What changed in this filing

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Item 1. Financial Statements

2020-09-09 compared with 2020-06-09 · 333 added, 239 removed, 553 unchanged (51% of the section changed)

3 unchanged sentences

($ in thousands, except share amounts)

July 31, 2020 October 31, 2019

Current assets:

Cash $ 878 $ 616

Accounts receivable, net 21,478 15,114

8 unchanged sentences

Investment in Calavo Growers, Inc.

Goodwill 1,538 1,839

Intangible assets, net 11,609 12,407

Other assets 8,837 9,266

Total assets $ 401,898 $ 399,867

Liabilities and stockholders’ equity

13 unchanged sentences

Series B Convertible Preferred Stock – $ 100.00 par value ( 50,000 shares authorized:

14,790 shares issued and outstanding at April 30, 2020 and October 31, 2019) (8.75% coupon rate)

14,790 shares issued and outstanding at July 31, 2020 and October 31, 2019) ( 8.75 % coupon rate)

Series B-2 Convertible Preferred Stock – $ 100.00 par value ( 10,000 shares authorized:

9,300 shares issued and outstanding at April 30, 2020 and October 31, 2019) (4% dividend rate on liquidation value of $1,000 per share)

9,300 shares issued and outstanding at July 31, 2020 and October 31, 2019) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

Stockholders’ equity:

Series A Junior Participating Preferred Stock – $ 0.01 par value ( 20,000 shares authorized:

zero issued or outstanding at April 30, 2020 and October 31, 2019)

zero issued or outstanding at July 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 April 30, 2020 and October 31, 2019, respectively)

17,857,707 and 17,756,180 shares issued and 17,815,607 and 17,756,180 shares outstanding at July 31, 2020 and October 31, 2019, respectively)

Additional paid-in capital 161,655 160,254

1 unchanged sentence

Accumulated other comprehensive loss ( 7,261 ) ( 7,255 )

Treasury stock, at cost, 42,100 shares at July 31, 2020

Noncontrolling interest 13,846 15,422

6 unchanged sentences

Three Months Ended

Six Months Ended April 30,

July 31, Nine Months Ended

2020 2019 2020 2019

Net revenues:

Agribusiness $ 52,387 $ 49,631 $ 131,309 $ 131,254

Other operations 1,172 1,238 3,477 3,668

Total net revenues 53,559 50,869 134,786 134,922

Costs and expenses:

Agribusiness 46,826 42,747 125,318 118,741

Other operations 1,010 1,043 3,396 3,269

1 unchanged sentence

Total costs and expenses 51,745 48,751 144,271 136,829

Operating loss

Other (expense) income:

Operating income (loss) 1,814 2,118 ( 9,485 ) ( 1,907 )

Other income (expense):

Interest expense, net ( 92 ) ( 774 ) ( 1,089 ) ( 1,313 )

Equity in (loss) earnings of investments

(Loss) gain on stock in Calavo Growers, Inc.

Other (expense) income, net

Total other (expense) income

(Loss) income before income tax benefit (provision)

Income tax benefit (provision)

Net (loss) income

Equity in earnings of investments, net 832 480 341 2,449

Loss on stock in Calavo Growers, Inc.

— ( 1,775 ) ( 6,299 ) ( 2,073 )

Other income, net 11 15 246 375

Total other income (expense) 751 ( 2,054 ) ( 6,801 ) ( 562 )

Income (loss) before income tax (provision) benefit 2,565 64 ( 16,286 ) ( 2,469 )

Income tax (provision) benefit ( 765 ) ( 461 ) 5,876 216

Net income (loss) 1,800 ( 397 ) ( 10,410 ) ( 2,253 )

Net loss (income) attributable to noncontrolling interest 509 ( 593 ) 1,409 ( 615 )

Net (loss) income attributable to Limoneira Company

Net income (loss) attributable to Limoneira Company 2,309 ( 990 ) ( 9,001 ) ( 2,868 )

Preferred dividends ( 125 ) ( 125 ) ( 376 ) ( 376 )

Net (loss) income attributable to common stock

Basic net (loss) income per common share

Diluted net (loss) income per common share

Net income (loss) attributable to common stock $ 2,184 $ ( 1,115 ) $ ( 9,377 ) $ ( 3,244 )

Basic net income (loss) per common share $ 0.12 $ ( 0.06 ) $ ( 0.54 ) $ ( 0.19 )

Diluted net income (loss) per common share $ 0.12 $ ( 0.06 ) $ ( 0.54 ) $ ( 0.19 )

Weighted-average common shares outstanding-basic 17,623,000 17,554,000 17,607,000 17,527,000

2 unchanged sentences

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)

Three Months Ended April 30,

Six Months Ended April 30,

Net (loss) income

Other comprehensive (loss) income, net of tax:

Three Months Ended July 31, Nine Months Ended July 31,

2020 2019 2020 2019

Net income (loss) $ 1,800 $ ( 397 ) $ ( 10,410 ) $ ( 2,253 )

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 1,410 ( 559 ) ( 476 ) ( 116 )

Minimum pension liability adjustment, net of tax of $50, $28, $100 and $55 for the three and six months ended April 30, 2020 and 2019, respectively.

Minimum pension liability adjustment, net of tax of $ 50 , $ 28 , $ 150 and $ 83 for the three and nine months ended July 31, 2020 and 2019, respectively.

135 72 330 218

Residual state tax effects on sale of equity securities — — 140 —

Total other comprehensive (loss) income, net of tax

Comprehensive (loss) income

Total other comprehensive income (loss), net of tax 1,545 ( 487 ) ( 6 ) 102

Comprehensive income (loss) 3,345 ( 884 ) ( 10,416 ) ( 2,151 )

Comprehensive loss attributable to noncontrolling interest 544 575 1,431 576

Comprehensive (loss) income attributable to Limoneira Company

Comprehensive income (loss) attributable to Limoneira Company $ 3,889 $ ( 309 ) $ ( 8,985 ) $ ( 1,575 )

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

2 unchanged sentences

($ in thousands)

Stockholders’ Equity

Temporary Equity

Comprehensive

Noncontrolling

Income (Loss)

Stockholders’ Equity Temporary Equity

Common Stock Additional

Paid-In Retained Accumulated

Comprehensive Treasury Non- controlling Series B

Preferred Series B-2

Shares Amount Capital Earnings Income (Loss) Stock 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 ) — —

1 unchanged sentence

Dividends Common ($ 0.075 per share)

— — — ( 1,341 ) — — — ( 1,341 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 32 ) — — — ( 32 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

Stock compensation — — 358 — — — — 358 — —

Noncontrolling interest adjustment — — — — — — ( 145 ) ( 145 ) — —

Net loss — — — ( 4,883 ) — — ( 423 ) ( 5,306 ) — —

Other comprehensive (loss) income, net of tax — — — — ( 419 ) — 1 ( 418 ) — —

Balance at April 30, 2020 17,857,707 $ 179 $ 161,227 $ 38,850 $ ( 8,806 ) $ — $ 14,390 $ 205,840 $ 1,479 $ 9,331

Stockholders’ Equity

Temporary Equity

Comprehensive

Noncontrolling

Income (Loss)

Dividends Common ($ 0.075 per share)

— — — ( 1,338 ) — — — ( 1,338 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 33 ) — — — ( 33 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

Stock compensation — — 428 — — — — 428 — —

Treasury shares ( 42,100 )

— — — — — ( 562 ) — ( 562 ) — —

Net income (loss) — — — 2,309 — — ( 509 ) 1,800 — —

Other comprehensive income (loss), net of tax — — — — 1,545 — ( 35 ) 1,510 — —

Balance at July 31, 2020 17,857,707 $ 179 $ 161,655 $ 39,695 $ ( 7,261 ) $ ( 562 ) $ 13,846 $ 207,552 $ 1,479 $ 9,331

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY (CONTINUED)

($ in thousands)

Stockholders’ Equity Temporary Equity

Common Stock Additional

Paid-In Retained Accumulated

Comprehensive Non- controlling Series B

Preferred Series B-2

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 — —

6 unchanged sentences

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 — —

Other comprehensive income, net of tax

Net income — — — 2,815 — 5 2,820 — —

Other comprehensive loss, 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

Dividends Common ($ 0.075 per share)

— — — ( 1,333 ) — — ( 1,333 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 32 ) — — ( 32 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — ( 93 ) — —

Stock compensation — — 208 — — — 208 — —

Acquired noncontrolling interest — — — — — 14,410 14,410 — —

Net (loss) income — — — ( 990 ) — 593 ( 397 ) — —

Other comprehensive loss, net of tax — — — — ( 487 ) ( 18 ) ( 505 ) — —

Balance at July 31, 2019 17,772,753 $ 178 $ 160,200 $ 57,309 $ ( 5,130 ) $ 15,560 $ 228,117 $ 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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)

Nine Months Ended

Operating activities

Net loss $ ( 10,410 ) $ ( 2,253 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

3 unchanged sentences

Non-cash lease expense 349 —

Equity in loss (earnings) of investments

Equity in earnings of investments ( 341 ) ( 2,449 )

Cash distributions from equity investments — 458

7 unchanged sentences

Income taxes receivable ( 4,848 ) —

Other assets 108 ( 39 )

Accounts payable and growers payable ( 2,969 ) 15,505

5 unchanged sentences

Agriculture property acquisition — ( 397 )

Payments to FGF Trapani

Business combination — ( 15,000 )

Net proceeds from sale of stock in Calavo Growers, Inc.

Collections of installments on note receivable

Equity investment contributions

Loan to Limoneira Lewis Community Builders, LLC ( 1,800 ) —

Collections on loan and note receivable 1,800 150

Equity investment contributions ( 2,800 ) ( 4,000 )

Investments in mutual water companies ( 55 ) ( 472 )

7 unchanged sentences

Exchange of common stock ( 213 ) ( 305 )

Purchase of treasury stock ( 562 ) —

Payments of deferred financing costs ( 70 ) —

Net cash provided by financing activities 11,479 27,479

6 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Supplemental disclosures of cash flow information

Cash paid during the period for interest, net of amounts capitalized $ 1,666 $ 2,018

Cash paid during the period for income taxes, net of refunds

Cash paid during the period for income taxes, net of (refunds received) $ ( 361 ) $ 130

Non-cash investing and financing activities:

2 unchanged sentences

Capital expenditures accrued but not paid at period-end $ 2,806 $ 199

Accrued contribution obligation of investment in water company

Accrued Series B-2 Convertible Preferred Stock dividends

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.

1 unchanged sentence

In February 2020, the Company received an annual patronage dividend of $ 966,000 from Farm Credit West, FLCA ("Farm Credit West"), of which $ 667,000 was recorded as a reduction in interest expense and $ 299,000 reduced the Company's real estate development assets.

In July 2020, Farm Credit West declared an additional annual cash patronage dividend of $ 600,000 received in August 2020, of which the Company recorded $ 400,000 as a reduction in interest expense and $ 200,000 as a reduction in the Company's real estate development assets as of July 31, 2020.

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

50 unchanged sentences

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 April 30, 2020 , the components of accumulated other comprehensive loss, net of tax, consist of accumulated foreign currency translation losses of $4,248,000 and accumulated pension losses of $4,558,000 .

Comprehensive Income (Loss)

Comprehensive income (loss) 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 July 31, 2020, the components of accumulated other comprehensive loss, net of tax, consist of accumulated foreign currency translation losses of $ 2,838,000 and accumulated pension losses of $ 4,423,000 .

As of October 31, 2019, accumulated other comprehensive loss consisted of accumulated foreign currency translation losses of $ 2,362,000 , accumulated pension losses of $ 4,753,000 and accumulated losses related to available for sale securities of $ 140,000 .

Reclassifications and Adjustments

Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the April 30, 2020 presentation.

Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the July 31, 2020 presentation.

The Company reclassified receivables/other from related parties and payables to related parties of $ 2,985,000 and $ 906,000 , respectively, as of October 31, 2019, from accounts receivable, net, and accrued liabilities, respectively.

11 unchanged sentences

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 balance sheet and recognize the associated lease payments in the consolidated statements of 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.

The Company also elected to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in

LIMONEIRA COMPANY

2 unchanged sentences

Recent Accounting Pronouncements (continued)

The 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.

the consolidated statements of 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.

The adoption of ASU 2016-02 had a material impact on the Company's 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 $ 2,400,000 and lease liabilities of $ 2,500,000 for operating leases in which the Company is a lessee.

27 unchanged sentences

The Company early adopted this ASU as of November 1, 2019 and the adoption did not have a material impact on its consolidated financial statements.

FASB ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

This amendment simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features.

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it.

The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

ASU 2020-06 is effective for public business entities that meet the definition of a SEC filer for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted for fiscal years beginning after December 15, 2020.

The Company is evaluating the effect this ASU may have on its consolidated financial statements.

Coronavirus Aid, Relief, and Economic Security Act ("CARES Act")

1 unchanged sentence

The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property.

The Company has evaluated the impact on its consolidated financial statements at April 30, 2020 and has estimated the impact of approximately $1,380,000 of income tax benefit and $4,924,000 federal tax refund utilizing net operating loss provisions of the CARES Act.

The Company has evaluated the impact on its consolidated financial statements at July 31, 2020 and has recorded a discrete tax benefit of $ 1,950,000 and an income tax refund of $ 5,801,000 due to our ability to carryback and obtain federal tax refund by utilizing net operating losses under the provisions of the CARES Act.

The Company anticipates it will benefit from the utilization of net operating losses, the technical correction for qualified leasehold improvements eligible for 100% tax bonus depreciation and potentially other provisions within the CARES Act.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

SEC Final Rule Release No.

33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses

On May 20, 2020, the SEC issued a final rule that amends the financial statement requirements for acquisitions and dispositions of businesses, including real estate operations, and related pro forma financial information.

As noted in the final rule, the amendments “are intended to improve for investors the financial information about acquired or disposed businesses, facilitate more timely access to capital, and reduce the complexity and costs to prepare the disclosure.” Among other changes, the final rule modifies the significance tests and improves the disclosure requirements for (1) acquired or to be acquired businesses, (2) real estate operations, and (3) pro forma financial information.

The final rule is applicable for a registrant’s fiscal year beginning after December 31, 2020 with early application permitted.

The Company early adopted the final rule effective July 31, 2020 and the adoption did not have a material impact on its consolidated financial statements.

Business Combination

8 unchanged sentences

Below is a summary of the fair value of the net assets acquired on the acquisition date based on a third-party valuation, which was finalized during the second quarter of fiscal year 2020 (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Business Combination (continued)

Cultural costs $ 3,270

1 unchanged sentence

Buildings and improvements 870

Orchards 8,410

Customer relationships, trademarks and non-competition agreement ( 10 -year useful life)

2 unchanged sentences

Net cash paid $ 14,848

Goodwill of $123,000 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.

Goodwill of $ 123,000 relates to synergies of the operations, has been allocated to the fresh lemons segment and is not 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.

4 unchanged sentences

The following table sets forth the Company’s financial assets as of October 31, 2019, which were measured on a recurring basis during the period, segregated by level within the fair value hierarchy (in thousands):

October 31, 2019

October 31, 2019 Level 1 Level 2 Level 3 Total

Assets at fair value:

Equity securities $ 17,346 $ — $ — $ 17,346

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Fair Value Measurements (continued)

Equity securities consisted of marketable securities in Calavo common stock.

1 unchanged sentence

These securities were measured at fair value by quoted market prices and changes in fair value were included in the statement of operations.

In March 2020, the Company sold all 200,000 shares of Calavo common stock for a total of $11,048,000 , recognizing a loss of $4,275,000 and $6,299,000 , for the three and six months ended April 30, 2020 , respectively, which is included in other (expense) income in the consolidated statement of operations.

In fiscal year 2019, the Company sold 50,000 shares of Calavo common stock for a total of $4,786,000 , recognizing a loss of $63,000 , which was included in other (expense) income in the consolidated statement of operations.

In March 2020, the Company sold all 200,000 shares of Calavo common stock for a total of $ 11,048,000 , recognizing a loss of $ 6,299,000 for the nine months ended July 31, 2020.

Concentrations and Geographic Information

Lemons procured from third-party growers were 60% and 59% of the Company's lemon supply in the three months ended April 30, 2020 and 2019 , respectively.

Lemons procured from third-party growers were 58% and 59% of the Company's lemon supply in the six months ended April 30, 2020 and 2019 , respectively, of which one third-party grower was 12% of lemon supply as of April 30, 2020 .

Lemons procured from third-party growers were 64 % and 59 % of the Company's lemon supply in the three months ended July 31, 2020 and 2019, respectively.

Lemons procured from third-party growers were 60 % and 59 % of the Company's lemon supply in the nine months ended July 31, 2020 and 2019, respectively.

The Company sells the majority of its avocado production to Calavo and the majority of its oranges and specialty citrus to a third-party packinghouse.

One individual customer represented 11 % of accounts receivable, net as of July 31, 2020.

Concentrations of credit risk with respect to trade receivables are limited due to a large, diverse customer base.

During the three and six months ended April 30, 2020 , the Company had approximately $921,000 and $1,460,000 of lemon and orange sales in Chile by PDA and San Pablo, respectively, and $2,280,000 and $2,479,000 of lemon and orange sales in Argentina by Trapani Fresh, respectively.

During the three and six months ended April 30, 2019 , the Company had approximately $907,000 , and $1,545,000 of lemon and orange sales in Chile by PDA and San Pablo, respectively.

LIMONEIRA COMPANY

Concentrations and Geographic Information (continued)

During the three and nine months ended July 31, 2020, the Company had approximately $ 643,000 and $ 2,103,000 , respectively, of lemon and orange sales in Chile by PDA and San Pablo and $ 9,626,000 and $ 12,105,000 , respectively, of lemon and orange sales in Argentina by Trapani Fresh.

During the three and nine months ended July 31, 2019, the Company had approximately $ 1,053,000 and $ 2,598,000 , respectively, of lemon and orange sales in Chile by PDA and San Pablo.

In addition, during the three and nine months ended July 31, 2019, the Company had approximately $ 11,685,000 of lemon sales in Argentina by Trapani Fresh.

Prepaid Expenses and Other Current Assets

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

October 31, 2019

July 31, 2020 October 31, 2019

Prepaid supplies and insurance $ 2,554 $ 3,199

1 unchanged sentence

Real estate development held for sale 2,543 2,543

Property held for sale 5,982 —

Lemon supplier advances and other 4,740 2,230

$ 18,309 $ 8,153

In June 2020, the Company entered into an agreement to sell a property, located in Lindsay, California, for $ 6,000,000 .

The transaction closed on August 26, 2020 with the Company receiving net proceeds of $ 6,011,000 .

After transaction and other costs, the Company recorded a loss of approximately $ 300,000 and classified the $ 5,982,000 carrying value of the property as held for sale as of July 31, 2020.

Real Estate Development

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

July 31, 2020 October 31, 2019

Retained Property - East Area I $ 13,251 $ 11,943

East Area II 6,891 5,659

$ 20,142 $ 17,602

East Area I, Retained Property and East Area II

2 unchanged sentences

To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB” or “Joint Venture”) as the development entity, contributed its East Area I property to LLCB and sold a 50 % interest in LLCB to Lewis for $ 20,000,000 .

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Real Estate Development (continued)

East Area I, Retained Property and East Area II (continued)

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 balance includes estimated costs incurred by and reimbursable to LLCB of $2,850,000 at April 30, 2020 , which is included in payables to related parties and $1,200,000 at October 31, 2019 , which was included in other long-term liabilities.

The balance includes estimated costs incurred by and reimbursable to LLCB of $ 3,675,000 at July 31, 2020, which is included in payables to related parties and $ 1,200,000 at October 31, 2019, which was included in other long-term liabilities.

In January 2018, the 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 scheduled to mature in January 2020 and was extended to February 22, 2021 per the terms thereof.

The Loan originally was scheduled to mature in January

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Real Estate Development (continued)

East Area I, Retained Property and East Area II (continued)

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 April 30, 2020 .

The extension had no impact on the Company's Loan guarantee $ 1,080,000 value as of July 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 April 30, 2020 .

The Company made contributions to the Joint Venture of $2,800,000 and $4,000,000 in the six months ended April 30, 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% originally due May 31, 2020 and extended to August 31, 2020.

The Joint Venture recorded the Loan balance of $ 39,404,000 as of July 31, 2020.

The Company made contributions to the Joint Venture of $ 2,800,000 and $ 4,000,000 in the nine months ended July 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 % originally due May 31, 2020 and extended to August 31, 2020, which was repaid in June 2020.

Other Real Estate Development Projects

The remaining real estate development parcel within the Templeton Santa Barbara, LLC project is described as Sevilla.

The Company's net carrying value of Sevilla was $2,543,000 , as of April 30, 2020 and October 31, 2019 , respectively, which has been included in prepaid expenses and other current assets.

The expenses associated with this property were immaterial.

In the first quarter of fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $ 2,700,000 , which is expected to close in the first quarter of fiscal year 2021.

After transaction and other costs, the Company expects to receive cash proceeds of approximately $ 2,550,000 and recognize an immaterial gain upon closing.

At July 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.

During December 2017, the Company sold its Centennial property with a net book value of $ 2,983,000 for $ 3,250,000 .

1 unchanged sentence

The promissory note was originally scheduled to mature in December 2019 but was extended to December 15, 2020 and the interest rate was reset to equal to the 6-month LIBOR plus 2.75 % on the outstanding principal balance of the note, interest only paid monthly on the first day of each month beginning January 1, 2020.

At April 30, 2020 , the net carrying value of the note was $2,489,000 and classified in prepaid expenses and other current assets.

In the first quarter of fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $2,700,000 , which is expected to close in fiscal year 2020.

After transaction and other costs, the Company expects to receive cash proceeds of approximately $2,550,000 and recognize an immaterial gain upon closing.

At April 30, 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.

At July 31, 2020, the net carrying value of the note was $ 2,490,000 and classified in prepaid expenses and other current assets.

Equity in Investments

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

October 31, 2019

July 31, 2020 October 31, 2019

Limoneira Lewis Community Builders, LLC $ 57,424 $ 54,016

Limco Del Mar, Ltd.

Rosales 1,344 1,745

Romney Property Partnership 509 512

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Equity in Investments (continued)

$ 61,245 $ 58,223

Unconsolidated Significant Subsidiary

In evaluating its investments, there are two tests utilized to determine if equity method investees are considered significant subsidiaries:

In accordance with Rule 10-01(b)(1) of Regulation S-X, which applies 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.

Summarized income statement information of an equity method investee is required in an interim report if either of the two tests exceed 20% in the interim periods presented.

During the year-to-date interim period for the six months ended April 30, 2019 , this threshold was met for the LLCB and thus summarized income statement information is presented in this Quarterly Report on Form 10-Q.

During the year-to-date interim period for the nine months ended July 31, 2019, this threshold was met for LLCB and thus summarized income statement information is presented in this Quarterly Report on Form 10-Q.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Equity in Investments (continued)

The following is unaudited summarized financial information for LLCB (in thousands):

Six Months Ended April 30,

Nine Months Ended

Revenues $ 25,716 $ 36,551

Cost of land sold 21,614 26,770

Operating expenses 848 445

Net income $ 3,254 $ 9,336

Net income attributable to Limoneira Company $ 1,659 $ 4,021

5 unchanged sentences

Foreign currency translation adjustment ( 4 )

April 30, 2020

July 31, 2020 $ 1,538

See Note 3 - Acquisitions for additional information regarding the acquisition of Trapani Fresh.

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 April 30, 2020 .

Intangible assets consisted of the following as of April 30, 2020 and October 31, 2019 (in thousands):

April 30, 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

There have been no impairment charges recorded against goodwill as of July 31, 2020.

Intangible assets consisted of the following as of July 31, 2020 and October 31, 2019 (in thousands):

July 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 $ ( 801 ) $ 2,985 10 $ 3,786 $ ( 542 ) $ 3,244 10

1 unchanged sentence

Non-competition agreement 1,040 ( 121 ) 919 10 1,040 ( 42 ) 998 10

Acquired water and mineral rights

Acquired water and mineral rights 3,609 — 3,609 Indefinite 3,655 — 3,655 Indefinite

$ 13,445 $ ( 1,836 ) $ 11,609 $ 13,491 $ ( 1,084 ) $ 12,407

Amortization expense totaled $ 262,000 and $ 205,000 for the three months ended July 31, 2020 and 2019, respectively.

Amortization expense totaled $ 752,000 and $ 383,000 for the nine months ended July 31, 2020 and 2019, respectively.

LIMONEIRA COMPANY

1 unchanged sentence

Goodwill and Intangible Assets (continued)

Amortization expense totaled $205,000 and $89,000 for the three months ended April 30, 2020 and 2019 , respectively.

Amortization expense totaled $490,000 and $178,000 for the six months ended April 30, 2020 and 2019 , respectively.

Estimated future amortization expense of intangible assets as of April 30, 2020 are as follows (in thousands):

2020 (excluding the six months ended April 30, 2020)

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

2020 (excluding the nine months ended July 31, 2020) $ 285

Thereafter 3,760

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 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 April 30, 2020 and October 31, 2019 were $6,000,000 and $5,499,000 , respectively.

Amounts included in other assets in the consolidated balance sheets as of July 31, 2020 and October 31, 2019 were $ 5,554,000 and $ 5,499,000 , respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

October 31, 2019

July 31, 2020 October 31, 2019

Compensation $ 1,787 $ 1,973

Property taxes 442 652

Lemon and orange supplier payables — 899

Allowances and packing and harvest expenses

Operating expenses 2,178 3,191

Other 1,764 1,546

$ 6,171 $ 8,261

LIMONEIRA COMPANY

2 unchanged sentences

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

October 31, 2019

July 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 0.94% at April 30, 2020, plus 1.60%.

the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 0.18 % at July 31, 2020, plus 1.60 %.

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.

$ 101,527 $ 82,843

Farm Credit West term loan:

Effective October 1, 2019, the interest rate was fixed at 3.76%.

Effective July 1, 2020, the interest rate was fixed at 2.48 %.

The loan is payable in quarterly installments through November 2022.

Farm Credit West term loan:

Effective October 1, 2019, the interest rate was fixed at 4.14%.

Effective July 1, 2020, the interest rate was fixed at 3.24 %.

The loan is payable in monthly installments through October 2035.

Farm Credit West term loan:

Effective October 1, 2019, the interest rate was fixed at 4.17%.

Effective July 1, 2020, the interest rate was fixed at 3.24 %.

The loan is payable in monthly installments through March 2036.

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.

Effective July 1, 2020 the interest rate was fixed at 2.77 % until July 1, 2025, becoming variable for the remainder of the loan.

The loan is payable in monthly installments through March 2036.

Wells Fargo term loan:

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Note Payable:

the interest rate ranges from 5.00% to 7.00% and was 6.00% at April 30, 2020.

the interest rate ranges from 5.00 % to 7.00 % and was 6.00 % at July 31, 2020.

The loan includes interest only monthly payments and principal is due in February 2023.

Subtotal 125,773 109,077

Less deferred financing costs, net of accumulated amortization 188 162

2 unchanged sentences

Long-term debt, less current portion $ 122,159 $ 105,892

In June 2017, the Company entered into a Master Loan Agreement (the “Loan Agreement”) with Farm Credit West that includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (the “Supplements”).

In January 2018, the Company amended the Revolving Credit Supplement to increase the borrowing capacity from $60,000,000 to $75,000,000 .

The Company and Farm Credit West, FLCA (“Farm Credit West”) are parties to that certain Master Loan Agreement (the “Loan Agreement”), dated June 20, 2017, which includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (together, the “Supplements”).

On June 30, 2020, the Company and Farm Credit West entered into a Conversion Agreement to convert the term loans noted above to fixed interest rates effective July 1, 2020.

No changes were made to the outstanding principal balances on the term loans and no cash repayments of principal were made by the Company.

The rates are subject to a prepayment restriction period for a portion of the fixed rate term that will expire on January 1, 2021, after which the Company may prepay any amounts without penalty.

In March 2020, the Company entered into a revolving equity line of credit promissory note and loan agreement with Farm Credit West for a $ 15,000,000 Revolving Equity Line of Credit (the "RELOC") secured by a first lien on 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 RELOC 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.

The Supplements and RELOC provide aggregate borrowing capacity of $ 130,000,000 comprised of $ 75,000,000 under the Revolving Credit Supplement, $ 40,000,000 under the Non-Revolving Credit Supplement and $ 15,000,000 under the RELOC.

The borrowing capacity based on collateral value was $130,000,000 at April 30, 2020 .

All indebtedness under the Loan Agreement, including any indebtedness under the Supplements, is secured by a first lien on certain of its agricultural properties in Tulare, Ventura and San Luis Obispo counties in California and certain of the Company's building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

The borrowing capacity based on collateral value was $ 130,000,000 at July 31, 2020.

All indebtedness under the Loan Agreement and RELOC with Farm Credit West, including any indebtedness under the Supplements, is secured by a first lien on certain of its agricultural properties in Tulare, Ventura and San Luis Obispo counties in California and certain of the 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, 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 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 received $966,000 in February 2020.

LIMONEIRA COMPANY

1 unchanged sentence

Long-Term Debt (continued)

In December 2019, Farm Credit West declared an annual cash patronage dividend of 1.00 % of average eligible loan balances.

The Company received $ 966,000 in February 2020.

In July 2020, Farm Credit West declared an additional annual cash patronage dividend of $ 600,000 , which the Company received in August 2020.

Under the Loan Agreement the Company is required to comply with a minimum debt service coverage ratio (as calculated in accordance with the Loan Agreement) of 1.25 :1.0 measured as of October 31 each year.

On May 29, 2020, the Loan Agreement was amended to adjust the debt service ratio to 1.00 :1.0 for October 31, 2020.

Interest is capitalized on non-bearing orchards, real estate development projects and significant construction in progress.

The Company capitalized interest of $355,000 and $344,000 during the three months ended April 30, 2020 and 2019 , respectively, and $444,000 and $611,000 during the six months ended April 30, 2020 and 2019 , respectively.

In August 2020, Farm Credit West modified the covenant to defer measurement at October 31, 2020 and revert to a debt service coverage ratio of 1.25 :1.0 measured as of October 31, 2021.

Capitalized interest is included in property, plant and equipment and real estate development assets in the Company’s consolidated balance sheets.

The Company capitalized interest of $ 353,000 and $ 366,000 during the three months ended July 31, 2020 and 2019, respectively, and $ 797,000 and $ 977,000 during the nine months ended July 31, 2020 and 2019, respectively.

Lessor Arrangements

3 unchanged sentences

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):

April 30, 2020

October 31, 2019

July 31, 2020 October 31, 2019

Land $ 1,234 $ 1,279

Buildings, equipment and building improvements 18,478 22,841

1 unchanged sentence

Property, plant and equipment, net under operating leases $ 14,200 $ 16,569

Depreciation expense for assets under operating leases was approximately $160,000 and $326,000 for the three and six months ended April 30, 2020 .

Depreciation expense for assets under operating leases was approximately $ 159,000 and $ 485,000 for the three and nine months ended July 31, 2020.

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

Three Months Ended

April 30, 2020

Six Months Ended

April 30, 2020

July 31, 2020 Nine Months Ended

July 31, 2020

Operating lease revenue $ 1,078 $ 3,235

1 unchanged sentence

Total lease revenue $ 1,172 $ 3,477

The future minimum lease payments to be received by the Company related to these operating lease agreements as of April 30, 2020 are as follows (in thousands):

2020 (excluding the six months ended April 30, 2020)

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

2020 (excluding the nine months ended July 31, 2020) $ 309

Thereafter 758

Total $ 2,697

LIMONEIRA COMPANY

7 unchanged sentences

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 April 30, 2020 , there were no material finance leases for which the Company was a lessee.

Operating lease costs were $137,000 and $274,000 for the three and six months ended April 30, 2020 , respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

As of July 31, 2020, there were no material finance leases for which the Company was a lessee.

Operating lease costs were $ 143,000 and $ 417,000 for the three and nine months ended July 31, 2020, respectively, 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

April 30, 2020

Operating lease ROU assets

Classification July 31, 2020

Operating lease ROU assets Other assets $ 2,174

Liabilities and Stockholders' Equity

Current operating lease liabilities

Accrued liabilities

Non-current operating lease liabilities

Other long-term liabilities

Current operating lease liabilities Accrued liabilities 600

Non-current operating lease liabilities Other long-term liabilities 1,637

Total operating lease liabilities $ 2,237

3 unchanged sentences

Three Months Ended

April 30, 2020

Six Months Ended

April 30, 2020

July 31, 2020 Nine Months Ended

July 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

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 six months ended April 30, 2020)

2020 (excluding the nine months ended July 31, 2020) $ 128

Thereafter 1,449

Total lease payments 2,777

Imputed interest ( 540 )

Total $ 2,237

LIMONEIRA COMPANY

3 unchanged sentences

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):

Basic and Diluted Net (Loss) Income per Share

Basic net (loss) income 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 (loss) income 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):

Thereafter 1,382

Basic and Diluted Net Income (Loss) per Share

Basic net income (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) 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 income (loss) per common share are as follows (in thousands, except per share amounts):

Three Months Ended

Six Months Ended

Basic net (loss) income per common share:

Net (loss) income applicable to common stock

July 31, Nine Months Ended

2020 2019 2020 2019

Basic net income (loss) per common share:

Net income (loss) applicable to common stock $ 2,184 $ ( 1,115 ) $ ( 9,377 ) $ ( 3,244 )

Effect of unvested, restricted stock ( 17 ) ( 16 ) ( 50 ) ( 49 )

Net (loss) income for basic EPS

Net income (loss) for basic EPS 2,167 ( 1,131 ) ( 9,427 ) ( 3,293 )

Weighted average common shares-basic 17,623 17,554 17,607 17,527

Basic net (loss) income per common share

Diluted net (loss) income per common share:

Net (loss) income for diluted EPS

Basic net income (loss) per common share $ 0.12 $ ( 0.06 ) $ ( 0.54 ) $ ( 0.19 )

Diluted net income (loss) per common share:

Net income (loss) for diluted EPS $ 2,309 $ ( 1,131 ) $ ( 9,427 ) $ ( 3,293 )

Weighted average common shares–basic 17,623 17,554 17,607 17,527

1 unchanged sentence

Weighted average common shares–diluted 18,497 17,554 17,607 17,527

Diluted net (loss) income per common share

Diluted (losses) earnings per common share are computed using the more dilutive method of either the two-class method or the treasury stock method.

Diluted net income (loss) per common share $ 0.12 $ ( 0.06 ) $ ( 0.54 ) $ ( 0.19 )

Diluted earnings (losses) 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 220,000 and 140,000 , 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, 2020 and 2019 , respectively, and 196,000 and 219,000 for the six months ended April 30, 2020 and 2019 , respectively.

The Company excluded 225,000 and 149,000 , unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted earnings (losses) per share for the three months ended July 31, 2020 and 2019, respectively, and 187,000 and 135,000 for the nine months ended July 31, 2020 and 2019, respectively.

LIMONEIRA COMPANY

2 unchanged sentences

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

April 30, 2020

October 31, 2019

Balance Sheet

Related Party

Receivable/Other from Related Parties

Accounts Payable

Payables to Related Parties

Other Long-Term Liabilities

Receivable/Other from Related Parties

Accounts Payable

Payables to Related Parties

Other Long-Term Liabilities

July 31, 2020 October 31, 2019

Balance Sheet Balance Sheet

Ref Related Party Receivable/Other from Related Parties Other Assets Accounts Payable Payables to Related Parties Other Long-Term Liabilities Receivable/Other from Related Parties Other Assets Accounts Payable Payables to Related Parties Other Long-Term Liabilities

1 Employees $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

2 Mutual water companies $ — $ — $ 79 $ — $ — $ — $ 473 $ 11 $ — $ —

3 Cooperative association $ — $ — $ 48 $ — $ — $ — $ — $ 35 $ — $ —

4 Calavo $ 2,701 $ — $ 1 $ — $ — $ — $ — $ — $ — $ —

5 Third-party growers $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

1 unchanged sentence

7 Colorado River Growers $ 297 $ — $ — $ — $ — $ 376 $ — $ — $ — $ —

Three Months Ended April 30, 2020

Three Months Ended April 30, 2019

Consolidated Statement of Operations

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

8 YMIDD $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

9 FGF $ 446 $ — $ — $ 1,370 $ — $ 2,609 $ — $ — $ 906 $ —

10 LLCB $ — $ — $ — $ 3,675 $ — $ — $ — $ — $ — $ 1,200

Three Months Ended July 31, 2020 Three Months Ended July 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 $ — $ 195 $ — $ — $ — $ — $ 190 $ — $ — $ —

2 Mutual water companies $ — $ — $ 211 $ — $ — $ — $ — $ 195 $ — $ —

3 Cooperative association $ — $ — $ 353 $ — $ — $ — $ — $ 302 $ — $ —

4 Calavo $ 4,724 $ 84 $ 23 $ — $ 126 $ 2,519 $ 81 $ 261 $ — $ 126

5 Third-party growers $ — $ — $ — $ — $ — $ — $ — $ 6 $ — $ —

1 unchanged sentence

7 Colorado River Growers $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

Six Months Ended April 30, 2020

Six Months Ended April 30, 2019

Consolidated Statement of Operations

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

8 YMIDD $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —

9 FGF $ 9,626 $ — $ 10,508 $ — $ — $ 11,685 $ — $ 8,798 $ — $ —

Nine Months Ended July 31, 2020 Nine Months Ended July 31, 2019

Consolidated Statement of Operations Consolidated Statement of Operations

1 Employees $ — $ 585 $ — $ — $ — $ — $ 550 $ — $ — $ —

2 Mutual water companies $ — $ — $ 675 $ — $ — $ — $ — $ 593 $ — $ —

3 Cooperative association $ — $ — $ 1,246 $ — $ — $ — $ — $ 1,158 $ — $ —

4 Calavo $ 6,296 $ 249 $ 200 $ 220 $ 377 $ 3,062 $ 240 $ 262 $ 250 $ 381

5 Third-party growers $ — $ — $ — $ — $ — $ — $ — $ 386 $ — $ —

1 unchanged sentence

7 Colorado River Growers $ 522 $ — $ 5,337 $ — $ — $ 306 $ — $ 3,841 $ — $ —

8 YMIDD $ — $ — $ 86 $ — $ — $ — $ — $ 85 $ — $ —

9 FGF $ 12,105 $ — $ 12,941 $ — $ — $ 11,685 $ — $ 8,798 $ — $ —

LIMONEIRA COMPANY

2 unchanged sentences

(1) Employees - The Company rents certain of its residential housing assets to employees on a month-to-month basis and recorded rental income from employees.

There were no rental payments due from employees at April 30, 2020 and October 31, 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.

There were no rental payments due from employees at July 31, 2020 and October 31, 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, refer to Note 10 - Other Assets.

The Company recorded capital contributions, purchased water and water delivery services and had water payments due to the mutual water companies.

21 unchanged sentences

(10) LLCB - Refer to Note 7 - Real Estate Development.

The Company’s estimated annual effective blended rate for fiscal year 2020 excluding discrete items is approximately 29.3% .

As such, a 35.2% estimated effective blended tax rate, after discrete items primarily related to the CARES Act, was utilized by the Company in the six months ended April 30, 2020 to calculate it income tax provision.

The effective tax rate for the six months ended April 30, 2020 was higher than the federal statutory tax rate of 21% mainly due to a $1,380,000 discrete benefit recorded as a result of the carryback of federal net operating losses to previous years when the federal income tax rate was 34% .

The Company has no material uncertain tax positions as of April 30, 2020 .

The Company recognizes interest expense and penalties related to income tax matters as a component of income tax expense.

There was no accrued interest or penalties associated with uncertain tax positions as of April 30, 2020 .

The effective tax rate for the nine months ended July 31, 2020 was higher than the federal statutory tax rate of 21% mainly due to a $ 1,950,000 discrete benefit recorded as a result of the carryback of federal net operating losses to previous years when the federal income tax rate was 34 %.

The effective tax rate for the nine months ended July 31, 2019 was lower than the federal statutory tax rate of 21.0% primarily due to income attributable to foreign jurisdictions which is taxed at different rates, state taxes, and nondeductible tax items.

LIMONEIRA COMPANY

5 unchanged sentences

The Plan is funded consistent with the funding requirements of federal law and regulations.

There were funding contributions of zero and $150,000 during the three months ended April 30, 2020 and 2019 , respectively.

There were funding contributions of zero and $300,000 during the six months ended April 30, 2020 and 2019 , respectively.

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

There were funding contributions of zero and $ 150,000 during the three months ended July 31, 2020 and 2019, respectively.

There were funding contributions of zero and $ 450,000 during the nine months ended July 31, 2020 and 2019, respectively.

The components of net periodic pension cost for the Plan for the three and nine months ended July 31, 2020 and 2019 were as follows (in thousands):

Three Months Ended

Six Months Ended

July 31, Nine Months Ended

2020 2019 2020 2019

Administrative expenses $ 70 $ 47 $ 209 $ 141

8 unchanged sentences

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.

Stock-based Compensation and Treasury Stock

Stock-based Compensation

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Stock-based Compensation (continued)

Stock-based Compensation and Treasury Stock (continued)

Director Awards

1 unchanged sentence

During January 2020 and 2019, 17,841 and 15,642 shares, respectively, of common stock were granted as Director Awards.

The Company recognized $358,000 and $339,000 of stock-based compensation to non-employee directors during the six months ended April 30, 2020 and 2019 , respectively.

The Company recognized $ 358,000 and $ 339,000 of stock-based compensation to non-employee directors during the nine months ended July 31, 2020 and 2019, respectively.

During the three months ended January 31, 2020 and 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.

Treasury Stock

Share Repurchase Program

On March 12, 2020, the Board of Directors of the Company approved a share repurchase program authorizing the Company to repurchase up to $ 10,000,000 of its outstanding shares of common stock through March 2021.

Under the share repurchase program, purchases of shares of common stock may be made from time to time in the open market or in privately negotiated transactions.

The share repurchase program may be modified, suspended or discontinued at any time and does not commit the Company to repurchase shares of its common stock.

See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” in this Quarterly Report on Form 10-Q for additional information on the share repurchase program.

Segment Information

11 unchanged sentences

The other agribusiness segment includes sales, farming and harvest costs of oranges, specialty citrus and other crops.

Revenues related to rental operations are included in “Corporate and Other”.

Other agribusiness revenues for the three and six months ended April 30, 2020 , consists of oranges of $2,667,000 and $4,939,000 , respectively, and specialty citrus and other crops of $1,152,000 and $3,044,000 , respectively.

Other agribusiness revenues for the three and six months ended April 30, 2019 , consists of oranges of $1,991,000 and $2,937,000 , respectively, and specialty citrus and other crops of $1,910,000 and $3,165,000 , respectively.

Revenues related to rental operations are included in “Corporate and Other.” Other agribusiness revenues for the three and nine months ended July 31, 2020, consists of oranges of $ 2,232,000 and $ 7,171,000 , respectively, and specialty citrus and other crops of $ 788,000 and $ 3,832,000 , respectively.

Other agribusiness revenues for the three and nine months ended July 31, 2019, consists of oranges of $ 711,000 and $ 3,794,000 , respectively, and specialty citrus and other crops of zero and $ 3,019,000 , respectively.

The Company does not separately allocate depreciation and amortization to its fresh lemons, lemon packing, avocados and other agribusiness segments.

4 unchanged sentences

Intersegment revenues represent packing revenues related to lemons grown on the Company’s orchards.

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

Segment information for the three months ended July 31, 2020 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 39,459 $ 3,775 $ — $ 6,133 $ 3,020 $ 52,387 $ 1,172 $ 53,559

3 unchanged sentences

Depreciation and amortization — — — — — 2,271 286 2,557

Operating income (loss)

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

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

Operating (loss) income $ ( 235 ) $ 4,117 $ — $ 3,596 $ 354 $ 5,561 $ ( 3,747 ) $ 1,814

Segment information for the three months ended July 31, 2019 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 41,169 $ 5,232 $ — $ 2,519 $ 711 $ 49,631 $ 1,238 $ 50,869

4 unchanged sentences

Operating income (loss) $ 5,516 $ 1,971 $ — $ 1,334 $ ( 114 ) $ 6,884 $ ( 4,766 ) $ 2,118

Segment information for the six months ended April 30, 2020 (in thousands):

Segment information for the nine months ended July 31, 2020 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 100,231 $ 11,752 $ — $ 8,323 $ 11,003 $ 131,309 $ 3,477 $ 134,786

3 unchanged sentences

Depreciation and amortization — — — — — 6,715 840 7,555

Operating income (loss)

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

Operating (loss) income $ ( 775 ) $ 8,716 $ — $ 3,752 $ 1,013 $ 5,991 $ ( 15,476 ) $ ( 9,485 )

Segment information for the nine months ended July 31, 2019 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 108,090 $ 13,289 $ — $ 3,062 $ 6,813 $ 131,254 $ 3,668 $ 134,922

5 unchanged sentences

Subsequent Events

The Company has evaluated events subsequent to April 30, 2020 through the date of this filing, to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q.

The Company has evaluated events subsequent to July 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 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements