		October 31, 2019
Prepaid supplies and insurance	$	3,370	$	3,199
Note receivable and related interest	2,670		181
Real estate development held-for-sale	2,543		2,543
Lemon supplier advances and other	3,098		2,230
	$	11,681	$	8,153

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

7. Real Estate Development

Real estate development assets are comprised primarily of land and land development costs and consist of the following (in thousands):


	April 30, 2019		October 31, 2018		January 31, 2020		October 31, 2019
East Area I	$	—	$	91,357
Retained Property - East Area I	10,613		10,408		$	11,799	$	11,943
East Area II	5,543		5,397		5,716		5,659
	$	16,156	$	107,162	$	17,515	$	17,602

East Area I, Retained Property and East Area II

In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities. On November 10, 2015 (the “Transaction Date”), the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project. To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC ~~(the “LLC”~~(“LLCB” or “Joint Venture”) as the development entity, contributed its East Area I property to ~~the LLC~~LLCB and sold a 50% interest in ~~the LLC~~LLCB to Lewis for $20,000,000.

The Company and the Joint Venture also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement"). Under the terms of the Retained Property Agreement, the Joint Venture transferred certain contributed East Area I property, which is entitled for commercial development, back to the Company (the "Retained Property") and arranged for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by the Company. The value as of January 31, 2020 and October 31, 2019 includes $1,200,000, respectively, for estimated costs incurred by and reimbursable to LLCB, which is included in accrued liabilities as of January 31, 2020.

In ~~August~~January 2018, the ~~Retained Property,~~Joint Venture entered into a $45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. The Loan originally was ~~transferred back~~scheduled to mature in January 2020 and was extended to February 22, 2021 per the terms thereof. The interest rate on the Loan is LIBOR plus 2.85% and is payable monthly. The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without penalty. The extension had no impact on the Company's loan guarantee $1,080,000 value as of January 31, 2020.

In February 2018, certain principals from Lewis and by the Company guaranteed the obligations under the Loan. The guarantee shall continue in effect until all of the Loan obligations are fully paid and the guarantors are jointly and severally liable for all Loan obligations in the event of default by the Joint Venture. The Joint Venture recorded the Loan balance of $45,000,000 as of January 31, 2020.

The Company made contributions to the ~~Company.~~ Joint Venture of $2,800,000 and $4,000,000 in the three months ended January 31, 2020 and 2019, respectively. Additionally, in February 2020 the Company and Lewis each loaned $1,800,000 to the Joint Venture at an interest rate of 4.6% due May 31, 2020.

Through January 31, 2020, the Joint Venture has closed the sales of the initial residential lots representing 244 residential units.

Other Real Estate Development Projects

The remaining real estate development parcel within the Templeton Santa Barbara, LLCB project is described as Sevilla. The Company's net carrying value of ~~the Retained Property~~Sevilla was $2,543,000, as of ~~April 30, 2019~~January 31, 2020 and October 31, ~~2018 was $10,613,000~~2019, respectively, which has been included in prepaid expenses and ~~$10,408,000, respectively, and classified as real estate development.~~other current assets. The expenses associated with this property were immaterial.

~~Further, on the Transaction Date, the Joint Venture and~~During December 2017, the Company ~~entered into~~sold its Centennial property with a ~~Lease Agreement (the "Lease Agreement"), pursuant to which the Joint Venture would lease certain~~net book value of ~~the contributed East Area I property back to the~~$2,983,000 for $3,250,000. The Company ~~for continuation of agricultural operations,~~received cash and ~~certain other permitted uses, on the property until the Joint Venture required~~a $3,000,000 promissory note secured by the property for ~~development. In~~the balance of the purchase price. The promissory note was originally scheduled to mature in December ~~2018,~~2019 but the Company ~~terminated~~extended the ~~Lease Agreement pursuant~~maturity date concurrently and resetting the interest rate to equal to the ~~terms therein.~~

~~The Company’s sale of an interest in~~6-month LIBOR plus 2.75% on the ~~LLC in which the Company’s contributed property comprises the LLC’s primary asset, combined with the Lease Agreement was considered a sale-leaseback transaction under FASB ASC 840, Leases,~~ ~~because~~outstanding principal balance of the ~~Company’s continuing involvement~~note, interest only paid monthly on the first day of each month beginning January 1, 2020. At January 31, 2020, the carrying value of the note was $2,670,000 and classified in ~~the property in the form of its agricultural operations. Accordingly, the property was carried on~~prepaid expenses and other current assets.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

7. Real Estate Development (continued)

~~East Area I, Retained Property and East Area II~~Other Real Estate Development Projects (continued)

In the consolidated balance sheet as real estate development, rather than being classified as an equity investment and a sale-leaseback deferral had been recorded for the $20,000,000 payment made by Lewis for the purchasefirst quarter of ~~the LLC interest. Lease expense associated with the Lease Agreement was not required under sale-leaseback accounting since~~fiscal year 2020, the Company was treated as though it continued to own the property. During the three and six months ended April 30, 2018, the Company recorded $5,699,000 and $8,425,000, respectively, of real estate development costs and corresponding increases in the sale-leaseback deferral to recognize real estate development costs capitalized by the LLC. There were no repayment requirements for the sale-leaseback deferral. When the Lease Agreement was terminated in December 2018 control of the property transferred to the Joint Venture and therefore, the Company reduced the sale lease-back deferral and corresponding real estate development by $58,330,000 and reclassified $33,353,000 to equity in investments upon derecognition of the real estate development. As the fair value of the Company’s ownership interest in the Joint Venture approximated the Company’s historical basis in the real estate development at the inception of the Joint Venture, no gain or loss was recorded.

The Company made contributions to the Joint Venture of $4,000,000 and $3,500,000 in the six months ended April 30, 2019 and 2018, respectively. Additionally, the Company recorded equity income, net of amortization of basis differences, of $2,270,000 for both the three and six months ended April 30, 2019.

~~In February and March 2019, the Company announced that its Joint Venture with Lewis closed the sales of the initial residential lots representing a total of 174 residential units.~~

~~Templeton Santa Barbara, LLC~~

The real estate development parcels within the Templeton Santa Barbara, LLC project are described as The Terraces at Pacific Crest (“Pacific Crest”), and Sevilla. The net carrying values of Pacific Crest and Sevilla were $2,481,000 and $2,543,000, respectively, as of April 30, 2019 and October 31, 2018. These projects were idle during the six months ended April 30, 2019 and 2018 and, as such, no costs were capitalized and expenses were insignificant.

~~In October 2018, the Company began negotiations~~entered into an agreement to sell its ~~Pacific Crest~~Sevilla property for $2,700,000. After transaction and ~~Sevilla properties for a combined total price of $5,200,000. As a result,~~other costs, the Company ~~recorded impairment charges on Pacific Crest~~expects to receive proceeds of approximately $2,550,000 and ~~Sevilla of $769,000 and $789,000, respectively, in October 2018. These negotiations have not resulted in a sale and the Company is actively marketing these properties.~~

recognize an insignificant gain upon closing. At ~~April 30, 2019 and October~~January 31, ~~2018, the $2,481,000 carrying value of Pacific Crest and~~2020, the $2,543,000 carrying value of ~~Sevilla were~~the property was classified as held for sale and included in prepaid expenses and other current assets.

8. Equity in Investments

Equity in investments consist of the following (in thousands):

April 30,
2019 October 31, 2018
Limoneira Lewis Community Builders, LLC $ 53,416
$ 14,060
Limco Del Mar, Ltd. 2,001
1,935
Rosales 1,543
2,191
Romney Property Partnership 510
512
$ 57,470
$ 18,698

The Rosales equity investment includes the Company’s 35% interest acquired in fiscal year 2014 and an additional 12% interest acquired with the purchase of PDA in fiscal year 2017. The Company’s investment in Rosales is accounted for using the equity method of accounting based on the sum of its direct and indirect ownership.

~~The Limoneira Lewis Community Builders, LLC investment balance includes the value of the Company's ownership interest in the Joint Venture as described in Note 7 - Real Estate Development.~~

~~LIMONEIRA COMPANY~~

~~8. Equity in Investments (continued)~~



	January 31, 2020		October 31, 2019
Limoneira Lewis Community Builders, LLC	$	56,872	$	54,016
Limco Del Mar, Ltd.	1,966		1,950
Rosales	1,435		1,745
Romney Property Partnership	512		512
	$	60,785	$	58,223

Unconsolidated Significant Subsidiary

~~The LLC investment balance includes the value of the Company's ownership interest in the LLC.~~ In accordance with Rule 10-01(b)(1) of Regulation S-X, which applies ~~for~~to interim reports on Form 10-Q, the Company must determine if its equity method investees are considered, “significant subsidiaries”. In evaluating its investments, there are two tests utilized to determine if equity method investees are considered significant subsidiaries: the income test and the investment test. ~~Rule 10-01(b)(1) of Regulation S-X requires summarized~~Summarized income statement information of an equity method investee is required in an interim report if either of the two tests exceed 20%. During the current ~~quarter,~~year-to-date interim period, this threshold was not met for any of the ~~LLC~~Company's equity investments and thus ~~requires~~ summarized income statement information is not required in this Quarterly Report on Form 10-Q.

~~The~~

9. Goodwill and Intangible Assets

Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable. There have been no impairment charges recorded against goodwill as of January 31, 2020.

Intangible assets consisted of the following ~~is unaudited summarized financial information~~as of January 31, 2020 and October 31, 2019 (in thousands):



	January 31, 2020								October 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life in Years	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life in Years

Trade names and trademarks	$	3,786	$	(652	)	$	3,134	10	$	3,786	$	(542	)	$	3,244	10
Customer relationships	5,010		(648		)	4,362		9	5,010		(500		)	4,510		9
Non-competition agreement	1,040		(69		)	971		10	1,040		(42		)	998		10
Acquired water and mineral rights	3,655		—			3,655		Indefinite	3,655		—			3,655		Indefinite
Other intangible assets	$	13,491	$	(1,369	)	$	12,122		$	13,491	$	(1,084	)	$	12,407

Amortization expense totaled $285,000 and $89,000 for the ~~LLC~~three months ended January 31, 2020 and 2019, respectively.

Estimated future amortization expense of intangible assets as of January 31, 2020 are as follows (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

9. Goodwill and Intangible Assets (continued)

Six Months Ended April 30,
2019 2018
Revenues $ 30,354
$ —
Cost of land sold 22,005
—
Operating expenses 107
83
Net income (loss) $ 8,242
$ (83 )
Net income (loss) attributable to Limoneira Company $ 3,481
$ (83 )



2020 (excluding the three months ended January 31, 2020)	$	752
2021	1,027
2022	976
2023	976
2024	976
Thereafter	3,760
	$	8,467

9.10. Other Assets

~~Other assets consist~~

Investments in Mutual Water Companies

The Company’s investments in various not-for-profit mutual water companies provide the Company with the right to receive a proportionate share of water from each of the ~~following (in thousands):~~not-for-profit mutual water companies that have been invested in and do not constitute voting shares and/or rights. Amounts included in other assets in the consolidated balance sheets as of January 31, 2020 and October 31, 2019 were $5,992,000 and $5,499,000, respectively.

April 30,
2019 October 31, 2018
Investments in mutual water companies $ 5,486
$ 5,026
Acquired water and mineral rights 3,841
3,783
Deposit for land purchase 608
593
Deferred lease assets and other 335
396
Notes receivable 815
566
Revolving funds and memberships 244
267
Acquired trade names, trademarks and customer relationships 2,270
2,442
Goodwill 1,435
1,431
Payments to FGF Trapani 4,000
—
$ 19,034
$ 14,504

~~10.~~11. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

April 30,
2019 October 31, 2018
Compensation $ 2,258
$ 2,784
Property taxes 21
785
Interest 342
297
Deferred rental income and deposits 460
497
Lease expense 78
378
Lemon supplier payables 53
1,214
Capital expenditures and other 1,616
1,769
$ 4,828
$ 7,724



	January 31, 2020		October 31, 2019
Compensation	$	2,065	$	1,973
Property taxes	229		652
Lemon and orange supplier payables	2,176		899
Allowances and packing and harvest expenses	1,930		3,191
Payable to FGF	1,123		906
Payable to LLCB	1,200		—
Other	1,548		1,546
	$	10,271	$	9,167

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

~~11.~~12. Long-Term Debt

Long-term debt is comprised of the following (in thousands):


	April 30, 2019		October 31, 2018		January 31, 2020		October 31, 2019
Farm Credit West revolving and non-revolving lines of credit: the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 2.50% at April 30, 2019, plus 1.60%. Effective July 1, 2018, the interest rate for the $40.0 million outstanding balance of the non-revolving line of credit was fixed at 4.77%. Interest is payable monthly and the principal is due in full on July 1, 2022.	$	69,142	$	50,888
Farm Credit West term loan: the interest rate is variable and was 4.95% at April 30, 2019. The loan is payable in quarterly installments through November 2022.	2,321		2,602
Farm Credit West term loan: the interest rate is variable and was 4.95% at April 30, 2019. The loan is payable in monthly installments through October 2035.	1,100		1,122
Farm Credit West term loan: the interest rate is fixed at 4.70%. The loan is payable in monthly installments though March 2036.	9,000		9,172
Farm Credit West revolving and non-revolving lines of credit: the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 1.80% at January 31, 2020, plus 1.85%. The interest rate for the $40.0 million outstanding balance of the non-revolving line of credit was fixed at 4.77%. Interest is payable monthly and the principal is due in full on July 1, 2022.					$	104,466	$	82,843
Farm Credit West term loan: Effective October 1, 2019, the interest rate was fixed at 3.76%. The loan is payable in quarterly installments through November 2022.					1,890		2,035
Farm Credit West term loan: Effective October 1, 2019, the interest rate was fixed at 4.14%. The loan is payable in monthly installments through October 2035.					1,066		1,078
Farm Credit West term loan: Effective October 1, 2019, the interest rate was fixed at 4.17%. The loan is payable in monthly installments through March 2036.					8,729		8,823
Farm Credit West term loan: the interest rate is fixed at 3.62% until March 2021, becoming variable for the remainder of the loan. The loan is payable in monthly installments though March 2036.	6,666		6,808		6,449		6,522
Wells Fargo term loan: the interest rate is fixed at 3.58%. The loan is payable in monthly installments through January 2023.	5,667		6,367		4,594		4,955
Banco de Chile term loan: the interest rate is fixed at 6.48%. The loan is payable in annual installments through January 2025.	1,470		1,857		1,115		1,386
Note Payable: the interest rate ranges from 5.00% to 7.00% and was 5.50% at April 30, 2019. The loan includes interest-only monthly payments and principal is due in February 2023.	1,435		1,435
Note Payable: the interest rate ranges from 5.00% to 7.00% and was 5.50% at January 31, 2020. The loan includes interest only monthly payments and principal is due in February 2023.					1,435		1,435
Subtotal	96,801		80,251		129,744		109,077
Less deferred financing costs, net of accumulated amortization	142		158		142		162
Total long-term debt, net	96,659		80,093		129,602		108,915
Less current portion	2,915		3,127		2,998		3,023
Long-term debt, less current portion	$	93,744	$	76,966	$	126,604	$	105,892

OnIn June ~~20,~~ 2017, the Company entered into a Master Loan Agreement (the “Loan Agreement”) with Farm Credit West ~~FLCA (“Farm Credit West”) which~~that includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (the “Supplements”). ~~Proceeds from the Supplements were used to pay down all the remaining outstanding indebtedness under the revolving credit facility the Company had with Rabobank, N.A.~~ On January 29, 2018, the Company amended the Revolving Credit Supplement to increase the borrowing capacity from $60,000,000 to $75,000,000. The Supplements provide aggregate borrowing capacity of $115,000,000 comprised of $75,000,000 under the Revolving Credit Supplement and $40,000,000 under the Non-Revolving Credit Supplement. The borrowing capacity based on collateral value was $115,000,000 at ~~April 30, 2019.~~January 31, 2020.

All indebtedness under the Loan ~~Agreements,~~Agreement, including any indebtedness under the Supplements, is secured by a first lien on certain of ~~the Company’s~~its agricultural properties in Tulare, Ventura and ~~Ventura~~San Luis Obispo counties in California and certain of the ~~Company’s~~Company's building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties. The Loan Agreement includes customary default provisions that provide should an event of default ~~occur,~~occur. Farm Credit West, at its option, may declare all or any portion of the indebtedness under the Loan Agreement to be immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend the ~~Company’s~~Company's right to draw or request funds on any loan or line of credit.

In December 2019, Farm Credit West declared an annual cash patronage dividend of 1.00% of average eligible loan balances. The Company accrued the $966,000 dividend receivable in prepaid expenses and other current assets at January 31, 2020, which was received in February 2020.

In March 2020, the Company entered into a loan agreement with Farm Credit West for a $15,000,000 revolving line of credit secured by the Windfall Investors, LLC property. The loan matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments. The interest rate is variable with monthly interest-only payments during the 3-year draw period and monthly principal and interest payments thereafter.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

12. Long-Term Debt (continued)

Interest is capitalized on non-bearing orchards, real estate development projects and significant construction in progress. The Company capitalized interest of ~~$344,000~~$89,000 and ~~$372,000~~$267,000 during the three months ended ~~April 30,~~January 31, 2020 and 2019, ~~and 2018, respectively, and $611,000 and $949,000 during the six months ended April 30, 2019 and 2018,~~ respectively. Capitalized interest is included in property, plant and equipment and real estate development assets in the Company’s consolidated balance sheets.

13. Leases

Lessor Arrangements

The Company enters into leasing transactions in which it rents certain of its assets and the Company is the lessor. These lease contracts are typically classified as operating leases with remaining terms ranging from one month to 23 years, with various renewal terms available. All of the residential rentals have month to month lease terms.

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of the dates indicated (in thousands):



	January 31, 2020			October 31, 2019
Land	$	1,279		$	1,279
Buildings, equipment and building improvements	22,841			22,841
Less accumulated depreciation	(7,717		)	(7,551		)
Property, plant and equipment, net under operating leases	$	16,403		$	16,569

Depreciation expense for assets under operating leases was approximately $166,000 for the three months ended January 31, 2020.

The Company’s rental operations revenue consists of the following (in thousands):



	Three Months Ended January 31, 2020
Operating lease payments	$	1,096
Variable lease payments	77
Total lease payments	$	1,173

The future minimum lease payments to be received by the Company related to these operating lease agreements as of January 31, 2020 are as follows (in thousands):



2020 (excluding the three months ended January 31, 2020)	$	592
2021	323
2022	133
2023	88
2024	42
Thereafter	758
Total	$	1,936

Lessee Arrangements

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for agricultural land and packinghouse equipment with remaining lease terms ranging from one to 18 years, with various term extensions available. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. As of January 31, 2020, there were no material finance leases for which the Company was a lessee.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

13. Leases (continued)

Operating lease costs were $137,000 for the three months ended January 31, 2020, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations. Variable and short term lease costs were immaterial.

Supplemental balance sheet information related to leases consists of the following (in thousands):



	Classification	January 31, 2020
Assets
Operating lease ROU assets	Other assets	$	2,302

Liabilities and Stockholders' Equity
Current operating lease liabilities	Accrued liabilities	545
Non-current operating lease liabilities	Other long-term liabilities	1,787
Total operating lease liabilities		$	2,332

Weighted-average remaining lease term (in years)		10.9
Weighted-average discount rate		3.9		%

Supplemental cash flow information related to leases consists of the following (in thousands):



	Three Months Ended January 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	184

ROU assets obtained in exchange for new operating lease liabilities	$	—

Future minimum lease payments under non-cancellable leases for the remainder of fiscal year 2020, each of the subsequent four fiscal years and thereafter are as follows (in thousands):



2020 (excluding the three months ended January 31, 2020)	$	362
2021	481
2022	330
2023	154
2024	134
Thereafter	1,449
Total lease payments	2,910
Less: Imputed interest	(578		)
Total	$	2,332

In addition to operating lease commitments, the Company also has a contract for pollination services which does not meet the definition of a lease, with minimum future payments of $230,000 for the remainder of fiscal year 2020, $307,000 for each of the fiscal years 2021 and 2022 and $51,000 in fiscal year 2023.

A summary of the Company’s future minimum payments for obligations under non-cancellable operating leases as of October 31, 2019 was as follows (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

~~12.~~13. Leases (continued)



2020	$	688
2021	492
2022	291
2023	154
2024	134
Thereafter	1,382
	$	3,141

14. Basic and Diluted Net (Loss) Income per Share

Basic net ~~income (loss)~~loss per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock. Diluted net ~~income (loss)~~loss per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested, restricted stock and preferred stock. The computations for basic and diluted net (loss) income per common share are as follows (in thousands, except per share amounts):

Three Months Ended April 30, Six Months Ended April 30,
2019 2018 2019 2018
Basic net income (loss) per common share:

Net income (loss) applicable to common stock $ 2,689
$ 6,473
$ (2,129 ) $ 14,973
Effect of unvested, restricted stock (16 ) (10 ) (33 ) (19 )
Numerator: Net income (loss) for basic EPS 2,673
6,463
(2,162 ) 14,954
Denominator: Weighted average common shares-basic 17,554
14,379
17,516
14,341
Basic net income (loss) per common share $ 0.15
$ 0.45
$ (0.12 ) $ 1.04



	Three Months Ended January 31,
	2020			2019
Basic net loss per common share:
Net loss applicable to common stock	$	(6,552	)	$	(4,818	)
Effect of unvested, restricted stock	(17		)	(16		)
Numerator: Net loss for basic EPS	(6,569		)	(4,834		)
Denominator: Weighted average common shares-basic	17,579			17,488
Basic net loss per common share	$	(0.37	)	$	(0.28	)


Diluted net income (loss) per common share:
Numerator: Net income (loss) for diluted EPS	$	2,815	$	6,599	$	(2,162	)	$	15,224
Diluted net loss per common share:
Numerator: Net loss for diluted EPS										$	(6,569	)	$	(4,834	)
Weighted average common shares–basic	17,554		14,379		17,516			14,341		17,579			17,488
Effect of dilutive unvested, restricted stock and preferred stock	671		644		—			645		—			—
Denominator: Weighted average common shares–diluted	18,225		15,023		17,516			14,986		17,579			17,488
Diluted net income (loss) per common share	$	0.15	$	0.44	$	(0.12	)	$	1.02
Diluted net loss per common share										$	(0.37	)	$	(0.28	)

Diluted (losses) earnings per common share are computed using the more dilutive method of either the two-class method or the treasury stock method. Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share. The Company’s unvested, restricted stock awards qualify as participating shares. The Company excluded ~~140,000~~114,000 and ~~94,000,~~162,000, unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted (losses) earnings per share for the three months ended ~~April 30,~~January 31, 2020 and 2019, ~~and 2018, respectively, and 219,000 and 93,000 for the six months ended April 30, 2019 and 2018,~~ respectively.

~~13.~~

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

15. Related-Party Transactions

The Company has transactions with various related-parties as summarized in the tables below (in thousands):



		January 31, 2020										October 31, 2019
		Balance Sheet										Balance Sheet
Ref	Related Party	Accounts Receivable		Other Assets		Accounts Payable		Accrued Liabilities		Other Long-Term Liabilities		Accounts Receivable		Other Assets		Accounts Payable		Accrued Liabilities
1	Employees	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2	Mutual water companies	—		457		2		—		—		—		473		11		—
3	Cooperative association	—		—		31		—		—		—		—		35		—
4	Calavo	32		—		1		—		—		—		—		—		—
5	Third-party growers	—		—		—		—		—		—		—		—		—
6	Cadiz / Fenner / WAM	—		1,498		—		134		1,408		—		—		—		—
7	Colorado River Growers	521		—		—		—		—		376		—		—		—
8	YMIDD	—		—		—		—		—		—		—		—		—
9	FGF	2,808		—		—		1,123		—		2,609		—		—		906



		Three Months Ended January 31, 2020										Three Months Ended January 31, 2019
		Consolidated Statement of Operations										Consolidated Statement of Operations
Ref	Related Party	Net Revenue Agribusiness		Net Revenue Rental Operations		Agribusiness Expense and Other		Other Income, Net		Dividends Paid		Net Revenue Agribusiness		Net Revenue Rental Operations		Agribusiness Expense and Other		Other Income, Net		Dividends Paid
1	Employees	$	—	$	197	$	—	$	—	$	—	$	—	$	178	$	—	$	—	$	—
2	Mutual water companies	—		—		348		—		—		—		—		321		—		—
3	Cooperative association	—		—		446		—		—		—		—		316		—		—
4	Calavo	32		81		118		220		126		3		79		1		250		129
5	Third-party growers	—		—		—		—		—		—		—		377		—		—
6	Cadiz / Fenner / WAM	—		—		102		—		—		—		—		66		—		—
7	Colorado River Growers	521		—		5,001		—		—		306		—		3,841		—		—
8	YMIDD	—		—		34		—		—		—		—		32		—		—
9	FGF	199		—		163		—		—		—		—		—		—		—

⁽¹⁾ Employees - The Company rents certain of its residential housing assets to employees on a month-to-month ~~basis. The Company~~basis and recorded ~~$182,000 and $178,000 of~~ rental ~~revenue~~income from ~~employees in the three months ended April 30, 2019 and 2018, respectively, and $360,000 and $355,000 in the six months ended April 30, 2019 and 2018, respectively.~~employees. There were no rental payments due from employees at ~~April 30, 2019 or~~January 31, 2020 and October 31, ~~2018.~~2019.

⁽²⁾ Mutual water companies - The Company has representation on the boards of directors of the mutual water companies in which the Company has investments. The Company recorded capital contributions, ~~and~~ purchased water and water delivery services ~~from such mutual~~and had water companies, in aggregate, of $81,000 and $166,000 in the three months ended April 30, 2019 and 2018, respectively, and $858,000 and $886,000 in the six months ended April 30, 2019 and 2018, respectively. Capital contributions are included in other assets in the Company’s consolidated balance sheets and purchases of water and water delivery services are included in agribusiness expense in the Company’s consolidated statements of operations. Water payments due to the mutual water ~~companies were, in aggregate, $681,000 and $142,000 at April 30, 2019 and October 31, 2018, respectively.~~companies.

⁽³⁾ Cooperative association - The Company has representation on the board of directors of a non-profit cooperative association that provides pest control services for the agricultural industry. The Company purchased services and supplies ~~of $540,000~~from and $508,000 from the association in the three months ended April 30, 2019 and 2018, respectively, and $856,000 and $815,000 in the six months ended April 30, 2019 and 2018, respectively, which are included in agribusiness expense in the Company’s consolidated statements of operations. Paymentshad payments due to the cooperative ~~were $185,000 and $142,000 at April 30, 2019 and October 31, 2018, respectively.~~association.

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~13. Related-Party Transactions (continued)~~

⁽⁴⁾ Calavo - The Company has an investment in and representation on the board of directors of Calavo and Calavo has an investment in ~~and~~the Company. Calavo had representation on the board of directors of the ~~Company.~~Company through December 2018. The Company recorded dividend income ~~of $250,000 and $285,000 in the six months ended April 30, 2019 and 2018, respectively,~~ on its investment in Calavo, ~~which is included in other income (expense), net in the Company’s consolidated statements of operations. The Company~~ paid ~~$255,000 and $216,000 of~~ dividends to Calavo ~~for the six months ended April 30, 2019~~ and ~~2018, respectively. The Company~~ had ~~$540,000 and $935,000 in~~ avocado sales to ~~Calavo for~~Calavo. Additionally, the three months ended April 30, 2019 and 2018, respectively, and $543,000 and $935,000 for the six months ended April 30, 2019 and 2018, respectively. which are included in agribusiness revenues in the Company's consolidated statements of operations. There were $467,000 and zero amounts receivable by the Company from Calavo at April 30, 2019 and October 31, 2018, respectively. The Company leases office space to Calavo, and received rental income of $80,000 and $73,000 in the three months ended April 30, 2019 and 2018, respectively, and $159,000 and $145,000 in the six months ended April 30, 2019 and 2018, respectively, which is included in rental operations revenues in the Company’s consolidated statements of operations. The Company purchased $1,000 and $4,000 ofpurchases storage services from Calavo ~~in the six months ended April 30, 2019~~ and ~~2018, respectively. Amounts~~had amounts due to Calavo ~~at April 30, 2019 and October 31, 2018 were zero and $3,000, respectively.~~for those services.

~~Certain members~~⁽⁵⁾ Third party growers - A member of the Company’s board of directors ~~market~~markets lemons through the Company. ~~The aggregate amount~~

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

15. Related-Party Transactions (continued)

⁽⁶⁾ Cadiz / Fenner / WAM - A member of ~~lemons procured from entities owned or controlled by members~~the Company’s board of directors serves as the CEO, President and a member of the board of directors was $232,000 and $1,158,000 in the three months ended April 30, 2019 and 2018, respectively, and $609,000 and $1,386,000 in the six months ended April 30, 2019 and 2018, respectively, which are included in agribusiness expense in the Company’s consolidated statements of operations. Payments due to these board members were $500,000 and $487,000 at April 30, 2019 and October 31, 2018, respectively. Additionally, the Company leases approximately 31 acres of orchards from entities affiliated with a member on the board of directors and incurred $23,000 and $11,000 of lease expense related to these leases in the six months ended April 30, 2019 and 2018, respectively.

~~On July 1,~~Cadiz, Inc. In 2013, the Company ~~and~~entered a long-term lease agreement (the “Lease”) with Cadiz Real Estate, LLC (“Cadiz”), a ~~wholly-owned~~wholly owned subsidiary of Cadiz, Inc., ~~entered into a long-term lease agreement (the “Lease”) for a minimum of 320~~and currently leases 670 acres ~~with options to lease up to an additional 960 acres,~~ located ~~within 9,600 zoned agricultural acres owned by Cadiz~~ in eastern San Bernardino County, California. The ~~initial term of the Lease runs for 20 years and the~~ annual base rental ~~rate~~ is equal to the sum of $200 per planted acre and 20% of gross revenues from the sale of harvested lemons (less operating expenses), not to exceed $1,200 per acre per year. A member of the Company’s board of directors serves as the CEO, President and a member of the board of directors of Cadiz Inc. Additionally, this board member is an attorney with a law firm that provided services of $12,000 and $10,000 to the Company during the three months ended April 30, 2019 and 2018, respectively, and $14,000 and $19,000 during the six months ended April 30, 2019 and 2018, respectively. Payments due to the law firm were zero and $67,000 at April 30, 2019 and October 31, 2018, respectively. The Company incurred lease and farming expenses of $22,000 and $50,000 in the three months ended April 30, 2019 and 2018, respectively, and $88,000 and $86,000 in the six months ended April 30, 2019 and 2018, respectively, which are recorded in agribusiness expense in the Company’s consolidated statements of operations.

On February 5, 2015, the Company entered into a Modification of Lease Agreement (the “Amendment”) with Cadiz. The Amendment, among other things, increased by 200 acres the amount of property leased by the Company under the lease agreement dated July 1, 2013. In ~~connection with the Amendment, the Company paid a total of $1,212,000 to acquire existing lemon trees and irrigations systems from Cadiz and a Cadiz tenant. In February~~ 2016, Cadiz assigned this lease to Fenner Valley Farms, LLC (“Fenner”), a subsidiary of Water Asset Management, LLC (“WAM”). An entity affiliated with WAM is the holder of 9,300 shares of ~~Limoneira Company~~the Company's Series B-2 convertible preferred stock. ~~Amounts due to Fenner were $80,000~~Upon the adoption of ASC 842, the Company recorded a ROU asset and ~~$100,000 at April 30, 2019 and October 31, 2018, respectively.~~corresponding lease liability.

⁽⁷⁾ Colorado River Growers, Inc. (“CRG”) - The Company has representation on the board of directors of ~~Colorado River Growers, Inc. (“CRG”),~~CRG, a non-profit cooperative association of fruit growers engaged in the agricultural harvesting business in Yuma County, Arizona. The Company paid harvest ~~costs~~expense to CRG, of zero in the three months ended April 30, 2019 and 2018. The Company paid harvest costs to CRG of $3,841,000 and $2,451,000 in the six months ended April 30, 2019 and 2018, respectively. Such amounts are included in agribusiness expense in the Company’s consolidated statements of operations. Additionally, Associated provided harvest management and administrative services to CRG ~~in the amounts of zero during the three months ended April 30, 2019~~ and 2018. Associated provided harvest management and administrative services to CRG in the amounts of $306,000 and $218,000 during the six months ended April 30, 2019 and 2018, respectively. Such amounts are included in agribusiness revenues in the Company’s consolidated statements of operations. There was zero and $232,000had a receivable due ~~to Associated~~ from CRG ~~at April 30, 2019 and October 31, 2018, respectively, which is included in accounts receivable, net in the Company’s consolidated balance sheets.~~for such services.

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~13. Related-Party Transactions (continued)~~

⁽⁸⁾ Yuma Mesa Irrigation and Drainage District (“YMIDD”) - The Company has representation on the board of directors of ~~Yuma Mesa Irrigation and Drainage District (“YMIDD”).~~YMIDD. The Company purchased water ~~in the amounts of $53,000 and $65,000 during the three months ended April 30, 2019 and 2018, respectively, and $85,000 and $149,000~~ from YMIDD ~~during the six months ended April 30, 2019~~ and ~~2018, respectively, which is included in agribusiness expenses in the Company’s consolidated statements of operations. There were no~~had amounts ~~due~~payable to ~~YMIDD at April 30, 2019 or October 31, 2018.~~them for such purchases.

⁽⁹⁾ FGF - The Company has a 1.3% interest in Limco Del Mar, Ltd. (“Del Mar”) as a general partner and a 26.8% interest as a limited partner. The Company provides Del Mar with farm management, orchard land development and accounting services and received expense reimbursements of $45,000 and $43,000 in the three months ended April 30, 2019 and 2018, respectively, and $80,000 and $95,000 in the six months ended April 30, 2019 and 2018, respectively. The Company procures lemons from Del Mar andadvances funds to FGF for fruit proceeds (due from) payable to Del Mar were $(2,000) and $709,000 at April 30, 2019 and October 31, 2018, respectively, and are included in grower’s payable in the Company’s consolidated balance sheets. The Company received no cash distributions and recorded equity in (losses) earnings of this investment of $(139,000) and $(45,000) in the three months ended April 30, 2019 and 2018, respectively, and $66,000 and $118,000, in the six months ended April 30, 2019 and 2018, respectively.

On August 14, 2014, the Company’s wholly owned subsidiary, Limoneira Chile SpA, invested approximately $1,750,000 for a 35% interest in Rosales, a citrus packing, marketing and sales business located in La Serena, Chile. The Company purchased an additional 12% interest in Rosales with the February 2017 acquisition of PDA. The Company recognized zero and $782,000 of lemon sales to Rosales in the three months ended April 30, 2019 and 2018, respectively, and $521,000 and $923,000 in the six months ended April 30, 2019 and 2018, respectively. Additionally, San Pablo recognized aggregate lemon and orange sales of $720,000 and $780,000 to Rosales for the three and six months ended April 30, 2019, respectively. PDA recognized aggregate lemon and orange sales of $685,000 and $421,000 to Rosales in the three months ended April 30, 2019 and 2018, respectively, and $765,000 and $703,000 in the six months ended April 30, 2019 and 2018, respectively,purchases which are recorded ~~in agribusiness revenues in~~as an asset until the ~~Company’s consolidated statements of operations. The aggregate amount of lemons~~sales occur and ~~oranges procured from Rosales was zero in~~ the ~~three months ended April 30, 2019~~remaining proceeds become due to FGF. Additionally, FGF provided farming, packing, by-product processing and 2018 and $359,000 and zero in the six months ended April 30, 2019 and 2018, respectively. Amounts due from (payable to) Rosales were $234,000 and $(65,000) at April 30, 2019 and October 31, 2018, respectively.administrative services to Trapani Fresh. The Company ~~recorded equity in (losses) earnings of this investment of $(119,000)~~had a payable due to FGF for such fruit purchases and $3,000 in the three months ended April 30, 2019 and 2018, respectively, and amortization of fair value basis differences of $85,000 in the three months ended April 30, 2019 and 2018. The Company recorded equity in losses of this investment of $(196,000) and $(33,000) in the six months ended April 30, 2019 and 2018, respectively, and amortization of fair value basis differences of $169,000 in the six months ended April 30, 2019 and 2018. The Company received $283,000 and zero cash distributions from this equity investment in the six months ended April 30, 2019 and 2018, respectively.services.

~~14.~~16. Income Taxes

The Company’s estimated annual effective blended tax rate for fiscal year ~~2019~~2020 is approximately ~~28.2%~~32.3%. ~~A 26.7%~~As such, a 31.3% estimated effective blended tax rate, after discrete items, was utilized by the Company in the ~~six~~three months ended ~~April 30, 2019~~January 31, 2020 to calculate its income tax provision.

The Company has no material uncertain tax positions as of ~~April 30, 2019.~~January 31, 2020. The ~~Company’s policy is to recognize~~Company recognizes interest expense and penalties related to income tax matters as a component of income tax expense. ~~The Company has not~~There was no accrued ~~any~~ interest ~~and~~or penalties associated with uncertain tax positions as of ~~April 30, 2019.~~

~~The Company applied the guidance in Staff Accounting Bulletin No. 118 (“SAB 118”) when accounting for the enactment-date effects of the 2017 Act throughout fiscal year 2018. At~~ January 31, 2019, the Company completed its evaluation for all of the enactment-date income tax effects of the 2017 Act and no material adjustments noted to be made on the provisional amounts recorded at January 31, 2018.2020.

~~15.~~17. Retirement Plans

The Limoneira Company Retirement Plan (the “Plan”) is a noncontributory, defined benefit, single employer pension plan, which provides retirement benefits for all eligible employees. Benefits paid by the Plan are calculated based on years of service, highest five-year average earnings, primary Social Security benefit and retirement age. Effective June 2004, the Company froze the Plan and no additional benefits accrued to participants subsequent to that date.

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~15. Retirement Plans (continued)~~

The Plan is funded consistent with the funding requirements of federal law and regulations. There were funding contributions of zero and $150,000 during ~~both~~the three months ended ~~April 30,~~January 31, 2020 and 2019, ~~and 2018, respectively, and $300,000 during both six months ended April 30, 2019 and 2018,~~ respectively.

The components of net periodic pension cost for the Plan for the three ~~and six~~ months ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended April 30,						Six Months Ended April 30,						Three Months Ended January 31,
	2019			2018			2019			2018			2020			2019
Administrative expenses	$	47		$	63		$	94		$	126		$	70		$	47
Interest cost	207			192			414			385			160			207
Expected return on plan assets	(272		)	(268		)	(544		)	(536		)	(248		)	(272		)
Prior service cost	11			11			22			22			11			11
Recognized actuarial loss	100			175			201			350			185			101
Net periodic benefit cost	$	93		$	173		$	187		$	347		$	178		$	94

~~16.~~LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

18. Commitments and Contingencies

The Company is from time to time involved in various lawsuits and legal proceedings that arise in the ordinary course of business. At this time, the Company is not aware of any pending or threatened litigation against it that it expects will have a material adverse effect on its business, financial condition, liquidity, or operating results. Legal claims are inherently uncertain, however, and it is possible that the Company’s business, financial condition, liquidity and/or operating results could be adversely affected in the future by legal proceedings.

~~17.~~19. Stock-based Compensation

The Company has a stock-based compensation plan (the “Stock Plan”) that allows for the grant of common stock of the Company to members of management, key executives and non-employee directors. The fair value of such awards is based on the fair value of the Company’s stock on the date of grant and all are classified as equity awards.

Performance Awards

Certain restricted stock grants are made to management each December under the Stock Plan based on the achievement of certain annual financial performance and other ~~criteria.~~criteria achieved during the previous fiscal year (“Performance Awards”). The ~~number of shares granted is~~performance grants are based on a percentage of the employee’s base salary divided by the stock price on the grant ~~date. Shares granted under~~date once the ~~Stock Plan~~performance criteria has been met, and generally vest over ~~two to five-year periods.~~

~~In December 2018, 40,094~~a two-year period as service is provided. There were no shares of common stock ~~with a per share value of $18.74 were~~ granted to management under the Stock Plan for fiscal year ~~2018~~2019 performance ~~resulting in total compensation expense of approximately $751,000, with $343,000 recognized in~~because the ~~year ended October 31, 2018~~financial performance and other criteria were not met.

Executive Awards

Certain restricted stock grants are made to key executives under the ~~balance~~Stock Plan (“Executive Awards”). These grants generally vest over a three to ~~be recognized over~~five-year period as service is provided. During December 2019, the ~~next two years as the shares vest. In addition, 90,000~~Company granted 95,000 shares of common stock with a per share ~~value~~price of ~~$19.84 were granted~~$18.87 to key executives under the Stock ~~Plan, resulting in a total~~Plan. The related compensation expense of approximately ~~$1,786,000, to~~$1,793,000 will be recognized equally over the next three years as the shares vest.

Director Awards

The Company issues shares of common stock to non-employee directors under the Stock Plan on an annual basis that vest upon grant (“Director Awards”). During January ~~2019~~2020 and ~~2018,~~2019, 17,841 and 15,642 ~~and 14,033~~ shares, respectively, of common stock were granted ~~to the Company’s non-employee directors under the Company’s stock-based compensation plans.~~as Director Awards. The Company recognized ~~$339,000~~$358,000 and ~~$309,000~~$339,000 of stock-based compensation to non-employee directors during the ~~six~~three months ended ~~April 30,~~January 31, 2020 and 2019, respectively.

During the three months ended January 31, 2020and ~~2018, respectively.~~2019, members of management exchanged 11,314 and 20,119 shares, respectively, of common stock with fair values of $213,000 and $305,000, respectively, at the date of the exchanges, for the payment of payroll taxes associated with the vesting of shares under the Company’s stock-based compensation programs.

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~18.~~20. Segment Information

The Company operates in ~~six~~four reportable operating segments: fresh lemons, lemon packing, avocados and other ~~agribusiness,~~agribusiness. The Company’s operating segments of rental operations and real estate ~~development.~~development are no longer disclosed as separate reportable operating segments and are included in the “Corporate and Other” category in the tables below as they do not meet the quantitative threshold and from a qualitative perspective are not a core focus of the Company's main agribusiness activities. Prior years’ information has been restated to conform to the current year’s presentation. The reportable operating segments of the Company are strategic business units with different products and services, distribution processes and customer bases. The fresh lemons segment includes sales, farming and harvesting expenses and third-party grower costs relative to fresh lemons. The lemon packing segment includes packing revenues and shipping and handling revenues relative to lemon packing. The lemon packing segment expenses are comprised of lemon packing costs. The lemon packing segment revenues include intersegment revenues between fresh lemons and lemon packing. The intersegment revenues are included gross in the segment note and a separate line item is shown as an elimination. The avocados segment includes sales, farming and harvest costs. The other agribusiness segment includes sales, farming and ~~harvesting~~harvest costs of oranges, specialty citrus and other crops. ~~The~~Revenues related to rental operations ~~segment includes housing~~are included in “Corporate and ~~commercial rental operations, leased land~~Other”. Other agribusiness revenues consist of oranges of $2,272,000 and ~~organic recycling. The real estate development segment includes real estate development operations.~~specialty citrus and other crops of $1,892,000 for the three months ended January 31, 2020 and oranges of $946,000 and specialty citrus and other crops of $1,255,000 for the three months ended January 31, 2019.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

20. Segment Information (continued)

The Company does not separately allocate depreciation and amortization to its fresh lemons, lemon packing, avocados and other agribusiness segments. No asset information is provided for reportable operating segments, as these specified amounts are not included in the measure of segment profit or loss reviewed by the Company’s chief operating decision maker. The Company measures operating performance, including revenues and operating income, of its operating segments and allocates resources based on its evaluation. The Company does not allocate selling, general and administrative expense, other income, interest expense and income taxes, or specifically identify them to its operating segments. The Company earns packing revenue for packing lemons grown on its orchards and lemons procured from third-party growers. Intersegment revenues represent packing revenues related to lemons grown on the Company’s orchards.

Segment information for the three months ended ~~April 30, 2019~~January 31, 2020 (in thousands):


	Fresh Lemons⁽¹⁾		Lemon Packing		Eliminations			Avocados			Other Agribusiness		Total Agribusiness		Rental Operations		Real Estate Development			Corporate and Other			Total			Fresh Lemons			Lemon Packing		Eliminations			Avocados			Other Agribusiness		Total Agribusiness			Corporate and Other			Total
Revenues from external customers	$	32,428	$	3,954	$	—		$	540		$	3,901	$	40,823	$	1,212	$	—		$	—		$	42,035		$	32,057		$	4,094	$	—		$	168		$	4,164	$	40,483		$	1,173		$	41,656
Intersegment revenue	—		8,157		(8,157		)	—			—		—		—		—			—			—			—			7,105		(7,105		)	—			—		—			—			—
Total net revenues	32,428		12,111		(8,157		)	540			3,901		40,823		1,212		—			—			42,035			32,057			11,199		(7,105		)	168			4,164		40,483			1,173			41,656
Costs and expenses	27,915		10,664		(8,157		)	921			3,875		35,218		901		24			4,776			40,919			34,351			8,609		(7,105		)	473			3,931		40,259			7,298			47,557
Depreciation and amortization	—		—		—			—			—		1,860		194		—			67			2,121			—			—		—			—			—		2,284			281			2,565
Operating income (loss)	$	4,513	$	1,447	$	—		$	(381	)	$	26	$	3,745	$	117	$	(24	)	$	(4,843	)	$	(1,005	)	$	(2,294	)	$	2,590	$	—		$	(305	)	$	233	$	(2,060	)	$	(6,406	)	$	(8,466	)

Segment information for the three months ended ~~April 30, 2018~~January 31, 2019 (in thousands):

Fresh
Lemons
Lemon
Packing
Eliminations

Avocados
Other
Agribusiness
Total
Agribusiness
Rental
Operations
Real Estate
Development
Corporate
and Other
Total
Revenues from external customers $ 30,561
$ 3,008
$ —
$ 935
$ 7,361
$ 41,865
$ 1,270
$ —
$ —
$ 43,135
Intersegment revenue —
7,152
(7,152 ) —
—
—
—
—
—
—
Total net revenues 30,561
10,160
(7,152 ) 935
7,361
41,865
1,270
—
—
43,135
Costs and expenses 22,601
7,170
(7,152 ) 875
3,808
27,302
781
39
3,889
32,011
Depreciation and amortization —
—
—
—
—
1,496
195
—
53
1,744
Operating income (loss) $ 7,960
$ 2,990
$ —
$ 60
$ 3,553
$ 13,067
$ 294
$ (39 ) $ (3,942 ) $ 9,380

~~Segment information for the six months ended April 30, 2019 (in thousands):~~

Fresh
Lemons⁽¹⁾
Lemon
Packing
Eliminations

Avocados
Other
Agribusiness
Total
Agribusiness
Rental
Operations
Real Estate
Development
Corporate
and Other
Total
Revenues from external customers $ 66,921
$ 8,057
$ —
$ 543
$ 6,102
$ 81,623
$ 2,430
$ —
$ —
$ 84,053
Intersegment revenue —
15,201
(15,201 ) —
—
—
—
—
—
—
Total net revenues 66,921
23,258
(15,201 ) 543
6,102
81,623
2,430
—
—
84,053
Costs and expenses 59,997
19,448
(15,201 ) 1,637
6,385
72,266
1,785
52
9,728
83,831
Depreciation and amortization —
—
—
—
—
3,728
389
—
130
4,247
Operating income (loss) $ 6,924
$ 3,810
$ —
$ (1,094 ) $ (283 ) $ 5,629
$ 256
$ (52 ) $ (9,858 ) $ (4,025 )

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~18. Segment Information (continued)~~

~~Segment information for the six months ended April 30, 2018 (in thousands):~~

Fresh
Lemons
Lemon
Packing
Eliminations

Avocados
Other
Agribusiness
Total
Agribusiness
Rental
Operations
Real Estate
Development
Corporate
and Other
Total
Revenues from external customers $ 55,537
$ 5,841
$ —
$ 935
$ 9,885
$ 72,198
$ 2,530
$ —
$ —
$ 74,728
Intersegment revenue —
12,076
(12,076 ) —
—
—
—
—
—
—
Total net revenues 55,537
17,917
(12,076 ) 935
9,885
72,198
2,530
—
—
74,728
Costs and expenses 45,491
12,894
(12,076 ) 1,579
6,129
54,017
1,651
69
7,915
63,652
Depreciation and amortization —
—
—
—
—
2,943
390
—
101
3,434
Operating income (loss) $ 10,046
$ 5,023
$ —
$ (644 ) $ 3,756
$ 15,238
$ 489
$ (69 ) $ (8,016 ) $ 7,642

~~The following table sets forth revenues by category, by segment for the three and six months ended April 30, 2019 and 2018 (in thousands):~~

Three Months Ended
April 30, Six Months Ended
April 30,
2019 2018 2019 2018
Fresh lemons ⁽¹⁾
$ 32,428
$ 30,561
$ 66,921
$ 55,537
Lemon packing 12,111
10,160
23,258
17,917
Intersegment revenue (8,157 ) (7,152 ) (15,201 ) (12,076 )
Lemon revenues 36,382
33,569
74,978
61,378

Avocados 540
935
543
935

Navel and Valencia oranges 1,991
5,223
2,937
6,566
Specialty citrus and other crops 1,910
2,138
3,165
3,319
Other agribusiness revenues 3,901
7,361
6,102
9,885
Agribusiness revenues 40,823
41,865
81,623
72,198

Residential and commercial rentals 885
878
1,762
1,728
Leased land 224
326
493
654
Organic recycling and other 103
66
175
148
Rental operations revenues 1,212
1,270
2,430
2,530

Real estate development revenues —
—
—
—
Total net revenues $ 42,035
$ 43,135
$ 84,053
$ 74,728

⁽¹⁾ During the first quarter of fiscal 2019, the Company adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of certain brokered fruit sales revenue received and the related cost of fruit incurred by the Company. The adoption of this guidance resulted in revenue within the Company’s fresh lemon segment of $162,000 and $456,000, during the three and six months ended April 30, 2019, respectively. See Note 2 - Summary of Significant Accounting Policies for additional information.



	Fresh Lemons		Lemon Packing		Eliminations			Avocados			Other Agribusiness			Total Agribusiness		Corporate and Other			Total
Revenues from external customers	$	34,493	$	4,103	$	—		$	3		$	2,201		$	40,800	$	1,218		$	42,018
Intersegment revenue	—		7,044		(7,044		)	—			—			—		—			—
Total net revenues	34,493		11,147		(7,044		)	3			2,201			40,800		1,218			42,018
Costs and expenses	32,082		8,784		(7,044		)	716			2,510			37,048		5,864			42,912
Depreciation and amortization	—		—		—			—			—			1,868		258			2,126
Operating income (loss)	$	2,411	$	2,363	$	—		$	(713	)	$	(309	)	$	1,884	$	(4,904	)	$	(3,020	)

~~LIMONEIRA COMPANY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)~~

~~19.~~21. Subsequent Events

The Company has evaluated events subsequent to ~~April 30, 2019~~January 31, 2020 through the date of this filing, to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q. Based upon this evaluation, except as described ~~below or~~ in the notes to the interim consolidated financial statements, it was determined that no other subsequent events occurred that require recognition or disclosure in the unaudited consolidated financial statements.

~~Acquisition~~

On May 30, 2019, the Company acquired a 51% interest in a joint venture formed with FGF Trapani (“FGF”), a multi-generational, family owned citrus operation in Argentina, and acquired a 51% interest in an Argentine Trust that holds a 75% interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons. The joint venture will control the trust and operate under the name Trapani Fresh to grow, pack, market and sell fresh citrus.

Total consideration paid for the Company’s interest in Trapani Fresh was $15,000,000. $7,500,000 of consideration was paid to FGF on May 30, 2019. The remaining $7,500,000 of consideration was advanced to FGF as prepayments for the 25% interest in Santa Clara retained by FGF. $4,000,000 was advanced in February 2019 and $3,500,000 was advanced in May 2019. Title to this 25% of Santa Clara will transfer to Trapani Fresh by 2024. These advances will be accounted for as an acquisition of property by the Company in May 2019. The Company is currently evaluating the accounting treatment for its 51% interest in Trapani Fresh and anticipates that it will consolidate Trapani Fresh as a business combination and reflect FGF’s 49% interest in Trapani Fresh as a non-controlling interest in its consolidated financial statements.

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

Overview

Limoneira Company was incorporated in Delaware in 1990 as the successor to several businesses with operations in California since 1893. We are primarily an agribusiness ~~and real estate development~~ company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 15,700 acres of land, water resources and other assets to maximize long-term stockholder value. Our current operations consist of fruit production, sales and marketing, rental operations, real estate ~~development~~ and capital investment activities.

We are one of California’s oldest citrus growers. According to Sunkist Growers, Inc. (“Sunkist”), we are one of the largest growers of lemons in the United States and, according to the California Avocado Commission, one of the largest growers of avocados in the United States. In addition to growing lemons and avocados, we grow oranges and a variety of ~~other~~ specialty citrus and other crops. We have agricultural plantings throughout Ventura, Tulare, San ~~Bernardino~~Luis Obispo and San ~~Luis Obispo~~Bernardino Counties in California, Yuma County in Arizona, ~~and~~ La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 6,200 acres of lemons, 900 acres of avocados, 1,600 acres of oranges and 1,000 acres of specialty citrus and other crops. We also operate our own packinghouses in Santa Paula and Oxnard, California and Yuma, Arizona, where we process, pack and ~~pack~~sell lemons that we grow, as well as lemons grown by others. We have a 47% interest in Rosales S.A. (“Rosales”), a citrus packing, marketing and sales business, a 90% interest in Fruticola Pan de Azucar S.A. (“PDA”), a lemon and orange orchard and 100% interest in Agricola San Pablo, SpA ("San Pablo"), a lemon and orange orchard, all of which are located near La Serena, Chile. We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh"), a lemon growing, packing, marketing and selling ~~operation~~business in ~~Argentina~~Argentina.

Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We use ground water from the San Joaquin Valley Basin and water from local water ~~districts~~ and irrigation districts in Tulare County, which is in California’s San Joaquin ~~Valley and we~~Valley. We also use ground water from the Cadiz Valley Basin in California's San Bernardino ~~County. We also use~~County and surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”). We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in Chile and our Trapani Fresh farming operations in Argentina.

For more than 100 years, we have been making strategic investments in California ~~agribusiness~~agriculture and real ~~estate development.~~estate. We currently have an interest in three real estate development projects in California. These projects include multi-family housing and single-family homes ~~comprised of~~comprising approximately 260 completed rental units and another approximately 1,500 units in various stages of planning and development.

Business Division Summary

We have three business divisions: agribusiness, rental operations and real estate development. The agribusiness division is comprised of four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness, and includes our core operations of farming, harvesting, lemon packing and lemon sales operations. The rental operations division includes our residential and commercial rentals, leased land operations and organic recycling. The real estate development division includes our investments in real estate ~~projects and development.~~development projects. Financial information and discussion of our ~~six~~four reportable segments ~~which includes fresh lemons, lemon packing, avocados, other agribusiness, rental operations and real estate development,~~ are contained in the notes to the accompanying consolidated financial statements of this Quarterly Report on Form 10-Q.

Agribusiness Division

The agribusiness division is comprised of four of our reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness, which represented approximately ~~96%~~97%, 96% and ~~95%~~96% of our fiscal year 2019, 2018 ~~2017~~ and ~~2016~~2017 consolidated revenues, respectively, of which fresh lemons and lemon packing combined represented ~~80%~~87%, ~~78%~~80% and ~~76%~~78% of our fiscal year 2019, 2018 ~~2017~~ and ~~2016~~2017 consolidated revenues, respectively.

Our lemon farming is included in our “fresh lemons” and “lemon packing” reportable operating segments within our financial statements. We are one of the largest growers of lemons and avocados in the United States. We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and certain other international markets. During the ~~six~~three months ended ~~April 30, 2019,~~January 31, 2020, lemon sales were comprised of approximately ~~73%~~71% in domestic and Canadian sales, ~~21%~~25% in sales to domestic exporters and 6%4% in international sales. Additionally, we had approximately ~~$1.5~~$0.5 million of lemon and orange sales in Chile by PDA and San Pablo and $0.2 million of lemon and orange sales in Argentina by Trapani Fresh in the ~~six~~three months ended ~~April 30, 2019.~~

January 31, 2020. We sell ~~a portion of~~ our oranges and specialty citrus to ~~Sunkist-~~

~~licensed~~Sunkist-licensed and other third-party packinghouses. We sell our pistachios to a roaster, packager and marketer of nuts, and our wine grapes are sold to various wine producers.

Historically, our agribusiness operations have been seasonal in nature with quarterly revenue fluctuating depending on the timing and variety of crops being harvested. Cultural costs in our agribusiness tend to be higher in the first and second quarters and lower in the third and fourth quarters because of the timing of expensing cultural costs in the current year that were inventoried in the prior year. Our harvest costs generally increase in the second quarter and peak in the third quarter coinciding with the increasing production and revenue.

Fluctuations in price are a function of global supply and demand with weather conditions, such as unusually low temperatures, typically having the most dramatic effect on the amount of lemons supplied in any individual growing season. We believe we have a competitive advantage by maintaining our own lemon packing operations, even though a significant portion of the costs related to these operations are fixed. As a result, cost per carton is a function of fruit throughput. While we regularly monitor our costs for redundancies and opportunities for cost reductions, we also supplement the number of lemons we pack in our packinghouse with additional lemons procured from other growers. Because the fresh utilization rate for our lemons, or percentage of lemons we harvest and pack that are sold to the fresh market, is directly related to the quality of lemons we pack and, consequently, the price we receive per 40-pound box, we only pack lemons from other growers if we determine their lemons are of good quality.

Our avocado producing business is important to us, yet it faces constraints on growth as there is little additional land that can be cost-effectively acquired to support new avocado orchards in Southern California. Also, avocado production is cyclical as avocados typically bear fruit on a bi-annual basis with large crops in one year followed by smaller crops the next year. While our avocado production can be volatile, the profitability and cash flow realized from our avocados ~~frequently offsets occasional losses in other crops we grow and~~ helps to diversify our fruit production base.

In addition to growing lemons and avocados, we grow oranges, specialty citrus and other crops, typically utilizing land not suitable for growing high quality lemons. We regularly monitor the demand for the fruit we grow in the ever-changing marketplace to identify trends. For instance, while per capita consumption of oranges in the United States has been decreasing since 2000 primarily as a result of consumers increasing their consumption of mandarin oranges and other specialty citrus, the international market demand for U.S. oranges has increased. As a result, we have focused our orange production on high quality late season Navel oranges primarily for export to Japan, China and Korea, which are typically highly profitable niche markets. We produce our specialty citrus and other crops in response to identified consumer trends ~~we identify~~ and believe that we are a leader in the niche production and sale of certain of these high margin fruits. We carefully monitor the respective markets of specialty citrus and other crops and we believe that demand for the types and varieties of specialty citrus and other crops that we grow will continue to increase throughout the world.

~~Rental Operations Division~~Other Divisions

Our rental operations division ~~is provided for in our financial statements as its own reportable operating segment and~~ includes our residential and commercial rentals, leased land operations and organic recycling. Our rental operations division represented approximately 4%3%, 4% and 5%4% of our consolidated revenues in fiscal years 2019, 2018 ~~2017~~ and ~~2016,~~2017, respectively. Our residential rental units generate reliable cash flows, which we use to partially fund the operations of all three of our business divisions and provide affordable housing to many of our employees, including our agribusiness employees, a unique employment benefit that helps us maintain a dependable, long-term employee base. In addition, our leased land business provides us with a typically profitable diversification. Revenue from ~~our~~ rental operations ~~segment~~ is generally level throughout the year.

~~Real Estate Development Division~~

Our real estate development division ~~is provided for in our financial statements as its own reportable operating segment and~~ includes our real estate development ~~operations.~~investments. The real estate development division had no ~~significant~~ revenue in fiscal years 2019, 2018 ~~2017~~ or ~~2016.~~2017. We recognize that long-term strategies are required for successful real estate development activities. Our goal is to redeploy real estate earnings and cash flow into the expansion of our agribusiness and other income producing real estate. For real estate development projects and joint ventures, it is not unusual for the timing and amounts of revenues and costs, partner contributions and distributions, project loans and other financing assumptions and project cash flows to be impacted by government approvals, project revenue and cost estimates and assumptions, economic conditions, financing sources and product demand as well as other factors. Such factors could affect our results of operations, cash flows and liquidity.

Water Resources

Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We use ground water from the San Joaquin Valley Basin and water from local water and irrigation districts in Tulare County, which is in California’s San Joaquin Valley. We also use ground water from the Cadiz Valley Basin in California’s San Bernardino County and surface water in Arizona from the Colorado River through the YMIDD. We use ground and surface water for our PDA and San Pablo farming operations in Chile and our Trapani Fresh farming operations in Argentina.

California has historically experienced periods of below average precipitation. Recent precipitation has brought relief to California’s drought conditions, although the last few years have been among the most severe droughts on record. Rainfall, snow levels and water content of snow pack had previously been significantly below historical averages. These conditions resulted in reduced water levels in streams, rivers, lakes, aquifers and reservoirs. The governor of California declared a drought State of Emergency in February 2014, which was lifted in April 2017. Federal officials oversee the Central Valley Project, California’s largest water delivery system and 100% of the contracted amount of water was provided to San Joaquin Valley farmers in 2018 and 2017 compared to 75% in 2016 and zero for 2015 and 2014.

Depending on the location of our agricultural operations, we obtain our water from aquifers, water delivered by water federal, state and local water and irrigation districts and rainfall. Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own.

~~Water for our farming operations~~ located in Ventura County, California is sourced from the existing water resources associated with our land, which includes approximately ~~8,600 acre~~8,600-acre feet of adjudicated water rights in the Santa Paula Basin (aquifer) and the un-adjudicated Fillmore Basin.

We use a combination of ground water provided by wells that derive water from the San Joaquin Valley Basin and water from various ~~local~~ water districts and irrigation districts in Tulare County, California, ~~that~~which is in the agriculturally productive San Joaquin Valley.

We use ground water provided by wells ~~that~~which derive water from the Cadiz Valley Basin at the Cadiz Ranch in San Bernardino County, California.

Our Windfall ~~Investors, LLC (“Windfall”)~~Farms property located in San Luis Obispo County, California obtains water from wells ~~deriving~~that derive water from the Paso Robles Basin.

Our Associated Citrus Packers, Inc. ~~(“Associated”~~("Associated") farming operations in Yuma, Arizona ~~sources~~source water from the Colorado River through the YMIDD, where we have access to approximately ~~11,700 acre~~11,700-acre feet of Class 3 Colorado River water rights.

We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in La Serena, Chile and our Trapani Fresh farming operations in Argentina.

California has historically experienced periods of below average precipitation. Precipitation in 2019 brought relief to California’s drought conditions, although the few years prior to 2019 were among the most severe droughts on record. Rainfall, snow levels and water content of snow pack were significantly below historical averages. These conditions resulted in reduced water levels in streams, rivers, lakes, aquifers and reservoirs. Federal officials oversee the Central Valley Project, California’s largest water delivery system and 100% of the contracted amount of water was provided to San Joaquin Valley farmers in 2019, 2018 and 2017 compared to 75% in 2016 and zero for 2015 and 2014.

Recent Developments

~~On November 10, 2015, we entered into~~We are equal partners in a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project. To consummate the transaction, we formed Limoneira Lewis Community Builders, LLC (the ~~"LLC"~~"LLCB" or "Joint Venture") as the development entity. The first phase of the project broke ground to commence mass grading ~~on November 8, 2017. Project plans include approximately 632 residential units in Phase 1. Grading began~~ in November ~~2017 and Phase 1 site improvements have been substantially completed.~~2017. The Joint Venture ~~received lot deposits from national homebuilders in fiscal year 2018 and initial lot~~has closed on lots sales representing ~~a total of 174 residential~~244 units ~~closed in February and March 2019.~~through January 31, 2020. For further information see Note 7 – Real Estate Development of the ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report on Form ~~10-Q~~

Late in the third quarter of fiscal year 2018, Ventura County experienced record high temperatures. We expect that the effect of these high temperatures will result in lower avocado crop volume in fiscal year 2019 compared to fiscal year 2018.

In October 2018, we sold 50,000 shares of Calavo Growers, Inc. (“Calavo”) common stock at an average price of $94.47 per share. Net proceeds from the sale were $4.7 million and we recognized a gain of $4.2 million. We continue to own 250,000 shares of Calavo common stock. With the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-01 on November 1, 2018, changes in the fair value of the equity securities result in gains or losses recognized in net income. The Company

recorded unrealized gains (losses) of $3.6 million and $(0.3) million during the three and six months ended April 30, 2019, which is included in other income (expense) in the consolidated statements of operations.

In October 2018, we began negotiations to sell both our The Terraces at Pacific Crest ("Pacific Crest") property and the remaining residential portion of our Sevilla property for $5.2 million. As a result, based on the estimated selling prices, we recorded an impairment charge of $1.6 million in fiscal year 2018. These negotiations have not resulted in a sale and we are actively marketing the properties.

For fiscal year 2018, we declared cash dividends to our stockholders totaling $0.25 per common share in the aggregate amount of $4.0 million compared to a total of $0.22 per common share in the aggregate amount of $3.2 million for fiscal year 2017. On April 15, 2019, we declared a cash dividend $0.075 per common share which was paid on April 19, 2019, in the aggregate amount of $1.3 million to common stockholders of record as of April 8, 2019. This represented a 20% increase in our dividend compared to 2018.10-Q.

On May 30, 2019, we acquired a 51% interest in a joint venture, Trapani Fresh, formed with FGF Trapani (“FGF”), a multi-generational, family owned citrus operation in Argentina. To consummate the transaction, we formed a subsidiary under the name Limoneira Argentina S.A.U. (“Limoneira Argentina”) as the managing partner and acquired a 51% interest in an Argentine Trust that holds a 75% interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons. ~~The joint venture will control~~Trapani Fresh controls the trust and ~~operate under the name Trapani Fresh to grow, pack, market~~grows, packs, markets and ~~sell~~sells fresh citrus.

Total consideration paid for our interest in Trapani Fresh was ~~$15.0 million. $7.5~~$15,000,000.

In the first quarter of fiscal year 2020, we entered into an agreement to sell our Sevilla property for $2,700,000. After transaction and other costs, we expect to receive proceeds of approximately $2,550,000 and recognize an insignificant gain. At January 31, 2020, the $2,543,000 carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

For fiscal year 2019, we declared cash dividends to our stockholders totaling $0.25 per common share in the aggregate amount of $4.0 million compared to a total of ~~consideration~~$0.21 per common share in the aggregate amount of $3.7 million for fiscal year 2018. On December 17, 2019, we declared a cash dividend $0.075 per common share, which was paid on January 15, 2020, in the aggregate amount of $1.3 million to ~~FGF on May~~common stockholders of record as of December 30, 2019. ~~The remaining $7.5 million~~

We believe the outbreak of ~~consideration was advanced~~COVID-19 poses increasing risks and may potentially have accounting implications for us with exposure to ~~FGF as prepayments for the 25% interest~~a broader economic downturn and decline in ~~Santa Clara retained by FGF. $4 million was advanced~~financial markets. We anticipate a decrease in February 2019 and $3.5 million was advanced in May 2019. Title to this 25% of Santa Clara will transfer to Trapani Fresh by 2024. These advances will be accounted for as an acquisition of property by our Company in May 2019. We are currently evaluating the accounting treatmentdemand for our ~~51% interest~~fresh citrus in ~~Trapani Fresh~~Asian countries which would result in supply chain disruptions and ~~anticipate that we will consolidate Trapani Fresh as a business combination and reflect FGF’s 49% interest in Trapani Fresh as a non-controlling interest in our consolidated financial statements.~~reduced exports to areas affected by the virus.

Results of Operations

The following table shows the results of operations (in thousands):

Three Months Ended April 30, Six Months Ended April 30,
2019 2018 2019 2018
Revenues:

Agribusiness $ 40,823
$ 41,865
$ 81,623
$ 72,198
Rental operations 1,212
1,270
2,430
2,530
Real estate development —
—
—
—
Total net revenues 42,035
43,135
84,053
74,728
Costs and expenses:
Agribusiness 37,078
28,798
75,994
56,960
Rental operations 1,095
976
2,174
2,041
Real estate development 24
39
52
69
Selling, general and administrative 4,843
3,942
9,858
8,016
Total costs and expenses 43,040
33,755
88,078
67,086
Operating income:
Agribusiness 3,745
13,067
5,629
15,238
Rental operations 117
294
256
489
Real estate development (24 ) (39 ) (52 ) (69 )
Selling, general and administrative (4,843 ) (3,942 ) (9,858 ) (8,016 )
Operating (loss) income (1,005 ) 9,380
(4,025 ) 7,642
Other income (expense):
Interest expense (686 ) (284 ) (539 ) (794 )
Equity in earnings of investments 1,927
(126 ) 1,969
(83 )
Unrealized gain (loss) on stock in Calavo Growers, Inc. 3,612
—
(298 ) —
Other income, net 56
16
360
257
Total other expense 4,909
(394 ) 1,492
(620 )
Income (loss) before income tax (provision) benefit 3,904
8,986
(2,533 ) 7,022
Income tax (provision) benefit (1,084 ) (2,380 ) 677
8,207
Net income (loss) 2,820
6,606
(1,856 ) 15,229
Net income attributable to noncontrolling interest (5 ) (7 ) (22 ) (5 )
Net income (loss) attributable to Limoneira Company $ 2,815
$ 6,599
$ (1,878 ) $ 15,224



	Three Months Ended January 31,
	2020			2019
Revenues:
Agribusiness	$	40,483		$	40,800
Other	1,173			1,218
Total net revenues	41,656			42,018
Costs and expenses:
Agribusiness	42,543			38,916
Other operations	1,269			1,107
Selling, general and administrative	6,310			5,015
Total costs and expenses	50,122			45,038
Operating loss:
Agribusiness	(2,060		)	1,884
Other operations	(96		)	111
Selling, general and administrative	(6,310		)	(5,015		)
Operating loss	(8,466		)	(3,020		)
Other expense:
Interest income, net	55			147
Equity in (loss) earnings of investments	(120		)	42
Unrealized loss on stock in Calavo Growers, Inc.	(2,024		)	(3,910		)
Other income, net	515			304
Total other expense	(1,574		)	(3,417		)
Loss before income tax benefit	(10,040		)	(6,437		)
Income tax benefit	3,136			1,761
Net loss	(6,904		)	(4,676		)
Net loss (income) attributable to noncontrolling interest	477			(17		)
Net loss attributable to Limoneira Company	$	(6,427	)	$	(4,693	)

Non-GAAP Financial Measures

Due to significant depreciable assets associated with the nature of our operations and interest costs associated with our capital structure, management believes that earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which excludes unrealized gain ~~(loss)~~or loss on stock in Calavo, ~~LLC~~LLCB earnings in equity investment and impairments on real estate development assets when applicable, is an important measure to evaluate our results of operations between periods on a more comparable basis. Such measurements are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be construed as an alternative to reported results determined in accordance with GAAP. The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies.

EBITDA and adjusted EBITDA are summarized and reconciled to net ~~income (loss)~~loss attributable to Limoneira Company which management considers to be the most directly comparable financial measure calculated and presented in accordance with GAAP as follows (in thousands):

Three Months Ended April 30, Six Months Ended April 30,
2019 2018 2019 2018
Net income (loss) attributable to Limoneira Company $ 2,815
$ 6,599
$ (1,878 ) $ 15,224
Interest expense 686
284
539
794
Income tax provision (benefit) 1,084
2,380
(677 ) (8,207 )
Depreciation and amortization 2,121
1,744
4,247
3,434
EBITDA $ 6,706
$ 11,007
$ 2,231
$ 11,245
Unrealized (gain) loss on stock in Calavo Growers, Inc. (3,612 ) —
298
—
LLC earnings in equity investment (2,270 ) —
(2,270 ) —
Adjusted EBITDA $ 824
$ 11,007
$ 259
$ 11,245



	Three Months Ended January 31,
	2020			2019
Net loss attributable to Limoneira Company	$	(6,427	)	$	(4,693	)
Interest income, net	(55		)	(147		)
Income tax benefit	(3,136		)	(1,761		)
Depreciation and amortization	2,565			2,126
EBITDA	$	(7,053	)	$	(4,475	)
Unrealized loss on stock in Calavo Growers, Inc.	2,024			3,910
LLCB earnings in equity investment	(55		)	—
Adjusted EBITDA	$	(5,084	)	$	(565	)

Three Months Ended ~~April 30, 2019~~January 31, 2020 Compared to the Three Months Ended ~~April 30, 2018~~January 31, 2019

Revenues

Total net revenues for the ~~second~~first quarter of fiscal year ~~2019 was $42.0~~2020 were $41.7 million compared to ~~$43.1~~$42.0 million for the ~~second~~first quarter of fiscal year ~~2018.~~2019. The 3%1% decrease of ~~$1.1~~$0.4 million was primarily the result of decreased agribusiness revenues, as detailed below ($ in thousands):


	Agribusiness Revenues for the Three Months Ended April 30,								Agribusiness Revenues for the Three Months Ended January 31,
	2019		2018		Change				2020		2019		Change
Lemons	$	36,382	$	33,569	$	2,813		8%	$	36,151	$	38,596	$	(2,445	)	(6)%
Avocados	540		935		(395		)	(42)%	168		3		165			5,500%
Navel and Valencia oranges	1,991		5,223		(3,232		)	(62)%
Oranges									2,272		946		1,326			140%
Specialty citrus and other crops	1,910		2,138		(228		)	(11)%	1,892		1,255		637			51%
Agribusiness revenues	$	40,823	$	41,865	$	(1,042	)	(2)%	$	40,483	$	40,800	$	(317	)	(1)%

Lemons: The ~~increase~~decrease in the ~~second~~first quarter of fiscal year ~~2019~~2020 was primarily the result of ~~increased volume of lemon by-products compared to the same period in fiscal year 2018. Additionally,~~ lower ~~fresh lemon~~ prices ~~were~~ partially offset by ~~increased~~an increase in volume of fresh lemons sold compared to the same period in fiscal year ~~2018.~~2019. During the ~~second~~first quarter of fiscal years ~~2019~~2020 and ~~2018,~~2019, fresh lemon sales were ~~$26.3~~$27.0 million and ~~$27.1~~$30.9 million, respectively, on ~~1,300,000~~1,280,000 and ~~1,157,000~~1,272,000 cartons of lemons sold at average per carton prices of ~~$20.26~~$21.12 and ~~$23.42,~~$24.30, respectively. Lemon revenues included ~~$4.0~~$4.1 million shipping and handling, ~~$4.3~~$1.0 million lemon by-products and ~~$1.8~~$4.0 million other lemon sales in the ~~second~~first quarter of fiscal year ~~2019~~2020 compared to ~~$3.0~~$4.1 million shipping and handling, ~~$2.2~~$2.0 million lemon by-products and ~~$1.3~~$1.5 million other lemon sales during the same period in fiscal year ~~2018.~~2019. Other lemon sales in the ~~second~~first quarter of fiscal year ~~2019~~2020 included ~~$1.0~~$0.6 million in Chile ~~by PDA~~ and ~~San Pablo~~Argentina, compared to $0.4 million in Chile ~~by PDA~~ in the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Avocados: ~~The decrease in~~In the ~~second~~first quarter of fiscal year ~~2019~~2020 we sold 125,000 pounds at average per pound prices of $1.34. No significant sales of avocados were recorded in the first quarter of fiscal year 2019.

Oranges: The increase in the first quarter of fiscal year 2020 was primarily ~~the~~ result of ~~lower~~an increase in volume, partially offset by higher prices of avocados sold compared to the same period in fiscal year 2018. During the second quarter of fiscal year 2019 0.4 million pounds of avocados were sold at an average per pound price of $1.27 compared to 1.0 million pounds of avocados were sold at an average per pound price of $0.94 during the same period in fiscal year 2018. The higher prices in fiscal year 2019 are the result of lower supply in the marketplace.

~~Navel and Valencia oranges: The decrease in the second quarter of fiscal year 2019 was primarily attributable to~~ lower prices ~~and lower volume~~ of oranges sold compared to the same period in fiscal year ~~2018.~~2019. In the ~~second~~first quarter of fiscal year ~~2019, 361,000~~2020, 196,000 40-pound carton equivalents of oranges were sold at average per carton prices of ~~$5.52~~$6.71 compared to ~~471,000~~124,000 40-pound carton equivalents sold at average per carton prices of ~~$11.09~~$7.63 in the ~~second~~first quarter of fiscal year ~~2018. Orange sales in~~2019. Additionally, the ~~second quarter of~~ fiscal year ~~2019 were zero in Chile by PDA and San Pablo compared to~~2020 revenues includes $0.1 million in Chile ~~by PDA in the second quarter~~and $0.9 million of ~~fiscal year 2018.~~oranges purchased for resale.

Specialty citrus and other crops: The ~~decrease~~increase in the ~~second~~first quarter of fiscal year ~~2019~~2020 was primarily the result of ~~lower prices~~an increase in volume partially offset by ~~higher volume~~decrease in price of specialty citrus sold compared to the same period in fiscal year ~~2018.~~2019. During the ~~second~~first quarter of fiscal year ~~2019, 272,000~~2020, 139,000 40-pound carton equivalents of specialty citrus were sold at an average per carton price of

~~$7.02~~ $13.61 compared to ~~193,000~~81,000 40-pound carton equivalents sold at an average per carton ~~price~~prices of ~~$11.08 during~~$15.49 in the ~~same period in~~first quarter of fiscal year ~~2018.~~2019.

Costs and Expenses

Our total costs and expenses in the ~~second~~first quarter of fiscal year ~~2019~~2020 were ~~$43.0~~$50.1 million compared to ~~$33.8~~$45.0 million in the ~~second~~first quarter of fiscal year ~~2018, for a 28%~~2019. The 11% increase of ~~$9.2 million. This increase~~$5.1 million was primarily attributable to increases in our agribusiness and selling, general and administrative costs and expenses. Costs and expenses associated with our agribusiness include packing costs, harvest costs, growing costs, costs related to the fruit we procure and sell for third-party growers and depreciation and amortization expense, as detailed below ($ in thousands):


	Agribusiness Costs and Expenses for the Three Months Ended April 30,								Agribusiness Costs and Expenses for the Three Months Ended January 31,
	2019		2018		Change				2020		2019		Change
Packing costs	$	10,664	$	7,170	$	3,494		49%	$	9,156	$	8,784	$	372		4%
Harvest costs	4,672		4,828		(156		)	(3)%	6,248		4,565		1,683			37%
Growing costs	6,665		5,857		808			14%	9,779		7,613		2,166			28%
Third-party grower costs	13,217		9,447		3,770			40%	15,076		16,086		(1,010		)	(6)%
Depreciation and amortization	1,860		1,496		364			24%	2,284		1,868		416			22%
Agribusiness costs and expenses	$	37,078	$	28,798	$	8,280		29%	$	42,543	$	38,916	$	3,627		9%

Packing costs: Packing costs primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. Lemon packing costs were ~~$9.9~~$9.2 million and ~~$6.6~~$8.8 million in the ~~second~~first quarter of fiscal years ~~2019~~2020 and ~~2018,~~2019, respectively. During the ~~second~~first quarter of fiscal year ~~2019,~~2020, we packed and sold ~~1,300,000~~1,280,000 cartons of lemons at average per carton costs of ~~$7.60~~$6.70 compared to ~~1,157,000~~1,272,000 cartons of lemons packed and sold at average per carton costs of ~~$5.68~~$6.50 during the same period in fiscal year 2018. The increase in average per carton costs in fiscal year 2019 compared to fiscal year 2018 is primarily due to increased volume of lemon by-products and $2.2 million of operating costs incurred at the Oxnard Lemon facility.2019. Additionally, packing costs included ~~$0.8~~$0.6 million of shipping costs in the ~~second~~first quarter of fiscal year ~~2019~~2020 compared to ~~$0.6~~$0.5 million in the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Harvest costs: The increase in the ~~second~~first quarter of fiscal year ~~2019~~2020 is primarily attributable to increased volume of lemons, ~~harvested partially offset by decreased volume of~~ avocados, oranges and ~~oranges~~specialty citrus harvested.

Growing costs: Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The increase in the ~~second~~first quarter of fiscal year ~~2019~~2020 was primarily due to net increased cost ~~of $0.8 million~~ for cultivation, fertilization and soil amendments ~~pest control~~ and ~~San Pablo cultural~~Trapani Fresh growing costs compared to the same period in fiscal year ~~2018.~~2019. Growing costs reflect farm management decisions based on weather, harvest timing and crop conditions.

Third-party grower costs: We sell fruit that we grow and fruit that we procure from other growers. The cost of procuring fruit from other growers is referred to as third-party grower costs. The ~~increase~~decrease in the ~~second~~first quarter of fiscal year ~~2019~~2020 is primarily attributable to ~~higher~~lower prices and decreased volume ~~partially offset by lower price~~ of third-party grower fruit sold. Of the ~~1,300,000~~1,280,000 and ~~1,157,000~~1,272,000 cartons of lemons packed and sold during the ~~second~~first quarter of fiscal years 2020 and 2019, ~~and 2018,~~ respectively, ~~770,000 (59%~~706,000 (55%) and ~~493,000 (43%~~757,000 (59%) cartons were procured from third-party growers at average per carton prices of ~~$17.01~~$16.58 and ~~$19.19,~~$20.87, respectively.

Depreciation and amortization: Depreciation and amortization expense for the ~~second~~first quarter of fiscal year ~~2019~~2020 was approximately $0.4 million higher than the ~~second~~first quarter of fiscal year ~~2018~~2019 primarily due to the ~~acquisitions~~acquisition of ~~Oxnard Lemon and San Pablo~~Trapani Fresh and an increase in assets placed into service.

Selling, general and administrative costs and expenses were ~~$4.8~~$6.3 million in the three months ended ~~April 30, 2019~~January 31, 2020 compared to ~~$3.9~~$5.0 million in the three months ended ~~April 30, 2018.~~January 31, 2019. The ~~$0.9~~$1.3 million increase is primarily ~~attributable to an~~the result of a $0.5 million increase in ~~administration personnel,~~ salaries and ~~benefits, increased incentive compensation and increased professional fees~~personnel, $0.4 million of training costs associated with ~~our strategic initiatives~~an ERP implementation and $0.4 million of other selling and administrative expenses, including certain corporate overhead expenses as of ~~April 30, 2019~~January 31, 2020 compared to ~~April 30, 2018.~~

~~Other Income (Expense)~~January 31, 2019.

Other income, net for the three months ended April 30, 2019 is comprised primarily of $3.6 million unrealized gain on equity securities and $1.9 million of equity in earnings of investments partially offset by $0.7 million of interest expense, net. (Expense) Income

Other expense, net for the three months ended ~~April 30, 2018~~January 31, 2020 is comprised primarily of $2.0 million unrealized loss on equity securities partially offset by $0.1 million of net interest income and $0.2 million of dividend income received from Calavo. Other expense, net for the three months ended January 31, 2019 is comprised primarily of $3.9 million unrealized loss on equity securities partially offset by $0.1 million of net interest income and $0.3 million of ~~interest expense, net and $0.1 million of equity in losses of investments.~~dividend income received from Calavo.

Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year. We capitalized ~~$0.3~~$0.1 million and ~~$0.4~~$0.3 million of interest in the ~~second~~first quarter of fiscal years ~~2019~~2020 and ~~2018,~~2019, respectively. Interest capitalization is discontinued when a project is substantially complete. Under the equity method of accounting used for our Limoneira/Lewis Joint Venture, interest capitalization ceased upon the commencement of lot sales in February 2019.

~~Income Taxes~~

We recorded an estimated income tax provision of $1.1 million in the second quarter of fiscal year 2019 on pre-tax income of $3.9 million compared to an estimated income tax provision of $2.4 million in the second quarter of fiscal year 2018 on pre-tax income of $9.0 million. Our projected annual effective blended tax rate for fiscal year 2019 is approximately 28.2%.

~~Net Income Attributable to Noncontrolling Interest~~

~~Net income attributable to noncontrolling interest represents 10% of the net income of PDA.~~

~~Six Months Ended April 30, 2019 Compared to the Six Months Ended April 30, 2018~~

~~Revenues~~

Total net revenues for the six months ended April 30, 2019 was $84.1 million compared to $74.7 million for the six months ended April 30, 2018. The 12% increase of $9.4 million was primarily the result of increased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Six Months Ended April 30,
2019 2018 Change
Lemons $ 74,978
$ 61,378
$ 13,600
22%
Avocados 543
935
(392 ) (42)%
Navel and Valencia oranges 2,937
6,566
(3,629 ) (55)%
Specialty citrus and other crops 3,165
3,319
(154 ) (5)%
Agribusiness revenues $ 81,623
$ 72,198
$ 9,425
13%

Lemons: The increase in the first six months of fiscal year 2019 was primarily the result of higher volume partially offset by lower prices of fresh lemons sold compared to the same period in fiscal year 2018. During the first six months of fiscal years 2019 and 2018, fresh lemon sales were $57.2 million and $51.1 million, respectively, on 2,572,000 and 2,069,000 cartons of lemons sold at average per carton prices of $22.26 and $24.70, respectively. Lemon revenues included $8.1 million shipping and handling, $6.3 million lemon by-products and $3.3 million other lemon sales in the first six months of fiscal year 2019 compared to $5.8 million shipping and handling, $2.7 million lemon by-product and $1.8 million other lemon sales during the same period in fiscal year 2018. Other lemon sales in the first six months of fiscal year 2019 include $1.4 million in Chile by PDA and San Pablo compared to $0.4 million in Chile by PDA in the first six months of fiscal year 2018.

Avocados: The decrease in the first six months of fiscal year 2019 was primarily the result of lower volume offset partially by higher prices of avocados sold compared to the same period in fiscal year 2018. During the first six months of fiscal year 2019 0.4 million pounds of avocados were sold at an average per pound price of $1.27 compared to 1.0 million pounds of avocados were sold at an average per pound price of $0.94 during the same period in fiscal year 2018. The higher prices in fiscal year 2019 are the result of lower supply in the marketplace.

Navel and Valencia oranges: The decrease in the first six months of fiscal year 2019 was primarily attributable to lower volume and prices of oranges sold compared to the same period in fiscal year 2018. In the first six months of fiscal year 2019, 486,000 40-pound carton equivalents of oranges were sold at average per carton prices of $6.04 compared to 575,000 40-pound carton equivalents sold at average per carton prices of $11.42 in the same period of fiscal year 2018. Orange sales in the first six months

~~of fiscal year 2019 included $0.2 million in Chile by PDA and San Pablo compared to $0.3 million in Chile by PDA in the first six months of fiscal year 2018.~~

Specialty citrus and other crops: The decrease in the first six months of fiscal year 2019 was primarily the result of lower prices partially offset by higher volume of specialty citrus sold compared to the same period in fiscal year 2018. During the first six months of fiscal year 2019, 353,000 40-pound carton equivalents of specialty citrus were sold at an average per carton price of $8.97 compared to 276,000 40-pound carton equivalents sold at an average per carton price of $12.02 during the same period in fiscal year 2018.

~~Costs and Expenses~~

Our total costs and expenses in the first six months of fiscal year 2019 were $88.1 million compared to $67.1 million in the first six months of fiscal year 2018, for a 31% increase of $21.0 million. This increase was primarily attributable to increases in our agribusiness and selling, general and administrative costs and expenses. Costs and expenses associated with our agribusiness include packing costs, harvest costs, growing costs, costs related to the fruit we procure and sell for third-party growers and depreciation and amortization expense, as detailed below ($ in thousands):

Agribusiness Costs and Expenses for the Six Months Ended April 30,
2019 2018 Change
Packing costs $ 19,448
$ 12,894
$ 6,554
51%
Harvest costs 9,237
8,101
1,136
14%
Growing costs 14,278
12,695
1,583
12%
Third-party grower costs 29,303
20,327
8,976
44%
Depreciation and amortization 3,728
2,943
785
27%
Agribusiness costs and expenses $ 75,994
$ 56,960
$ 19,034
33%

Packing costs: Packing costs primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. Lemon packing costs were $18.2 million and $12.0 million in the first six months of fiscal years 2019 and 2018, respectively. During the first six months of fiscal year 2019, we packed and sold 2,572,000 cartons of lemons at average per carton costs of $7.06 compared to 2,069,000 cartons of lemons sold at average per carton costs of $5.80 during the same period in fiscal year 2018. The increase in average per carton costs in fiscal year 2019 compared to fiscal year 2018 is primarily due to $3.4 million of operating costs incurred at the Oxnard Lemon facility, partially offset by decreased average per carton costs incurred at our Santa Paula facility. Additionally, packing costs included $1.3 million of shipping costs in the first six months of fiscal year 2019 compared to $0.9 million in the first six months of fiscal year 2018.

Harvest costs: The increase in the first six months of fiscal year 2019 is primarily attributable to increased volume of lemons harvested partially offset by decreased volume of avocados and oranges harvested.

Growing costs: Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The increase in the first six months of fiscal year 2019 was primarily due to net increased costs of $1.6 million primarily for cultivation, fertilization and soil amendments, pest control, and San Pablo cultural costs compared to the same period of fiscal year 2018. Growing costs reflect farm management decisions based on weather, harvest timing and crop conditions.

Third-party grower costs: We sell fruit that we grow and fruit that we procure from other growers. The cost of procuring fruit from other growers is referred to as third-party grower costs. The increase in the first six months of fiscal year 2019 is primarily attributable to higher volume partially offset by lower price of third-party grower fruit sold. Of the 2,572,000 and 2,069,000 cartons of lemons packed and sold during the first six months of fiscal years 2019 and 2018, respectively, 1,527,000 (59%) and 976,000 (47%) cartons were procured from third-party growers at average per carton prices of $18.92 and $20.81, respectively.

Depreciation and amortization expense for the first six months of fiscal year 2019 was approximately $0.8 million higher than the first six months of fiscal year 2018 primarily due to the acquisitions of Oxnard Lemon and San Pablo and an increase in assets placed into service.

Selling, general and administrative costs and expenses were $9.9 million in the six months ended April 30, 2019 compared to $8.0 million in the six months ended April 30, 2018. The $1.9 million increase is primarily attributable to an increase in administration personnel, salaries and benefits, increased incentive compensation and increased professional fees associated with our strategic initiatives as of April 30, 2019 compared to April 30, 2018.

~~Other Income (Expense)~~

Other income, net for the six months ended April 30, 2019 is comprised primarily of $2.0 million of equity in earnings of investments partially offset by $0.5 million of interest expense, net. Other expense, net for the six months ended April 30, 2018 is comprised primarily of $0.8 million of interest expense, net partially offset by $0.3 million of dividend income received from Calavo.

Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year. We capitalized $0.6 million and $1.0 million of interest in the first six months of fiscal years 2019 and 2018, respectively. Interest capitalization is discontinued when a project is substantially complete. Under the equity method of accounting used for our Limoneira/Lewis Joint Venture, interest capitalization ceased upon the commencement of lot sales in February 2019.

Income Taxes

We recorded an estimated income tax benefit of ~~$0.7~~$3.1 million in the first ~~six months~~quarter of fiscal year ~~2019~~2020 on pre-tax loss of ~~$2.5~~$10.0 million compared to an estimated income tax benefit of ~~$8.2~~$1.8 million in the first ~~six months~~quarter of fiscal year ~~2018~~2019 on pre-tax ~~income~~loss of ~~$7.0~~$6.4 million. The ~~discrete driver of~~tax benefit recorded for the ~~estimated income tax benefit~~first quarter of fiscal year ~~2018 was~~2020 differs from the ~~approximately $10.0 million decrease in deferred tax liabilities related to the change in the~~U.S. federal statutory tax rate ~~from the Tax Cuts~~of 21.0% due primarily to income attributable to foreign jurisdictions, which is taxed at different rates, state taxes, and ~~Jobs Act of 2017 (the "2017 Act") from 34% to 21%.~~nondeductible tax items. Our projected annual effective blended tax rate for fiscal year ~~2019~~2020 is approximately ~~28.2%~~32.3%.

Net ~~Income~~Loss (Income) Attributable to Noncontrolling Interest

Net ~~income~~loss (income) attributable to noncontrolling interest represents 10% and 49% of the net ~~income~~loss (income) of ~~PDA.~~PDA and Trapani Fresh, respectively.

Segment Results of Operations

We operate in ~~six~~four reportable operating segments: fresh lemons, lemon packing, avocados and other ~~agribusiness, rental operations and real estate development.~~agribusiness. Our reportable operating segments are strategic business units with different products and services, distribution processes and customer bases. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. Each segment is subject to review and evaluations related to current market conditions, market opportunities and available resources. See Note 1820 - Segment Information of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

Three Months Ended ~~April 30, 2019~~January 31, 2020 Compared to the Three Months Ended ~~April 30, 2018~~January 31, 2019

The following table shows the segment results of operations for the three months ended ~~April 30, 2019~~January 31, 2020 (in thousands):


	Fresh Lemons⁽¹⁾		Lemon Packing		Eliminations			Avocados			Other Agribusiness		Total Agribusiness		Rental Operations		Real Estate Development			Corporate and Other			Total			Fresh Lemons			Lemon Packing		Eliminations			Avocados			Other Agribusiness		Total Agribusiness			Corporate and Other			Total
Revenues from external customers	$	32,428	$	3,954	$	—		$	540		$	3,901	$	40,823	$	1,212	$	—		$	—		$	42,035		$	32,057		$	4,094	$	—		$	168		$	4,164	$	40,483		$	1,173		$	41,656
Intersegment revenue	—		8,157		(8,157		)	—			—		—		—		—			—			—			—			7,105		(7,105		)	—			—		—			—			—
Total net revenues	32,428		12,111		(8,157		)	540			3,901		40,823		1,212		—			—			42,035			32,057			11,199		(7,105		)	168			4,164		40,483			1,173			41,656
Costs and expenses	27,915		10,664		(8,157		)	921			3,875		35,218		901		24			4,776			40,919			34,351			8,609		(7,105		)	473			3,931		40,259			7,298			47,557
Depreciation and amortization	—		—		—			—			—		1,860		194		—			67			2,121			—			—		—			—			—		2,284			281			2,565
Operating income (loss)	$	4,513	$	1,447	$	—		$	(381	)	$	26	$	3,745	$	117	$	(24	)	$	(4,843	)	$	(1,005	)	$	(2,294	)	$	2,590	$	—		$	(305	)	$	233	$	(2,060	)	$	(6,406	)	$	(8,466	)

The following table shows the segment results of operations for the three months ended ~~April 30, 2018~~January 31, 2019 (in thousands):

⁽¹⁾ During the first quarter of fiscal 2019, we adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of certain brokered fruit sales revenue received and the related cost of fruit incurred by us. The adoption of this guidance resulted in revenue within our fresh lemon segment of $162,000, as well as costs and expenses within that segment, during the three months ended April 30, 2019. Refer to Note 2 - Summary of Significant Accounting Policies for more information regarding the impact from the adoption of this new standard.



	Fresh Lemons		Lemon Packing		Eliminations			Avocados			Other Agribusiness			Total Agribusiness		Corporate and Other			Total
Revenues from external customers	$	34,493	$	4,103	$	—		$	3		$	2,201		$	40,800	$	1,218		$	42,018
Intersegment revenue	—		7,044		(7,044		)	—			—			—		—			—
Total net revenues	34,493		11,147		(7,044		)	3			2,201			40,800		1,218			42,018
Costs and expenses	32,082		8,784		(7,044		)	716			2,510			37,048		5,864			42,912
Depreciation and amortization	—		—		—			—			—			1,868		258			2,126
Operating income (loss)	$	2,411	$	2,363	$	—		$	(713	)	$	(309	)	$	1,884	$	(4,904	)	$	(3,020	)

The following analysis should be read in conjunction with the previous section “Results of Operations”.

Fresh Lemons

For the ~~second~~first quarter of fiscal year ~~2019,~~2020, our fresh lemons segment total net revenues were ~~$32.4~~$32.1 million compared to ~~$30.6~~$34.5 million for the ~~second~~first quarter of fiscal year ~~2018;~~2019, a ~~6% increase~~7% decrease of ~~$1.8~~$2.4 million, primarily due to ~~higher volume~~decrease in fresh lemon carton sales of $3.9 million and $1.0 million lemon by-products, ~~sold.~~partially offset by an increase in brokerage and other sales of $2.5 million.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs and costs of fruit we procure from third-party growers. For the ~~second~~first quarter of fiscal year ~~2019,~~2020, our fresh lemons segment costs and expenses were ~~$27.9~~$34.4 million compared to ~~$22.6~~$32.1 million for the ~~second~~first quarter of fiscal year ~~2018.~~2019. The ~~24%~~7% increase of ~~$5.3~~$2.3 million primarily consisted of the following:

Harvest costs for the ~~second~~first quarter of fiscal year ~~2019~~2020 were ~~$0.1~~$1.3 million ~~lower~~higher than the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Growing costs for the ~~second~~first quarter of fiscal year ~~2019~~2020 were ~~$0.6~~$2.2 million higher than the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Third-party grower costs for the ~~second~~first quarter of fiscal year ~~2019~~2020 were ~~$3.8~~$1.9 million lower than the first quarter of fiscal year 2019.

Transportation costs for the first quarter of fiscal year 2020 were $0.6 million higher than the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Intersegment costs and expenses for the ~~second~~first quarter of fiscal year ~~2019~~2020 were ~~$1.0~~$0.1 million higher than the ~~second~~first quarter of fiscal year ~~2018.~~2019.

Lemon Packing

Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue. For the ~~second~~first quarter of fiscal years ~~2019~~2020 and ~~2018,~~2019, our lemon packing ~~segment revenues were $12.1 million and $10.2 million, respectively.~~

Costs and expenses associated with our lemon packing segment consist of the cost to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. For the second quarter of fiscal years 2019 and 2018, our lemon packing costs and expenses were $10.7 million and $7.2 million, respectively.

~~For the second quarter of fiscal years 2019 and 2018, lemon packing segment operating income per carton sold was $1.11 and $2.58, respectively.~~

In the second quarter of fiscal years 2019 and 2018, the lemon packing segment included $8.2 million and $7.2 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale. Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

~~Avocados~~

~~For the second quarter of fiscal year 2019, our avocados segment revenue was $0.5 million compared to $0.9 million for the second quarter of fiscal year 2018.~~

Costs and expenses associated with our avocados segment include harvest and growing costs. For the second quarters of fiscal years 2019 and 2018, our avocados segment costs and expenses were $0.9 million and primarily consisted of the following:

~~Harvest costs for the second quarter of fiscal year 2019 were $0.1 million lower than the second quarter of fiscal year 2018.~~

~~Growing costs for the second quarter of fiscal year 2019 were $0.1 million higher than the second quarter of fiscal year 2018.~~

~~Other Agribusiness~~

~~For the second quarter of fiscal year 2019, our other agribusiness~~ segment total net revenues were ~~$3.9 million compared to $7.4 million for the second quarter of fiscal year 2018. The 47% decrease of $3.5 million primarily consisted of the following:~~

~~Navel and Valencia orange revenues for the second quarter of fiscal year 2019 were $3.2 million lower than the second quarter of fiscal year 2018.~~

~~Specialty citrus and other crop revenues for the second quarter of fiscal year 2019 were $0.2 million lower than the second quarter of fiscal year 2018.~~

Costs and expenses associated with our other agribusiness segment include harvest costs and growing costs. For the second quarter of fiscal year 2019, our other agribusiness costs and expenses were $3.9 million compared to $3.8 million for the second quarter of fiscal year 2018. The 2% increase of $0.1 million primarily consisted of the following:

~~Harvest costs for the second quarter of fiscal year 2019 were similar to the second quarter of fiscal year 2018.~~

~~Growing costs for the second quarter of fiscal year 2019 were $0.1 million higher than the second quarter of fiscal year 2018.~~

~~Total agribusiness depreciation and amortization expenses for the second quarter of fiscal year 2019 were $0.4 million higher than the second quarter of fiscal year 2018.~~

~~Rental Operations~~

~~Our rental operations segment had total net revenues of $1.2~~$11.2 million and ~~$1.3~~$11.1 million, ~~for the second quarter of fiscal years 2019 and 2018,~~ respectively.

Costs and expenses in our rental operations segment for the second quarter of fiscal year 2019 were $0.1 million higher than the second quarter of fiscal year 2018. Depreciation and amortization expenses for the second quarter of fiscal year 2019 were similar to the second quarter of fiscal year 2018 at approximately $0.2 million.

~~Real Estate Development~~

~~For the second quarter of fiscal years 2019 and 2018, our real estate development segment total net revenues were zero.~~

~~Costs and expenses in our real estate development segment for the second quarter of fiscal year 2019 were similar to the second quarter of fiscal year 2018.~~

~~Selling, General and Administrative Expenses~~

Selling, general and administrative costs and expenses include selling, general and administrative costs and other costs not allocated to the operating segments. Selling, general and administrative costs and expenses for the second quarter of fiscal year 2019 were $0.9 million higher than the second quarter of fiscal year 2018. Depreciation expense for the second quarter of fiscal year 2019 was similar to the second quarter of fiscal year 2018 at approximately $0.1 million.

~~Six Months Ended April 30, 2019 Compared to the Six Months Ended April 30, 2018~~

~~The following table shows the segment results of operations for the six months ended April 30, 2019 (in thousands):~~

~~The following table shows the segment results of operations for the three months ended~~ ~~April 30, 2018~~ ~~(in thousands):~~

Fresh
Lemons
Lemon
Packing
Eliminations

Avocados
Other
Agribusiness
Total
Agribusiness
Rental
Operations
Real Estate
Development
Corporate
and Other
Total
Revenues from external customers $ 55,537
$ 5,841
$ —
$ 935
$ 9,885
$ 72,198
$ 2,530
$ —
$ —
$ 74,728
Intersegment revenue —
12,076
(12,076 ) —
—
—
—
—
—
—
Total net revenues 55,537
17,917
(12,076 ) 935
9,885
72,198
2,530
—
—
74,728
Costs and expenses 45,491
12,894
(12,076 ) 1,579
6,129
54,017
1,651
69
7,915
63,652
Depreciation and amortization —
—
—
—
—
2,943
390
—
101
3,434
Operating income (loss) $ 10,046
$ 5,023
$ —
$ (644 ) $ 3,756
$ 15,238
$ 489
$ (69 ) $ (8,016 ) $ 7,642

⁽¹⁾ During the first quarter of fiscal 2019, we adopted a comprehensive new revenue recognition standard using a modified retrospective method that does not restate prior periods to be comparable to the current period presentation. The adoption of this guidance primarily impacted the presentation of certain brokered fruit sales revenue received and the related cost of fruit incurred by us. The adoption of this guidance resulted in revenue within our fresh lemon segment of $456,000, as well as costs and expenses within that segment, during the six months ended April 30, 2019. Refer to Note 2 - Summary of Significant Accounting Policies for more information regarding the impact from the adoption of this new standard.

~~The following analysis should be read in conjunction with the previous section “Results of Operations”.~~

~~Fresh Lemons~~

For the six months ended April 30, 2019, our fresh lemons segment total net revenues were $66.9 million compared to $55.5 million for the six months ended April 30, 2018, a 20% increase of $11.4 million, primarily due to higher volume of fresh lemons sold.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs and costs of fruit we procure from third-party growers. For the six months ended April 30, 2019, our fresh lemons costs and expenses were $60.0 million compared to $45.5 million for the six months ended April 30, 2018. The 32% increase of $14.5 million primarily consisted of the following:

~~Harvest costs for the six months ended April 30, 2019 were $1.1 million higher than the six months ended April 30, 2018.~~

~~Growing costs for the six months ended April 30, 2019 were $1.3 million higher than the six months ended April 30, 2018.~~

~~Third-party grower costs for the six months ended April 30, 2019 were $9.0 million higher than the six months ended April 30, 2018.~~

~~Intersegment costs and expenses for the six months ended April 30, 2019 were $3.1 million higher than the six months ended April 30, 2018.~~

~~Lemon Packing~~

Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue. For the six months ended April 30, 2019 and 2018, our lemon packing segment revenues were $23.3 million and $17.9 million, respectively.

Costs and expenses associated with our lemon packing segment consist of the cost to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. For the ~~six months ended April 30,~~first quarter of fiscal years 2020 and 2019, ~~and 2018,~~ our lemon packing costs and expenses were ~~$19.4~~$8.6 million and ~~$12.9~~$8.8 million, respectively.

For the ~~six months ended April 30,~~first quarter of fiscal years 2020 and 2019, ~~and 2018,~~ lemon packing segment operating income per carton sold was ~~$1.48~~$2.02 and ~~$2.43,~~$1.86, respectively.

In the ~~six months ended April 30,~~first quarter of fiscal years 2020 and 2019, ~~and 2018,~~ the lemon packing segment included ~~$15.2~~$7.1 million and ~~$12.1~~$7.0 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale. Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

Avocados

For the ~~six months ended April 30,~~first quarter of fiscal year 2020, our avocados segment had total net revenues of $0.2 million. In the first quarter of fiscal year 2019, our avocados segment ~~revenue was $0.5 million compared to $0.9 million for the six months ended April 30, 2018.~~had no significant revenues.

Costs and expenses associated with our avocados segment include harvest and growing costs. For ~~both~~the first quarter of ~~the six months ended April 30, 2019 and 2018,~~fiscal year 2020, our avocados segment costs and expenses were ~~$1.6~~$0.5 million ~~and~~compared to $0.7 million for the first quarter of fiscal year 2019. The 34% decrease of $0.2 million primarily consisted of the following:

Harvest costs for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.1 million lower than~~similar to the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Growing costs for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.1~~$0.3 million ~~higher~~lower than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Other Agribusiness

For the ~~six months ended April 30, 2019,~~first quarter of fiscal year 2020, our other agribusiness segment total net revenues were ~~$6.1~~$4.2 million compared to ~~$9.9~~$2.2 million for the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019. The ~~38% decrease~~89% increase of ~~$3.8~~$2.0 million primarily consisted of the following:

~~Navel and Valencia orange~~Orange revenues for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$3.6~~$1.3 million ~~lower~~higher than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Specialty citrus and other ~~crop~~crops revenues for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.2~~$0.6 million ~~lower~~higher than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Costs and expenses associated with our other agribusiness segment include harvest costs, growing costs and ~~growing~~purchased fruit costs. For the ~~six months ended April 30, 2019,~~first quarter of fiscal year 2020, our other agribusiness costs and expenses were ~~$6.4~~$3.9 million compared to ~~$6.1~~$2.5 million for the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019. The 4%57% increase of ~~$0.3~~$1.4 million primarily consisted of the following:

Harvest costs for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.1~~$0.4 million higher than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Growing costs for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were $0.2 million higher than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

Purchased fruit costs for the first quarter of fiscal year 2020 were $0.9 million higher than the first quarter of fiscal year 2019.

Total agribusiness depreciation and amortization expenses for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.8~~$0.4 million higher than the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019.

~~Rental Operations~~Corporate and Other

Our rental operations ~~segment~~ had total net revenues of ~~$2.4 million and $2.5~~approximately $1.2 million for each of the ~~six months ended April 30, 2019~~quarters of fiscal years 2020 and ~~2018, respectively.~~2019.

Costs and expenses in ~~our~~ rental operations ~~segment~~and real estate development for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$0.1~~$1.3 million ~~higher than~~compared to $1.1 million in the ~~six months ended April 30, 2018.~~first quarter of fiscal year 2019. Depreciation and amortization ~~expense~~expenses for the ~~six months ended April 30, 2019 was similar to the six months ended April 30, 2018 at approximately $0.4 million.~~

~~Real Estate Development~~

~~For the six months ended April 30, 2019 and 2018, our real estate development segment total net revenues were zero.~~

~~Costs and expenses in our real estate development segment for the six months ended April 30, 2019~~first quarter of fiscal year 2020 were similar to the ~~six months ended April 30, 2018.~~

~~Selling, General and Administrative Expenses~~first quarter of fiscal year 2019 at approximately $0.3 million.

Selling, general and administrative costs and expenses include ~~selling, general and administrative costs and~~ other costs not allocated to the operating segments. Selling, general and administrative costs and expenses for the ~~six months ended April 30, 2019~~first quarter of fiscal year 2020 were ~~$1.8~~$1.3 million higher than the ~~six months ended April 30, 2018. Depreciation and amortization expense for the six months ended April 30, 2019 was similar to the six months ended April 30, 2018 at approximately $0.1 million.~~first quarter of fiscal year 2019.

Seasonal Operations

Historically, our agribusiness operations have been seasonal in nature with quarterly revenue fluctuating depending on the timing and the variety of crops being harvested. Cultural costs in our agribusiness tend to be higher in the first and second quarters and lower in the third and fourth quarters because of the timing of expensing cultural costs in the current year that were inventoried in the prior year. Our harvest costs generally increase in the second quarter and peak in the third quarter coinciding with the increasing production and revenue. Due to this seasonality and to avoid the inference that interim results are indicative of the estimated results for a full fiscal year, we present supplemental information for 12-month periods ended at the interim date for the current and preceding years.

Results of Operations for the Trailing Twelve Months Ended ~~April 30,~~January 31, 2020 and 2019 ~~and 2018~~

The following table shows the unaudited results of operations (in thousands):

Trailing twelve months ended April 30,
2019 2018
Revenues:

Agribusiness $ 133,769
$ 125,881
Rental operations 4,948
5,171
Real estate development —
—
Total revenues 138,717
131,052
Costs and expenses:
Agribusiness 117,117
95,323
Rental operations 4,218
3,968
Real estate development 110
229
Impairment of real estate development assets 1,558
—
Selling, general and administrative 17,895
15,000
Total costs and expenses 140,898
114,520
Operating (loss) income (2,181 ) 16,532
Other income (expense):
Interest expense (867 ) (1,721 )
Equity in earnings of investments 2,635
33
Gain on sale of stock in Calavo Growers, Inc. 4,223
—
Unrealized gain (loss) on stock in Calavo Growers, Inc. (298 ) —
Other income, net 416
422
Total other income (expense) 6,109
(1,266 )
Income before income tax (provision) benefit 3,928
15,266
Income tax (provision) benefit (801 ) 5,048
Net income 3,127
20,314
(Income) loss attributable to noncontrolling interest (41 ) 37
Net income attributable to Limoneira Company $ 3,086
$ 20,351



	Trailing twelve months ended January 31,
	2020			2019
Revenues:
Agribusiness	$	166,232		$	134,811
Other	4,804			5,006
Total revenues	171,036			139,817
Costs and expenses:
Agribusiness	155,999			108,837
Other operations	4,601			4,224
Impairment of real estate development assets	—			1,558
Selling, general and administrative	22,465			16,994
Total costs and expenses	183,065			131,613
Operating (loss) income	(12,029		)	8,204
Other income:
Interest expense, net	(2,226		)	(465		)
Equity in earnings of investments	2,911			582
(Loss) gain on sale of stock in Calavo Growers, Inc.	(63		)	4,223
Unrealized loss on stock in Calavo Growers, Inc.	(168		)	(3,910		)
Other income, net	340			376
Total other income	794			806
(Loss) income before income tax benefit (provision)	(11,235		)	9,010
Income tax benefit (provision)	2,472			(2,097		)
Net (loss) income	(8,763		)	6,913
Loss (income) attributable to noncontrolling interest	17			(43		)
Net (loss) income attributable to Limoneira Company	$	(8,746	)	$	6,870

The following analysis should be read in conjunction with the previous section “Results of Operations”.

Total revenues increased ~~$7.7~~$31.2 million in the twelve months ended ~~April 30, 2019~~January 31, 2020 compared to the twelve months ended ~~April 30, 2018~~January 31, 2019 primarily due to increased agribusiness revenues, particularly increased lemon sales.

Total costs and expenses increased ~~$26.4~~$51.5 million in the twelve months ended ~~April 30, 2019~~January 31, 2020 compared to the twelve months ended ~~April 30, 2018~~January 31, 2019 primarily due to increases in our agribusiness costs ~~real estate impairments~~ and selling, general and administrative expenses. The increase in agribusiness costs is associated with increased agribusiness production and the increase in selling, general and administrative expenses is primarily attributable to increased administrative personnel, salaries and ~~higher salaries,~~ benefits, and ~~incentive compensation.~~certain corporate expenses associated with strategic initiatives.

Total other income ~~increased $7.4~~was similar in the twelve months ended January 31, 2020 compared to the twelve months ended January 31, 2019.

Income tax benefit (provision) decreased $4.6 million in the twelve months ended ~~April 30, 2019~~January 31, 2020 compared to the twelve months ended ~~April 30, 2018~~January 31, 2019 primarily due to decreased income before taxes as a ~~$0.9 million decrease in net interest expense, $2.6 million increase in equity in earnings~~result of ~~investments and $4.2 million gain on sale of stock in Calavo.~~

~~Income tax benefit~~ decreased $5.8 million in the twelve months ended April 30, 2019 compared to the twelve months ended April 30, 2018 primarily due to the approximately $10.0 million decrease in deferred tax liabilities related to the change in the federal corporate tax rate from the 2017 Act offset by the effect of earnings before income taxes.operating income.

Liquidity and Capital Resources

Overview

Our ~~Company’s~~ liquidity and capital position fluctuates during the year depending on seasonal production cycles, weather events and demand for our products. Typically, our first and last fiscal quarters coincide with the fall and winter months during which we are growing crops that are harvested and sold in the spring and summer, which are our second and third ~~quarters tend to generate greater operating income than our first and fourth quarters due to the volume of fruit harvested.~~

quarters. To meet working capital demand and investment requirements of our agribusiness and real estate development ~~segments~~projects and to supplement operating cash flows, we utilize our revolving credit facility to fund agricultural inputs and farm management practices until sufficient returns from crops allow us to repay amounts borrowed. Raw materials needed to propagate the various crops grown by us consist primarily of fertilizer, herbicides, insecticides, fuel and water, all of which are readily available from local sources.

Cash Flows from Operating Activities

For the ~~six~~three months ended ~~April 30,~~January 31, 2020 and 2019, net cash ~~provided by~~used in operating activities was ~~$4.0~~$12.2 million ~~compared to net cash provided by operating activities of $7.1~~and $4.5 million, ~~for the six months ended April 30, 2018.~~respectively. The significant components of our ~~Company’s~~ cash flows ~~provided by~~used in operating activities ~~as included in the unaudited consolidated statements of cash flows are~~were as follows:

Net loss for the ~~six~~three months ended ~~April 30, 2019~~January 31, 2020 was ~~$1.9~~$6.9 million compared to net ~~income~~loss of ~~$15.2~~$4.7 million for the ~~six~~three months ended ~~April 30, 2018.~~January 31, 2019. The ~~decrease in~~components of net ~~income of $17.1 million~~loss in the ~~six~~three months ended ~~April 30, 2019~~January 31, 2020 compared to the same period in fiscal year ~~2018 was primarily attributable to~~2019 consist of a decrease in operating income of ~~$11.7~~$5.4 million, a decrease in total other expense of $1.8 million and ~~a decrease~~an increase in income tax benefit of ~~$7.5 million, offset by an increase in other income of $2.1~~$1.4 million.

~~Depreciation and amortization expenses increased $0.8~~The adjustments to reconcile net loss to net cash used in operating activities provided $2.2 million of cash in the ~~six~~three months ended ~~April 30, 2019~~January 31, 2020 compared to providing $5.3 million of cash in the same period in fiscal year ~~2018~~2019 primarily due to ~~the acquisitions of San Pablo~~significant changes in depreciation and ~~Oxnard Lemon~~amortization, deferred taxes and unrealized loss on stock in ~~July 2018 and an increase in assets placed into service.~~Calavo.

The gain on disposals of assets was $11,000 in the six months ended April 30, 2019 compared to a loss on disposals of assets of $0.2 million in the six months ended April 30, 2018. Fiscal year 2018 loss was primarily the result of expenses incurred from orchard disposals related to the December 2017 Southern California wildfires and our ongoing orchard redevelopment plans.

Stock compensation expense was $1.2 million and $0.9 million in the six months ended April 30, 2019 and 2018, respectively, and was comprised primarily of vesting and expense recognition of the 2016, 2017, 2018 and 2019 grants to management under our stock-based compensation plan plus non-employee directors’ stock-based compensation.

~~Accounts receivable, net balance at April 30, 2019 was $20.0 million compared to $14.1 million at October 31, 2018, resulting in a corresponding decrease~~changes in operating cash flows of approximately $5.8 million in the six months ended April 30, 2019. Accounts receivable, net balance at April 30, 2018 was $17.2 million compared to $11.0 million at October 31, 2017, resulting in a corresponding decrease in operating cash flows of $6.3 million. The $5.8 million decrease in operating cash flows in the

~~six months ended April 30, 2019 compared to the $6.3 million decrease in operating cash flows during same period in fiscal year 2018 was primarily due to fluctuations in price~~assets and ~~volume related to agribusiness revenues.~~

~~Cultural costs provided $2.6~~liabilities used $7.5 million of operating cash ~~flows~~ in the ~~six~~three months ended ~~April 30, 2019~~January 31, 2020 compared to ~~providing $2.1~~using $5.1 million of operating cash ~~flows during~~in the ~~same period in fiscal year 2018. This increase in operating cash flows was~~three months ended January 31, 2019, primarily due to an initial higher amount of capitalized cultural costs carried at the beginning of fiscal year 2019 and the related amortization of such costs during the six months ended April 30, 2019 compared to the same periodsignificant changes in ~~fiscal year 2018.~~

~~Income taxes~~accounts receivable, ~~balance was zero and $0.4 million at April 30, 2019 and October 31, 2018, respectively. Income taxes receivable balance was $0.6 million at April 30, 2018 and October 31, 2017.~~

~~Accounts~~accounts payable, ~~and~~ growers payable, ~~provided $9.9 million~~prepaid expenses and ~~$2.2 million of operating cash flows in the six months ended April 30, 2019~~other current assets, and 2018, respectively. The $9.9 million of cash provided in the six months ended April 30, 2019 was primarily the result of $3.9 million increase in accounts payable, $6.9 million increase in growers payable offset by $0.4 million of capital expenditures accrued but not paid at period end and $0.5 million accrued contribution obligation of investment in mutual water company. The $2.2 million of cash provided by the six months ended April 30, 2018 was primarily the result of $3.5 million increase in growers payable, offset by $0.6 million decrease in accounts payable, $0.3 million of capital expenditures accrued but not paid at period end and $0.3 million accrued contribution obligation of investment in mutual water company.

Accrued liabilities used $2.9 million of operating cash flows in the six months ended April 30, 2019 compared to $1.0 million of operating cash flows provided during the same period in fiscal year 2018. The operating cash used in the six months ended April 30, 2019 was primarily due to payments for incentive compensation, property taxes and lemon suppliers. The operating cash flows used in the six months ended April 30, 2018 was primarily comprised of accrued income taxes offset by payments for incentive compensation and property taxes.

Other long-term liabilities operating cash flows in the six months ended April 30, 2019 represented $0.2 million of non-cash pension expense offset by $0.3 million of pension contributions for the period. Other long-term liabilities operating cash flows in the six months ended April 30, 2018 represented $0.3 million of non-cash pension expense offset by $0.3 million of pension contributions for the period.liabilities.

Cash Flows from Investing Activities

For the ~~six~~three months ended ~~April 30, 2019,~~January 31, 2020, net cash used in investing activities was ~~$16.4~~$6.5 million compared to net cash used in investing activities of ~~$8.8~~$9.8 million during the same period in fiscal year ~~2018.~~2019. Net cash used in investing activities was primarily comprised of capital expenditures, an agriculture property ~~acquisition~~acquisitions and investments.

Capital expenditures were ~~$8.2~~$3.7 million in the ~~six~~three months ended ~~April 30,~~January 31, 2020, comprised of $3.5 million for property, plant and equipment primarily related to orchard and vineyard development and $0.2 million for real estate development projects. Additionally, in the three months ended January 31, 2020, we contributed $2.8 million to the Joint Venture for the development of our East Area I real estate development project.

Capital expenditures were $5.1 million in the three months ended January 31, 2019, comprised of ~~$7.9~~$4.6 million for property, plant and equipment primarily related to orchard and vineyard development and the purchase of a photovoltaic solar array and $0.3 million for real estate development projects. Additionally, in the ~~six~~three months ended ~~April 30,~~January 31, 2019, we purchased an agriculture property for $0.4 million and contributed $4.0 million to the Joint Venture for the development of our East Area I real estate development ~~project and paid $4.0 million to FGF towards the joint venture formation in Argentina.~~project.

Capital expenditures were $5.4 million in the six months ended April 30, 2018, comprised of $4.9 million for property, plant and equipment primarily related to orchard and vineyard development and $0.6 million for real estate development projects. Additionally, in the six months ended April 30, 2018, we contributed $3.5 million to the Joint Venture for the development of our East Area I real estate development project and received combined net proceeds of $1.5 million from the sale of the commercial portion of Sevilla and the sale of Centennial Square ("Centennial").

Cash Flows from Financing Activities

For the ~~six~~three months ended ~~April 30, 2019,~~January 31, 2020, net cash provided by financing activities was ~~$13.3~~$19.1 million compared to net cash provided by financing activities of ~~$1.8~~$14.9 million during the same period in fiscal year ~~2018.~~2019.

The ~~$13.3~~$19.1 million of cash provided by financing activities during the ~~six~~three months ended ~~April 30,~~January 31, 2020 was primarily comprised of net borrowings of long-term debt in the amount $20.7 million partially offset by common and preferred dividends, in aggregate, of $1.5 million. The $14.9 million of cash provided by financing activities during the three months ended January 31, 2019 was primarily comprised of net borrowings of long-term debt in the amount ~~$16.5~~$16.7 million partially offset by common and preferred dividends, in aggregate, of $2.9 million. The $1.8 million of net cash provided by financing activities in the six months ended April 30, 2018 was primarily comprised of net borrowings of long-term debt in the amount of $4.2 million partially offset by common and preferred dividends, in aggregate, of $2.1$1.5 million.

Transactions Affecting Liquidity and Capital Resources

OnIn June ~~20,~~ 2017, we entered into a Master Loan Agreement (the “Loan Agreement”) with Farm Credit West, FLCA (“("Farm Credit ~~West”~~West") which includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (the “Supplements”). ~~Proceeds from the Supplements were used to pay down all the remaining outstanding indebtedness under the revolving credit facility we had with Rabobank, N.A.~~ On January 29, 2018, we amended the Revolving Credit Supplement to increase the borrowing capacity from $60.0 million to $75.0 million. The Supplements provide aggregate borrowing capacity of $115.0 million comprised of $75.0 million under the Revolving Credit Supplement and $40.0 million under the Non-Revolving Credit Supplement. ~~In May 2018, we locked the interest rate~~The borrowing capacity based on ~~the Non-Revolving Credit Supplement~~collateral value was $115.0 million at ~~4.77%, effective July 1, 2018.~~January 31, 2020.

The interest rate for any amount outstanding under the Supplements is based on the one-month London Interbank Offered Rate (“LIBOR”) rate plus an applicable margin, which is subject to adjustment on a monthly basis. The applicable margin ranges from 1.60% to 2.35% depending on the ratio of current assets plus the remaining available commitment divided by current liabilities. On July 1, ~~2018,~~2019, and on each one-year anniversary thereafter, we have the option to convert the interest rate in use under each Supplement from the preceding LIBOR-based calculation to a variable interest rate, or the reverse, as applicable. Any amounts outstanding under the Supplements are due and payable in full on July 1, 2022.

All indebtedness under the Loan Agreement, including any indebtedness under the Supplements, is secured by a first lien on certain of our agricultural properties in Tulare and Ventura counties in California and certain of our building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties. The Loan Agreement includes customary default provisions that provide that should an event of default occur, Farm Credit West, at its option, may declare all or any portion of the indebtedness under the Loan Agreement to be immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend our right to draw or request funds on any loan or line of credit.

The Loan Agreement subjects us to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of our business. We are also subject to a covenant that we will maintain a debt service coverage ratio greater than 1.25:1.0 measured annually at October 31.

In February 2020, we received an annual patronage dividend of $966,000 from Farm Credit West. This dividend was accrued at January 31, 2020, of which $667,000 was recorded as a reduction in interest expense and $299,000 reduced our real estate development assets.

In March 2020, we entered into a loan agreement with ~~which we were~~Farm Credit West for a $15.0 million revolving line of credit secured by the Windfall Investors, LLC property. The loan matures in ~~compliance at October 31, 2018.~~2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments. The interest rate is variable with monthly interest-only payments during the 3-year draw period and monthly principal and interest payments thereafter.

We finance our working capital and other liquidity requirements primarily through cash from operations and our Farm Credit West Credit Facility. In addition, we have the Farm Credit West ~~Term Loans,~~term loans, the Wells Fargo term loan, the Banco de Chile term loan and a note payable to the sellers of a land parcel. Additional information regarding the Farm Credit West Credit Facility, the Farm Credit West ~~Term Loans,~~term loans, the Wells Fargo term loan, the Banco de Chile term loan and the note payable can be found in the ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

We believe that the cash flows from operations and available borrowing capacity from our existing credit facilities will be sufficient to satisfy our capital expenditures, debt service, working capital needs and other contractual obligations for the remainder of fiscal year ~~2019.~~2020. In addition, we have the ability to control a portion of our investing cash flows to the extent necessary based on our liquidity demands.

~~Farm Credit West Credit Facility~~

As of April 30, 2019, our outstanding borrowings under the Farm Credit West Credit Facility were $69.1 million and we had $45.9 million of availability. The Farm Credit West revolving line of credit balance of $29.1 million currently bears interest at a variable rate equal to the one-month LIBOR plus 1.60%. The interest rate resets on the first of each month and was 4.10% at April 30, 2019. We have the ability to prepay any amounts outstanding under the Farm Credit West revolving line of credit without penalty. The line of credit provides for maximum borrowings of $115.0 million and the borrowing capacity based on collateral value was $115.0 million at April 30, 2019.

We have the option of fixing the interest rate under the Farm Credit West Credit Facility on any portion of outstanding borrowings using interest rate swaps. Effective July 2013, we fixed the interest rate at 4.30% utilizing an interest rate swap on $40.0 million of the Rabobank Credit Facility. In connection with the paydown of the Rabobank debt noted above, on June 20, 2017, we entered into a novation agreement with Rabobank International, Utrecht and CoBank, ACB (“CoBank”). The agreement provided for the prior interest rate swap agreement with Rabobank to be in place with CoBank. This interest rate swap expired June 30, 2018.

~~Farm Credit West Term Loans~~

~~As of April 30, 2019, we had an aggregate of approximately $19.1 million outstanding under Farm Credit West Term Loans, which are further discussed here:~~

~~Term Loan Maturing November 2022.~~ As of April 30, 2019, we had $2.3 million outstanding under the Farm Credit West Term Loan that matures in November 2022. This term loan bears interest at a variable rate equal to an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25% and is payable in quarterly installments through November 2022. The interest rate resets monthly and was 4.95% at April 30, 2019. This term loan is secured by certain of our agricultural properties.

~~Term Loan Maturing October 2035.~~ As of April 30, 2019, Windfall had $1.1 million outstanding under the Farm Credit West Term Loan that matures in October 2035. This term loan bears interest at a variable rate equal to an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25% and is payable in monthly installments through October 2035. The interest rate resets monthly and was 4.95% at April 30, 2019. This term loan is secured by the Windfall Farms property.

~~Term Loan Maturing March 2036.~~ As of April 30, 2019, we had $9.0 million outstanding under the Farm Credit West Term Loan that matures in March 2036. This loan bears interest at a fixed rate of 4.70% and is payable in monthly installments through March 2036. This term loan is secured by certain of our agricultural properties.

~~Term Loan Maturing March 2036.~~ As of April 30, 2019, we had $6.7 million outstanding under the Farm Credit West Term Loan that matures in March 2036. This loan bears interest at a fixed rate of 3.62% until March 2021, becoming variable for the remainder of the loan at a variable rate equal to an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25%. This term loan is payable in monthly installments through March 2036 and is secured by certain of our agricultural properties.

The Farm Credit West Term Loans contain various conditions, covenants and requirements with which our Company and Windfall must comply. In addition, our Company and Windfall are subject to limitations on, among other things, selling, abandoning or ceasing business operations; merging or consolidating with a third party; disposing of a substantial portion of assets by sale, transfer, gifts or lease except for inventory sales in the ordinary course of business; obtaining credit or loans from other lenders other than trade credit customary in the business; becoming a guarantor or surety on or otherwise liable for the debts or obligations of a third party; and mortgaging, pledging, leasing for over a year, or otherwise making or allowing the filing of a lien on any collateral.

~~Wells Fargo Term Loan~~

As of April 30, 2019, we had $5.7 million outstanding under the Wells Fargo term loan. This term loan bears interest at a fixed rate of 3.58% and is payable in monthly installments through January 2023. The loan is secured by certain equipment associated with our new lemon packing facilities. The loan contains affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets. We are also subject to a covenant that our Company will maintain a debt service coverage ratio, as defined in the loan agreement, of less than 1.25 to 1.0 measured annually at October 31, with which we were in compliance at October 31, 2018.

~~Banco de Chile Term Loan~~

Through the acquisition of PDA in February 2017, we assumed a $1.7 million term loan with Banco de Chile that matures in January 2025. This term loan bears interest at a fixed rate of 6.48% and is payable in eight annual installments which began in January 2018. This loan is unsecured and contains certain pre-payment limitations.

~~Note Payable~~

In February 2018, we exercised an option to purchase a 7-acre parcel adjacent to our East Area II real estate development project. In connection with this purchase, we issued a note payable for $1.4 million secured by first deed of trust, payable to the sellers. The note is due in February 2023, with interest-only, monthly payments at interest rates ranging from 5.0% to 7.0% and was 5.50% at April 30, 2019.

~~Public Offering of Common Stock~~

In June 2018, we completed the sale of an aggregate of 3,136,362 shares of our common stock, at a price of $22.00 per share, to a limited number of institutional and other investors in a registered offering under the shelf registration statement. The offering represented 18% of our outstanding common stock on an after-issued basis as of June 25, 2018. Upon completion of the offering and issuance of common stock, we had 17,669,314 shares of common stock outstanding. The net proceeds from the sale of shares, after deducting underwriting discounts and our estimated expenses related to the offering, were approximately $64.1 million. In June and July 2018, we used the offering proceeds to pay down debt, purchase the San Pablo ranch and purchase Oxnard Lemon's packinghouse, related land and certain other assets.

~~Interest Rate Swap~~

~~From time to time we enter into interest rate swap agreements to manage the risks and costs associated with our financing activities.~~

~~Our debt bears interest at fixed and variable rates, ranging from 3.58% to 6.48% at April 30, 2019.~~

Contractual Obligations

There have been no material changes to our contractual obligations as disclosed in our fiscal year 2019 Annual Report on Form 10-K, except as follows:

In January 2018, the Joint Venture entered into a $45.0 million unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. The Loan ~~matures~~originally matured in January 2020 ~~with an option~~and was extended to ~~extend~~February 22, 2021 per the ~~maturity date until 2021, subject to certain conditions.~~terms thereof. The interest rate on the Loan is LIBOR plus 2.85%, and is payable monthly. The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without

penalty. ~~In February 2018, the~~The Joint Venture recorded a $45.0 million outstanding loan balance at January 31, 2020 related to this Loan. The obligations under the Loan ~~were~~are guaranteed by certain principals from Lewis and by ~~the Company. The Joint Venture recorded an $25.8 million outstanding loan balance at April 30, 2019 related to this Loan.~~us.

We believe that the cash flows from our agribusiness and rental operations business segments as well as available borrowing capacity from our existing credit facilities will be sufficient to satisfy our future capital expenditure, debt service, working capital and other contractual obligations for the remainder of fiscal year 2019. In addition, we have the ability to control the timing of a portion of our investing cash flows to the extent necessary based on our liquidity demands.

Fixed Rate and Variable Rate Debt

Details of amounts included in long-term debt can be found above and in the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

~~Preferred Stock Dividends~~

In 1997, in connection with the acquisition of Ronald Michaelis Ranches, Inc., we issued 30,000 shares of Series B Convertible Preferred Stock at $100.00 par value (the “Series B Stock”), of which 14,790 shares are currently outstanding. The holders of the Series B Stock are entitled to receive cumulative cash dividends at an annual rate of 8.75% of par value. Such dividends are payable quarterly on the first day of January, April, July and October in each year commencing July 1, 1997 and total $0.1 million annually.

During March and April 2014, we issued, in aggregate, 9,300 shares of Series B-2 Convertible Preferred Stock at $100.00 par value (the “Series B-2 Preferred Stock”). The holders of the Series B-2 Preferred Stock are entitled to receive cumulative cash dividends at an annual rate of 4% of the liquidation value of $1,000 per share. Such dividends are payable quarterly on the first day of January, April, July and October in each year commencing July 1, 2014 and total $0.4 million annually.

~~Defined Benefit Pension Plan~~

We have a noncontributory, defined benefit, single employer pension plan (the “Plan”), which provides retirement benefits for all eligible employees of the Company. Effective June 2004, the Company froze the Plan and no additional benefits accrued to participants subsequent to that date. We may make discretionary contributions to the Plan and we may be required to make contributions to adhere to applicable regulatory funding provisions, based in part on the Plan’s asset valuations and underlying actuarial assumptions. We made funding contributions of $0.6 million, $0.7 million and $0.5 million in fiscal years 2018, 2017 and 2016, respectively, and we plan to contribute approximately $0.6 million to the Plan in fiscal year 2019.

~~Operating Lease Obligations~~

We have numerous operating lease commitments with remaining terms ranging from less than one year to ten years. In fiscal year 2008, we installed a one mega-watt photovoltaic solar array on one of our agricultural properties located in Ventura County that produces a significant portion of the power to run our lemon packinghouse. The construction of this array was financed by Farm Credit Leasing and we have a long-term lease with Farm Credit Leasing for this array. Annual payments for this lease were $0.5 million, however the operating lease agreement terminated and the solar array was purchased in fiscal year 2018 for $1.1 million. In fiscal year 2009, we entered into a similar transaction with Farm Credit Leasing for a second photovoltaic array at one of our agricultural properties located in the San Joaquin Valley to supply a significant portion of the power to operate four deep water well pumps located on our property. Annual lease payments for this facility ranged from $0.3 million to $0.8 million, however, the operating lease agreement terminated and the solar array was purchased in the first quarter of fiscal year 2019 for $1.3 million.

We lease approximately 80 acres of lemons in Lindsay, California at a base rent of $500 per acre plus 50% of the operating profit of the leased acreage as defined in the lease. The lease expires in December 2021 and includes four five-year renewal options. Estimated aggregate lease expense is approximately $0.1 million per year.

On July 1, 2013, we entered into a lease agreement with Cadiz, Inc. (“Cadiz”) to develop new lemon orchards on Cadiz’s agricultural property in eastern San Bernardino County, California (the “Cadiz Ranch”). Under the terms of the lease agreement, we have the right to lease and plant up to 1,280 acres of lemons over the next five years at the Cadiz Ranch operations in the Cadiz Valley and have leased 320 acres initially, subject to a mutually agreed upon planting schedule. The lease agreement provides options to plant up to 960 additional acres (320 acres in Option 1 and 640 acres in Option 2) by 2019. The annual rental payment includes a base rent of $200 per planted acre and a lease payment equal to 20% of net cash flow from the harvested crops grown on Cadiz property. Pursuant to the terms of the lease agreement, the annual rental payment will not exceed a total of $1,200 per acre. We incurred approximately $0.1 million of lease expense in fiscal years 2018, 2017 and 2016, respectively.

On February 3, 2015, we entered into a Modification of Lease Agreement (the “Amendment”) with Cadiz. The Amendment, among other things, increased by 200 acres the amount of property leased by our Company under the lease agreement dated July 1, 2013. In connection with the Amendment, we paid a total of $1.2 million to acquire existing lemon trees and irrigation systems from Cadiz and a Cadiz tenant. In February 2016, Cadiz assigned this lease to Fenner Valley Farms, LLC, a subsidiary of Water Asset Management, LLC (“WAM”). An entity affiliated with WAM is the holder of 9,300 shares of our Series B-2 Preferred Stock.

~~We lease machinery and equipment for our packing operations and other land for our agricultural operations under leases with annual lease commitments that are individually immaterial.~~

~~Real Estate Development Activities, Capital Expenditures and Related Capital Resources~~

On November 10, 2015 (the “Transaction Date”), we entered into the Joint Venture with Lewis for the residential development of our East Area I real estate development project. To consummate the transaction, we formed Limoneira Lewis Community Builders, LLC (the "LLC" or “Joint Venture”) as the development entity, contributed our East Area I property to the Joint Venture and sold a 50% interest in the Joint Venture to Lewis for $20.0 million, comprised of a $2.0 million deposit received in September 2015 and $18.0 million received on the Transaction Date. We received net cash of approximately $18.8 million after transaction costs of approximately $1.2 million, which were expensed in the first quarter of fiscal year 2016. In addition, on the Transaction Date, we incurred a Success Fee with Parkstone Companies, Inc., in the amount of $2.1 million, which was capitalized as a component of our investment in the Joint Venture.

The Joint Venture agreement provides that Lewis will serve as the manager of the Joint Venture with the right to manage, control and conduct its day-to-day business and development activities. Certain major decisions, which are enumerated in the Joint Venture agreement, require approval by an executive committee comprised of two representatives appointed by Lewis and two representatives appointed by Limoneira.

Pursuant to the Joint Venture agreement, the Joint Venture will own, develop, subdivide, entitle, maintain, improve, hold for investment, market and dispose of the Joint Venture’s property in accordance with the business plan and budget approved by the executive committee.

Further, on the Transaction Date, the Joint Venture and Limoneira entered into a lease agreement (the "Lease Agreement"), pursuant to which the Joint Venture would lease certain of the contributed East Area I property back to Limoneira for continuation of agricultural operations, and certain other permitted uses, on the property until the Joint Venture required the property for development. The Lease

Agreement was set to terminate in stages corresponding to the Joint Venture's development of the property pursuant to a phased master development plan. Limoneira terminated this Lease Agreement pursuant to the terms therein during the first quarter of fiscal year 2019.

Limoneira and the Joint Venture also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement"). Under the terms of the Retained Property Agreement, the Joint Venture will transfer certain contributed East Area I property, which is entitled for commercial development, back to Limoneira (the "Retained Property") and arrange for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by Limoneira. In August 2018, the Retained Property was transferred back to Limoneira.

We expect to receive approximately $100.0 million from the Joint Venture over the estimated 7 to 10-year life of the project including $20.0 million received on the consummation of the Joint Venture. The Joint Venture partners will share in capital contributions to fund project costs until project loan proceeds and or revenues are sufficient to fund the project. These funding requirements are currently estimated to total $15.0 to $20.0 million for each Joint Venture partner in the first three to four years of the project. We funded $4.0 million in the first six months of fiscal year 2019, $3.5 million in fiscal year 2018, $7.5 million in fiscal year 2017 and $2.3 million in fiscal year 2016.

In January 2018, the Joint Venture entered into the $45.0 million Loan with Bank of America, N.A. to fund early development activities. The Loan matures in January 2020, with an option to extend the maturity date until 2021, subject to certain conditions. The interest rate on the Loan is LIBOR plus 2.85%, payable monthly. The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without penalty. In February 2018, the obligations under the Loan were guaranteed by certain principals from Lewis and by the Company. The Joint Venture recorded a $25.8 million outstanding loan balance at April 30, 2019 related to this Loan.

Off-Balance Sheet Arrangements

As discussed above and in Note 7 – Real Estate Development and Note 8 – Equity in Investments in the Notes to Consolidated Financial Statements included in our fiscal year ~~2018~~2019 Annual Report on Form 10-K, we have investments in joint ventures and partnerships that are accounted for using the equity method of accounting.

Inflation

Historically, inflation has not had a material effect on our results of operations. However, significant increases in inflation, including in Argentina, could have an adverse impact on our business, financial condition and results of operations.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires us to develop critical accounting policies and make certain estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates and judgments on historical experience, available relevant data and other information that we believe to be reasonable under the circumstances. Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information become available in future periods. We believe the following critical accounting policies reflect our more significant estimates and judgments used in the preparation of our consolidated financial statements.

Changes in Accounting Policies

On November 1, 2019, we adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-02, Leases (as amended, "ASU 2016-02" or the "new lease standard"). A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We enter into contracts that are, or contain, leases as both a lessee and a lessor. The following accounting policies have been updated as part of the adoption of the new lease standard.

Leases

~~Foreign Currency Translation~~Accounting for Operating Leases as a Lessee ~~– PDA~~- In our ordinary course of business, we enter into leases as a lessee generally for agricultural land and ~~San Pablo’s functional currency~~packinghouse equipment. We determine if an arrangement is a lease or contains a lease at inception. Operating leases are included in other assets, accrued liabilities and other long-term liabilities on our Consolidated Balance Sheets. Operating lease right-of-use (“ROU”) assets represent the ~~Chilean Peso. Our balance sheets~~right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis. Operating lease ROU assets and operating lease liabilities are ~~translated to U.S. dollars~~recognized based on the present value of the future minimum lease payments over the lease term at ~~exchange rates~~commencement date. As none of the our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in ~~effect at~~determining the present value of future payments.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet ~~dates~~as we have elected to recognize lease expense for these leases on a straight-line basis over the lease term. We have material leases with related parties which are further described in Note 15 - Related-Party Transactions of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Certain of our agricultural land agreements contain variable costs based on a percentage of the operating results of the leased property. Such variable lease costs are expensed as incurred. These land agreements also contain costs for non-lease components such as water usage. We account for the lease and ~~their income statements are translated at average exchange rates during~~non-lease components separately. For all other agreements, we generally combine lease and non-lease components in calculating the ~~reporting period. The resulting foreign currency translation adjustments are recorded~~ROU assets and lease liabilities. See Note 13 - Leases of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional information.

Accounting for Leases as a Lessor - We lease in which we act as the lessor includes land and residential and commercial units and are all classified as operating leases. Certain of our contracts contain variable income based on a percentage of the operating results of the leased asset. Certain of our contracts contain non-lease components such as water, utilities and common area services. We have elected to not separate lease and non-lease components for our lessor arrangements and the combined component is accounted for entirely under ASC 842. The underlying asset in an operating lease arrangement is carried at depreciated cost within Property, plant and equipment, net on the consolidated balance sheets. Depreciation is calculated using the straight-line method over the useful life of ~~accumulated other comprehensive income.~~the underlying asset. We recognize operating lease revenue on a straight-line basis over the lease term.

Revenue Recognition ~~– On November 1, 2018, we adopted~~ ~~FASB ASU 2014-09,~~- We account for our agribusiness revenue in accordance with ASC 606, Revenue from Contracts with ~~Customers (Topic 606),~~ that amends the guidance for the recognition of revenue from contracts with customers. The results for the reporting period beginning after November 1, 2018 are presented in accordance with the new standard which was adopted using the modified-retrospective method and applied to those contract that were not completed as of November 1, 2018. As a result, comparative information has not been restated and the results for the reporting periods before November 1, 2018 continue to be reported under the accounting standards and policies in effect for those periods.

Customers. The core principle of the ~~guidance~~standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with a ~~customer.~~customer;

Identify the performance obligations in the ~~contract.~~contract;

Determine the transaction ~~price.~~price;

Allocate the transaction price to the performance obligations in the ~~contract.~~contract; and

Recognize revenue when (or as) the entity satisfies a performance obligation.

We determine the appropriate method by which we recognize revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with our customers. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A ~~contracts~~contract's transaction price is allocated to each distinct good or service (i.e., performance obligation) identified in the contract and each performance obligation is valued based on its estimated relative standalone selling price.

We recognize the majority of our revenue at a point in time when ~~it satisfies~~we satisfy a performance obligation and ~~transfers~~transfer control of the product to the respective customer. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as allowances for estimated customer discounts or concessions, where applicable. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.

Upon adoption, we changed the accounting of certain brokered fruit sales. Under previous guidance, we were considered an agent and recorded revenues for certain brokered fruit sales and the costs of such fruit on a net basis in its consolidated statement of operations. Under the new revenue recognition standard, we are considered a principal in the transaction and revenues are recorded on a gross basis in our consolidated statement of operations with the related cost of such fruit included in agribusiness costs and expenses. This change resulted in the recognition of additional agribusiness revenue and agribusiness costs and expenses of $162,000 and $168,000, respectively, during the three months ended April 30, 2019 and $456,000 and $420,000, respectively, during the six months ended April 30, 2019. Had we used the previous revenue recognition guidance, we would have recorded insignificant net agribusiness revenue for the three and six months ended April 30, 2019. No cumulative adjustment to retained earnings was necessary as there is no net effect of applying the standard.

Agribusiness revenue– - Revenue from lemon sales is generally recognized at a point in time when the customer takes control of the fruit from ~~the Company’s~~our packinghouse which aligns with the transfer of title to the customer. We have elected to treat any shipping and handling costs incurred after control of the goods has been transferred to the customer as agribusiness costs.

Our avocados, oranges, specialty citrus and other specialty crops are packed and sold by Calavo and other third-party packinghouses. We deliver ~~all~~the majority of our avocado production from our orchards to Calavo. These avocados are then packed by Calavo at its packinghouse and sold and distributed under Calavo brands to its customers primarily in the United States and Canada. Our ~~Company’s~~ arrangements with other third-party packinghouses related to ~~its~~our oranges, specialty citrus and other specialty crops are similar to our arrangement with Calavo. Our arrangements with our third-party packinghouses are such that we are the producer and supplier of the product and the third-party packinghouses are our customers.

The revenues we recognize related to the fruits sold to the third-party packinghouses are based on the volume and quality of the fruits delivered, the market price for such fruit, less the packinghouses’ charges to pack and market the fruit. Such packinghouse charges include the grading, sizing, packing, cooling, ripening and marketing of the related fruit. We control the product until it is delivered to the third-party packinghouses at which time control of the product is transferred to the third-party packinghouses and revenue is recognized. Such third-party packinghouse charges are recorded as a reduction of revenue as they are not for distinct services. The identifiable benefit we receive from the third-party packinghouses for packaging and marketing services cannot be sufficiently separated from the third-party packinghouses’ purchase of our products. In addition, we are not able to reasonably estimate the fair value of the benefit received from the third-party packinghouses for such services and as such, these costs are characterized as a reduction of revenue in our consolidated statements of operations.

Revenue from the sales of certain of our agricultural products is recorded based on estimated proceeds provided by certain of our sales and marketing partners (Calavo and other third-party packinghouses) due to the time between when the product is delivered by us and the closing of the pools for such fruits at the end of each month or harvest period. Calavo and other third-party packinghouses are agricultural cooperatives or function in a similar manner as an agricultural cooperative. We estimate the variable consideration using

the most likely amount method, with the most likely amount being the quantities actually shipped extended by the prices reported by Calavo and other third-party packinghouses. Revenue is recognized at time of delivery to the packinghouses relating to fruits that are in pools that have not yet closed at month end if: (a) the related fruits have been delivered to and accepted by Calavo and other third-party packinghouses (i.e., Calavo and other third-party packinghouses obtain control) and (b) sales price information has been provided by Calavo and other third-party packinghouses (based on the marketplace activity for the related fruit) to estimate with reasonable certainty the final selling price for the fruit upon the closing of the pools. In such instances, we have the present right to payment and Calavo and other third-party packinghouses have the present right to direct the use of, and obtain substantially all of the remaining benefits from, the delivered fruit. We do not expect that there is a high likelihood that a significant reversal in the amount of cumulative

revenue recognized in the early periods of the pool will occur once the final pool prices have been reported by the packinghouses. Historically, the revenue that is recorded based on the sales price information provided to ~~the Company~~us by Calavo and other third-party packinghouses at the time of delivery, have not materially differed from the actual amounts that are paid after the monthly or harvest period pools are closed.

We have entered into brokerage arrangements with third-party international packinghouses. In ~~certain of~~ these arrangements, we have the exclusive ability to direct the use of, and obtain substantially all of the remaining benefits from the fruit, and are therefore acting as a principal. As such, we record the related revenue and costs of the fruit gross in the consolidated statement of operations.

Revenue from crop insurance proceeds is recorded when the amount can be reasonably determined and upon establishment of the present right to payment.

Rental Revenue –- We account for our rental operations revenue in accordance with ASC 842, Leases. Minimum rental revenues are generally recognized on a straight-line basis over the respective initial lease term. Contingent rental revenues are contractually defined as to the percentage of rent received by us and are based on fees collected by the lessee. Such revenues are recognized when actual results, based on collected fees reported by the tenant, are received. Our rental arrangements generally require payment on a monthly or quarterly basis.

~~Real Estate Development Revenue~~ – We recognize revenue on real estate development projects with customers at a point in time (i.e., the closing) when we satisfy the single performance obligation and transfers control of such real estate to a buyer. The transaction price, which is the amount of consideration we receive upon delivery of the completed real estate to the buyer, is allocated to this single obligation and is received at closing. Real estate development projects with non-customers are accounted for in accordance with ASC 610-20, ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets~~.

Real Estate Development Costs –- We capitalize the planning, entitlement, construction and development costs associated with our various real estate projects. Costs that are not capitalized, which include property maintenance and repairs, general and administrative and marketing expenses, are expensed as incurred. A real estate development project is considered substantially complete upon the cessation of construction and development activities. Once a project is substantially completed, future costs are expensed as incurred. Costs incurred to sell the real estate are evaluated for capitalization in accordance with ASC 340-40, and incremental costs of obtaining a contract and costs to fulfill a contract are capitalized only if the costs relate directly to a specifically identified contract, enhance resources to satisfy performance obligations in the future and are expected to be recovered. ~~For fiscal year 2018, we capitalized approximately $32.7 million of costs related to our real estate projects and expensed approximately $1.7 million of costs.~~

Financing and payment –- Our payment terms vary by the type and location of our customer and the products or services offered. Payment terms differ by jurisdiction and customer but payment is generally required in a term ranging from 30 to 60 days from date of shipment or satisfaction of the performance obligation. We do not provide financing with extended payment terms beyond generally standard commercial payment terms for the applicable industry.

Practical expedients and exemptions– - Taxes collected from customers and remitted to government authorities and that are related to the sales of ~~the Company’s~~our products are excluded from revenues.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for the services performed.

Foreign Currency Translation - PDA and San Pablo’s functional currency is the Chilean Peso. Our balance sheets are translated to U.S. dollars at exchange rates in effect at the balance sheet dates and their income statements are translated at average exchange rates during the reporting period. The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive income.

Income Taxes –- Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements

from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Business Combinations and Asset Acquisitions –- Business combinations are accounted for under the acquisition method in accordance with ASC 805, Business ~~Combinations~~.Combinations. The acquisition method requires identifiable assets acquired and liabilities assumed and any noncontrolling interest in the business acquired be recognized and measured at fair value on the acquisition date, which is the date that the acquirer obtains control of the acquired business. The amount by which the fair value of consideration transferred as the purchase

price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill. Acquisitions that do not meet the definition of a business under the ASC are accounted for as asset acquisitions. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Goodwill is not recognized in an asset acquisition with any consideration in excess of net assets acquired allocated to acquired assets on a relative fair value basis. Transaction costs are expensed in a business combination and are considered a component of the cost of the acquisition in an asset acquisition.

~~Derivative Financial Instruments~~ - We use derivative financial instruments for purposes other than trading to manage our exposure to interest rates as well as to maintain an appropriate mix of fixed and floating-rate debt. Contract terms of our hedge instruments closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is a hedge, depending on the nature of the hedge, changes in the fair value of the instrument will be either offset against the change in the fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value will be immediately recognized in earnings. Instruments that do not meet the criteria for hedge accounting, or contracts for which we have not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of change.

Impairment of Long-Lived Assets - We evaluate our long-lived assets including our real estate development projects for impairment when events or changes in circumstances indicate the carrying value of these assets may not be recoverable. ~~As a result of various factors, in recent years, we recorded impairment charges of $1.6 million, $0.1 million and zero in fiscal years 2018, 2017 and 2016, respectively.~~

Defined Benefit Retirement Plan - As discussed in the notes to our consolidated financial statements, we sponsor a defined benefit retirement plan that was frozen in June 2004, and no future benefits accrued to participants subsequent to that time. Ongoing accounting for this plan under FASB ASC 715 provides guidance as to, among other things, future estimated pension expense, pension liability and minimum funding requirements. ~~This~~Third-party actuarial consultants provide this information ~~is provided~~ to ~~us by third-party actuarial consultants.~~us. In developing this data, certain estimates and assumptions are used, including among other things, discount rate, long-term rate of return and mortality tables. During ~~2018,~~2019, the Society of Actuaries (“SOA”) released a new mortality improvement scale table, referred to as ~~MP-2018,~~MP-2019, which is believed to better reflect mortality improvements and is to be used in calculating defined benefit pension obligations. In addition, during fiscal year ~~2018,~~2019, the assumed discount rate to measure the pension obligation ~~increased~~decreased to ~~4.4%~~3.0%. ~~The Company~~We used the latest mortality tables released by the SOA through October ~~31, 2018~~2019 to measure ~~its~~our pension obligation as of October 31, ~~2018~~2019 and combined with the assumed discount rate and other demographic assumptions, ~~its~~our pension liability ~~decreased~~increased by approximately ~~$1.5~~$0.6 million as of October 31, ~~2018.~~2019. Further changes in any of these estimates could materially affect the amounts recorded that are related to our defined benefit retirement plan.

Recent Accounting Pronouncements

Please See Note 2 – "Summary of Significant Accounting Policies" of the ~~notes~~Notes to ~~consolidated financial statements~~Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~There~~Except for the broad effects of COVID-19 as a result of its negative impact on the global economy and major financial markets, there have been no material changes in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018~~2019 as filed with the Securities and Exchange Commission ("SEC") on January ~~14, 2019.~~13, 2020. We believe the outbreak of COVID-19 poses increasing risks and may potentially have accounting implications for us with exposure to a broader economic downturn and decline in financial markets. We anticipate a decrease in demand for our fresh citrus in Asian countries which would result in supply chain disruptions and reduced exports to areas affected by the virus.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. As of ~~April 30, 2019,~~January 31, 2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting. There have been no material changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q or, to our knowledge, in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls. Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time involved in legal proceedings arising in the normal course of business. Other than proceedings incidental to our business, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings and no such proceedings are, to our knowledge, contemplated by governmental authorities.

Item 1A. Risk Factors

~~There~~Except for the broad effects of COVID-19 as a result of its negative impact on the global economy and major financial markets, there have been no material changes in the disclosures discussed in the section entitled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2018,~~2019, as filed with the SEC on January ~~14, 2019.~~13, 2020.

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

~~None.~~Issuer Purchases of Equity Securities

During the first quarter of fiscal year 2020, we purchased shares of our common stock as follows:



Period	Total Number of Shares Purchased(1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2)
November 1, 2019 - November 30, 2019	—	—	—	—
December 1, 2019 - December 31, 2019	11,314	$18.87	—	—
January 1, 2020 - January 31, 2020	—	—	—	—
Total	11,314		—	—

(1) Shares were acquired from our employees in accordance with our stock-based compensation plan as a result of share withholdings to pay income tax related to the vesting and distribution of a restricted stock award.

(2) We currently have no Company repurchase program in place.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number	Exhibit
3.1	Restated Certificate of Incorporation of Limoneira Company, dated July 5, 1990 (Incorporated by reference to exhibit 3.1 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.2	Certificate of Merger of Limoneira Company and The Samuel Edwards Associates into Limoneira Company, dated October 31, 1990 (Incorporated by reference to exhibit 3.2 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.3	Certificate of Merger of McKevett Corporation into Limoneira Company dated December 31, 1994 (Incorporated by reference to exhibit 3.3 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.4	Agreement of Merger Between Ronald Michaelis Ranches, Inc. and Limoneira Company, dated June 24, 1997 (Incorporated by reference to exhibit 3.6 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.5	Certificate of Amendment of Certificate of Incorporation of Limoneira Company, dated April 22, 2003 (Incorporated by reference to exhibit 3.7 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.6	Certificate of Amendment of Certificate of Incorporation of Limoneira Company, dated March 24, 2010 (Incorporated by reference to exhibit 3.9 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

3.7	Certificate of Amendment of Certificate of Incorporation of Limoneira Company, dated March 29, 2017 (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed March 31, 2017 (File No. 001-34755))

3.8	Amended and Restated Bylaws of Limoneira Company (Incorporated by reference to exhibit 3.10 to the Company’s Annual Report on Form 10-K, filed January 14, 2013 (File No. 001-34755))

3.8.1	Amendment to Amended and Restated Bylaws of Limoneira Company (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed September 25, 2013 (File No. 001-34755))

3.8.2	Amendment to Amended and Restated Bylaws of Limoneira Company (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed December 18, 2014 (File No. 001-34755))

3.8.3	Amendment to Amended and Restated Bylaws of Limoneira Company (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed January 25, 2017 (File No. 001-34755))

3.8.4	Amendment to Amended and Restated Bylaws of Limoneira Company (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed July 26, 2017 (File No. 001-34755))

4.1	Specimen Certificate representing shares of Common Stock, par value $0.01 per share (Incorporated by reference to exhibit 4.1 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

4.2	Rights Agreement dated December 20, 2006 between Limoneira Company and The Bank of New York, as Rights Agent (Incorporated by reference to exhibit 4.2 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

4.3	Certificate of Designation, Preferences and Rights of $8.75 Voting Preferred Stock, $100.00 Par Value, Series B of Limoneira Company, dated May 21, 1997 (Incorporated by reference to exhibit 3.4 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))



Exhibit Number	Exhibit
4.4	Amended Certificate of Designation, Preferences and Rights of $8.75 Voting Preferred Stock, $100.00 Par Value, Series B of Limoneira Company, dated May 21, 1997 (Incorporated by reference to exhibit 3.5 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

4.5	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, $.01 Par Value, of Limoneira Company, dated November 21, 2006 (Incorporated by reference to exhibit 3.8 to the Company’s Registration Statement on Form 10, and amendments thereto, declared effective April 13, 2010 (File No. 000-53885))

4.6	Certificate of Designation, Preferences and Rights of 4% Voting Preferred Stock, $100.00 Par Value, Series B-2 of Limoneira Company, dated March 20, 2014 (Incorporated by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K, filed March 24, 2014 (File No. 001-34755))

31.1*	Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a)

31.2*	Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a)

32.1*	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document



	*	Filed or furnished herewith,

		In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's ~~Reports~~Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in ~~Exhibit~~Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

LIMONEIRA COMPANY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	LIMONEIRA COMPANY

~~June 10, 2019~~March 11, 2020	By:	/s/ HAROLD S. EDWARDS
		Harold S. Edwards
		Director, President and Chief Executive Officer
		(Principal Executive Officer)

~~June 10, 2019~~March 11, 2020	By:	/s/ MARK PALAMOUNTAIN
		Mark Palamountain
		Chief Financial Officer, Treasurer and Corporate Secretary
		(Principal Financial and Accounting Officer)

5646



	Three Months Ended April 30,					Six Months Ended April 30,
	2019			2018		2019			2018
Net income (loss)	$	2,820		$	6,606	$	(1,856	)	$	15,229
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(452		)	50		443			293
Minimum pension liability adjustment, net of tax of $28, $52, $55 and $103 for the three and six months ended April 30, 2019 and 2018, respectively.	72			123		146			247
Unrealized holding gains on security available-for-sale, net of tax of $0, $589, $0 and $1,758 for the three and six months ended April 30, 2019 and 2018, respectively.	—			1,421		—			4,242
Unrealized gains from derivative instrument, net of tax of $0, $25, $0 and $67 for the three and six months ended April 30, 2019 and 2018, respectively.	—			58		—			161
Total other comprehensive (loss) income, net of tax	(380		)	1,652		589			4,943
Comprehensive income (loss)	2,440			8,258		(1,267		)	20,172
Comprehensive (income) loss attributable to noncontrolling interest	13			13		1			36
Comprehensive income (loss) attributable to Limoneira Company	$	2,453		$	8,271	$	(1,266	)	$	20,208



Cultural costs	$	579
Land and land improvements	9,114
Buildings and equipment	207
Orchards	2,058
Water rights	1,153
Total assets acquired	$	13,111



April 30, 2019	Level 1		Level 2		Level 3		Total
Assets at fair value:
Equity securities	$	23,953	$	—	$	—	$	23,953



	April 30, 2019		October 31, 2018
Prepaid insurance	$	779	$	647
Prepaid supplies	1,165		1,196
Lemon supplier advances	508		170
Note receivable, net	2,552		2,797
Real estate development held for sale	5,024		5,024
Water assessment fees and other	1,780		694
	$	11,808	$	10,528



	Six Months Ended April 30,
	2019		2018
Revenues	$	30,354	$	—
Cost of land sold	22,005		—
Operating expenses	107		83
Net income (loss)	$	8,242	$	(83	)
Net income (loss) attributable to Limoneira Company	$	3,481	$	(83	)



	Trailing twelve months ended April 30,
	2019			2018
Revenues:
Agribusiness	$	133,769		$	125,881
Rental operations	4,948			5,171
Real estate development	—			—
Total revenues	138,717			131,052
Costs and expenses:
Agribusiness	117,117			95,323
Rental operations	4,218			3,968
Real estate development	110			229
Impairment of real estate development assets	1,558			—
Selling, general and administrative	17,895			15,000
Total costs and expenses	140,898			114,520
Operating (loss) income	(2,181		)	16,532
Other income (expense):
Interest expense	(867		)	(1,721		)
Equity in earnings of investments	2,635			33
Gain on sale of stock in Calavo Growers, Inc.	4,223			—
Unrealized gain (loss) on stock in Calavo Growers, Inc.	(298		)	—
Other income, net	416			422
Total other income (expense)	6,109			(1,266		)
Income before income tax (provision) benefit	3,928			15,266
Income tax (provision) benefit	(801		)	5,048
Net income	3,127			20,314
(Income) loss attributable to noncontrolling interest	(41		)	37
Net income attributable to Limoneira Company	$	3,086		$	20,351