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Item 7. Management’s Discussion and Analysis

2021-01-14 compared with 2020-01-14 · 324 added, 288 removed, 445 unchanged (58% of the section changed)

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Limoneira Company was incorporated in Delaware in 1990 as the successor to several businesses with operations in California since 1893.

We are 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, real estate development and capital investment activities.

We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 15,400 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 and capital investment activities.

We are one of California’s oldest citrus growers.

According to 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 and San Luis Obispo Counties in California, Yuma County in Arizona and La Serena, Chile, 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 and pack lemons that we grow, as well as lemons grown by others.

We have a 47% interest in Rosales, a citrus packing, marketing and sales business, a 90% interest in PDA, a lemon and orange orchard and 100% interest in 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, a lemon growing, packing, marketing and selling operation in Argentina.

In addition to growing lemons and avocados, we grow oranges and a variety of specialty citrus and other crops.

We have agricultural plantings throughout Ventura, Tulare, San Luis Obispo and San Bernardino Counties in California, Yuma County in Arizona, La Serena, Chile, and Jujuy, Argentina, which collectively consist of approximately 6,000 acres of lemons, 900 acres of avocados, 1,400 acres of oranges and 900 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 sell lemons that we grow, as well as lemons grown by others.

We have a 47% interest in 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 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, a lemon growing, packing, marketing and selling business in 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 water districts and irrigation districts in Tulare County, which is in California’s San Joaquin Valley and we use ground water from the Cadiz Valley Basin in San Bernardino County.

We also use surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District.

We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in Chile.

For more than 100 years, we have been making strategic investments in California agribusiness and real estate development.

We currently have three real estate development projects in California.

These projects include multi-family housing and single-family homes comprised of approximately 260 completed rental units and another approximately 1,500 units in various stages of planning and development.

We use ground water from the San Joaquin Valley Basin and water from water districts 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 Yuma Mesa Irrigation and Drainage District.

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 agriculture and real 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 256 completed rental units and another approximately 1,150 units in various stages of planning and development.

We have three business divisions:

agribusiness, rental operations and real estate development.

Our agribusiness division is comprised of four reportable segments, fresh lemons, lemon packing, avocados and other agribusiness, and currently generates the majority of our revenue from its farming, harvesting and lemon packing and sales operations;

our rental operations division generates revenue from our housing, organic recycling and commercial and leased land operations;

and our real estate development division primarily generates revenues from the sale of real estate development projects.

From a general view, we see our Company as a land and farming company that generates annual cash flows to support our progress into diversified real estate development activities.

Our 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 development projects.

Generally, we see our Company as a land and farming company that generates annual cash flows to support our progress into diversified real estate development activities.

As real estate developments are monetized, our agriculture business will then be able to expand more rapidly into new regions and markets.

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Years Ended October 31,

Net revenues:

Rental operations

2020 2019 2018

Agribusiness $ 159,937 97% $ 166,549 97% $ 124,344 96%

Other operations 4,622 3% 4,849 3% 5,048 4%

Total net revenues 164,559 100% 171,398 100% 129,392 100%

Costs and expenses:

Rental operations

Real estate development

Agribusiness 157,281 86% 152,372 86% 98,083 83%

Other operations 4,504 2% 4,439 3% 4,212 3%

Impairment of real estate development assets — — — — 1,558 1%

Gain on sale of property

Loss (gain) on sale and disposal of property assets 502 — (1,069) (1)% — —

Selling, general and administrative 21,280 12% 21,170 12% 16,053 13%

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Operating (loss) income:

Rental operations

Real estate development

Gain on sale of property

Agribusiness 2,656 14,177 26,261

Other operations 118 410 (722)

Loss (gain) on sale and disposal of property assets (502) 1,069 —

Selling, general and administrative (21,280) (21,170) (16,053)

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Other (expense) income:

Interest expense, net

Equity in earnings of investments

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

Net unrealized loss on stock in Calavo Growers, Inc.

Interest income 362 207 201

Interest expense (2,048) (2,341) (1,323)

Equity in earnings of investments, net 339 3,073 583

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

(6,299) (2,117) 4,223

Other income, net 219 129 313

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(Loss) income before income tax benefit (provision) (26,435) (6,563) 13,483

Income tax benefit (provision)

Income tax benefit 8,494 1,097 6,729

Net (loss) income (17,941) (5,466) 20,212

(Income) loss attributable to noncontrolling interest

Loss (income) attributable to noncontrolling interest 1,506 (477) (24)

Net (loss) income attributable to Limoneira Company $ (16,435) $ (5,943) $ 20,188

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 loss on stock in Calavo, LLCB earnings in equity investment, sale of property assets 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.

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 loss on stock in Calavo, LLCB earnings in equity investment, sale and disposal of property assets 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.

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Years Ended October 31,

2020 2019 2018

Net (loss) income attributable to Limoneira Company $ (16,435) $ (5,943) $ 20,188

Interest expense, net

Income tax (benefit) provision

Interest income (362) (207) (201)

Interest expense 2,048 2,341 1,323

Income tax benefit (8,494) (1,097) (6,729)

Depreciation and amortization 10,097 8,633 7,275

Unrealized loss on stock in Calavo Growers, Inc.

LLCB earnings in equity investments

Gain on sale of two property assets

Impairments of real estate development assets

EBITDA (13,146) 3,727 21,856

Loss on stock in Calavo Growers, Inc.

6,299 2,054 —

LLCB earnings in equity investments, net (326) (2,870) —

Loss (gain) on sale and disposal of property assets 502 (991) —

Impairment of real estate development assets — — 1,558

Adjusted EBITDA $ (6,671) $ 1,920 $ 23,414

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Total revenues for fiscal year 2020 was $164.6 million compared to $171.4 million for fiscal year 2019.

The 32% increase of $42.0 million was primarily the result of increased agribusiness revenues, as detailed below ($ in thousands):

The 4% decrease of $6.8 million was primarily the result of decreased lemons agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Years Ended October 31,

Navel and Valencia oranges

2020 2019 Change

Lemons $ 137,563 $ 149,971 $ (12,408) (8)%

Avocados 8,806 5,391 3,415 63%

Oranges 7,722 6,022 1,700 28%

Specialty citrus and other crops 5,846 5,165 681 13%

Agribusiness revenues $ 159,937 $ 166,549 $ (6,612) (4)%

The increase in fiscal year 2019 was primarily the result of higher volume partially offset by lower prices of fresh lemons sold compared to fiscal year 2018 .

A portion of the increased revenue was the result of fresh lemon sales of $14.7 million by Trapani Fresh on 746,000 cartons of fresh lemons sold in fiscal year 2019 .

During fiscal years 2019 and 2018 , fresh lemon sales were $110.1 million and $83.9 million , respectively, on 5.2 million and 3.3 million cartons of fresh lemons sold at average per carton prices of $21.00 and $25.42 , respectively.

Lemon revenues in fiscal year 2019 included $15.6 million shipping and handling, $10.8 million lemon by-products and $13.5 million other lemon sales.

Other lemon sales in fiscal year 2019 included $2.9 million of lemon sales in Chile by PDA and San Pablo and $9.5 million of brokered fruit sales, of which $8.8 million is due to the adoption of FASB ASU 2014-19 .

Lemon revenues in fiscal year 2018 included $9.0 million shipping and handling, $4.4 million lemon by-products and $6.5 million other lemon sales.

Other lemon sales in fiscal year 2018 included $2.3 million of lemon sales in Chile by PDA and $1.1 million of commissions earned on 912,000 cartons of brokered fruit sales.

The decrease in fiscal year 2019 was the result of lower volume partially offset by higher prices of avocados sold.

The decrease in fiscal year 2020 was primarily the result of lower prices partially offset by higher volume of fresh lemons sold compared to fiscal year 2019.

During fiscal years 2020 and 2019, fresh lemon sales were $101.1 million and $110.1 million on 5.5 million and 5.2 million cartons of fresh lemons sold at average per carton prices of $18.32 and $21.00, respectively.

COVID-19 related food service closures reduced the demand for lemons in the food service marketplace and created an over-supply in the retail marketplace.

This oversupply of lemons resulted in lower average per carton prices in fiscal year 2020 compared to fiscal year 2019.

Lemon revenues in fiscal years 2020 and 2019 included $13.4 million and $15.6 million shipping and handling, $4.1 million and $10.8 million lemon by-products and $18.9 million and $13.5 million other lemon sales, respectively.

The increase in fiscal year 2020 was primarily the result of higher volume partially offset by lower prices of avocados sold compared to fiscal year 2019.

The California avocado crop typically experiences alternating years of high and low production due to plant physiology.

During fiscal years 2019 and 2018 , 1.8 million and 6.3 million pounds of avocados were sold, respectively, at average per pound prices of $1.72 and $1.04 , respectively.

Higher prices in fiscal year 2019 were primarily related to lower supply of fruit in the marketplace.

During fiscal years 2020 and 2019, 8.0 million and 1.8 million pounds of avocados were sold at average per pound prices of $1.10 and $1.72, respectively.

Lower prices in fiscal year 2020 were primarily related to higher supply of fruit in the marketplace.

Fiscal year 2019 avocados revenues included approximately $2.3 million of crop insurance.

Navel and Valencia oranges:

The decrease in fiscal year 2019 was primarily due to lower prices partially offset by higher volume of oranges sold.

The increase in fiscal year 2020 was primarily due to higher prices partially offset by lower volume of oranges sold compared to fiscal year 2019.

During fiscal years 2020 and 2019, sales consisted of 743,000 and 907,000 40-pound carton equivalents of oranges sold at average per carton prices of $10.39 and $6.64, respectively.

Oranges revenues in fiscal year 2019 and 2018 include $0.3 million of orange sales in Chile.

• Specialty citrus and other crops:

The slight increase in fiscal year 2019 was primarily the result of higher volume of wine grapes and pistachios sold offset by lower specialty citrus revenues compared to fiscal year 2018 .

In fiscal year 2019 , we sold

approximately 1,300 tons of wine grapes for $1.3 million compared to approximately 600 tons of wine grapes for $0.9 million in fiscal year 2018 .

The increase in fiscal year 2020 was primarily the result of higher prices partially offset by lower volume of specialty citrus sold compared to fiscal year 2019.

In fiscal years 2020 and 2019, we sold 333,000 and 358,000 40-pound carton equivalents of specialty citrus at an average per carton price of $12.37 and $9.34, respectively.

Rental operations revenue was $4.6 million in fiscal year 2020 compared to $4.8 million in fiscal year 2019.

The decrease in fiscal year 2019 was primarily due to decreased revenues from land leased to third-party agricultural tenants.

The decrease in fiscal year 2020 was primarily due to decreased revenues from residential rental units leased to employees, former employees and non-employees compared to fiscal year 2019.

Real estate development revenue was zero in both fiscal years 2020 and 2019.

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Total costs and expenses for fiscal year 2020 were $183.6 million compared to $176.9 million for fiscal year 2019.

This 48% increase of $57.0 million was primarily attributable to increases in our agribusiness, real estate development and selling, general and administrative costs and expenses.

Costs associated with our agribusiness division include packing costs, harvest costs, growing costs, costs related to the lemons we procure from third-party growers and depreciation expense.

This 4% increase of $6.7 million was primarily attributable to increases in our agribusiness expenses.

Costs associated with our agribusiness division include packing costs, harvest costs, growing costs, costs related to the lemons we procure from third-party growers and depreciation and amortization expense.

These costs are discussed further below ($ in thousands):

Agribusiness Costs and Expenses for the Years Ended October 31,

2020 2019 Change

Packing costs $ 45,545 $ 41,018 $ 4,527 11%

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Third-party grower costs 54,218 57,497 (3,279) (6)%

Depreciation and amortization 8,943 7,623 1,320 17%

Agribusiness costs and expenses $ 157,281 $ 152,372 $ 4,909 3%

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The increase in fiscal year 2020 was primarily attributable to higher average per carton costs and higher volume of fresh lemons packed and sold compared to fiscal year 2019.

In fiscal year 2019 , we packed and sold 5.2 million cartons of lemons at average per carton costs of $7.20 compared to 3.3 million cartons of lemons sold at average per carton costs of $6.48 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 $5.8 million of operating costs incurred at the Oxnard Lemon facility.

Additionally, packing costs include $3.2 million of shipping costs in fiscal year 2019 compared to $1.7 million in fiscal year 2018 .

In fiscal years 2020 and 2019, we packed and sold 5.5 million and 5.2 million cartons of lemons at average per carton costs of $7.71 and $7.20, respectively.

The increase in average per carton costs in fiscal year 2020 compared to fiscal year 2019 was primarily due to decreased percentage of the crop that went to the fresh market.

Additionally, in fiscal years 2020 and 2019, packing costs included $3.0 million and $3.2 million of shipping costs.

• Harvest costs:

The increase in fiscal year 2019 was primarily attributable to increased volume of lemons and Navel oranges and specialty citrus harvested partially offset by decreased volume of avocados harvested compared to fiscal year 2018 .

The increase in fiscal year 2020 was primarily attributable to increased volume of lemons and avocados harvested partially offset by decreased volume of oranges harvested compared to fiscal year 2019.

• 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 fiscal year 2019 is primarily due to net increased costs for fertilization and soil amendments and pruning in addition to San Pablo and Trapani Fresh growing costs compared to the same period in fiscal year 2018 .

The increase in fiscal year 2020 was primarily due to net increased costs for cultivation compared to fiscal year 2019.

These net increases reflect farm management decisions based on weather, harvest timing and crop conditions.

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The cost of procuring lemons from other growers is referred to as third-party grower costs.

The increase is primarily due to higher volume of third-party grower lemons sold.

Of the 5.2 million and 3.3 million cartons sold during fiscal years 2019 and 2018 , respectively, 3.1 million ( 60% ) and 1.5 million ( 45% ) were procured from third-party growers at average per carton prices of $15.52 and $20.89 , respectively.

Additionally, in fiscal year 2019 we incurred $9.0 million of costs for purchased, packed fruit for resale compared to $0.4 million in fiscal year 2018 .

Depreciation expense in fiscal year 2019 was $1.4 million higher than fiscal year 2018 primarily due to the acquisitions of San Pablo, Oxnard Lemon and Trapani Fresh and an increase in assets placed into service.

Real estate development expenses for fiscal year 2019 were $0.1 million compared to $1.7 million in fiscal year 2018 .

Real estate development costs and expenses in fiscal year 2018 include $1.6 million impairment on Pacific Crest and Sevilla real estate development projects.

Gain on sales of property for fiscal year 2019 includes $1.1 million for the sale of two properties.

The decrease in fiscal year 2020 was primarily due to lower prices of third-party grower lemons sold, partially offset by increased volume compared to fiscal year 2019.

During fiscal years 2020 and 2019, of the 5.5 million and 5.2 million cartons sold, 3.3 million (60%) and 3.1 million (60%) were procured from third-party growers at average per carton prices of $11.71 and $15.52, respectively.

Additionally, in fiscal years 2020 and 2019 we incurred $15.5 million and $9.0 million, respectively of costs for purchased, packed fruit for resale.

• Depreciation and amortization expense in fiscal year 2020 was $1.3 million higher than fiscal year 2019 primarily due to the acquisition of Trapani Fresh in May 2019.

Other operations expenses were $4.5 million in the fiscal year 2020 compared to $4.4 million in the fiscal year 2019.

Loss (gain) on sales of property assets for fiscal years 2020 and 2019 were $0.5 million and $(1.1) million, respectively.

Selling, general and administrative expenses for fiscal year 2020 were $21.3 million compared to $21.2 million for fiscal year 2019.

This 1% increase of $0.1 million was primarily attributable to the following:

$3.2 million in Trapani Fresh selling, general and administrative expenses;

$0.8 million increase in legal, consulting and other administrative expenses primarily associated with our acquisition of Trapani Fresh in May 2019;

$0.4 million increase in lemon selling expenses primarily due to an increase in personnel;

$0.7 million increase in other selling, general and administrative expenses, including certain corporate overhead expenses.

• $0.9 million increase in training, depreciation and other costs associated with an ERP implementation;

• $0.8 million decrease in other selling, general and administrative expenses, including certain corporate overhead expenses.

Other (Expense) Income

Other (expense) income, for fiscal year 2019 was $1.0 million of expense compared to $4.0 million of income for fiscal year 2018 .

The $5.0 million decrease in income is primarily the result of:

$1.0 million increase in interest expense as a result of higher debt;

$2.5 million increase in equity in earnings of investments primarily from LLCB;

$4.3 million decrease in the gain on sales of stock in Calavo;

$2.1 million in unrealized loss on stock in Calavo in fiscal year 2019.

We recorded an income tax benefit of $1.1 million for fiscal year 2019 on pre-tax loss of $6.6 million compared to an income tax benefit of $6.7 million for fiscal year 2018 on pre-tax income of $13.5 million .

Our effective tax rate is 17.1 % for fiscal year 2019 compared to an effective tax rate of (49.9)% for fiscal year 2018 .

Our effective tax rate in fiscal year 2018 was primarily due to the approximate $10.3 million decrease in deferred tax liabilities related to the change in the federal tax rate from the Tax Cuts and Jobs Act of 2017.

No such tax rate changes occurred in fiscal year 2019.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest primarily represents 10% of the net income of PDA and 49% of the net income of Trapani Fresh.

Other (expense) income, for fiscal year 2020 was $(7.4) million compared to $(1.0) million for fiscal year 2019.

The $6.4 million increase in expense is primarily the result of:

• $0.3 million decrease in interest expense as a result of lower interest rates;

• $2.7 million decrease in equity in earnings of investments primarily from LLCB;

• $4.2 million increase in the loss on sales of stock in Calavo.

We recorded an income tax benefit of $8.5 million for fiscal year 2020 on pre-tax loss of $26.4 million compared to an income tax benefit of $1.1 million for fiscal year 2019 on pre-tax loss of $6.6 million.

The tax provision recorded for the fiscal year 2020 differs from the U.S.

federal statutory tax rate of 21% due primarily to a $1.9 million discrete benefit related to the CARES Act.

Our effective tax rate for fiscal years 2020 and 2019 was 32.2% and 17.1%, respectively.

Net (Loss) Income Attributable to Noncontrolling Interest

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

Fiscal Year 2019 Compared to Fiscal Year 2018

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Agribusiness Revenues for the Years Ended October 31,

Navel and Valencia oranges

2019 2018 Change

Lemons $ 149,971 $ 103,830 $ 46,141 44%

Avocados 5,391 6,576 (1,185) (18)%

Oranges 6,022 8,884 (2,862) (32)%

Specialty citrus and other crops 5,165 5,054 111 2%

Agribusiness revenues $ 166,549 $ 124,344 $ 42,205 34%

The increase in fiscal year 2018 was primarily the result of higher prices and volume of fresh lemons sold compared to fiscal year 2017.

During fiscal years 2018 and 2017, fresh lemon sales were $83.9 million and $76.5 million, respectively, on 3.3 million and 3.2 million cartons of fresh lemons sold at average per carton prices of $25.42 and $23.91, respectively.

Lemon revenues in fiscal year 2018 include $9.0 million shipping and handling, $4.4 million lemon by-products and $6.5 million other lemon sales.

Other lemon sales in fiscal year 2018 include $2.3 million of lemon sales in Chile by PDA and San Pablo and $1.1 million of commissions earned on 0.9 million cartons of brokered fruit sales.

Lemon revenues in fiscal year 2017 include $8.8 million shipping and handling, $5.4 million lemon by-products and $3.5 million other lemon sales.

Other lemon sales in fiscal year 2017 include $0.8 million of lemon sales in Chile by PDA and $0.3 million of commissions earned on 0.3 million cartons of brokered fruit sales.

The decrease in fiscal year 2018 was primarily due to lower prices.

The increase in fiscal year 2019 was primarily the result of higher volume partially offset by lower prices of fresh lemons sold compared to fiscal year 2018.

A portion of the increased revenue was the result of fresh lemon sales of $14.7 million by Trapani Fresh on 746,000 cartons of fresh lemons sold in fiscal year 2019.

During fiscal years 2019 and 2018, fresh lemon sales were $110.1 million and $83.9 million on 5.2 million and 3.3 million cartons of fresh lemons sold at average per carton prices of $21.00 and $25.42, respectively.

Lemon revenues in fiscal year 2019 included $15.6 million shipping and handling, $10.8 million lemon by-products and $13.5 million other lemon sales.

Lemon revenues in fiscal year 2018 included $9.0 million shipping and handling, $4.4 million lemon by-products and $6.5 million other lemon sales.

Other lemon sales in fiscal year 2018 included $2.3 million of lemon sales in Chile by PDA and $1.1 million of commissions earned on 912,000 cartons of brokered fruit sales.

The decrease in fiscal year 2019 was the result of lower volume partially offset by higher prices of avocados sold compared to fiscal year 2018.

The California avocado crop typically experiences alternating years of high and low production due to plant physiology.

During fiscal years 2018 and 2017, 6.3 million pounds of avocados were sold each year at average per pound prices of $1.04 and $1.51, respectively.

Lower prices in fiscal year 2018 are the result of higher supply of imported fruit in the marketplace.

Navel and Valencia oranges:

The increase in fiscal year 2018 was primarily due to higher prices for oranges sold partially offset by lower volume.

During fiscal years 2018 and 2017, orange sales were $8.9 million and $7.1 million, respectively, on 712,000 and 893,000 40-pound carton equivalents of oranges sold at average per carton prices of $12.48 and $7.95, respectively.

Orange revenues in fiscal year 2018 and 2017 include $0.5 million and $0.3 million, respectively, of orange sales in Chile.

During fiscal years 2019 and 2018, 1.8 million and 6.3 million pounds of avocados were sold at average per pound prices of $1.72 and $1.04, respectively.

Higher prices in fiscal year 2019 were primarily related to lower supply of fruit in the marketplace.

Fiscal year 2019 avocados revenues included approximately $2.3 million of crop insurance.

The decrease in fiscal year 2019 was primarily due to lower prices partially offset by higher volume of oranges sold compared to fiscal year 2018.

During fiscal years 2019 and 2018, sales consisted of 907,000 and 712,000 40-pound carton equivalents of oranges sold at average per carton prices of $6.64 and $12.48, respectively.

Oranges revenues in fiscal years 2019 and 2018 included $0.3 million of orange sales in Chile.

• Specialty citrus and other crops:

The slight increase in fiscal year 2018 was primarily the result of higher specialty citrus revenues offset by lower volume of pistachios and wine grapes sold compared to fiscal year 2017.

The slight increase in fiscal year 2019 was primarily the result of higher volume of wine grapes and pistachios sold offset by lower specialty citrus revenues compared to fiscal year 2018.

In fiscal year 2019, we sold approximately 1,300 tons of wine grapes for $1.3 million compared to approximately 600 tons of wine grapes for $0.9 million in fiscal year 2018.

Rental operations revenue was $5.0 million in fiscal year 2018 compared to $5.4 million in fiscal year 2017.

The decrease in fiscal year 2018 was primarily due to decreased revenues from land leased to third-party agricultural tenants.

Real estate development revenue was zero in both fiscal years 2018 and 2017.

Corporate and other operations revenue was $4.8 million in fiscal year 2019 compared to $5.0 million in fiscal year 2018.

The decrease in fiscal year 2019 was primarily due to decreased revenues from land leased to third-party agricultural tenants compared to fiscal year 2018.

Costs and Expenses

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This 48% increase of $57.0 million was primarily attributable to increases in our agribusiness, real estate development and selling, general and administrative costs and expenses.

Costs associated with our agribusiness division include packing costs, harvest costs, growing costs, costs related to the lemons we procure from third-party growers and depreciation expense.

These costs are discussed further below ($ in thousands):

Agribusiness Costs and Expenses for the Years Ended October 31,

2019 2018 Change

Packing costs $ 41,018 $ 23,071 $ 17,947 78%

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Third-party grower costs 57,497 31,733 25,764 81%

Depreciation and amortization 7,623 6,244 1,379 22%

Agribusiness costs and expenses $ 152,372 $ 98,083 $ 54,289 55%

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Lemon packing costs were $37.7 million and $21.4 million in fiscal years 2019 and 2018, respectively.

The decrease in fiscal year 2018 was primarily attributable to lower average per carton costs partially offset by higher volume of fresh lemons packed and sold compared to fiscal year 2017.

The increase in fiscal year 2019 was primarily attributable to higher average per carton costs and higher volume of fresh lemons packed and sold compared to fiscal year 2018.

In fiscal year 2019, we packed and sold 5.2 million cartons of lemons at average per carton costs of $7.20 compared to 3.3 million cartons of lemons sold at average per carton costs of $6.48 in fiscal year 2018.

Additionally, packing costs include $1.7 million of shipping costs in fiscal year 2018 compared to $1.3 million in fiscal year 2017.

Further, in fiscal year 2017 we incurred $2.2 million of packing service charges from an independent packinghouse to have a portion of our oranges and specialty citrus packed in Limoneira branded cartons.

Additionally, packing costs included $3.2 million of shipping costs in fiscal year 2019 compared to $1.7 million in fiscal year 2018.

• Harvest costs:

The decrease in fiscal year 2018 was primarily attributable to decreased volume of Navel oranges and specialty citrus harvested partially offset by increased volume of lemons harvested compared to fiscal year 2017.

• 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 fiscal year 2018 is primarily due to net increased costs of $2.2 million for cultivation, fertilization and soil amendments, and irrigation plus San Pablo growing costs compared to the same period in fiscal year 2017.

These net increases reflect farm management decisions based on weather, harvest timing and crop conditions.

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The cost of procuring lemons from other growers is referred to as third-party grower costs.

The increase is primarily due to higher price and volume of third-party grower lemons sold.

Of the 3.3 million and 3.2 million cartons sold during fiscal years 2018 and 2017, respectively, 1.5 million (45%) and 1.4 million (44%) were procured from third-party growers at average per carton prices of $20.89 and $19.02, respectively.

The increase is primarily due to higher volume of third-party grower lemons sold.

During fiscal years 2019 and 2018, of the 5.2 million and 3.3 million cartons sold, 3.1 million (60%) and 1.5 million (45%) were procured from third-party growers at average per carton prices of $15.52 and $20.89, respectively.

Additionally, in fiscal year 2019 we incurred $9.0 million of costs for purchased, packed fruit for resale compared to $0.4 million in fiscal year 2018.

Depreciation expense in fiscal year 2018 was $0.8 million higher than fiscal year 2017 primarily due to the acquisitions of San Pablo and Oxnard Lemon and an increase in assets placed into service.

• Depreciation and amortization expense in fiscal year 2019 was $1.4 million higher than fiscal year 2018 primarily due to the acquisitions of San Pablo, Oxnard Lemon and Trapani Fresh and an increase in assets placed into service.

Real estate development expenses for fiscal year 2019 were $0.1 million compared to $1.7 million in fiscal year 2018.

Real estate development costs and expenses in fiscal year 2018 include $1.6 million impairment on our Pacific Crest and Sevilla real estate development projects.

Real estate development costs and expenses in fiscal year 2017 include $0.1 million impairment on our Pacific Crest real estate development project.

Real estate development costs and expenses in fiscal year 2018 include $1.6 million impairment on Pacific Crest and Sevilla real estate development projects.

Gain on sales of property for fiscal year 2019 includes $1.1 million for the sale of two properties.

Selling, general and administrative expenses for fiscal year 2019 were $21.2 million compared to $16.1 million for fiscal year 2018.

This 32% increase of $5.1 million was primarily attributable to the following:

$0.5 million increase in legal, consulting and other administrative expenses primarily associated with our acquisitions in July 2018;

$0.5 million increase in administrative salaries, benefits and incentive compensation;

$0.4 million net increase in lemon selling expenses primarily due to an increase in personnel;

$0.7 million net increase in other selling, general and administrative expenses, including certain corporate overhead expenses.

• $3.2 million in Trapani Fresh selling, general and administrative expenses;

• $0.8 million increase in legal, consulting and other administrative expenses primarily associated with our acquisition of Trapani Fresh in May 2019;

• $0.4 million increase in lemon selling expenses primarily due to an increase in personnel;

• $0.7 million increase in other selling, general and administrative expenses, including certain corporate overhead expenses.

Other (Expense) Income

Other (expense) income, for fiscal year 2018 was $4.0 million of income compared to $1.2 million of expense for fiscal year 2017.

The $5.2 million increase in income is primarily the result of:

$0.7 million decrease in net interest expense as a result of lower debt levels;

$0.5 million increase in equity in earnings of investments primarily from Limco Del Mar, Ltd.

$4.2 million gain on the sales of stock in Calavo in fiscal year 2018.

We recorded an income tax benefit of $6.7 million for fiscal year 2018 on pre-tax income of $13.5 million compared to an income tax provision of $4.1 million for fiscal year 2017 on pre-tax income of $10.6 million.

Our effective tax rate is (49.9)% for fiscal year 2018 compared to an effective rate of 38.4% for fiscal year 2017.

The decrease in our effective tax rate in fiscal year 2018 is primarily due to the approximately $10.3 million decrease in deferred tax liabilities related to the change in the federal tax rate from the Tax Cuts and Jobs Act of 2017.

Net Income Attributable to Noncontrolling Interest

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

Other (expense) income, for fiscal year 2019 was ($1.0) million of expense compared to $4.0 million of income for fiscal year 2018.

The $5.0 million decrease in income is primarily the result of:

• $1.0 million increase in interest expense as a result of higher debt;

• $2.5 million increase in equity in earnings of investments primarily from LLCB;

• $4.3 million decrease in the gain on sales of stock in Calavo;

• $2.1 million in unrealized loss on stock in Calavo in fiscal year 2019.

Our effective tax rate was 17.1% for fiscal year 2019 compared to an effective tax rate of (49.9)% for fiscal year 2018.

No such tax rate changes occurred in fiscal year 2019.

Net (Loss) Income Attributable to Noncontrolling Interest

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

Segment Results of Operations

We operate in six reportable operating segments:

fresh lemons, lemon packing, avocados, other agribusiness, rental operations and real estate development.

We operate in four reportable operating segments:

fresh lemons, lemon packing, avocados and other 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.

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.

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Segment information for fiscal year 2020 (in thousands):

Packing Eliminations Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 124,150 $ 13,413 $ — $ 8,806 $ 13,568 $ 159,937 $ 4,622 $ 164,559

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Depreciation and amortization — — — — — 8,943 1,154 10,097

Operating income (loss)

Operating (loss) income $ (1,155) $ 7,670 $ — $ 3,638 $ 1,446 $ 2,656 $ (21,664) $ (19,008)

Segment information for fiscal year 2019 (in thousands):

Packing Eliminations Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 134,342 $ 15,629 $ — $ 5,391 $ 11,187 $ 166,549 $ 4,849 $ 171,398

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Depreciation and amortization — — — — — 7,623 1,010 8,633

Operating income

Operating income (loss) $ 13,344 $ 8,063 $ — $ 2,241 $ (1,848) $ 14,177 $ (19,691) $ (5,514)

Segment information for fiscal year 2018 (in thousands):

Packing Eliminations Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 94,840 $ 8,990 $ — $ 6,576 $ 13,938 $ 124,344 $ 5,048 $ 129,392

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Depreciation and amortization — — — — — 6,244 1,031 7,275

Operating income

(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 additional revenue and costs and expenses within our fresh lemon segment of $8.8 million , respectively, during the fiscal year 2019.

Refer to Note 2 - Summary of Significant Accounting Policies for more information regarding the impact from the adoption of this new standard.

Operating income (loss) $ 20,031 $ 5,890 $ — $ 2,177 $ 4,407 $ 26,261 $ (16,775) $ 9,486

Fiscal Year 2020 Compared to Fiscal Year 2019

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Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products and other lemon revenue such as purchased, packed fruit for resale.

For fiscal year 2019 , our fresh lemons segment revenue was $134.3 million compared to $94.8 million for fiscal year 2018 , a 42% increase of $39.5 million , primarily the result of higher volume and Trapani Fresh revenue of fresh lemons sold, partially offset by lower prices of fresh lemons sold, as discussed earlier.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs, cost of fruit we procure from third-party growers and packing service charges incurred from the lemon packing segment to pack lemons for sale.

For fiscal year 2020, our fresh lemons segment revenue was $124.2 million compared to $134.3 million for fiscal year 2019.

The 8% decrease of $10.2 million was primarily the result of lower prices partially offset by higher volume of fresh lemons sold, as discussed earlier.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs, cost of fruit we procure from third-party growers, transportation costs and packing service charges incurred from the lemon packing segment to pack lemons for sale.

For fiscal year 2020, our fresh lemon costs and expenses were $125.3 million compared to $121.0 million for fiscal year 2019.

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• Growing costs for fiscal year 2020 were $2.3 million higher than fiscal year 2019.

Third-party grower costs for fiscal year 2019 were $25.8 million higher than fiscal year 2018 .

Transportation costs for fiscal year 2019 were $3.3 million higher than fiscal year 2018 .

• Third-party grower costs for fiscal year 2020 were $5.2 million lower than fiscal year 2019.

• Transportation costs for fiscal year 2020 were $0.2 million lower than fiscal year 2019.

• Intersegment costs and expenses for fiscal year 2020 were $6.7 million higher than fiscal year 2019.

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Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue.

For fiscal year 2019 , our lemon packing segment revenue was $45.7 million compared to $29.0 million for fiscal year 2018 , a 58% increase of $16.7 million primarily due to increased volume of lemons packed and increased shipping and handling revenues.

For fiscal year 2020, our lemon packing segment revenue was $50.2 million compared to $45.7 million for fiscal year 2019.

The 10% increase of $4.5 million was primarily due to increased volume of lemons packed and sold.

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 fiscal year 2020, our lemon packing costs and expenses were $42.6 million compared to $37.6 million for fiscal year 2019.

The 63% increase of $14.6 million was primarily due to increased volume of lemons packed and increased shipping costs.

The 13% increase of $4.9 million was primarily due to increased volume of lemons packed and decreased fresh utilization.

Lemon packing segment operating income per carton sold was $1.39 and $1.54 for fiscal years 2020 and 2019, respectively.

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Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

For fiscal year 2019 , our avocados segment revenue was $5.4 million compared to $6.6 million for fiscal year 2018 , a 18% decrease of $1.2 million .

Costs and expenses associated with our avocados segment include harvest costs and growing costs.

For fiscal year 2020, our avocados segment revenue was $8.8 million compared to $5.4 million for fiscal year 2019, a 63% increase of $3.4 million.

Cost and expenses associated with our avocados segment include harvest costs and growing costs.

For fiscal year 2020, our avocado costs and expenses were $5.2 million compared to $3.2 million for fiscal year 2019.

The 28% decrease of $1.2 million primarily consisted of the following:

Avocado harvest costs for fiscal year 2019 were $0.8 million lower than fiscal year 2018 .

Growing costs for fiscal year 2019 were $0.5 million lower than fiscal year 2018 .

The 64% increase of $2.0 million primarily consists of the following:

• Harvest costs for fiscal year 2020 were $0.9 million higher than fiscal year 2019.

• Growing Costs for fiscal year 2020 were $1.2 million higher than fiscal year 2019.

Other Agribusiness

For fiscal year 2020, our other agribusiness segment revenue was $13.6 million compared to $11.2 million for fiscal year 2019.

The 20% decrease of $2.8 million primarily consisted of the following:

Navel and Valencia orange revenue in fiscal year 2019 was $2.9 million lower than fiscal year 2018 .

The 21% increase of $2.4 million primarily consisted of the following:

• Orange revenue in fiscal year 2020 was $1.7 million higher than fiscal year 2019.

• Specialty citrus and other crop revenue for fiscal year 2020 was $0.7 million higher than fiscal year 2019.

Costs and expenses associated with our other agribusiness segment include harvest and growing costs.

Costs and expenses associated with our other agribusiness segment include harvest, growing and purchased fruit costs.

Our other agribusiness costs and expenses for fiscal year 2020 were $12.1 million compared to $13.0 million for fiscal year 2019.

The 37% increase of $3.5 million primarily consisted of the following:

Harvest costs for fiscal year 2019 were $0.6 million higher than fiscal year 2018 .

Growing costs for fiscal year 2019 were $2.9 million higher than fiscal year 2018 .

The 7% decrease of $0.9 million primarily consisted of the following:

• Harvest costs for fiscal year 2020 were $0.2 million lower than fiscal year 2019.

• Growing costs for fiscal year 2020 were $2.6 million lower than fiscal year 2019.

• Purchased fruit costs for fiscal year 2020 were $1.9 million higher than fiscal year 2019.

Fresh lemons, lemon packing, avocados and other agribusiness depreciation and amortization for fiscal year 2020 were $8.9 million compared to $7.6 million in fiscal year 2019.

The 22% increase of $1.4 million was primarily due to the acquisitions of San Pablo, Oxnard Lemon and Trapani Fresh and an increase in assets placed into service.

Rental Operations

Our rental operations segment had revenues of approximately $4.8 million and $5.0 million in fiscal years 2019 and 2018 , respectively.

The $0.2 million decrease in fiscal year 2019 was primarily due to decreased revenues from land leased to third-party agricultural tenants.

Costs and expenses in our rental operations segment were approximately $4.3 million and $4.1 million in fiscal years 2019 and 2018 , respectively.

Depreciation expense was similar in fiscal year 2019 compared to fiscal year 2018 at $0.8 million .

Real Estate Development

Our real estate development segment had revenues of zero for both fiscal years 2019 and 2018 .

Costs and expenses in our real estate development segment were approximately $0.1 million and $1.7 million in fiscal years 2019 and 2018 , respectively.

We recorded no impairment charge in fiscal year 2019 compared to $1.6 million in fiscal year 2018 .

Additionally, in fiscal year 2019 we sold two properties and recognized a gain on sales of property of approximately $1.1 million .

The 17% increase of $1.3 million was primarily due to the acquisition of Trapani Fresh and an increase in assets placed into service.

Corporate and Other

Our corporate and other segment had revenues of approximately $4.6 million and $4.8 million in fiscal years 2020 and 2019, respectively.

The $0.2 million decrease in fiscal year 2020 was primarily due to decreased revenues from residential rental units leased to employees, former employees and non-employees compared to fiscal year 2019.

Costs and expenses in our corporate and other segment were approximately $25.1 million and $23.5 million in fiscal years 2020 and 2019, respectively.

Depreciation expense was approximately $1.2 million and $1.0 million in fiscal years 2020 and 2019, respectively.

Additionally, loss (gain) on sales of property assets for fiscal years 2020 and 2019 were $0.5 million and $(1.1) million, respectively.

Selling, general and administrative expenses

Selling, general and administrative expenses include corporate and other costs and expenses not allocated to the operating segments.

Selling, general and administrative expenses for fiscal year 2019 were $5.1 million higher than fiscal year 2018 .

Selling, general and administrative expenses for fiscal year 2020 were $0.1 million lower than fiscal year 2019.

Fiscal Year 2019 Compared to Fiscal Year 2018

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

Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products and other lemon revenue such as brokerage commissions.

For fiscal year 2018, our fresh lemons segment revenue was $94.8 million compared to $85.4 million for fiscal year 2017, an 11% increase of $9.4 million, primarily due to higher price and volume of fresh lemons sold, as discussed earlier.

Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products and other lemon revenue such as purchased, packed fruit for resale.

For fiscal year 2019, our fresh lemons segment revenue was $134.3 million compared to $94.8 million for fiscal year 2018, a 42% increase of $39.5 million, primarily the result of higher volume and Trapani Fresh revenue of fresh lemons sold, partially offset by lower prices of fresh lemons sold, as discussed earlier.

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• Third-party grower costs for fiscal year 2019 were $25.8 million higher than fiscal year 2018.

• Transportation costs for fiscal year 2019 were $3.3 million higher than fiscal year 2018.

• Intersegment costs and expenses for fiscal year 2019 were $10.1 million higher than fiscal year 2018.

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Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

For fiscal year 2018, our avocados segment revenue was $6.6 million compared to $9.5 million for fiscal year 2017, a 31% decrease of $2.9 million.

Costs and expenses associated with our avocados segment include harvest costs and growing costs.

For fiscal year 2019, our avocados segment revenue was $5.4 million compared to $6.6 million for fiscal year 2018, an 18% decrease of $1.2 million.

Cost and expenses associated with our avocados segment include harvest costs and growing costs.

For fiscal year 2019, our avocado costs and expenses were $3.2 million compared to $4.4 million for fiscal year 2018.

The 6% increase of $0.3 million primarily consisted of the following:

Avocado harvest costs for fiscal year 2018 were similar to fiscal year 2017.

Growing costs for fiscal year 2018 were $0.3 million higher than fiscal year 2017.

The 28% decrease of $1.2 million primarily consists of the following:

• Harvest costs for fiscal year 2019 were $0.8 million lower than fiscal year 2018.

• Growing Costs for fiscal year 2019 were $0.5 million lower than fiscal year 2018.

Other Agribusiness

For fiscal year 2019, our other agribusiness segment revenue was $11.2 million compared to $13.9 million for fiscal year 2018.

The 15% increase of $1.8 million primarily consisted of the following:

Navel and Valencia orange revenue in fiscal year 2018 was $1.8 million higher than in fiscal year 2017.

Specialty citrus and other crop revenue for fiscal year 2018 was similar to fiscal year 2017.

The 20% decrease of $2.8 million primarily consisted of the following:

• Orange revenue in fiscal year 2019 was $2.9 million lower than fiscal year 2018.

• Specialty citrus and other crop revenue for fiscal year 2019 was $0.1 million higher than fiscal year 2018.

Costs and expenses associated with our other agribusiness segment include harvest and growing costs.

Our other agribusiness costs and expenses for fiscal year 2019 were $13.0 million compared to $9.5 million for fiscal year 2018.

The 19% decrease of $2.2 million primarily consisted of the following:

Orange and specialty citrus packing service charges for fiscal year 2018 were zero compared to $2.2 million in fiscal year 2017.

In fiscal year 2017, we contracted with an independent packinghouse to pack a portion of our oranges and specialty citrus in Limoneira branded cartons.

Harvest costs for fiscal year 2018 were $0.4 million lower than fiscal year 2017.

The 37% increase of $3.5 million primarily consisted of the following:

• Harvest costs for fiscal year 2019 were $0.6 million higher than fiscal year 2018.

• Growing costs for fiscal year 2019 were $2.9 million higher than fiscal year 2018.

Fresh lemons, lemon packing, avocados and other agribusiness depreciation and amortization for fiscal year 2019 were $7.6 million compared to $6.2 million in fiscal year 2018.

The 14% increase of $0.8 million was primarily due to the acquisitions of San Pablo and Oxnard Lemon and an increase in assets placed into service.

Rental Operations

Our rental operations segment had revenues of approximately $5.0 million and $5.4 million in fiscal years 2018 and 2017, respectively.

The 22% increase of $1.4 million was primarily due to the acquisitions of San Pablo, Oxnard Lemon and Trapani Fresh and an increase in assets placed into service.

Corporate and Other Operations

Our corporate and other operations segment had revenues of approximately $4.8 million and $5.0 million in fiscal years 2019 and 2018, respectively.

The $0.2 million decrease in fiscal year 2019 was primarily due to decreased revenues from land leased to third-party agricultural tenants.

Costs and expenses in our rental operations segment were approximately $4.1 million and $3.9 million in fiscal years 2018 and 2017, respectively.

Costs and expenses in our corporate and other operations segment were approximately $23.5 million and $20.8 million in fiscal years 2019 and 2018, respectively.

Depreciation expense was similar in fiscal year 2019 compared to fiscal year 2018 at $1.0 million.

Real Estate Development

Our real estate development segment had revenues of zero for both fiscal years 2018 and 2017.

Costs and expenses in our real estate development segment were approximately $1.7 million and $0.4 million in fiscal years 2018 and 2017, respectively.

We recorded impairment charges of $1.6 million in fiscal year 2018 compared to $0.1 million in fiscal year 2017.

We recorded no impairment charge in fiscal year 2019 compared to $1.6 million in fiscal year 2018.

Additionally, in fiscal year 2019 we sold two properties and recognized a gain on sales of property of approximately $1.1 million.

Selling, general and administrative expenses

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Statement of Operations Data:

Revenues $ 29,773 $ 53,559 $ 39,571 $ 41,656

Costs and expenses 39,296 51,745 42,404 50,122

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Net (loss) income (7,531) 1,800 (5,306) (6,904)

Loss (income) attributable to noncontrolling interest

(Income) loss attributable to noncontrolling interest 97 509 423 477

Net (loss) income attributable to Limoneira Company $ (7,434) $ 2,309 $ (4,883) $ (6,427)

Net (loss) income per common share:

Basic $ (0.43) $ 0.12 $ (0.29) $ (0.37)

Diluted $ (0.43) $ 0.12 $ (0.29) $ (0.37)

Number of shares used in per common share computations:

Basic 17,617 17,623 17,634 17,579

Diluted 17,617 18,497 17,634 17,579

Three Months Ended 2019

Statement of Operations Data:

Revenues $ 36,476 $ 50,869 $ 42,035 $ 42,018

Costs and expenses 40,083 48,751 43,040 45,038

Operating (loss) income (3,607) 2,118 (1,005) (3,020)

Other income (loss), net

Other (loss) income, net (487) (2,054) 4,909 (3,417)

(Loss) income before income tax benefit (provision) (4,094) 64 3,904 (6,437)

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Net (loss) income (3,213) (397) 2,820 (4,676)

(Income) loss attributable to noncontrolling interest

Loss (income) attributable to noncontrolling interest 138 (593) (5) (17)

Net (loss) income attributable to Limoneira Company $ (3,075) $ (990) $ 2,815 $ (4,693)

Net (loss) income per common share:

Basic $ (0.18) $ (0.06) $ 0.15 $ (0.28)

Diluted $ (0.18) $ (0.06) $ 0.15 $ (0.28)

Number of shares used in per common share computations:

Basic 17,597 17,554 17,554 17,488

Diluted 17,597 17,554 18,225 17,488

The following information compares our fourth quarter ended October 31, 2020 to the fourth quarter ended October 31, 2019.

Information concerning comparisons of our first, second and third quarters can be found in our quarterly reports on Form 10-Q.

Total revenues increased $21.8 million in the three months ended October 31, 2019 compared to the three months ended October 31, 2018 primarily due to increased lemon and orange crop revenues of $16.9 million and $1.9 million , respectively, in addition to $2.3 million in avocado crop insurance revenue.

During the fourth quarter of fiscal year 2019 , we sold 793,000 cartons of fresh lemons, including 498,000 cartons procured from third-party growers, at an average per carton price of $21.46 , compared to 239,000 cartons of fresh lemons, including 150,000 cartons procured from third party growers, at an average per carton price of $29.71 in the fourth quarter of fiscal year 2018 .

The increase in orange revenues in the fourth quarter of fiscal year 2019 compared to the fourth quarter of fiscal year 2018 was primarily due to higher brokered fruit sales.

Total costs and expenses increased $15.8 million in the three months ended October 31, 2019 compared to the three months ended October 31, 2018 primarily due to increases in agribusiness costs of $16.2 million .

The increase in agribusiness costs is primarily due to increased third-party grower, packinghouse and harvest costs and expenses of $10.1 million , $3.9 million and $1.9 million , respectively.

These costs increased primarily due to higher volume of lemon cartons packed and sold and the acquisitions of Oxnard Lemon and Trapani Fresh.

Total other income decreased $5.2 million in the three months ended October 31, 2019 compared to the three months ended October 31, 2018 primarily due to the $4.2 million gain on the sale of stock in Calavo in fiscal year 2018.

Income tax benefit decreased $0.8 million in the three months ended October 31, 2019 compared to the three months ended October 31, 2018 primarily due to the decrease in pre-tax loss of $0.8 million .

• Total revenues decreased $6.7 million in the three months ended October 31, 2020 compared to the three months ended October 31, 2019 primarily due to decreased lemon and orange crop revenues of $3.0 million and $1.7 million, respectively.

In addition, avocado revenues decreased $1.8 million primarily due to $2.3 million insurance revenue received in fiscal year 2019.

During the fourth quarter of fiscal years 2020 and 2019, we sold 787,000 and 793,000 cartons of fresh lemons, at an average per carton price of $17.00 and $21.46, respectively.

The decrease in orange revenues in the fourth quarter of fiscal year 2020 compared to the fourth quarter of fiscal year 2019 was primarily due to lower brokered fruit sales.

fourth quarter of fiscal year 2020, we sold 487,000 pounds of avocados at an average per pound price of $0.99, compared to no sales for the fourth quarter of fiscal year 2019.

• Total costs and expenses decreased $0.8 million in the three months ended October 31, 2020 compared to the three months ended October 31, 2019.

Decreases in agribusiness costs and selling, general and administrative expenses of $1.7 million and $0.6 million, respectively were partially offset by the change in loss (gain) on the sale and disposal of property assets of $1.6 million.

The decrease in agribusiness costs was primarily due to decreased harvest costs and cultural costs of $0.6 million and $1.3 million, respectively.

• Total other loss increased $0.1 million in the three months ended October 31, 2020 compared to the three months ended October 31, 2019.

• Income tax benefit increased $1.7 million in the three months ended October 31, 2020 compared to the three months ended October 31, 2019 primarily due to the increase in pre-tax loss of $6.1 million.

Liquidity and Capital Resources

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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.

To meet working capital demand and investment requirements of our agribusiness and real estate development divisions and to supplement operating cash flows, we utilize our revolving and non-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, which are readily available from local sources.

To meet working capital demand and investment requirements of our agribusiness and real estate development divisions 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 fiscal years ended October 31, 2019 , 2018 and 2017 , net cash provided by operating activities was $1.4 million , $18.4 million and $18.5 million , respectively.

For the fiscal years ended October 31, 2020, 2019 and 2018, net cash (used in) provided by operating activities was $(11.3) million, $1.4 million and $18.4 million, respectively.

The significant components of our cash flows provided by operating activities are as follows:

• Net (loss) income was $(17.9) million, $(5.5) million and $20.2 million for fiscal years 2020, 2019 and 2018, respectively.

The components of net income in fiscal year 2019 compared to fiscal year 2018 consist of a decrease in operating income of $15.0 million , an increase in total other expense of $5.0 million and a decrease in income tax benefit of $5.6 million .

The components of net income in fiscal year 2018 compared to fiscal year 2017 consist of a decrease in operating income of $2.3 million, an increase in total other income of $5.2 million and an increase in income tax benefit of $10.8 million.

The adjustments to reconcile net (loss) income to net cash provided from operating activities provided $7.8 million of cash in fiscal year 2019 compared to using $1.4 million of cash in fiscal year 2018 primarily due to an increase in gain from disposals of assets, a decrease in deferred taxes, a decrease in loss on sale of stock in Calavo and an increase in unrealized loss on stock in Calavo.

The adjustments to reconcile net income to net cash provided from operating activities used $1.4 million in cash in fiscal year 2018 compared to providing $11.2 million of cash in fiscal year 2017 primarily due to a decrease in deferred taxes and an increase in loss on sale of stock in Calavo.

The components of net loss in fiscal year 2020 compared to fiscal year 2019 consist of an increase in operating loss of $13.5 million, an increase in total other expense of $6.4 million and an increase in income tax benefit of $7.4 million.

The components of net income in fiscal 2019 compared to fiscal year 2018 consist of a decrease in operating income of $15.0 million, an increase in total other expense of $5.0 million and a decrease in income tax benefit of $5.6 million.

• The adjustments to reconcile net (loss) income to net cash (used in) provided from operating activities provided $17.6 million of cash in fiscal year 2020 compared to providing $7.6 million of cash in fiscal year 2019, primarily due to significant changes in depreciation and amortization, loss on stock in Calavo and equity in earnings of investments.

The adjustments to reconcile net (loss) income to net cash provided from operating activities provided $7.6 million of cash in fiscal year 2019 compared to using $1.3 million of cash in fiscal year 2018 primarily due to an increase in loss (gain) on sale and disposals of property assets, a decrease in deferred taxes and an increase in loss on stock in Calavo.

• The changes in operating assets and liabilities, net of business combinations used $11.0 million of operating cash in fiscal year 2020 compared to using $0.8 million of operating cash in fiscal year 2019, primarily due to significant changes in accounts receivable, prepaid expenses and other current assets, income tax receivable, accounts payable and growers payable and accrued liabilities.

The changes in operating assets and liabilities, net of business combinations used $0.8 million of operating cash in fiscal year 2019 compared to using $0.5 million of operating cash in fiscal year 2018, primarily due to a decrease in cultural costs, an increase in prepaid expenses and other current assets, a net increase in accounts and growers payable and a decrease in accrued liabilities.

The changes in operating assets and liabilities, net of business combinations used $0.4 million of operating cash in fiscal year 2018 compared to providing $0.7 million of operating cash in fiscal year 2017, primarily due to an increase in accounts receivable, an increase in cultural costs, an increase in income taxes receivable and an increase in accrued liabilities.

Cash Flows from Investing Activities

For the years ended October 31, 2019 , 2018 and 2017 , net cash used in investing activities was $23.7 million , $50.8 million and $26.4 million , respectively, and is primarily comprised of capital expenditures, business acquisitions, sales of assets and investments.

For the years ended October 31, 2020, 2019 and 2018, net cash provided by (used in) investing activities was $3.8 million, $(23.7) million and $(50.8) million, respectively, and is primarily comprised of capital expenditures, business acquisitions, sales of assets and investments.

• Capital expenditures for fiscal year 2020 were comprised of $10.6 million for property, plant and equipment primarily related to orchard and real estate development projects.

Additionally, in fiscal year 2020, we received proceeds from sale of stock in Calavo of $11.0 million, proceeds from sales of property assets of $6.3 million and contributed $2.8 million to the Joint Venture for the development of our East Area I real estate development project.

• Capital expenditures for fiscal year 2019 were comprised of $14.1 million for property, plant and equipment primarily related to orchard and vineyard development and the purchase of a photovoltaic solar array and $1.8 million for real estate development projects.

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Further, we sold 50,000 shares of stock in Calavo for $4.7 million and a real estate development parcel for $1.5 million.

Capital expenditures for fiscal year 2017 were comprised of $11.6 million for property, plant and equipment primarily related to orchard and vineyard development and $1.3 million for real estate development projects.

Additionally, in fiscal year 2017, we purchased PDA for $5.7 million and contributed $7.5 million to the Joint Venture for the development of our East Area I real estate development project.

Cash Flows from Financing Activities

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• The $7.4 million of cash provided by financing activities for fiscal year 2020 is primarily comprised of net borrowings of long-term debt in the amount of $17.0 million.

Additionally, we paid common and preferred dividends, in aggregate, of $5.9 million and purchases of shares of our common stock of $3.5 million under our share repurchase program in fiscal year 2020.

• The $22.4 million of cash provided by financing activities for fiscal year 2019 is primarily comprised of net borrowings of long-term debt in the amount of $28.9 million.

Additionally, we paid common and preferred dividends, in aggregate, of $5.8 million in fiscal year 2019.

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Additionally, we paid common and preferred dividends, in aggregate, of $4.5 million in fiscal year 2018.

The $8.4 million of cash provided by financing activities for fiscal year 2017 is primarily comprised of net borrowings of long-term debt in the amount of $12.5 million partially offset by common and preferred dividends, in aggregate, of $3.7 million in fiscal year 2017.

Transactions Affecting Liquidity and Capital Resources

On September 26, 2019, the Company and Farm Credit West, FLCA ("Farm Credit West") entered into Rate Lock Agreements ("Rate Lock Agreements") which fixed the interest rates effective October 1, 2019 for term loans noted below.

Conversion Agreements were also signed as of October 1, 2019 documenting the key terms of the modified lending arrangements.

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

The rates are subject to a prepayment restriction period for a portion of the fixed rate term that will expire on March 1, 2020, after which we may prepay any amounts without penalty.

We paid and capitalized debt financing costs of $35,000 related to the Rate Lock Agreements.

On June 20, 2017, we entered into a Master Loan Agreement (the “Loan Agreement”) with Farm Credit 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.

Our 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, we entered into a Conversion Agreement with Farm Credit West to convert term loans to fixed interest rate loans effective July 1, 2020.

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

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 we may prepay any amounts without penalty.

In March 2020, we entered into a revolving equity line of credit promissory note and loan agreement with Farm Credit West for a $15.0 million Revolving Equity Line of Credit (the "RELOC") secured by a first lien on the Windfall Investors, LLC property.

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 $130.0 million comprised of $75.0 million under the Revolving Credit Supplement, $40.0 million under the Non-Revolving Credit Supplement and $15.0 million under the RELOC.

The borrowing capacity based on collateral value was $130.0 million at October 31, 2020.

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 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 of each year, 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 and RELOC with Farm Credit West, 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 .

We were not in compliance with covenants at October 31, 2019 , but the non-compliance was waived by Farm Credit West and Wells Fargo.

Under the Loan Agreement, we are 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.

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

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.

We expect to be in compliance with these covenants in fiscal year 2021.

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, the Wells Fargo Term Loan and the Banco de Chile term loan.

We expect to be in compliance with these covenants in 2021.

In February 2020, we received an annual patronage dividend of $1.0 million from Farm Credit West, of which $0.7 million was recorded as a reduction in interest expense and $0.3 million reduced our real estate development assets.

In July 2020, Farm Credit West declared an additional annual cash patronage dividend of $0.6 million received in August 2020, of which we recorded $0.4 million as a reduction in interest expense and $0.2 million reduction in our real estate development assets as of October 31, 2020.

In April 2020, we entered into a Promissory Note with City National Bank for a $3.6 million loan (the “PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act.

The PPP Loan had a two-year term, an interest rate of 1.0% per annum, and was able to be prepaid at any time prior to maturity with no prepayment penalties.

In April 2020, we returned the $3.6 million in proceeds from the PPP Loan.

We finance our working capital and other liquidity requirements primarily through cash from operations and our Farm Credit West Credit Facility, which includes the Loan Agreement, Supplements and RELOC.

In addition, we have Farm Credit West 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, the Wells Fargo term loan, the Banco de Chile term loan and the note payable can be found in the notes to consolidated financial statements included in this Annual Report.

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The interest rate resets on the first of each month and was 1.75% at October 31, 2020.

We have the ability to prepay any amounts outstanding under the Farm Credit West revolving line of credit

without penalty.

We have the ability to prepay any amounts outstanding under the Farm Credit West revolving line of credit without penalty.

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.

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As of October 31, 2020, we had $1.4 million outstanding under the Farm Credit West Term Loan that matures in November 2022.

On October 1, 2019, the term loan was converted to a fixed rate of 3.76% and is payable in quarterly installments through November 2022.

On July 1, 2020, the term loan was converted to a fixed rate of 2.48% and is payable in quarterly installments through November 2022.

This term loan is secured by certain of our agricultural properties.

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As of October 31, 2020, Windfall had $1.0 million outstanding under the Farm Credit West Term Loan that matures in October 2035.

On October 1, 2019, the term loan was converted to a fixed rate of 4.14% and is payable in monthly installments through October 2035.

On July 1, 2020, the term loan was converted to a fixed rate of 3.24% and is payable in monthly installments through October 2035.

This term loan is secured by the Windfall Farms property.

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As of October 31, 2020, we had $8.4 million outstanding under the Farm Credit West Term Loan that matures in March 2036.

On October 1, 2019, the term loan was converted to a fixed rate of 4.17% and is payable in monthly installments through March 2036.

On July 1, 2020, the term loan was converted to a fixed rate of 3.24% and is payable in monthly installments through March 2036.

This term loan is secured by certain of our agricultural properties.

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As of October 31, 2020, we had $6.2 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%.

On July 1, 2020, this loan was converted to a fix rate of 2.77% until July 1, 2025, 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.

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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.

Certain equipment associated with our new lemon packing facilities secure this loan.

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.

The Company is also subject to a covenant that it will maintain a debt service coverage ratio greater than 1.25:1.0 measured annually at October 31, with which we were not in compliance at October 31, 2019 .

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, with which we were not in compliance at October 31, 2020.

The non-compliance was waived by Wells Fargo.

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This loan is unsecured and contains certain pre-payment limitations.

Banco de Chile Small Business Guarantee Fund Loans

In July and September 2020, PDA and San Pablo entered into term loan agreements for an aggregate amount of approximately $0.5 million.

These small business loans are guaranteed by the Chilean government in response to economic instability caused by the COVID-19 pandemic.

The unsecured loans mature in July and September 2024, bear interest at fixed rates of 3.48% and 2.90% and are payable in monthly installments beginning February and April 2021, respectively.

In February 2018, we exercised an option to purchase a 7-acre parcel adjacent to our East Area II real estate development project.

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As of October 31, 2020 and 2019, we had no outstanding interest rate swap agreements.

Treasury Stock

On March 12, 2020, the Board of Directors of our Company approved a share repurchase program authorizing us to repurchase up to $10.0 million of our 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 us to repurchase shares of our common stock.

During fiscal year 2020, we repurchased 250,977 shares under the share repurchase program for approximately $3.5 million.

Real Estate Development Activities and Related Capital Resources

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While we are frequently in discussions with potential external sources of capital in respect to all of our development projects, current market conditions for California real estate projects, while improving, continue to be challenging and make it difficult to predict the timing and amounts of future capital that will be required to complete the development of our projects.

On November 10, 2015, we entered into the Joint Venture with Lewis for the residential development of our East Area I real estate development project.

In November 2015, 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 LLCB 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.

We expect to receive approximately $100.0 million from the Joint Venture over the estimated 7 to 10-year life of the project.

We expect to receive approximately $100.0 million from the Joint Venture over the estimated 10 to 12-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 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 and we funded $4.0 million in fiscal year 2019, $3.5 million in fiscal year 2018, and $7.5 million in fiscal year 2017.

We also entered into a lease agreement with the Joint Venture to lease back a portion of the contributed property, which allowed us to continue farming the property during the phased build-out of the project.

We terminated this lease in December 2018.

We are planning approximately 632 units in Phase 1 of the project.

Grading began in November 2017.

The Joint Venture received lot deposits from national homebuilders in fiscal year 2018 and initial lot sales representing a total of 210 residential units closed in fiscal year 2019.

The Joint Venture closed an additional 33 lots in the first quarter of fiscal year 2020.

Since inception each Joint Venture partner has made funding contributions of $21.4 million, including $2.8 million, $4.0 million and $3.5 million in fiscal years 2020, 2019 and 2018, respectively.

The first phase of the project broke ground to commence mass grading in November 2017.

Project plans include approximately 1,500 residential units with 632 residential units in Phase 1 and site improvements substantially completed.

Lot sales representing a total of 144 and 210 residential units closed in fiscal years 2020 and 2019, respectively.

The Joint Venture closed on an additional 44 units in the first quarter of fiscal year 2021 and 354 residential units have closed from the projects inception to October 31, 2020.

Trend Information

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Health-conscious consumers are driving much of the growth in demand for fresh produce.

Over the past several decades, the benefits of natural, preservative-free and organic foods have become an increasingly significant element of the public dialogue on health and nutrition.

Over the past several decades, the benefits of natural, preservative-free and

organic foods have become an increasingly significant element of the public dialogue on health and nutrition.

As a result, consumption of fresh fruit and vegetables has markedly increased.

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Real Estate Development Division

We believe the residential real estate market is recovering in the locations that we own real estate development property following the well-known economic downturn of the recent past.

We incurred impairment charges on one of our real estate development projects in fiscal years 2018 and 2017 and future impairment is possible.

No impairment charges were recorded in fiscal year 2019.

We incurred impairment charges on one of our real estate development projects in fiscal years 2018 and future impairment is possible.

No impairment charges were recorded in fiscal year 2020 or 2019.

Due to these factors, we anticipate maintaining a cautious and patient perspective with respect to our real estate development activities.

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Payments due by Period

Total < 1 year 1-3 years 3-5 years 5+ years

Fixed rate debt (principal) $ 62,338 $ 3,277 $ 46,512 $ 2,612 $ 9,937

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Operating lease obligations 2,649 509 540 285 1,315

Other 665 307 358 — —

Total contractual obligations $ 129,338 $ 4,093 $ 109,661 $ 2,897 $ 12,687

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Interest Payments on Fixed and Variable Debt

The above table assumes that our fixed rate and long-term debt is held to maturity and the interest rates on our variable rate debt remain unchanged for the remaining life of the debt from those in effect at October 31, 2019 .

The above table assumes that our fixed rate and long-term debt is held to maturity.

Preferred Stock Dividends

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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 and totaled $0.1 million , $0.1 million and $0.2 million for fiscal years 2019 , 2018 and 2017 , respectively.

Such dividends are payable quarterly on the first day of January, April, July and October in each year and totaled $0.1 million in each of the fiscal years 2020, 2019 and 2018, respectively.

In 2014, we issued, in aggregate, 9,300 shares of Series B-2 Preferred Stock at $100 par value (the “Series B-2 Preferred Stock”).

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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 have a noncontributory, defined benefit, single employer pension plan (the “Plan”), which provides retirement benefits for all eligible employees of our Company.

Effective June 2004, we 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 , $0.6 million and $0.7 million in fiscal years 2019 , 2018 and 2017 , respectively and we plan to contribute approximately $0.6 million to the Plan in fiscal year 2020 .

We made funding contributions of zero, $0.6 million and $0.6 million in fiscal years 2020, 2019 and 2018, respectively and we do not plan to contribute to the Plan in fiscal year 2021.

Operating Lease Obligations

We have numerous operating lease commitments with remaining terms ranging from less than one year to eighteen years.

In October 2018, the Company purchased a 1,000 KW photovoltaic generator for $1,125,000 that was previously under a 10 -year operating lease agreement with Farm Credit West.

In December 2018, the Company purchased another 1,000 KW photovoltaic generator for $1,275,000 that was previously under a 10 -year operating lease agreement with Farm Credit West.

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.

We have numerous operating lease commitments with remaining terms ranging from less than one year to 17 years.

We lease machinery and equipment for our packing operations and other land for our agricultural operations.

Further information regarding our Company leases can be found in Note 13, "Leases" of the notes to consolidated financial statements included in this Annual Report.

Real Estate Development Activities, Capital Expenditures and Related Capital Resources

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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 , $3.5 million and $7.5 million in fiscal years 2019 , 2018 and 2017 , respectively.

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.

Since inception, each Joint Venture partner has made funding contributions of $21.4 million, including $2.8 million, $4.0 million and $3.5 million in fiscal years 2020, 2019 and 2018, respectively.

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.

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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.

In February 2018, the obligations under the Loan were guaranteed by certain principals from Lewis and by us.

The Joint Venture recorded a $30.4 million outstanding loan balance at October 31, 2020 related to this Loan.

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Under the new revenue recognition standard, we are 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 within the fresh lemons segment of $8,827,000 for the year ended October 31, 2019.

Had we used the previous revenue recognition guidance, the Company would have recorded insignificant net agribusiness revenue for these transactions for the year ended October 31, 2019.

This change resulted in the recognition of additional agribusiness revenue and agribusiness costs and expenses within the fresh lemons segment of $8.8 million for the year ended October 31, 2019.

Had we used the previous revenue recognition guidance, we would have recorded insignificant net agribusiness revenue for these transactions for the year ended October 31, 2019.

No cumulative adjustment to retained earnings was necessary, as there is no net effect to the consolidated statement of operations.

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 packinghouse, which aligns with the transfer of title to the customer.

Agribusiness revenue - Revenue from lemon sales is generally recognized at a point in time when the customer takes control of the fruit from 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 of our avocado production from our orchards to Calavo.

We deliver 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 oranges, specialty citrus and other specialty crops are similar to its arrangement with Calavo.

Our Company’s arrangements with other third-party packinghouses related to 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.

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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 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 obtains substantially all of the remaining benefits from the fruit, and therefore is acting as a principal.

As such, we record the related revenue and costs of the fruit gross in the consolidated statement of operations.

Historically, the revenue that is recorded based on the sales price information

provided to 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.

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

We recorded agribusiness revenues from crop insurance proceeds of $2.3 million , $0.1 million and $0.1 million in fiscal years 2019 , 2018 and 2017 , respectively.

We recorded agribusiness revenues from crop insurance proceeds of zero, $2.3 million and $0.1 million in fiscal years 2020, 2019 and 2018, respectively.

Rental Operations Revenue - Minimum rental revenues are generally recognized on a straight-line basis over the respective initial lease term.

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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 Accounting Standards Code (“ASC”) 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.

Incidental operations may occur during the holding or development period of real estate development projects to reduce holding or development costs.

Incremental revenue from incidental operations in excess of incremental costs from incidental operations is accounted for as a reduction of development costs.

Incremental costs from incidental operations in excess of incremental revenue from incidental operations are charged to operations.

Real Estate Development Costs - We capitalize the planning, entitlement, construction and development costs and interest associated with our various real estate projects.

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Once a project is substantially completed, future costs are expensed as incurred.

For fiscal year 2019 , we capitalized approximately $1.8 million of costs related to our real estate projects and expensed approximately $0.1 million of costs.

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.

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 our products are excluded from revenues.

Foreign Currency Translation - PDA and San Pablo’s functional currency is the Chilean Peso.

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The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive income.

Trapani Fresh’s functional currency is the U.S.

Income Taxes - Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future.

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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.

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.

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 and $0.1 million in fiscal years 2018 and 2017 , respectively.

There were no impairment charges recorded in fiscal year 2019 .

As a result of various factors, in recent years, we recorded impairment charges of $1.6 million in fiscal year 2018.

There were no impairment charges recorded in fiscal years 2020 or 2019.

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 have been accrued to participants subsequent to that time.

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This information is provided to us by third-party actuarial consultants.

In developing this data, certain estimates and assumptions are used, including among other things, discount rate, long-term rate of return and mortality tables.

In developing this data, certain estimates and assumptions are used, including among other things, discount rate, long-term rate of return on assets and mortality tables.

During 2020, the Society of Actuaries (SOA) released a new mortality improvement scale table, referred to as MP-2020, which is believed to better reflect mortality improvements and is to be used in calculating defined benefit pension obligations.

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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-K

Item 7. Management’s Discussion and Analysis