What changed in this filing

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Item 1. Financial Statements

2021-09-08 compared with 2021-06-08 · 184 added, 140 removed, 608 unchanged (35% of the section changed)

3 unchanged sentences

($ in thousands, except share amounts)

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Current assets:

28 unchanged sentences

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

14,790 shares issued and outstanding at April 30, 2021 and October 31, 2020) ( 8.75 % coupon rate)

14,790 shares issued and outstanding at July 31, 2021 and October 31, 2020) ( 8.75 % coupon rate)

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

9,300 shares issued and outstanding at April 30, 2021 and October 31, 2020) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

9,300 shares issued and outstanding at July 31, 2021 and October 31, 2020) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

Stockholders' Equity:

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

zero issued or outstanding at April 30, 2021 and October 31, 2020)

zero issued or outstanding at July 31, 2021 and October 31, 2020)

Common Stock – $ 0.01 par value ( 39,000,000 shares authorized:

17,936,377 and 17,857,707 shares issued and 17,685,400 and 17,606,730 shares outstanding at April 30, 2021 and October 31, 2020, respectively)

17,936,377 and 17,857,707 shares issued and 17,685,400 and 17,606,730 shares outstanding at July 31, 2021 and October 31, 2020, respectively)

Additional paid-in capital 163,460 162,084

1 unchanged sentence

Accumulated other comprehensive loss ( 6,815 ) ( 7,548 )

Treasury stock, at cost, 250,977 shares at April 30, 2021 and October 31, 2020

Treasury stock, at cost, 250,977 shares at July 31, 2021 and October 31, 2020

( 3,493 ) ( 3,493 )

7 unchanged sentences

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2021 2020 2021 2020

12 unchanged sentences

Interest expense, net of patronage dividends ( 574 ) ( 92 ) ( 1,062 ) ( 1,089 )

Equity in earnings (losses) of investments, net 643 ( 371 ) 1,009 ( 491 )

Equity in earnings of investments, net 1,462 832 2,471 341

Loss on stock in Calavo Growers, Inc.

— — — ( 6,299 )

Other income (expense), net 57 ( 280 ) 51 235

Other income, net 32 11 83 246

Total other income (expense) 1,131 751 1,771 ( 6,801 )

14 unchanged sentences

(In thousands)

Three Months Ended April 30, Six Months Ended April 30,

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

2021 2020 2021 2020

Net income (loss) $ 3,170 $ 1,800 $ 767 $ ( 10,410 )

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ( 1,042 ) 1,410 330 ( 476 )

Minimum pension liability adjustment, net of tax of $ 50 , $ 50 , $ 100 and $ 100 for the three and six months ended April 30, 2021 and 2020, respectively.

Minimum pension liability adjustment, net of tax of $ 50 , $ 50 , $ 150 and $ 150 for the three and nine months ended July 31, 2021 and 2020, respectively.

135 135 403 330

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

Total other comprehensive income (loss), net of tax 711 ( 419 ) 1,640 ( 1,551 )

Total other comprehensive (loss) income, net of tax ( 907 ) 1,545 733 ( 6 )

Comprehensive income (loss) 2,263 3,345 1,500 ( 10,416 )

33 unchanged sentences

Balance at April 30, 2021 17,685,400 $ 179 $ 163,020 $ 25,620 $ ( 5,908 ) $ ( 3,493 ) $ 13,669 $ 193,087 $ 1,479 $ 9,331

Dividends Common ($ 0.075 per share)

— — — ( 1,326 ) — — — ( 1,326 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 32 ) — — — ( 32 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

Stock compensation — — 440 — — — — 440 — —

Noncontrolling interest adjustment — — — — — — ( 1,331 ) ( 1,331 ) — —

Net income (loss) — — — 3,705 — — ( 535 ) 3,170 — —

Other comprehensive loss, net of tax — — — — ( 907 ) — ( 23 ) ( 930 ) — —

Balance at July 31, 2021 17,685,400 $ 179 $ 163,460 $ 27,874 $ ( 6,815 ) $ ( 3,493 ) $ 11,780 $ 192,985 $ 1,479 $ 9,331

LIMONEIRA COMPANY

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

Stockholders' Equity Temporary Equity

27 unchanged sentences

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

Dividends Common ($ 0.075 per share)

— — — ( 1,338 ) — — — ( 1,338 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 33 ) — — — ( 33 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

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

Treasury shares ( 42,100 ) — — — — ( 562 ) — ( 562 ) — —

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

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

Balance at July 31, 2020 17,815,607 $ 179 $ 161,655 $ 39,695 $ ( 7,261 ) $ ( 562 ) $ 13,846 $ 207,552 $ 1,479 $ 9,331

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

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

Operating activities

Net loss $ ( 2,403 ) $ ( 12,210 )

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

Net income (loss) $ 767 $ ( 10,410 )

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

Depreciation and amortization 7,490 7,555

2 unchanged sentences

Non-cash lease expense 346 349

Equity in (earnings) losses of investments, net ( 1,009 ) 491

Equity in earnings of investments, net ( 2,471 ) ( 341 )

Deferred income taxes 1,122 ( 581 )

13 unchanged sentences

Capital expenditures ( 8,282 ) ( 8,189 )

Net proceeds from sales of property assets 83 —

Net proceeds from sales of assets 87 —

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

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

Collection on note receivable 25 —

Collection on loan and note receivable 25 1,800

Equity investment contributions — ( 2,800 )

Cash distribution from equity investment 106 —

Investments in mutual water companies and water rights ( 652 ) ( 55 )

7 unchanged sentences

Exchange of common stock ( 700 ) ( 213 )

Net cash provided by financing activities 1,908 15,362

Purchase of treasury stock — ( 562 )

Payments of deferred financing costs — ( 70 )

Net cash (used in) provided by financing activities ( 7,809 ) 11,479

Effect of exchange rate changes on cash ( 3 ) ( 77 )

5 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Supplemental disclosures of cash flow information

Cash paid during the period for interest, net of amounts capitalized $ 1,340 $ 1,666

Cash (received) paid during the period for income taxes, net $ ( 4,997 ) $ —

Cash received during the period for income taxes, net $ 5,942 $ 361

Non-cash investing and financing activities:

Capital expenditures accrued but not paid at period-end $ 437 $ 2,806

Accrued contribution obligation of investment in water company $ 450 $ 450

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

23 unchanged sentences

Other comprehensive income or loss primarily includes foreign currency translation items and defined benefit pension items.

Accumulated other comprehensive income (loss) is reported as a component of the Company's stockholders' equity.

The following tables summarizes the changes in other comprehensive income (loss) by component (in thousands):

Three Months Ended April 30,

Accumulated other comprehensive (loss) income is reported as a component of the Company's stockholders' equity.

The following tables summarizes the changes in other comprehensive (loss) income by component (in thousands):

Three Months Ended July 31,

Pre-tax Amount Tax Expense Net Amount Pre-tax Amount Tax Expense Net Amount

2 unchanged sentences

Other comprehensive gain before reclassifications 185 ( 50 ) 135 185 ( 50 ) 135

Available-for-sale securities:

Amounts reclassified to earnings included in "Selling, general and administrative" — — — 140 — 140

Other comprehensive income (loss) $ 761 $ ( 50 ) $ 711 $ ( 369 ) $ ( 50 ) $ ( 419 )

Other comprehensive (loss) income $ ( 857 ) $ ( 50 ) $ ( 907 ) $ 1,595 $ ( 50 ) $ 1,545

LIMONEIRA COMPANY

1 unchanged sentence

Summary of Significant Accounting Policies (continued)

Six Months Ended April 30,

Nine Months Ended July 31,

Pre-tax Amount Tax Expense Net Amount Pre-tax Amount Tax Expense Net Amount

9 unchanged sentences

Other comprehensive income 330 403 — 733

Balance as of April 30, 2021 $ ( 1,697 ) $ ( 4,211 ) $ — $ ( 5,908 )

Balance as of July 31, 2021 $ ( 2,739 ) $ ( 4,076 ) $ — $ ( 6,815 )

Foreign Currency Translation Loss Defined Benefit Pension Plan Available-for-Sale Securities Accumulated Other Comprehensive Loss

1 unchanged sentence

Other comprehensive (loss) income ( 476 ) 330 140 ( 6 )

Balance as of April 30, 2020 $ ( 4,248 ) $ ( 4,558 ) $ — $ ( 8,806 )

Balance as of July 31, 2020 $ ( 2,838 ) $ ( 4,423 ) $ — $ ( 7,261 )

Recent Accounting Pronouncements

18 unchanged sentences

Concentrations and Geographic Information

Lemons procured from third-party growers were 50 % and 60 % of the Company's lemon supply in the three months ended April 30, 2021 and 2020, respectively.

Lemons procured from third-party growers were 49 % and 58 % of the Company's lemon supply in the six months ended April 30, 2021 and 2020, respectively, of which one third-party grower was 19 % of the lemon supply for the six months ended April 30, 2021.

The Company sells the majority of its avocado production to Calavo.

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

Lemons procured from third-party growers were 57 % and 64 % of the Company's lemon supply in the three months ended July 31, 2021 and 2020, respectively, and were 51 % and 60 % of the Company's lemon supply in the nine months ended July 31, 2021 and 2020, respectively, of which one third-party grower was 10 % of the lemon supply for the nine months ended July 31, 2021.

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

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

One individual customer represented 11 % of revenues for the six months ended April 30, 2021.

One individual customer represented more than 10 % of accounts receivable, net as of April 30, 2021.

During the three months ended April 30, 2021 and 2020, the Company had approximately $ 950,000 and $ 921,000 , respectively, of total sales in Chile by Fruticola Pan de Azucar S.A.

Two individual customers represented 17 % and 13 % of revenues, respectively, for the nine months ended July 31, 2021.

No individual customer represented more than 10% of accounts receivable, net as of July 31, 2021.

During the three months ended July 31, 2021 and 2020, the Company had approximately $ 578,000 and $ 643,000 , respectively, of total sales in Chile by Fruticola Pan de Azucar S.A.

("PDA") and Agricola San Pablo SpA ("San Pablo").

During the three months ended April 30, 2021 and 2020, the Company had approximately $ 884,000 and $ 2,280,000 , respectively, of total sales in Argentina by Trapani Fresh.

During the six months ended April 30, 2021 and 2020, the Company had approximately $ 1,977,000 and $ 1,460,000 , respectively, of total sales in Chile by PDA and San Pablo.

During the six months ended April 30, 2021 and 2020, the Company had approximately $ 2,555,000 and $ 2,479,000 , respectively, of total sales in Argentina by Trapani Fresh.

Aggregate foreign exchange transaction losses realized for our foreign subsidiaries was approximately $ 551,000 for the six months ended April 30, 2021 and are included in selling, general and administrative expenses in the consolidated statements of operations.

Foreign exchange transaction gains/losses were immaterial for the six months ended April 30, 2020.

During the nine months ended July 31, 2021 and 2020, the Company had approximately $ 2,555,000 and $ 2,103,000 , respectively, of total sales in Chile by PDA and San Pablo.

In June 2021, the Company entered into an agreement, effective March 1, 2021, to sell and license certain assets of Trapani Fresh to its 49 % partner in the joint venture, FGF Trapani ("FGF").

These assets consist of packing supplies and certain intangible assets related to the packing, marketing, and selling business of Trapani Fresh.

The total consideration to be received is approximately $ 3,900,000 over an 8-year term in 16 equal installments.

Payments to be received are secured by FGF’s interest in land parcels at the Santa Clara ranch and consist of a $ 1,200,000 note receivable and $ 2,700,000 of royalty payments.

There was no material gain or loss recognized on the transaction.

Trapani Fresh continues to own and operate the 1,200 -acre Santa Clara ranch and now sells the lemons it grows to FGF, who packs, markets, and sells the fruit to its export customers.

As a result of this transaction, Trapani Fresh now recognizes lemon revenues at the market price less packinghouse charges to harvest, pack and market the fruit.

During the three months ended July 31, 2021 and 2020, the Company had approximately $ 710,000 and $ 9,626,000 , respectively, of total sales in Argentina by Trapani Fresh.

During the nine months ended July 31, 2021 and 2020, the Company had approximately $ 3,265,000 and $ 12,105,000 , respectively, of total sales in Argentina by Trapani Fresh.

Aggregate foreign exchange transaction losses realized for our foreign subsidiaries was approximately $ 598,000 for the nine months ended July 31, 2021 and are included in selling, general and administrative expenses in the consolidated statements of operations.

Foreign exchange transaction gains/losses were immaterial for the nine months ended July 31, 2020.

Prepaid Expenses and Other Current Assets

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

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Prepaid supplies and insurance $ 2,634 $ 2,080

6 unchanged sentences

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

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Retained Property - East Area I $ 13,011 $ 13,169

10 unchanged sentences

Under the terms of the Retained Property Agreement, the Joint Venture transferred certain contributed East Area I property, which is entitled for commercial development, back to the Company (the "Retained Property") and arranged for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by the Company.

The balance in Retained Property and East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 5,450,000 and $ 5,300,000 at April 30, 2021 and October 31, 2020, respectively, which is included in payables to related parties.

The balance in Retained Property and East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 5,600,000 and $ 5,300,000 at July 31, 2021 and October 31, 2020, respectively, which is included in payables to related parties.

In January 2018, the Joint Venture entered into a $ 45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A.

4 unchanged sentences

The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without penalty.

The Joint Venture had an outstanding balance of $ 11,411,000 as of April 30, 2021.

The Joint Venture had an outstanding balance of zero as of July 31, 2021.

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

3 unchanged sentences

Additionally, a Reimbursement Agreement was executed between the Lewis guarantors and the Company, which provides for unpaid liabilities of the Joint Venture to be shared pro-rata by the Lewis guarantors and the Company in proportion to their percentage interest in the Joint Venture.

The Company made contributions to the Joint Venture of zero and $ 2,800,000 in the six months ended April 30, 2021 and 2020, respectively.

Through April 30, 2021, the Joint Venture has closed the sales of the initial residential lots representing 464 residential units.

The Company made contributions to the Joint Venture of zero and $ 2,800,000 in the nine months ended July 31, 2021 and 2020, respectively.

Through July 31, 2021, the Joint Venture has closed the sales of the initial residential lots representing 556 residential units.

Other Real Estate Development Projects

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

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

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

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

At April 30, 2021, the $ 2,543,000 carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

At July 31, 2021, the $ 2,543,000 carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

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

3 unchanged sentences

The option was exercised and the extension payment was paid in May 2021.

At April 30, 2021, the net carrying value of the note was $ 2,625,000 and classified in prepaid expenses and other current assets.

At July 31, 2021, the net carrying value of the note was $ 2,600,000 and classified in prepaid expenses and other current assets.

LIMONEIRA COMPANY

2 unchanged sentences

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

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Limoneira Lewis Community Builders, LLC $ 59,844 $ 57,142

7 unchanged sentences

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

During the year-to-date interim periods for the six months ended April 30, 2021 and 2020, this threshold was met for the Company's equity investment in LLCB.

During the year-to-date interim period for the nine months ended July 31, 2021, this threshold was met for the Company's equity investment in LLCB.

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

Six Months Ended

Nine Months Ended

Revenues $ 36,684 $ 25,716

3 unchanged sentences

Net income attributable to Limoneira Company $ 3,944 $ 1,659

Goodwill and Intangible Assets

Goodwill and Intangible Assets, Net

A summary of the change in the carrying amount of goodwill is as follows (in thousands):

2 unchanged sentences

Foreign currency translation adjustment 4

Balance at April 30, 2021 $ 1,550

Balance as of July 31, 2021 $ 1,539

Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable.

There have been no impairment charges recorded against goodwill as of April 30, 2021.

During the six months ended April 30, 2021, the Company acquired additional water rights in Chile for $ 186,000 .

There have been no impairment charges recorded against goodwill as of July 31, 2021.

During the nine months ended July 31, 2021, the Company acquired additional water rights in Chile for $ 186,000 .

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Goodwill and Intangible Assets (continued)

Intangible assets consisted of the following as of April 30, 2021 and October 31, 2020 (in thousands):

April 30, 2021 October 31, 2020

Goodwill and Intangible Assets, Net (continued)

Intangible assets consisted of the following as of July 31, 2021 and October 31, 2020 (in thousands):

July 31, 2021 October 31, 2020

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life in Years

4 unchanged sentences

$ 10,381 $ ( 1,701 ) $ 8,680 $ 13,392 $ ( 2,083 ) $ 11,309

Amortization expense totaled $ 263,000 and $ 205,000 for the three months ended April 30, 2021 and 2020, respectively.

Amortization expense totaled $ 526,000 and $ 490,000 for the six months ended April 30, 2021 and 2020, respectively.

Estimated future amortization expense of intangible assets as of April 30, 2021 are as follows (in thousands):

2021 (excluding the six months ended April 30, 2021) $ 514

Amortization expense totaled $ 210,000 and $ 262,000 for the three months ended July 31, 2021 and 2020, respectively.

Amortization expense totaled $ 736,000 and $ 752,000 for the nine months ended July 31, 2021 and 2020, respectively.

Estimated future amortization expense of intangible assets as of July 31, 2021 are as follows (in thousands):

2021 (excluding the nine months ended July 31, 2021) $ 192

Thereafter 1,814

1 unchanged sentence

The Company’s investments in various not-for-profit mutual water companies provide the Company with the right to receive a proportionate share of water from each of the not-for-profit mutual water companies that have been invested in and do not constitute voting shares and/or rights.

Amounts included in other assets in the consolidated balance sheets as of April 30, 2021 and October 31, 2020 were $ 6,024,000 and $ 5,563,000 , respectively.

Amounts included in other assets in the consolidated balance sheets as of July 31, 2021 and October 31, 2020 were $ 5,990,000 and $ 5,563,000 , respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Compensation $ 2,295 $ 2,275

9 unchanged sentences

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

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Farm Credit West revolving and non-revolving lines of credit:

the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 0.11 % at April 30, 2021, plus 1.60 %.

The interest rate for the $ 40.0 million outstanding balance of the non-revolving line of credit was fixed at 4.77 %.

the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 0.10 % at July 31, 2021, plus 1.75 %.

The interest rate for the $ 40.0 million outstanding balance of the non-revolving line of credit is fixed at 4.77 % through July 1, 2022, 3.57 % through July 1, 2025 and variable thereafter.

Interest is payable monthly and the principal is due in full on July 1, 2026.

19 unchanged sentences

Note Payable:

the interest rate ranges from 5.00 % to 7.00 % and was 6.50 % at April 30, 2021.

the interest rate ranges from 5.00 % to 7.00 % and was 6.50 % at July 31, 2021.

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

7 unchanged sentences

Long-term debt, less current portion $ 120,935 $ 122,571

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

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

In June 2021, the Company entered into a Master Loan Agreement (the “MLA”) with Farm Credit West, PCA (the “Lender”) dated June 1, 2021, together with a revolving credit facility supplement (the “Revolving Credit Supplement”), a non-revolving credit facility supplement (the “Non-Revolving Credit Supplement,” and together with the Revolving Credit Supplement, the “Supplements”) and an agreement to convert to fixed interest rate ("Fixed Interest Rate Agreement").

The MLA governs the terms of the Supplements.

The MLA amends and restates the previous Master Loan Agreement between the Company and the Lender, dated June 19, 2017 and extends the principal repayment to July 1, 2026.

Debt financing costs related to the MLA agreement were immaterial.

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

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

5 unchanged sentences

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

The borrowing capacity based on collateral value was $ 130,000,000 at April 30, 2021, of which $ 20,516,000 was available to borrow.

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

The Loan Agreement includes customary default provisions that provide should an event of default occur, Farm Credit West, at its option, may declare all or any portion of the indebtedness under the Loan Agreement to be

The borrowing capacity based on collateral value was $ 130,000,000 at July 31, 2021, of which $ 28,198,000 was available to borrow.

For amounts outstanding under both Supplements interest will begin to be charged on the date the Lender disburses principal and will continue until the outstanding indebtedness under the Supplements is paid in full with interest.

LIMONEIRA COMPANY

1 unchanged sentence

Long-Term Debt (continued)

immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend the Company's right to draw or request funds on any loan or line of credit.

The initial interest rate in effect under the Revolving Credit Supplement was 1.69 % per annum, and was automatically adjusted commencing July 1, 2021 and on the first day of each month thereafter.

The interest rate for any amount outstanding under the Revolving Credit Supplement will be based on the one-month LIBOR rate plus or minus an applicable margin.

The applicable margin will range from 1.75 % to 2.35 % depending on the ratio of current assets, plus the remaining available commitment divided by current liabilities.

On July 1, 2022, and on each one-year anniversary thereafter, the Company has the option to convert the interest rate in use under the Revolving Credit Supplement from the preceding LIBOR-based calculation to a variable interest rate.

Any amounts outstanding under the Revolving Credit Supplement will be due and payable in full on July 1, 2026.

The Company may prepay any amounts outstanding under the Revolving Credit Supplement without penalty.

The initial interest rate in effect under the Non-Revolving Credit Supplement is a fixed interest rate of 4.77 % per year and such rate shall continue for a period of one year and one month.

Pursuant to the Fixed Interest Rate Agreement, the Non-Revolving Credit Supplement will convert to a fixed interest rate of 3.57 % per year until July 1, 2025 (the “Fixed Rate Term”).

Thereafter, the interest rate will convert to a variable interest rate established by the Lender corresponding to the corresponding interest rate group.

Any amounts outstanding under the Non-Revolving Credit Supplement is due and payable in full on July 1, 2026.

The Company may not prepay any amounts under the outstanding Non-Revolving Credit Supplement during the Fixed Rate Term.

Thereafter, the Company may prepay any amounts outstanding under the Non-Revolving Credit Supplement, provided that a fee equal to 0.50 % of the amount prepaid and any other cost or loss suffered by the Lender must be paid with any prepayment.

All indebtedness under the MLA and RELOC, including any indebtedness under the Supplements, is secured by a first lien on Company-owned stock or participation certificates, Company funds maintained with Lender, Lender’s unallocated surplus, and certain of the Company’s agricultural properties in Tulare and Ventura counties in California and certain of the Company’s building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

The MLA includes customary default provisions that provide should an event of default occur, the Lender, at its option, may declare all or any portion of the indebtedness under the MLA to be immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend the Company’s right to draw or request funds on any loan or line of credit.

The MLA subjects the Company 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 the Company’s business.

The Company is also subject to a covenant that it will maintain a debt service coverage ratio greater than or equal to 1.15 :1.00 measured at October 31, 2021, and greater than or equal to 1.25 :1 when measured at October 31, 2022, and annually thereafter.

In August 2021, the Lender modified the covenant to a minimum debt service coverage ratio greater than or equal to 1.0 :1.0 measured at October 31, 2021.

In August 2021, the Company entered into an equipment finance agreement (a "FCW term loan") with Lender in the amount of $ 2,508,000 and used the proceeds to payoff the Wells Fargo term loan.

The FCW term loan has a fixed interest rate of 3.19 % and is payable in monthly installments through September 2026.

There were no unamortized debt financing costs related to the Wells Fargo term loan and no capitalized financing costs related to the FCW term loan.

In December 2020, Farm Credit West declared an annual cash patronage dividend of 1.50 % of average eligible loan balances.

The Company received $ 1,170,000 in February 2021.

The Loan Agreement subjects the Company 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 the Company's business.

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.

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.

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

The Company capitalized interest of $ 308,000 and $ 355,000 during the three months ended April 30, 2021 and 2020, respectively, and $ 308,000 and $ 444,000 during the six months ended April 30, 2021 and 2020, respectively.

The Company capitalized interest of $ 353,000 and $ 353,000 during the three months ended July 31, 2021 and 2020, respectively, and $ 661,000 and $ 797,000 during the nine months ended July 31, 2021 and 2020, respectively.

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

3 unchanged sentences

All of the residential rentals have month to month lease terms.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Leases (continued)

Lessor Arrangements (continued)

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

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2021 2020 2021 2020

8 unchanged sentences

Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

As of April 30, 2021, there were no material finance leases for which the Company was a lessee.

Operating lease costs were $ 136,000 and $ 137,000 for the three months ended April 30, 2021 and 2020, respectively, and $ 278,000 and $ 274,000 for the six months ended April 30, 2021 and 2020, respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

As of July 31, 2021, there were no material finance leases for which the Company was a lessee.

Operating lease costs were $ 128,000 and $ 143,000 for the three months ended July 31, 2021 and 2020, respectively, and $ 406,000 and $ 417,000 for the nine months ended July 31, 2021 and 2020, respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

Variable and short term lease costs were immaterial.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Leases (continued)

Lessee Arrangements (continued)

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

Classification April 30, 2021 October 31, 2020

Classification July 31, 2021 October 31, 2020

Operating lease ROU assets Other assets $ 1,978 $ 2,053

5 unchanged sentences

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2021 2020 2021 2020

2 unchanged sentences

ROU assets obtained in exchange for new operating lease liabilities $ — $ 108 $ 271 $ 108

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Basic and Diluted Net Income (Loss) per Share

3 unchanged sentences

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2021 2020 2021 2020

11 unchanged sentences

Diluted net income (loss) per common share $ 0.20 $ 0.12 $ 0.06 $ ( 0.54 )

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Basic and Diluted Net Income (Loss) per Share (continued)

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

1 unchanged sentence

The Company’s unvested, restricted stock awards qualify as participating shares.

The Company excluded 178,000 and 220,000 , unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted earnings (losses) per share for the three months ended April 30, 2021 and 2020, respectively, and 185,000 and 196,000 for the six months ended April 30, 2021 and 2020, respectively.

The Company excluded 147,000 and 225,000 , unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted earnings (losses) per share for the three months ended July 31, 2021 and 2020, respectively, and 146,000 and 187,000 for the nine months ended July 31, 2021 and 2020, respectively.

Related-Party Transactions

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

April 30, 2021 October 31, 2020

July 31, 2021 October 31, 2020

Balance Sheet Balance Sheet

7 unchanged sentences

9 LLCB $ — $ — $ 5,600 $ — $ — $ — $ 5,300 $ —

10 Freska $ 86 $ — $ — $ — $ — $ — $ — $ —

11 Third party growers $ — $ — $ 62 $ — $ — $ — $ — $ —

Three Months Ended April 30, 2021 Three Months Ended April 30, 2020

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related-Party Transactions (continued)

Three Months Ended July 31, 2021 Three Months Ended July 31, 2020

Consolidated Statement of Operations Consolidated Statement of Operations

5 unchanged sentences

5 Cadiz / Fenner / WAM $ — $ — $ 36 $ — $ — $ — $ 1 $ — $ —

6 Colorado River Growers $ — $ — $ — $ — $ 1 $ — $ 337 $ — $ —

7 YMIDD $ — $ — $ 53 $ — $ — $ — $ 53 $ — $ —

8 FGF $ 710 $ — $ 1,761 $ — $ 9,926 $ — $ 10,508 $ — $ —

1 unchanged sentence

11 Third party growers $ — $ — $ 16 $ — $ — $ — $ — $ — $ —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related-Party Transactions (continued)

Six Months Ended April 30, 2021 Six Months Ended April 30, 2020

Nine Months Ended July 31, 2021 Nine Months Ended July 31, 2020

Consolidated Statement of Operations Consolidated Statement of Operations

11 unchanged sentences

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

There were no rental payments due from employees at April 30, 2021 or October 31, 2020.

There were no rental payments due from employees at July 31, 2021 or October 31, 2020.

(2) Mutual water companies - The Company has representation on the boards of directors of the mutual water companies in which the Company has investments, refer to Note 8 - Other Assets.

5 unchanged sentences

Additionally, the Company leases office space to Calavo, purchased storage services from Calavo and had immaterial amounts due to Calavo for those services.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related-Party Transactions (continued)

(5) Cadiz / Fenner / WAM - A member of the Company’s board of directors serves as the CEO, President and a member of the board of directors of Cadiz, Inc.

9 unchanged sentences

The Company purchased water from YMIDD and had amounts payable to them for such purchases.

(8) FGF Trapani ("FGF") - The Company advances funds to FGF for fruit purchases which are recorded as an asset until the sales occur and the remaining proceeds become due to FGF.

(8) FGF - The Company advances funds to FGF for fruit purchases, which are recorded as an asset until the sales occur and the remaining proceeds become due to FGF.

Additionally, FGF provided farming, packing, by-product processing and administrative services to Trapani Fresh.

The Company had a receivable from FGF for lemon sales and a payable due to FGF for fruit purchases and services.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related-Party Transactions (continued)

The Company had a receivable from FGF for lemon sales and the sale of packing supplies and a payable due to FGF for fruit purchases and services.

Effective March 1, 2021, Trapani Fresh sells the lemons it grows to FGF, who packs, markets, and sells the fruit to its export customers.

The Company also records revenue related to the licensing of intangible assets to FGF.

(9) LLCB - Refer to Note 5 - Real Estate Development.

2 unchanged sentences

(11) Third party growers - A member of the Company's board of directors markets lemons through the Company and the Company had payments due to the member for such lemon procurement.

The effective tax rate for the six months ended April 30, 2021 was lower than the federal statutory tax rate of 21% mainly due to foreign jurisdictions which are taxed at different rates, state taxes, and nondeductible tax items.

The Company has no material uncertain tax positions as of April 30, 2021.

The effective tax rate for the nine months ended July 31, 2021 was higher than the federal statutory tax rate of 21% mainly due to foreign jurisdictions which are taxed at different rates, state taxes, and nondeductible tax items.

The Company has no material uncertain tax positions as of July 31, 2021.

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

There was no accrued interest or penalties associated with uncertain tax positions as of April 30, 2021.

There was no accrued interest or penalties associated with uncertain tax positions as of July 31, 2021.

Retirement Plans

3 unchanged sentences

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

There were no funding contributions during the six months ended April 30, 2021 and 2020.

The components of net periodic pension cost for the Plan for the three and six months ended April 30, 2021 and 2020 were as follows (in thousands):

There were no funding contributions during the nine months ended July 31, 2021 and 2020.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Retirement Plans (continued)

The components of net periodic pension cost for the Plan for the three and nine months ended July 31, 2021 and 2020 were as follows (in thousands):

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2021 2020 2021 2020

9 unchanged sentences

Legal claims are inherently uncertain, however, and it is possible that the Company’s business, financial condition, liquidity and/or operating results could be adversely affected in the future by legal proceedings.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Stock-based Compensation and Treasury Stock

14 unchanged sentences

During January 2021 and 2020, 27,815 and 17,841 shares, respectively, of common stock were granted as Director Awards.

The Company recognized $ 469,000 and $ 358,000 of stock-based compensation to non-employee directors during the six months ended April 30, 2021 and 2020, respectively.

The Company recognized $ 469,000 and $ 358,000 of stock-based compensation to non-employee directors during the nine months ended July 31, 2021 and 2020, respectively.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Stock-based Compensation and Treasury Stock (continued)

Stock-based Compensation (continued)

Director Awards (continued)

During the three months ended January 31, 2021 and 2020, members of management exchanged 46,993 and 11,314 shares, respectively, of common stock with fair values of $ 701,000 and $ 213,000 , respectively, at the date of the exchanges, for the payment of payroll taxes associated with the vesting of shares under the Company’s stock-based compensation programs.

15 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

Revenues related to rental operations are included in “Corporate and Other.” Other agribusiness revenues consisted of oranges of $ 1,404,000 and $ 2,495,000 and specialty citrus and other crops of $ 1,175,000 and $ 3,024,000 for the three and six months ended April 30, 2021, respectively.

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

Revenues related to rental operations are included in “Corporate and Other.” Other agribusiness revenues consisted of oranges of $ 1,981,000 and $ 4,476,000 and specialty citrus and other crops of $ 1,065,000 and $ 4,089,000 for the three and nine months ended July 31, 2021, respectively.

Other agribusiness revenues consisted of oranges of $ 2,232,000 and $ 7,171,000 and specialty citrus and other crops of $ 788,000 and $ 3,832,000 for the three and nine months ended July 31, 2020, respectively.

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

4 unchanged sentences

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

Segment information for the three months ended April 30, 2021 (in thousands):

Segment information for the three months ended July 31, 2021 (in thousands):

Packing Eliminations

9 unchanged sentences

Operating income (loss) $ 4,449 $ 2,453 $ — $ 1,365 $ 1,090 $ 7,263 $ ( 3,889 ) $ 3,374

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

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

Packing Eliminations

8 unchanged sentences

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

Operating income (loss) $ 1,754 $ 2,009 $ — $ 461 $ 426 $ 2,490 $ ( 5,323 ) $ ( 2,833 )

Segment information for the six months ended April 30, 2021 (in thousands):

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

Segment information for the nine months ended July 31, 2021 (in thousands):

Packing Eliminations

9 unchanged sentences

Operating income (loss) $ 8,213 $ 9,015 $ — $ 2,639 $ 1,733 $ 15,009 $ ( 14,891 ) $ 118

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

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

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

Packing Eliminations

10 unchanged sentences

Subsequent Events

In June 2021, the Company entered into an agreement, effective March 1, 2021, to sell and license certain assets of Trapani Fresh to its 49 % partner in the joint venture, FGF.

These assets consist of packing supplies and certain intangible assets related to the packing, marketing, and selling business of Trapani Fresh.

The total consideration to be received is approximately $ 3,800,000 over an 8-year term in 16 equal installments.

There was no material gain or loss recognized on the transaction.

Trapani Fresh continues to own and operate the 1,200 -acre Santa Clara ranch and now sells the lemons it grows to FGF, who packs, markets, and sells the fruit to its export customers.

Except as described in the notes to the interim consolidated financial statements, no other subsequent events occurred that require recognition or disclosure in the unaudited consolidated financial statements.

The Company has evaluated events subsequent to July 31, 2021 through the date of this filing, to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q.

Based upon this evaluation, except as described in the notes to the interim consolidated financial statements, it was determined that no other subsequent events occurred that require recognition or disclosure in the unaudited consolidated financial statements.

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

What changed 10-Q

Item 1. Financial Statements