What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-01-10 compared with 2021-01-14 · 422 added, 520 removed, 966 unchanged (49% of the section changed)

2 unchanged sentences

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firms 60

Report of Independent Registered Public Accounting Firm 44

Consolidated Financial Statements of Limoneira Company

1 unchanged sentence

Consolidated Statements of Operations for the years ended October 31, 2021, 2020 and 2019 47

Consolidated Statements of Comprehensive (Loss) Income for the years ended October 31, 2020, 2019 and 2018 64

Consolidated Statements of Comprehensive Loss for the years ended October 31, 2021, 2020 and 2019 48

Consolidated Statements of Stockholders’ Equity and Temporary Equity for the years ended October 31, 2021, 2020 and 2019 49

3 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Limoneira Company

To the Stockholders and the Board of Directors of Limoneira Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries (the "Company") as of October 31, 2020 and October 31, 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and temporary equity, and cash flows, for each of the two years in the period ended October 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, based on our audits and the report of the other auditors, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2020 and October 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended October 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of Limoneira Lewis Community Builders, LLC (“LLCB”), the Company's investment which is accounted for by use of the equity method.

The accompanying financial statements of the Company include its equity investment in LLCB of $46,908,000 and $42,722,000 as of October 31, 2020 and 2019, respectively, and its equity earnings in LLCB of $1,386,000 and $4,368,000 000 for the years ended October 31, 2020 and 2019, respectively.

The financial statements of LLCB were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for LLCB, is based solely on the report of the other auditors.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2020, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 14, 2021, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

Change in Accounting Principles

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases effective November 1, 2019 due to adoption of Accounting Standards Update ("ASU") No.

2016-02, Leases .

We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries (the "Company") as of October 31, 2021 and 2020, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity and temporary equity, and cash flows, for each of the three years in the period ended October 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, based on our audits and the report of the other auditors, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We did not audit the financial statements of Limoneira Lewis Community Builders, LLC (“LLCB”), the Company's investment in which is accounted for by use of the equity method.

The accompanying consolidated financial statements of the Company include, before the basis difference and related amortization discussed in Note 8, its equity investment in LLCB of $51,416,000 and $46,908,000 as of October 31, 2021 and 2020, respectively, and its equity earnings in LLCB of $4,508,000, $1,386,000 and $4,368,000 for the years ended October 31, 2021, 2020 and 2019, respectively.

The financial statements of LLCB were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Company’s equity investment and equity earnings in LLCB, is based on the report of the other auditors.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October 31, 2021, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 10, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

9 unchanged sentences

We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Real Estate Development – Impairment Indicators – Refer to Notes 2, 5, 7 and 8 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of real estate development, as held by the Company or as included specifically within its investment in Limoneira Lewis Community Builders, LLC (“LLCB”) , for impairment involves an initial assessment of each real estate

development to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of, or investment in, real estate development are no longer recoverable.

Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, zoning, government regulation, geographical demand for new housing or commercial property, and market conditions related to pricing of residential or commercial land lots.

When events or changes in circumstances exist, the Company further evaluates the real estate development for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development to the respective carrying amount for its own real estate development or b) determining if its equity in investment has incurred an other-than-temporary decline.

The Company makes significant judgments in evaluating real estate development for possible indications of impairment.

These judgments may relate to the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, the likelihood of successfully completing the entitlement process, changes in zoning or government regulation, and demand for new housing.

Changes in these judgments could have a significant impact on real estate development.

Real estate development assets were $22,828,000, and equity in investment in LLCB was $60,216,000 as of October 31, 2021.

For the year ended October 31, 2021, no impairment loss has been recognized on any real estate development and no other-than-temporary-impairment has been recognized on the Company’s equity in LLCB.

We identified the management judgments used in the determination of impairment indicators for real estate development as a critical audit matter due to their significance and because of the subjectivity used by management when determining whether events or changes in circumstances have occurred indicating that the carrying amounts of, or investment in, real estate development may not be recoverable.

This required a high degree of auditor judgment when performing audit procedures to evaluate whether management appropriately identified impairment indicators.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of real estate development for possible indications of impairment included the following, among others:

• We tested the effectiveness of the controls over management’s identification of possible circumstances that may indicate that real estate development is no longer recoverable, including controls over management’s evaluation of the entitlement process, litigation, changes in zoning, government regulation, geographical demand for new housing or commercial property and market conditions related to pricing of residential or commercial land lots.

▪ We evaluated management’s impairment analysis by:

◦ Searching for adverse asset-specific and/or market conditions by reviewing publicly available information on home values and land values in the surrounding regions of the development, periodicals and news information relating to the Southern California housing market, other independent market data, including considerations of the demand for housing in the market and changes to comparable home prices

◦ Obtaining information from legal counsel and performing inquiries with management in order to evaluate any changes in the status of litigation matters affecting the development properties and the potential impact on the ability to recover the accumulated costs, including any relevant government regulations and/or other matters impacting the entitlement process

◦ With the assistance of our fair value specialists, we evaluated comparable land sales for both commercial and residential lots in the area as well as cost to develop residential lot information and compared it to information used by management

◦ Developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis

/s/ Deloitte & Touche LLP

2 unchanged sentences

We have served as the Company’s auditor since 2019.

Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors of Limoneira Company

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of operations, comprehensive (loss) income, stockholders' equity and temporary equity, and cash flows for the year ended October 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended October 31, 2018, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2006 to 2018.

Los Angeles, California

January 14, 2019

LIMONEIRA COMPANY

12 unchanged sentences

Equity in investments 64,072 61,214

Investment in Calavo Growers, Inc.

Goodwill 1,527 1,535

5 unchanged sentences

Accounts payable $ 8,963 $ 5,838

Growers payable 8,126 14,500

Growers and suppliers payable 10,371 8,126

Accrued liabilities 6,542 7,947

20 unchanged sentences

Accumulated other comprehensive loss ( 5,733 ) ( 7,548 )

Treasury stock, at cost, 250,977 shares at October 31, 2020

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

( 3,493 ) ( 3,493 )

Noncontrolling interest 11,965 13,741

14 unchanged sentences

Other operations 4,332 4,504 4,439

Impairment of real estate development assets — — 1,558

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

Loss (gain) on disposal of assets 109 502 ( 1,069 )

Selling, general and administrative 19,427 21,280 21,170

Total costs and expenses 172,360 183,567 176,912

Operating (loss) income ( 19,008 ) ( 5,514 ) 9,486

Other (expense) income:

Operating loss ( 6,333 ) ( 19,008 ) ( 5,514 )

Other income (expense):

Interest income 379 362 207

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

Interest expense, net of patronage dividends ( 1,501 ) ( 2,048 ) ( 2,341 )

Equity in earnings of investments, net 3,203 339 3,073

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

Loss on stock in Calavo Growers, Inc.

— ( 6,299 ) ( 2,117 )

Other income, net 89 219 129

Total other (expense) income ( 7,427 ) ( 1,049 ) 3,997

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

Total other income (expense) 2,170 ( 7,427 ) ( 1,049 )

Loss before income tax benefit ( 4,163 ) ( 26,435 ) ( 6,563 )

Income tax benefit 266 8,494 1,097

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

Net loss ( 3,897 ) ( 17,941 ) ( 5,466 )

Loss (income) attributable to noncontrolling interest 456 1,506 ( 477 )

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

Net loss attributable to Limoneira Company ( 3,441 ) ( 16,435 ) ( 5,943 )

Preferred dividends ( 501 ) ( 501 ) ( 501 )

Net (loss) income applicable to common stock $ ( 16,936 ) $ ( 6,444 ) $ 19,687

Basic net (loss) income per common share $ ( 0.96 ) $ ( 0.37 ) $ 1.26

Diluted net (loss) income per common share $ ( 0.96 ) $ ( 0.37 ) $ 1.25

Net loss applicable to common stock $ ( 3,942 ) $ ( 16,936 ) $ ( 6,444 )

Basic net loss per common share $ ( 0.23 ) $ ( 0.96 ) $ ( 0.37 )

Diluted net loss per common share $ ( 0.23 ) $ ( 0.96 ) $ ( 0.37 )

Weighted-average common shares outstanding-basic 17,555,000 17,666,000 17,580,000

2 unchanged sentences

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

1 unchanged sentence

2021 2020 2019

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

Other comprehensive (loss) income, net of tax:

Net loss $ ( 3,897 ) $ ( 17,941 ) $ ( 5,466 )

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments ( 685 ) ( 707 ) ( 1,103 )

2 unchanged sentences

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

Unrealized holding gains on security available for sale, net of tax of $ 0 , $ 0 and $ 1,956

Reclassification of unrealized gain on security sold, net of tax of $ 0 , $ 0 and $( 1,160 )

— — ( 2,965 )

Unrealized gains from derivative instruments, net of tax of $ 0 , $ 0 and $ 79

Total other comprehensive (loss) income, net of tax ( 293 ) ( 1,710 ) 1,889

Comprehensive (loss) income ( 18,234 ) ( 7,176 ) 22,101

Comprehensive loss (income) attributable to noncontrolling interest 1,536 438 ( 13 )

Comprehensive (loss) income attributable to Limoneira Company $ ( 16,698 ) $ ( 6,738 ) $ 22,088

Total other comprehensive income (loss), net of tax 1,815 ( 293 ) ( 1,710 )

Comprehensive loss ( 2,082 ) ( 18,234 ) ( 7,176 )

Comprehensive loss attributable to noncontrolling interest 445 1,536 438

Comprehensive loss attributable to Limoneira Company $ ( 1,637 ) $ ( 16,698 ) $ ( 6,738 )

See Notes to Consolidated Financial Statements.

9 unchanged sentences

Balance at October 31, 2018

17,647,135 $ 176 $ 159,071 $ 50,354 $ 8,965 $ — $ 574 $ 219,140 $ 1,479 $ 9,331

Dividends - common ($ 0.30 per share)

6 unchanged sentences

Exchange of common stock ( 36,692 ) — ( 606 ) — — — — ( 606 ) — —

Issuance of common stock 3,136,362 31 64,066 — — — — 64,097 — —

Noncontrolling interest — — — — — — ( 37 ) ( 37 ) — —

Net income — — — 20,188 — — 24 20,212 — —

Other comprehensive income, net of tax — — — — 1,889 — — 1,889 — —

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

Net (loss) income — — — ( 5,943 ) — — 477 ( 5,466 ) — —

Other comprehensive loss, net of tax — — — — ( 1,710 ) — ( 39 ) ( 1,749 ) — —

Reclassification of unrealized gain on marketable securities upon adoption of ASU 2016-01 — — — 15,921 ( 15,921 ) — — — — —

Reclassification upon adoption of ASU 2018-02 — — — ( 1,411 ) 1,411 — — — — —

Balance at October 31, 2019

17,756,180 178 160,254 53,089 ( 7,255 ) — 15,422 221,688 1,479 9,331

Dividends - common ($ 0.30 per share)

6 unchanged sentences

Exchange of common stock ( 11,314 ) — ( 213 ) — — — — ( 213 ) — —

Issuance of common stock — — — — — — — — — —

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

Net (loss) income — — — ( 5,943 ) — — 477 ( 5,466 ) — —

Other comprehensive income, net of tax — — — — ( 1,710 ) — ( 39 ) ( 1,749 ) — —

Reclassification of unrealized gain on marketable securities upon adoption of ASU 2016-01 — — — 15,921 ( 15,921 ) — — — — —

Reclassification upon adoption of ASU 2018-02 — — — ( 1,411 ) 1,411 — — — — —

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

Treasury shares ( 250,977 ) — — — — ( 3,493 ) — ( 3,493 ) — —

Net loss — — — ( 16,435 ) — — ( 1,506 ) ( 17,941 ) — —

Other comprehensive loss, net of tax — — — — ( 293 ) — ( 30 ) ( 323 ) — —

Balance at October 31, 2020

17,606,730 179 162,084 30,797 ( 7,548 ) ( 3,493 ) 13,741 195,760 1,479 9,331

Dividends - common ($ 0.30 per share)

7 unchanged sentences

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

Treasury shares ( 250,977 ) — — — — ( 3,493 ) — ( 3,493 ) — —

Net loss — — — ( 3,441 ) — — ( 456 ) ( 3,897 ) — —

Other comprehensive income, net of tax — — — — ( 293 ) — ( 30 ) ( 323 ) — —

Other comprehensive (loss) income, net of tax — — — — 1,815 — 11 1,826 — —

Balance at October 31, 2021

17,685,400 $ 179 $ 163,965 $ 21,552 $ ( 5,733 ) $ ( 3,493 ) $ 11,965 $ 188,435 $ 1,479 $ 9,331

See Notes to Consolidated Financial Statements

5 unchanged sentences

Operating activities

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

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

Net loss $ ( 3,897 ) $ ( 17,941 ) $ ( 5,466 )

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

Depreciation and amortization 9,812 10,097 8,633

Impairment of real estate development assets — — 1,558

Loss (gain) on sale and disposals of property assets 502 ( 1,069 ) 153

Loss (gain) on disposal of assets 109 502 ( 1,069 )

Stock compensation expense 2,582 2,044 1,791

Non-cash lease expense 520 470 —

Equity in earnings of investments ( 339 ) ( 3,073 ) ( 583 )

Equity in earnings of investments, net ( 3,203 ) ( 339 ) ( 3,073 )

Cash distributions from equity investments 219 — 351

Deferred income taxes ( 189 ) ( 2,133 ) ( 773 )

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

Loss on stock in Calavo Growers, Inc.

— 6,299 2,117

6 unchanged sentences

Other assets ( 5 ) 411 ( 7 )

Accounts payable and growers payable ( 5,545 ) 3,392 707

Accounts payable and growers and suppliers payable 5,389 ( 5,545 ) 3,392

Accrued liabilities and payables to related parties ( 730 ) ( 685 ) 1,459

Other long-term liabilities ( 512 ) ( 242 ) 117

Net cash (used in) provided by operating activities ( 11,317 ) 1,365 18,397

Net cash provided by (used in) operating activities 9,605 ( 11,317 ) 1,365

Investing activities

Capital expenditures ( 9,834 ) ( 10,599 ) ( 15,867 )

Purchase of real estate development parcel — — ( 1,444 )

Net proceeds from sales of property assets 6,261 3,978 —

Net proceeds from sales of assets

119 6,261 3,978

Net proceeds from sales of real estate development assets — — 2,886

Agriculture property acquisitions — ( 397 ) ( 13,111 )

Business combinations — ( 15,000 ) ( 25,000 )

Agriculture property acquisition — — ( 397 )

Business combination — — ( 15,000 )

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

1 unchanged sentence

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

Collections on loan and note receivable 1,800 150 200

Collection on loan and note receivable 25 1,800 150

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

1 unchanged sentence

Investments in mutual water companies and water rights ( 653 ) ( 64 ) ( 472 )

Net cash provided by (used in) investing activities $ 3,846 $ ( 23,654 ) $ ( 50,807 )

Net cash (used in) provided by investing activities $ ( 10,237 ) $ 3,846 $ ( 23,654 )

LIMONEIRA COMPANY

6 unchanged sentences

Repayments of long-term debt ( 95,140 ) ( 104,066 ) ( 93,994 )

Principal paid on finance lease ( 18 ) — —

Dividends paid - common ( 5,303 ) ( 5,356 ) ( 5,331 )

2 unchanged sentences

Purchase of treasury stock — ( 3,493 ) —

Issuance of common stock — — 64,097

Payments of deferred financing costs — ( 66 ) ( 35 )

1 unchanged sentence

Effect of exchange rate changes on cash 36 ( 5 ) ( 137 )

Net increase in cash ( 115 ) 7 117

Net (decrease) increase in cash ( 62 ) ( 115 ) 7

Cash at beginning of year 501 616 609

1 unchanged sentence

Supplemental disclosures of cash flow information

Net cash paid during the year for interest, net of amounts capitalized $ 1,865 $ 2,532 $ 1,585

Cash paid during the year for income taxes, net of (refunds received) $ ( 1,235 ) $ 130 $ 210

Cash paid during the year for interest, net of amounts capitalized $ 1,503 $ 1,865 $ 2,532

Cash (received) paid during the year for income taxes, net $ ( 5,911 ) $ ( 1,235 ) $ 130

Non-cash investing and financing activities:

Unrealized holding gain on Calavo investment $ — $ — $ ( 6,765 )

Decrease in real estate development and sale-leaseback deferral $ — $ — $ ( 58,330 )

Increase in equity in investments and other long-term liabilities $ — $ — $ 1,080

Non-cash receipt of note receivable $ — $ — $ 3,000

Non-cash reduction of note receivable $ — $ — $ 89

Capital expenditures accrued but not paid at year-end $ 657 $ 4,269 $ 1,333

Non-cash issuance of notes payable $ — $ — $ 1,435

In December 2018, the Company terminated its lease agreement with the Joint Venture (as defined herein) that is developing the East Area I real estate development project.

As a result, the Company reduced its sale lease-back deferral and corresponding real estate development by $ 58,330,000 and reclassified $ 33,353,000 of the Company’s basis in the Joint Venture from real estate development to equity in investments as further described in Note 7 - Real Estate Development and Note 8 - Equity in Investments of the notes to consolidated financial statements included in this Annual Report on Form 10-K.

In February 2013, the Company entered into an option agreement for the purchase of a 7 -acre parcel adjacent to its East Area II real estate development project.

In February 2018, the Company exercised its option and purchased the property for $ 3,145,000 , by making a cash payment of $ 1,444,000 and issuing a note payable for $ 1,435,000 .

In October 2017, the Company entered an agreement to sell its Centennial Square (“Centennial”) real estate development property for $ 3,250,000 .

This transaction closed in December 2017 with the Company receiving net proceeds of $ 179,000 and received a $ 3,000,000 promissory note secured by the property for the balance of the purchase price.

In December 2018, the Company terminated its lease agreement with LLCB (as defined herein) that is developing the East Area I real estate development project.

As a result, the Company reduced its sale lease-back deferral and corresponding real estate development by $ 58,330,000 and reclassified $ 33,353,000 of the Company’s basis in the joint venture from real estate development to equity in investments as further described in Note 7 - Real Estate Development and Note 8 - Equity in Investments of the notes to consolidated financial statements included in this Annual Report.

See Notes to Consolidated Financial Statements.

13 unchanged sentences

The consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest.

The consolidated financial statements represent the consolidated balance sheets, statements of operations, statements of comprehensive income, statements of stockholders’ equity and temporary equity and statements of cash flows of Limoneira Company and consolidated subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial statements represent the consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of stockholders’ equity and temporary equity and statements of cash flows of Limoneira Company and consolidated subsidiaries.

Intercompany balances and transactions have been eliminated in consolidation.

The Company considers the criteria established under the Financial Accounting Standards Board (“FASB”) – Accounting Standards Code (“ASC”) 810, Consolidations, and the effect of variable interest entities, in its consolidation process.

14 unchanged sentences

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

One individual customer represented 10% of revenue for the year ended October 31, 2020.

One individual customer represented more than 10% of accounts receivable, net as of October 31, 2020, respectively.

Two customers each represented 10 % of revenue for the year ended October 31, 2021 and one customer represented 10 % of revenue for the year ended October 31, 2020.

No individual customer represented more than 10% of accounts receivable, net as of October 31, 2021 and one customer represented more than 10% of accounts receivable, net as of October 31, 2020.

Lemons procured from third-party growers were approximately 52 %, 60 % and 60 % of the Company's lemon supply in fiscal years 2021, 2020 and 2019, respectively.

10 unchanged sentences

During fiscal years 2021, 2020 and 2019, the Company had approximately $ 3,633,000 , $ 14,150,000 and $ 14,651,000 , respectively, of total sales in Argentina by Trapani Fresh.

The majority of our avocados, oranges and specialty citrus and other crops are sold to packinghouses and processors located in the United States.

Most of our long-lived assets are located within the United States.

The majority of the Company's avocados, oranges and specialty citrus and other crops are sold to packinghouses and processors located in the United States.

Most of its long-lived assets are located within the United States.

Long-lived assets, net of accumulated depreciation, located in Chile were $ 14,322,000 and $ 15,261,000 as of October 31, 2021 and 2020, respectively, and located in Argentina were $ 19,700,000 and $ 18,576,000 as of October 31, 2021 and 2020, respectively.

9 unchanged sentences

Certain other costs, such as property taxes, indirect labor, including farm supervision and management, and irrigation that benefit multiple crops are allocated to crops on a per acre basis.

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.

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

Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income.

9 unchanged sentences

Orchards and vineyards 20 – 40

Costs of planting and developing orchards are capitalized until the orchards become commercially productive.

Planting costs consist primarily of the costs to purchase and plant nursery stock.

Orchard development costs consist primarily of maintenance costs of orchards such as cultivation, pruning, irrigation, labor, spraying and fertilization, and interest costs during the development period.

The Company ceases the capitalization of costs and commences depreciation when the orchards become commercially productive and orchard maintenance costs are accounted for as cultural costs as described above.

LIMONEIRA COMPANY

1 unchanged sentence

Summary of Significant Accounting Policies (continued)

Property, Plant and Equipment (continued)

Costs of planting and developing orchards are capitalized until the orchards become commercially productive.

Planting costs consist primarily of the costs to purchase and plant nursery stock.

Orchard development costs consist primarily of maintenance costs of orchards such as cultivation, pruning, irrigation, labor, pest control and fertilization, and interest costs during the development period.

Capitalized Interest

Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year.

Interest of $ 921,000 and $ 1,369,000 was capitalized during the years ended October 31, 2020 and 2019, respectively, and is included in property, plant, and equipment and real estate development assets in the Company’s consolidated balance sheets.

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

Real Estate Development Costs

8 unchanged sentences

The Company’s equity securities, are stated at fair value with unrealized gains (losses) reported in net income.

The Company has no equity securities as of October 31, 2020.

At October 31, 2019, equity securities were comprised of the Company’s investment in Calavo.

The Company had no equity securities as of October 31, 2021 and 2020.

Long-Lived and Intangible Assets

Intangible assets consist primarily of customer relationships, trade names and trademarks and a non-competition agreement.

The Company’s definite-life intangible assets are being amortized on a straight-line basis over their estimated lives ranging from eight to nine years .

The Company’s definite-life intangible assets are being amortized on a straight-line basis over their estimated lives ranging from eight to ten years .

Acquired water and mineral rights are indefinite-life assets not subject to amortization.

Assets held for sale are carried at the lower of cost or fair value less estimated cost to sell.

The Company evaluates long-lived assets, including its definite-life intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

If the estimated fair value or undiscounted future cash flows from the use of an asset are less than the carrying value of that asset, a write-down is recorded to reduce the carrying value of the asset to its fair value.

The Company evaluates long-lived assets, including its property and equipment, real estate development projects and definite-life intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Company evaluates its indefinite-life intangible assets annually or whenever events or changes in circumstances indicate an impairment of the assets’ value may exist.

COVID-19 Pandemic

There is uncertainty around the breadth and duration of the Company's business disruptions related to the COVID-19 pandemic.

The decline in demand for the Company's products beginning the second quarter of fiscal year 2020, which it believes was due to the COVID-19 pandemic, negatively impacted its sales and profitability for the last three quarters of fiscal year 2020 and all of fiscal year 2021.

The Company also expects COVID-19 to have some impact to its sales and profitability in future periods.

The duration of these trends and the magnitude of such impacts are uncertain and therefore cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control.

The full impact of the COVID-19 pandemic on the Company's results of operations, financial condition, or liquidity, including its ability to comply with debt covenants, for fiscal year 2022 and beyond, is driven by estimates that contain uncertainties.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

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.

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Goodwill impairment testing involves significant judgment and estimates.

The annual assessment of goodwill impairment was performed as of July 31, 2020 with no impairment recorded.

Fair Values of Financial Instruments

The fair values of financial instruments are based on level-one indicators within the fair value hierarchy or quoted market prices, where available, or are estimated using the present value or other valuation techniques.

Estimated fair values are significantly affected by the assumptions used.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Fair Values of Financial Instruments (continued)

Accounts receivable, note receivable, accounts payable, growers payable and accrued liabilities reported on the Company’s consolidated balance sheets approximate their fair values due to the short-term nature of the instruments.

Accounts receivable, note receivable, accounts payable, growers and suppliers payable and accrued liabilities reported on the Company’s consolidated balance sheets approximate their fair values due to the short-term nature of the instruments.

Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities, the fair value of long-term debt is approximately equal to its carrying amount as of October 31, 2021 and 2020.

Business Combinations and Asset Acquisitions

Business Combination and Asset Acquisition

Business combinations are accounted for under the acquisition method in accordance with ASC 805, Business Combinations .

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Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions.

Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis.

An asset acquisition is accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis.

Goodwill is not recognized in an asset acquisition with any consideration in excess of net assets acquired allocated to acquired assets on a relative fair value basis.

Transaction costs are expensed in a business combination and are considered a component of the cost of the acquisition in an asset acquisition.

Comprehensive (Loss) Income

Comprehensive (loss) income represents all changes in a company’s net assets, except changes resulting from transactions with shareholders.

Comprehensive Loss

Comprehensive loss represents all changes in a company’s net assets, except changes resulting from transactions with stockholders.

Other comprehensive income or loss primarily includes foreign currency translation items, defined benefit pension items and unrealized gains or losses on available-for-sale securities.

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

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

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

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

2021 2020 2019

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Minimum pension liability adjustments:

Other comprehensive (loss) gain before reclassifications 205 69 274 ( 859 ) 252 ( 607 ) 1,552 ( 415 ) 1,137

Other comprehensive gain (loss) before reclassifications 3,440 ( 940 ) 2,500 205 69 274 ( 859 ) 252 ( 607 )

Available-for-sale securities:

Other comprehensive (loss) gain before reclassifications — — — — — — 6,765 ( 1,956 ) 4,809

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

Derivative instruments:

Other comprehensive gain before reclassifications — — — — — — 242 ( 79 ) 163

Other comprehensive (loss) income $ ( 502 ) $ 209 $ ( 293 ) $ ( 1,962 ) $ 252 $ ( 1,710 ) $ 3,179 $ ( 1,290 ) $ 1,889

Other comprehensive income (loss) $ 2,755 $ ( 940 ) $ 1,815 $ ( 502 ) $ 209 $ ( 293 ) $ ( 1,962 ) $ 252 $ ( 1,710 )

LIMONEIRA COMPANY

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Summary of Significant Accounting Policies (continued)

Accumulated Other Comprehensive (Loss) Income

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

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

Balance as of October 31, 2017 $ ( 2 ) $ ( 4,375 ) $ 11,591 $ ( 138 ) $ 7,076

Other comprehensive (loss) income ( 1,255 ) 1,137 1,844 163 1,889

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

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

Balance as of October 31, 2018

$ ( 1,257 ) $ ( 3,238 ) $ 13,435 $ 25 $ 8,965

Adoption of ASU 2016-01 — — ( 15,921 ) — ( 15,921 )

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Balance as of November 1, 2018

( 1,259 ) ( 4,146 ) ( 140 ) — ( 5,545 )

Other comprehensive loss ( 1,103 ) ( 607 ) — — ( 1,710 )

Balance as of October 31, 2019

( 2,362 ) ( 4,753 ) ( 140 ) — ( 7,255 )

Other comprehensive (loss) income ( 707 ) 274 140 — ( 293 )

Balance as of October 31, 2020

( 3,069 ) ( 4,479 ) — — ( 7,548 )

Other comprehensive (loss) income ( 685 ) 2,500 — — 1,815

Balance as of October 31, 2021

Foreign Currency Translation

$ ( 3,754 ) $ ( 1,979 ) $ — $ — $ ( 5,733 )

Foreign Currency

San Pablo and PDA’s functional currency is the Chilean Peso.

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dollars at exchange rates in effect at the balance sheet date and their income statements are translated at average exchange rates during the reporting period.

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

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

Aggregate foreign exchange transaction losses realized for the Company's foreign subsidiaries was approximately $ 646,000 for fiscal year 2021 and are included in selling, general and administrative expenses in the consolidated statements of operations.

Revenue Recognition

On November 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) – Accounting Standards Update (“ASU”) ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , that amends the guidance for the recognition of revenue from contracts with customers.

The results for the reporting period beginning after November 1, 2018 are presented in accordance with the new standard, which was adopted using the modified-retrospective method, and applied to those contracts that were not completed as of November 1, 2018.

There was no net effect of applying the standard and therefore no cumulative adjustment to retained earnings was necessary at the date of initial application.

As a result, comparative information has not been restated and the results for the reporting periods before November 1, 2018 continue to be reported under the accounting standards and policies in effect for those periods.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve that core principle, an entity should apply the following steps:

The Company recognizes revenue in accordance with ASC 606, Revenue from contracts with customers , and recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

To achieve that core principle, the Company applies the following steps:

• Identify the contract(s) with a customer;

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

The Company determined the appropriate method by which it recognizes revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with its customers.

The Company determines the appropriate method by which it recognizes revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with its customers.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

A contract's transaction price is allocated to each distinct good or service (i.e., performance obligation) identified in the contract and each performance obligation is valued based on its estimated relative standalone selling price.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Revenue Recognition (continued)

The Company recognizes the majority of its revenue at a point in time when it satisfies a performance obligation and transfers control of the product to the respective customer.

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The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.

Upon adoption, the Company changed the accounting of certain brokered fruit sales.

Under previous guidance, the Company was considered an agent and recorded revenues for certain brokered fruit sales and the costs of such fruit on a net basis in its consolidated statement of operations.

Under the new revenue recognition standard, the Company is considered a principal in the transaction and revenues are recorded on a gross basis in the Company’s consolidated statement of operations with the related cost of such fruit included in agribusiness costs and expenses.

This change resulted in the recognition of additional agribusiness revenue and agribusiness costs and expenses within the fresh lemons segment of $ 8,827,000 for the year ended October 31, 2019.

Had it 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.

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.

The Company has elected to treat any shipping and handling costs incurred after control of the goods has been transferred to the customer as agribusiness costs.

The Company’s avocados, oranges, specialty citrus and other specialty crops are packed and sold by Calavo and other third-party packinghouses.

The Company delivers the majority of its avocado production from its 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.

The Company’s arrangements with other third-party packinghouses related to the remaining avocados and its oranges, specialty citrus and other specialty crops are similar to its arrangement with Calavo.

The Company’s arrangements with its third-party packinghouses are such that the Company is the producer and supplier of the product and the third-party packinghouses are the Company’s customers.

The revenues the Company recognizes related to the fruits sold to the third-party packinghouses are based on the volume and quality of the fruits delivered, the market price for such fruit, less the packinghouses’ charges to pack and market the fruit.

Such packinghouse charges include the grading, sizing, packing, cooling, ripening and marketing of the related fruit.

The Company controls the product until it is delivered to the third-party packinghouses at which time control of the product is transferred to the third-party packinghouses and revenue is recognized.

Such third-party packinghouse charges are recorded as a reduction of revenue as they are not for distinct services.

The identifiable benefit the Company receives from the third-party packinghouses for packaging and marketing services cannot be sufficiently separated from the third-party packinghouses’ purchase of the Company’s products.

In addition, the Company is not able to reasonably estimate the fair value of the benefit received from the third-party packinghouses for such services and as such, these costs are characterized as a reduction of revenue in the Company’s consolidated statements of operations.

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

Calavo and other third-party packinghouses are agricultural cooperatives or function in a similar manner as an agricultural cooperative.

The Company estimates the variable consideration using the most likely amount method, with the most likely amount being the quantities actually shipped extended by the prices reported by Calavo and other third-party packinghouses.

Revenue is recognized at time of delivery to the packinghouses relating to fruits that are in pools that have not yet closed at month end if:

(a) the related fruits have been delivered to and accepted by Calavo and other third-party packinghouses (i.e., Calavo and other third-

party packinghouses obtain control) and (b) sales price information has been provided by Calavo and other third-party packinghouses (based on the marketplace activity for the related fruit) to estimate with reasonable certainty the final selling price for the fruit upon the closing of the pools.

In such instances the Company has the present right to payment and Calavo and other third-party packinghouses have the present right to direct the use of, and obtain substantially all of the remaining benefits from, the delivered fruit.

The Company does not expect that there is a high likelihood that a significant reversal in the amount of cumulative revenue recognized in the early periods of the pool will occur once the final pool prices have been reported by the

LIMONEIRA COMPANY

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Summary of Significant Accounting Policies (continued)

Revenue Recognition (continued)

packinghouses.

Historically, the revenue that is recorded based on the sales price information provided to the Company by Calavo and other third-party packinghouses at the time of delivery, have not materially differed from the actual amounts that are paid after the monthly or harvest period pools are closed.

The Company’s avocados, oranges, specialty citrus and other specialty crops are packed and sold by Calavo and other third-party packinghouses.

The Company’s arrangements with its third-party packinghouses are such that the Company is the producer and supplier of the product and the third-party packinghouses are the Company’s customers.

The Company controls the product until it is delivered to the third-party packinghouses at which time control of the product is transferred to the third-party packinghouses and revenue is recognized.

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

The Company recorded agribusiness revenues from crop insurance proceeds of zero , $ 2,311,000 and $ 54,000 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.

Contingent rental revenues are contractually defined as to the percentage of rent received by the Company and are based on fees collected by the lessee.

Such revenues are recognized when actual results, based on collected fees reported by the tenant, are received.

The Company's rental arrangements generally require payment on a monthly or quarterly basis.

The Company recorded agribusiness revenues from crop insurance proceeds of $ 2,311,000 in fiscal year 2019.

No proceeds were received in fiscal years 2021 and 2020.

Advertising Expense

Advertising costs are expensed as incurred.

Advertising costs were $ 239,000 in fiscal year 2020 and were not material in fiscal years 2019 and 2018.

Accounting for Operating Leases as a Lessee - In its ordinary course of business, the Company enters into leases as a lessee generally for agricultural land and packinghouse equipment.

Advertising costs were $ 178,000 and $ 239,000 in fiscal years 2021 and 2020, respectively, and were not material in fiscal year 2019.

Accounting for Leases as a Lessee - In its ordinary course of business, the Company enters into leases as a lessee generally for agricultural land and packinghouse equipment.

The Company determines if an arrangement is a lease or contains a lease at inception.

Operating leases are included in other assets, accrued liabilities and other long-term liabilities on its consolidated balance sheets.

Operating lease right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As none of the Company’s leases provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Operating and finance leases are included in other assets, accrued liabilities and other long-term liabilities on its consolidated balance sheets.

Lease right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis.

Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

The Company uses either its incremental borrowing rate based on the information available at commencement date, or the rate implicit in the lease, if known, in determining the present value of future payments.

Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

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

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The Company recognizes operating lease revenue on a straight-line basis over the lease term.

Basic and Diluted Net (Loss) Income per Share

Basic net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of preferred stock.

Diluted net (loss) income per common share is calculated using the weighted-average number of common shares outstanding plus the dilutive effect of conversion of preferred stock.

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years ended October 31, 2020 and 2019 and dilutive for fiscal year ended October 31, 2018.

Basic and Diluted Net Loss per Share

Basic net loss per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of preferred stock.

Diluted net loss per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested, restricted stock and preferred stock.

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years ended October 31, 2021, 2020 and 2019.

Diluted net loss per common share is calculated using the more dilutive method of either the two-class method or the treasury stock method.

Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share using the treasury stock method.

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

LIMONEIRA COMPANY

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Summary of Significant Accounting Policies (continued)

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

Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share using the treasury stock method.

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

Reclassifications and Adjustments

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

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

The Company reclassified certain components within cash provided by operating activities within the statements of cash flows.

Defined Benefit Retirement Plan

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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 fiscal year 2021, the Company decided to terminate the Plan effective December 31, 2021.

The liabilities disclosed as of October 31, 2021, reflect an estimate of the additional cost to pay lump sums to a portion of the active and vested terminated participants and purchase annuities for all remaining participants from an insurance company.

During 2021, the Society of Actuaries (SOA) released a new mortality improvement scale table, referred to as MP-2021, which is believed to better reflect mortality improvements and is to be used in calculating defined benefit pension obligations.

In addition, during fiscal year 2021, the assumed discount rate to measure the pension obligation decreased to 2.6 %.

The Company used the latest mortality tables released by the SOA through October 2020 to measure its pension obligation as of October 31, 2020 and combined with the assumed discount rate and other demographic assumptions, its pension liability increased by approximately $ 508,000 as of October 31, 2020.

Further changes in any of these estimates could materially affect the amounts recorded that are related to our defined benefit retirement plan.

The Company used the latest mortality tables released by the SOA through October 2021 to measure its pension obligation as of October 31, 2021 and combined with the assumed discount rate and other demographic assumptions, its pension liability decreased by approximately $ 2,699,000 as of October 31, 2021.

Further changes in any of these estimates could materially affect the amounts recorded that are related to the Company's defined benefit retirement plan.

Recent Accounting Pronouncements

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

Targeted Improvements

In February 2016, the FASB issued ASU 2016-02, which requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.

ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions.

Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

In July 2018, the FASB issued ASU 2018-11, which, among other things, provides administrative relief by allowing entities to implement the lease standard on a modified retrospective basis (the "Optional Transition Method").

Effectively, the Optional Transition Method permits companies to adopt the lease standard through a cumulative effect adjustment to their opening balance sheet on the date of adoption and report under the New Lease Standard on a post-adoption basis.

The Company adopted ASU 2016-02 effective November 1, 2019 using the Optional Transition Method.

The Company elected the package of practical expedients permitted under the transition guidance, which allows the Company to carry forward its historical lease classification, its assessment of whether a contract is or contains a lease, and its initial direct costs for any leases that existed prior to adoption of the New Lease Standard.

The Company elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of ROU assets.

The Company did not elect to combine lease and non-lease components for land leases but elected to combine lease and non-lease components for all other asset classes.

The Company also elected to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The Company updated its accounting policies, processes and internal controls in order to meet the New Lease Standard's reporting and disclosure requirements.

The adoption of ASU 2016-02 had a material impact on the Company's consolidated balance sheets, but did not have a material impact on its consolidated statements of operations or its consolidated statements of cash flows.

Upon adoption as of November 1, 2019, the Company recorded ROU assets of $ 2,400,000 and lease liabilities of $ 2,500,000 for operating leases in which the Company is a lessee.

The adoption also included an immaterial reclassification of accrued rent liabilities against the ROU asset

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

As of November 1, 2019, there were no material finance leases for which the Company was a lessee.

The adoption of ASU 2016-02 did not change the Company’s accounting for its operating leases in which it acts as the lessor.

See Note 13 - Leases for additional information.

FASB ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

Measurement of Credit Losses on Financial Instruments and related ASUs

This amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

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ASU 2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company will adopt this ASU effective November 1, 2020 and the adoption is not expected to have a material impact on its consolidated financial statements.

FASB ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans

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

For public business entities, the amendments are effective for fiscal years ending after December 15, 2020.

The Company early adopted as of October 31, 2020 and there was no material impact on its consolidated financial statements other than the change in disclosures based on the new requirements.

FASB ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes

This amendment removes specific exceptions to the general principles in Topic 740 in GAAP.

It eliminates the need for an organization to analyze whether certain exceptions apply in a given period.

The amendment also improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP under certain situations.

ASU 2019-12 is effective for public business entities, for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption is permitted.

An entity that elects early adoption in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

Additionally, an entity that elects early adoption should adopt all the amendments in the same period.

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

The Company adopted this ASU effective November 1, 2020 and the adoption did not have a material impact on its consolidated financial statements.

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

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

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

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

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

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

SEC Final Rule Release No.

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

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

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

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

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

Agriculture Property Acquisition

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This agriculture property acquisition is included in property, plant and equipment on the Company’s consolidated balance sheet.

On July 18, 2018, the Company completed the acquisition of San Pablo ranch and related assets in La Serena, Chile, for $ 13,000,000 .

The San Pablo ranch consists of 3,317 acres on two parcels, including 247 acres producing lemons, 61 acres producing oranges, the opportunity to immediately plant 120 acres for lemon production, as well as the potential for approximately 500 acres of avocado production.

This acquisition was accounted for as an asset purchase and is included in property, plant and equipment in the Company’s consolidated balance sheet.

In addition, transaction costs of $ 111,000 were capitalized as part of total acquisition costs.

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

Cultural costs $ 579

Land and land improvements 9,114

Buildings and equipment 207

Orchards 2,058

Water rights 1,153

Total assets acquired $ 13,111

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

Business Combinations

Trapani Fresh

On May 30, 2019, the Company acquired a 51 % interest in a joint venture, Trapani Fresh, formed with FGF Trapani (“FGF”), a multi-generational, family owned citrus operation in Argentina.

To consummate the transaction, the Company formed a subsidiary under the name Limoneira Argentina S.A.U.

(“Limoneira Argentina”) as the managing partner and acquired a 51 % interest in an Argentine Trust that holds a 75 % interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons.

Trapani Fresh controls the trust and grows, packs, markets and sells fresh citrus.

LIMONEIRA COMPANY

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Acquisitions (continued)

Business Combinations (continued)

Trapani Fresh (continued)

Trapani Fresh Business Combination

On May 30, 2019, the Company acquired a 51 % interest in a joint venture, Trapani Fresh, formed with FGF Trapani ("FGF"), a multi-generational, family owned citrus operation in Argentina.

To consummate the transaction, the Company formed a subsidiary under the name Limoneira Argentina S.A.U.

(“Limoneira Argentina”) as the managing partner and acquired a 51 % interest in an Argentine Trust that held a 75 % interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons.

Trapani Fresh controls the trust and grows fresh citrus.

Total consideration paid for the Company’s interest in Trapani Fresh was $ 15,000,000 and transaction costs of approximately $ 654,000 were included in selling, general and administrative expense during fiscal year 2019.

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Net cash paid $ 14,848

Goodwill of $ 123,000 relates to synergies of the operations, was allocated to the fresh lemons segment and is not deductible for tax purposes.

Goodwill of $ 123,000 relates to synergies of the operations, was allocated to the fresh lemons segment and was not deductible for tax purposes.

Revenue of $ 14,651,000 and net income of $ 999,000 of Trapani Fresh were included in the Company’s consolidated statement of operations from the acquisition date to the period ended October 31, 2019.

The unaudited, pro forma consolidated statement of operations as if Trapani Fresh had been included in the consolidated results of the Company for the years ended October 31, 2019 and 2018 would have resulted in revenues of $ 177,625,000 and $ 153,033,000 , respectively, and net (loss) income of $( 6,092,000 ) and $ 21,942,055 , respectively.

On July 24, 2018, the Company and Oxnard Lemon Associates, Ltd., a California limited partnership (“Seller”), entered into an Asset Purchase Agreement (the “Purchase Agreement”).

Pursuant to the Purchase Agreement, on July 26, 2018 (the “Initial Closing Date”), the Company acquired certain tangible assets of Seller, including a packinghouse and related land (“Oxnard Lemon”), for a purchase price of $ 24,750,000 (the “Initial Acquisition”).

Pursuant to the Purchase Agreement, the closing on the purchase of the intangible assets of Seller, including Seller’s trade names, trademarks and copyrights, took place on October 31, 2018 (the “Final Closing Date”), at which point an additional $ 250,000 in purchase price was paid to Seller by the Company.

The aggregate purchase price for the tangible assets and the intangible assets provided in the Purchase Agreement was $ 25,000,000 .

Additionally, the Purchase Agreement provided that Seller lease back the tangible assets from the Company until the Final Closing Date, pursuant to a lease executed on the Initial Closing Date.

Transaction costs of $ 142,000 were included in selling, general and administrative expense.

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

Land and land improvements $ 7,294

Buildings and equipment 14,866

Customer relationships and trade names 2,270

Total assets acquired $ 25,000

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Acquisitions (continued)

Business Combinations (continued)

Oxnard Lemon (continued)

The unaudited, pro forma consolidated statement of operations as if Oxnard Lemon had been included in the consolidated results of the Company for the year ended October 31, 2018 would have resulted in revenues of $ 142,253,000 and net income of $ 19,728,000 .

The unaudited, pro forma consolidated statement of operations as if Trapani Fresh had been included in the consolidated results of the Company for the year ended October 31, 2019 would have resulted in revenues of $ 177,625,000 and net loss of $ 6,092,000 .

In June 2021, the Company entered into an agreement, effective March 1, 2021, to sell and license certain assets of Trapani Fresh to 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.

In August 2021, the Company entered into several additional agreements whereby the additional 25 % interest in Santa Clara was transferred into the trust resulting in the trust now holding a 100 % interest in Santa Clara.

Trapani Fresh owns and operates 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.

Fair Value Measurements

1 unchanged sentence

A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

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

2019 Level 1 Level 2 Level 3 Total

Assets at fair value:

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

Equity securities consist of marketable securities in Calavo common stock.

At October 31, 2019, the Company owned 200,000 shares representing approximately 1.1 % of Calavo’s outstanding common stock at a stock price of $ 86.73 per share.

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fair Value Measurements (continued)

At October 31, 2019, the Company owned equity securities consisting of marketable securities in Calavo common stock of 200,000 shares representing approximately 1.1 % of Calavo’s outstanding common stock at a stock price of $ 86.73 per share.

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

In fiscal year 2020, the Company sold all 200,000 shares of Calavo common stock for a total of $ 11,048,000 , recognizing a loss of $ 6,299,000 .

In fiscal year 2019, the Company sold 50,000 shares of Calavo common stock for a total of $ 4,785,000 , recognizing a loss of $ 2,117,000 .

In fiscal year 2018, the Company sold 50,000 shares for a total of $ 4,721,000 , recognizing a gain of $ 4,223,000 .

Prepaid Expenses and Other Current Assets

6 unchanged sentences

$ 10,709 $ 10,688

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Property, Plant and Equipment

11 unchanged sentences

In August 2020, the Company sold property located in Lindsay, California.

The Company received net proceeds of $ 6,011,000 after transaction and other costs, and recorded a loss of approximately $ 424,000 , which is included in loss (gain) on sale and disposal of property assets in the consolidated statements of operations.

The Company received net proceeds of $ 6,011,000 after transaction and other costs, and recorded a loss of approximately $ 424,000 , which is included in loss (gain) on disposal of assets in the consolidated statements of operations.

In September 2019, the Company sold its multi-use Mercantile property consisting of a retail convenience store, gas station, car wash and quick serve restaurant located in Santa Paula, California.

The Company received net proceeds of $ 4,000,000 and recognized a gain of approximately $ 586,000 , which is included in loss (gain) on sale and disposal of property assets in the consolidated statement of operations.

The Company received net proceeds of $ 4,000,000 and recognized a gain of approximately $ 586,000 , which is included in loss (gain) on disposal of assets in the consolidated statement of operations.

Real Estate Development

Real estate development assets are comprised primarily of land and land development costs and consist of the following at October 31 (in thousands):

Retained property - East Area I $ 13,169 $ 11,943

East Area I - Retained property $ 13,335 $ 13,169

East Area II 9,493 8,467

$ 22,828 $ 21,636

East Area I, Retained Property and East Area II

In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities.

In November 2015, the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project.

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

The Company and the Joint Venture also entered into a Retained Property Development Agreement (the "Retained Property Agreement").

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

The balance includes estimated costs incurred by and reimbursable to LLCB of $ 5,300,000 at October 31, 2020, which is included in payables to related parties and $ 1,200,000 at October 31, 2019, which was included in other long-term liabilities.

LIMONEIRA COMPANY

1 unchanged sentence

Real Estate Development (continued)

East Areas I and II (continued)

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.

East Area I, Retained Property and East Area II

In November 2015 (the "Transaction Date"), the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project.

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

The Company and the joint venture also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement").

Under the terms of the Retained Property Agreement, the joint venture will transfer 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 $ 5,771,000 and $ 5,300,000 at October 31, 2021 and 2020, respectively, which is included in payables to related parties.

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

to fund early development activities.

The Loan originally was scheduled to mature in January 2020 and was extended to February 22, 2021 per the terms thereof.

The interest rate on the Loan is LIBOR plus 2.85 %, payable monthly.

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

The Loan, as modified and extended, matures February 22, 2023.

The interest rate on the Loan is LIBOR plus 2.85 %, and is payable monthly.

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

The joint venture had an outstanding balance of zero as of October 31, 2021.

The Loan has a one year extension option through February 22, 2024 subject to terms and conditions as defined in the agreement, with the maximum borrowing amount reduced to $ 35,000,000 during the extension period.

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

The guarantee shall continue in effect until all of the Loan obligations are fully paid and the guarantors are jointly and severally liable for all Loan obligations in the event of default by the Joint Venture.

The Joint Venture recorded the Loan balance of $ 30,368,000 as of October 31, 2020.

The $ 1,080,000 estimated value of the guarantee was recorded in the Company’s consolidated balance sheets and is included in other long-term liabilities with a corresponding increase in equity in investments.

The guarantee shall continue in effect until all of the Loan obligations are fully paid and the guarantors are jointly and severally liable for all Loan obligations in the event of default by LLCB.

The $ 1,080,000 estimated value of the guarantee was recorded in the Company’s consolidated balance sheets and is included in other long-term liabilities with a corresponding value in equity in investments.

The extension had no impact on the Company's guarantee value.

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.

In February 2020 the Company and Lewis each loaned $ 1,800,000 to the Joint Venture at an interest rate of 4.6 %, which was repaid in June 2020.

In fiscal years 2020 and 2019, the Company announced that its Joint Venture closed the sales of residential lots representing 144 and 210 residential units, respectively.

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

In February 2020, the Company and Lewis each loaned $ 1,800,000 to LLCB at an interest rate of 4.6 %, which was repaid in June 2020.

Through October 31, 2021, the joint venture has closed sales of the initial residential lots representing 586 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 fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $ 2,700,000 , which is expected to close in the second quarter of fiscal year 2022.

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

2 unchanged sentences

The Company received cash and a $ 3,000,000 promissory note secured by the property for the balance of the purchase.

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

In September 2020, the promissory note was further extended to June 15, 2021 on the same terms and conditions upon making a principal paydown of $ 25,000 on or before December 1, 2020 and an option to further extend the maturity date of the promissory note to December 15, 2021 on the same terms and conditions and upon making an additional principal paydown of $ 25,000 on or before June 1, 2021.

At October 31, 2020 the carrying value of the note was $ 2,650,000 and classified in prepaid expenses and other current assets.

The promissory note was originally scheduled to mature in December 2019 but has been periodically extended with principal payments totaling $ 400,000 received through October 31, 2021.

In November 2021, the promissory note was further extended to June 30, 2022 upon making a principal paydown of $ 250,000 , which was paid in November 2021, and revising the interest rate to 4.00 % per annum, with an option to further extend the maturity date of the promissory note to September 30, 2022 upon making an additional principal paydown of $ 250,000 .

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

LIMONEIRA COMPANY

25 unchanged sentences

The $ 2,122,000 in basis differences exclusive of goodwill is being amortized over the estimated life of the underlying intangible assets as a reduction in the equity investment and an expense included in equity in earnings (losses) of investments.

Amortization amounted to $ 180,000 , $ 298,000 and $ 337,000 for fiscal years 2020, 2019 and 2018, respectively, and is estimated to be approximately $ 179,000 , $ 118,000 , $ 87,000 , $ 76,000 and $ 32,000 per year for years ending October 31, 2021 through October 31, 2025, respectively, and $ 43,000 thereafter.

Amortization amounted to $ 180,000 , $ 180,000 and $ 298,000 for fiscal years 2021, 2020 and 2019, respectively, and is estimated to be approximately $ 118,000 $ 87,000 and $ 76,000 per year for years ending October 31, 2022 through October 31, 2024, respectively, and immaterial thereafter.

The Company recognized $ 3,405,000 , $ 3,975,000 and $ 3,741,000 of lemon sales to Rosales in fiscal years 2021, 2020 and 2019, respectively.

In fiscal years 2021, 2020 and 2019, the aggregate amount of lemons and oranges procured from Rosales was $ 5,304,000 , $ 3,190,000 and $ 4,315,000 , respectively.

Amounts due (to) from Rosales were $( 954,000 ) and $ 156,000 at October 31, 2020 and 2019, respectively.

Amounts due from (to) Rosales were $ 1,570,000 and $( 954,000 ) at October 31, 2021 and 2020, respectively, and are included in receivables/other from related parties and payables to related parties, respectively.

LIMONEIRA COMPANY

1 unchanged sentence

Equity in Investments (continued)

Limoneira Lewis Community Builders, LLC (the “LLCB” or "Joint Venture")

As described in Note 7 – Real Estate Development of the notes to consolidated financial statements included in this Annual Report, on November 10, 2015, the Company entered into a Joint Venture with Lewis for the residential development of its East Area I real estate development project.

Limoneira Lewis Community Builders, LLC (“LLCB”)

As described in Note 7 – Real Estate Development, the Company has a joint venture with Lewis for the residential development of its East Area I real estate development project.

In addition to the assessment performed by the Company of its investment in LLCB under the requirements of Regulation S-X Rule 4-08(g), the Company also assessed its investment in LLCB under the requirements of Regulation S-X Rule 3-09(b).

LLCB was not deemed significant for the year ended October 31, 2020 but was deemed significant for the year ended October 31, 2019.

LLCB was deemed significant for the years ended October 31, 2021 and 2019 but was not deemed significant for the year ended October 31, 2020.

Therefore, the audited financial statements of LLCB for the years ended October 31, 2021, 2020 and 2019 are provided as exhibits to this document to comply with this rule.

10 unchanged sentences

Revenues $ 2,059 $ 17 $ 9,862 $ 42,853

Operating (loss) income $ ( 109 ) $ ( 2 ) $ 1,216 $ 2,615

Net (loss) income $ ( 109 ) $ ( 2 ) $ 476 $ 2,615

Operating income (loss) $ 1,052 $ ( 4 ) $ 438 $ 9,087

Net income (loss) $ 1,052 $ ( 4 ) $ 35 $ 9,087

Current assets $ 270 $ — $ 4,564 $ 130,171

3 unchanged sentences

Revenues $ 930 $ 20 $ 10,097 $ 25,906

Operating income (loss) $ 1,299 $ ( 5 ) $ 403 $ 10,001

Net income (loss) $ 1,299 $ ( 5 ) $ 288 $ 10,001

Operating (loss) income $ ( 109 ) $ ( 2 ) $ 1,216 $ 2,615

Net (loss) income $ ( 109 ) $ ( 2 ) $ 476 $ 2,615

Revenues $ 2,290 $ 15 $ 8,898 $ 37,788

10 unchanged sentences

Investment contributions — — — 4,000 4,000

Loan guarantee — — — 1,080 1,080

Investment balance October 31, 2018 1,935 512 2,191 14,060 18,698

Equity earnings (losses) 366 — ( 163 ) 2,870 3,073

Cash distributions ( 351 ) — ( 283 ) — ( 634 )

Investment contributions — — — 4,000 4,000

Capitalized interest adjustment — — — ( 267 ) ( 267 )

5 unchanged sentences

Investment balance October 31, 2020 1,920 511 1,641 57,142 61,214

Goodwill and Intangible Assets

Equity earnings (losses) 296 ( 3 ) ( 164 ) 3,074 3,203

Cash distributions ( 219 ) — ( 106 ) — ( 325 )

Foreign currency adjustments — — ( 20 ) — ( 20 )

Investment balance October 31, 2021 $ 1,997 $ 508 $ 1,351 $ 60,216 $ 64,072

Goodwill and Intangible Assets, Net

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

Goodwill Net Carrying Amount

October 31, 2018 $ 1,431

Acquisition of Trapani Fresh 420

Foreign currency translation adjustment ( 12 )

October 31, 2019 1,839

Goodwill Carrying Amount

Balance at October 31, 2019 $ 1,839

Trapani Fresh purchase price adjustment ( 297 )

Foreign currency translation adjustment ( 7 )

October 31, 2020 $ 1,535

See Note 3 - Acquisitions - of the notes to consolidated financial statements included in this Annual Report for additional information regarding the acquisition of Trapani Fresh.

Balance at October 31, 2020 1,535

Foreign currency translation adjustment ( 8 )

Balance at October 31, 2021 $ 1,527

See Note 3 - Acquisitions for additional information regarding the Trapani Fresh purchase price adjustment.

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.

3 unchanged sentences

Fresh Lemons $ 957,000 and Lemon Packing $ 570,000 .

During the fiscal year ended October 31, 2021, the Company acquired additional water rights in Chile for $ 186,000 .

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Goodwill and Intangible Assets (continued)

Goodwill and Intangible Assets, Net (continued)

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

28 unchanged sentences

The interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 0.09 % at October 31, 2021, plus 1.85 %.

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

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

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

13 unchanged sentences

Wells Fargo term loan:

The interest rate is fixed at 3.58 %.

The loan is payable in monthly installments through January 2023.

The loan was repaid in August 2021 with proceeds from the Farm Credit West term loan.

Farm Credit West term loan:

Effective August 2, 2021, the interest rate was fixed at 3.19 %.

The loan is payable in monthly installments through September 2026.

Banco de Chile term loan:

7 unchanged sentences

The loans are payable in monthly installments beginning February 2021 through September 2024.

Banco de Chile COVID-19 loans:

The interest rates are fixed at 3.48 % and 4.26 %.

The loans are payable in monthly installments beginning September 2021 through September 2026.

Subtotal 132,956 126,024

3 unchanged sentences

Long-term debt, less current portion $ 130,353 $ 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.

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

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

In August 2021, the Company entered into an equipment finance agreement (the "FCW term loan") with Farm Credit West, PCA (the “Lender”) and used the proceeds to pay off 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 June 2021, the Company entered into a Master Loan Agreement (the “MLA”) with 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 for a period of time as described in the table above ("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.

LIMONEIRA COMPANY

1 unchanged sentence

Long-Term Debt (continued)

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.

The rates were subject to a prepayment restriction period for a portion of the fixed rate term that expired on January 1, 2021.

The Company may prepay any amounts without penalty.

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

2 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 October 31, 2020, of which $ 27,749,000 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 immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend the Company's right to draw or request funds on any loan or line of credit.

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

The Company received $ 966,000 in February 2020.

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

In February 2019, the Company received an annual cash patronage dividend of $ 853,000 .

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.

The Company was not in compliance with the Wells Fargo covenant at October 31, 2020 and the non-compliance was waived.

This loan is secured by certain lemon packing equipment.

As of October 31, 2021, the Company's outstanding borrowings under the revolving and non-revolving lines of credit were $ 111,293,000 and it had $ 18,707,000 of availability.

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.

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 % through July 1, 2022 and then 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 amount 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 nonpayment, 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 financial covenant that requires it to maintain compliance with a specified debt service coverage ratio on an annual basis.

In December 2021, the Lender modified the covenant to defer measurement at October 31, 2021 and revert to a debt service coverage ratio of 1.25 :1.0 measured as of October 31, 2022.

The Company received annual cash patronage dividends from Farm Credit West of $ 1,170,000 , $ 1,566,000 and $ 853,000 in fiscal years 2021, 2020 and 2019, respectively.

In August 2021, PDA and San Pablo entered into term loan agreements for an aggregate amount of approximately $ 652,000 .

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 August 2025 and September 2026, bear interest at fixed rates of 3.48 % and 4.26 %, respectively, and are payable in monthly installments beginning September 2021.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Long-Term Debt (continued)

In July and September 2020, PDA and San Pablo entered into term loan agreements for an aggregate amount of approximately $ 522,000 .

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.

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

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

6 unchanged sentences

Thereafter 10,443

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Lessor Arrangements

2 unchanged sentences

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

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

October 31, 2020 October 31, 2019

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of October 31 (in thousands):

Land $ 3,516 $ 3,522

2 unchanged sentences

Property, plant and equipment, net under operating leases $ 15,897 $ 16,347

Depreciation expense for assets under operating leases was approximately $ 664,000 for fiscal year 2020.

Depreciation expense for assets under operating leases was approximately $ 669,000 and $ 664,000 for the fiscal years 2021 and 2020, respectively.

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

October 31, 2020

Operating lease payments $ 4,287

Variable lease payments 335

Total lease payments $ 4,622

Year ended October 31,

Operating lease revenue $ 4,329 $ 4,287

Variable lease revenue 317 335

Total lease revenue $ 4,646 $ 4,622

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

Lessor Arrangements (continued)

The future minimum lease payments to be received by the Company related to these operating lease agreements as of October 31, 2021 are as follows (in thousands):

1 unchanged sentence

Total $ 4,861

The Company’s rental operations revenue included contingent rental revenue of $ 355,000 and $ 324,000 for fiscal years 2019 and 2018, respectively.

The Company’s rental operations revenue included contingent rental revenue of $ 355,000 for fiscal year 2019.

Lessee Arrangements

The Company enters into leasing transactions in which the Company is the lessee.

These lease contracts are typically classified as operating leases.

These lease contracts are classified as either operating or finance leases.

The Company’s lease contracts are generally for agricultural land and packinghouse equipment with remaining lease terms ranging from one to 16 years, with various term extensions available.

1 unchanged sentence

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

Operating lease costs were $ 559,000 for fiscal year 2020, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

Variable and short term lease costs were immaterial.

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

Classification October 31, 2020

Operating lease costs were $ 606,000 and $ 559,000 and variable lease costs were $ 288,000 and immaterial, for the fiscal years 2021 and 2020, respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

Finance lease costs and short term lease costs were immaterial for both years.

Supplemental balance sheet information related to leases consists of the following as of October 31 (in thousands):

Classification 2021 2020

Operating lease ROU assets Other assets $ 2,041 $ 2,053

Liabilities and Stockholders' Equity

Current operating lease liabilities Accrued liabilities 521

Finance lease assets Other assets 1,142 —

$ 3,183 $ 2,053

Current operating lease liabilities Accrued liabilities and payables to related parties $ 488 $ 521

Current finance lease liabilities Accrued liabilities 249 —

Non-current operating lease liabilities Other long-term liabilities 1,648 1,610

Non-current finance lease liabilities Other long-term liabilities 884 —

Total operating lease liabilities $ 3,269 $ 2,131

Weighted-average remaining lease term (in years)

Operating leases 10.9 11.0

Finance leases 4.9 —

Weighted-average discount rate

Operating leases 3.7 % 3.8 %

Finance leases 3.3 % —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

Lessee Arrangements (continued)

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

October 31, 2020

Year ended October 31,

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

Operating cash outflows from operating leases $ 603 $ 559

Operating cash outflows from finance leases $ 3 $ —

Financing cash outflows from finance leases $ 18 $ —

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

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

Leased assets obtained in exchange for new finance lease liabilities $ 1,151 $ —

Future minimum lease payments under non-cancellable leases for each of the subsequent five fiscal years and thereafter are as follows (in thousands), which excludes $ 448,000 of operating lease payments for leases that have been signed but not commenced:

Operating Finance Total

2022 $ 488 $ 249 $ 737

2023 312 249 561

2024 281 249 530

2025 210 249 459

2026 134 229 363

Thereafter 1,192 — 1,192

1 unchanged sentence

Imputed interest ( 481 ) ( 92 ) ( 573 )

Total $ 2,131

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

Present value of lease liabilities $ 2,136 $ 1,133 $ 3,269

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

Total lease expense for fiscal year 2019 was $ 733,000 , which was included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

Earnings Per Share

Basic net loss per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock.

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years ended October 31, 2021, 2020 and 2019.

The computations for basic and diluted net loss per common share are as follows (in thousands, except per share amounts):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

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

Thereafter 1,382

Total $ 3,141

Total lease expense for fiscal years 2019 and 2018 was $ 733,000 and $ 2,028,000 , respectively, which was included in agribusiness costs and expenses in the Company’s consolidated statements of operations.

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.

Earnings Per Share

Diluted net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested, restricted stock and preferred stock.

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years ended October 31, 2020 and 2019 and dilutive for fiscal years ended October 31, 2018.

The computations for basic and diluted net (loss) income per common share are as follows (in thousands, except per share amounts):

Earnings Per Share (continued)

Year ended October 31,

2021 2020 2019

Basic net (loss) income per common share:

Net (loss) income applicable to common stock $ ( 16,936 ) $ ( 6,444 ) $ 19,687

Basic net loss per common share:

Net loss applicable to common stock $ ( 3,942 ) $ ( 16,936 ) $ ( 6,444 )

Effect of unvested, restricted stock ( 35 ) ( 44 ) ( 51 )

Net (loss) income for basic EPS ( 16,980 ) ( 6,495 ) 19,653

Net loss for basic EPS ( 3,977 ) ( 16,980 ) ( 6,495 )

Weighted average common shares-basic 17,555 17,666 17,580

Basic net (loss) income per common share $ ( 0.96 ) $ ( 0.37 ) $ 1.26

Diluted net (loss) income per common share:

Net (loss) income for diluted EPS $ ( 16,980 ) $ ( 6,495 ) $ 20,188

Basic net loss per common share $ ( 0.23 ) $ ( 0.96 ) $ ( 0.37 )

Diluted net loss per common share:

Net loss for diluted EPS $ ( 3,977 ) $ ( 16,980 ) $ ( 6,495 )

Weighted average common shares-basic 17,555 17,666 17,580

1 unchanged sentence

Weighted average common shares-diluted 17,555 17,666 17,580

Diluted net (loss) income per common share $ ( 0.96 ) $ ( 0.37 ) $ 1.25

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

Diluted net loss per common share $ ( 0.23 ) $ ( 0.96 ) $ ( 0.37 )

Diluted net loss per common share is calculated using the more dilutive method of either the two-class method or the treasury stock method.

Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share.

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

The Company excluded 164,000 , 119,000 and 70,000 , unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted (losses) earnings per share for the fiscal years ended October 31, 2020, 2019 and 2018, respectively.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company excluded 117,000 , 164,000 and 119,000 , unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted losses per share for the fiscal years ended October 31, 2021, 2020 and 2019, respectively.

Related-Party Transactions

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

The Company has transactions with equity method investments and various related-parties summarized in Note 8 - Equity in Investments and in the tables below (in thousands):

October 31, 2021 October 31, 2020

Balance Sheet Balance Sheet

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

Ref Related Party Receivables/Other from Related Parties Other Assets Payables to Related Parties Other Long-Term Liabilities Receivables/Other from Related Parties Other Assets Payables to Related Parties Other Long-Term Liabilities

2 Mutual water companies $ — $ 432 $ 40 $ — $ — $ 64 $ 64 $ —

4 unchanged sentences

9 LLCB $ — $ — $ 5,771 $ — $ — $ — $ 5,300 $ —

11 Third party growers $ — $ — $ 41 $ — $ — $ — $ — $ —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

Year Ended October 31, 2021 Year Ended October 31, 2020

Consolidated Statement of Operations Consolidated Statement of Operations

Ref Related-Party Net Revenue - Agribusiness Net Revenue - Other Operations Agribusiness Expense and Other Other Income, Net Dividends Paid Net Revenue - Agribusiness Net Revenue - Other Operations Agribusiness Expense and Other Other Income, Net Dividends Paid

Ref Related-Party Net Revenue Agribusiness Net Revenue Rental Operations Agribusiness Expense and Other Dividends Paid Net Revenue Agribusiness Net Revenue Rental Operations Agribusiness Expense and Other Other Income, Net Dividends Paid

1 Employees $ — $ 814 $ — $ — $ — $ 785 $ — $ — $ —

2 unchanged sentences

4 Calavo $ 6,594 $ 320 $ 721 $ 503 $ 8,806 $ 330 $ 1,223 $ 220 $ 503

(5) Third party growers $ — $ — $ — $ — $ — $ — $ — $ 10 $ — $ —

5 Cadiz / Fenner / WAM $ — $ — $ 338 $ — $ — $ — $ 240 $ — $ —

2 unchanged sentences

8 FGF $ 4,129 $ — $ 2,884 $ — $ 10,338 $ — $ 13,478 $ — $ —

10 Freska $ 128 $ — $ 150 $ — $ — $ — $ — $ — $ —

11 Third party growers $ — $ — $ 147 $ — $ — $ — $ — $ — $ —

Year Ended October 31, 2019

5 unchanged sentences

4 Calavo $ 3,080 $ 400 $ 1,096 $ 250 $ 506

(5) Third party growers $ — $ — $ 2,279 $ — $ —

5 Cadiz / Fenner / WAM $ — $ — $ 186 $ — $ —

1 unchanged sentence

7 YMIDD $ — $ — $ 150 $ — $ —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

8 FGF $ 14,471 $ — $ 10,300 $ — $ —

11 Third party growers $ — $ — $ 10 $ — $ —

(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 October 31, 2021 and 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.

(2) Mutual water companies - The Company has representation on the boards of directors of the mutual water companies in which the Company has investments, refer to Note 10 - Other Assets.

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

Refer to Note 10 - Other Assets.

(3) Cooperative association - The Company has representation on the board of directors of a non-profit cooperative association that provides pest control services for the agricultural industry.

The Company purchased services and supplies from and had payments due to the cooperative association.

(4) Calavo - The Company had an investment in Calavo through March 2020 and has representation on the board of directors and Calavo has an investment in and had representation on the board of directors of the Company through December 2018.

(4) Calavo - The Company had an investment in Calavo through March 2020 and has representation on the board of directors and Calavo has an investment in the Company.

The Company recorded dividend income on its investment in Calavo, paid dividends to Calavo and had avocado sales to Calavo.

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

(5) Third party growers - A member of the Company’s board of directors markets lemon through the Company.

Additionally, the Company leases office space to Calavo and purchases storage services from Calavo.

(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.

4 unchanged sentences

Upon the adoption of ASC 842, the Company recorded a ROU asset and corresponding lease liability.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

(6) Colorado River Growers, Inc.

(“CRG”) - The Company has representation on the board of directors of CRG, a non-profit cooperative association of fruit growers engaged in the agricultural harvesting business in Yuma County, Arizona.

The Company paid harvest expense to CRG, provided harvest management and administrative services to CRG and had a receivable due from CRG for such services.

(“CRG”) - The Company had representation on the board of directors of CRG, a non-profit cooperative association of fruit growers engaged in the agricultural harvesting business in Yuma County, Arizona.

CRG was dissolved in August 2021.

The Company paid harvest expense to CRG and provided harvest management and administrative services to CRG.

(7) Yuma Mesa Irrigation and Drainage District (“YMIDD”) - The Company has representation on the board of directors of YMIDD.

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

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

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

The Company had a payable due to FGF for such fruit purchases and services.

(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 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 customers.

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

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

(10) Freska - A member of the Company's board of directors is a majority shareholder of Freska Produce International, LLC ("Freska").

The Company had avocado sales to Freska.

(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 of such lemon procurement.

A reconciliation of income before income taxes for domestic and foreign locations for the years ended October 31, 2021, 2020 and 2019 are as follows (in thousands):

3 unchanged sentences

Income before income taxes $ ( 4,163 ) $ ( 26,435 ) $ ( 6,563 )

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Taxes (continued)

The components of the provisions for income taxes for fiscal years 2021, 2020 and 2019 are as follows (in thousands):

11 unchanged sentences

The components of deferred income tax assets at October 31, 2021 and 2020 are as follows (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Taxes (continued)

Deferred income tax assets:

4 unchanged sentences

Amortization — 325

Other assets 240 —

Interest expense limitation 2 306

6 unchanged sentences

Depreciation ( 18,665 ) ( 16,930 )

Amortization ( 242 ) —

Land and other indefinite life assets ( 6,581 ) ( 6,905 )

1 unchanged sentence

Right-of-use asset ( 510 ) ( 557 )

Unrealized net gain on Calavo investment — ( 4,142 )

Prepaids and receivables ( 260 ) —

Other ( 55 ) ( 1,241 )

3 unchanged sentences

Deferred income taxes — noncurrent liabilities $ ( 22,853 ) $ ( 22,430 )

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Taxes (continued)

The Company periodically evaluates the recoverability of the deferred tax assets.

1 unchanged sentence

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The Company has recorded a valuation allowance of $ 540,000 on two Chilean subsidiaries deferred tax assets as of October 31, 2020 as the Company does not believe it is more likely than not that these deferred tax assets will be realized due to the recent history of cumulative pre-tax book losses and lack of objectively verifiable future source of taxable income.

At October 31, 2020, the Company recorded a deferred tax asset of $ 4,983,000 related to its federal, state, and foreign net operating carryforwards.

The Company has recorded a valuation allowance of $ 1,324,000 on the net deferred tax assets of its subsidiaries in Argentina and Chile as of October 31, 2021 as the Company does not believe it is more likely than not that these deferred tax assets will be realized due to the recent history of cumulative pre-tax book losses and lack of objectively verifiable future source of taxable income.

At October 31, 2021, the Company has recorded a deferred tax asset of $ 6,312,000 related to its federal, state, and foreign net operating loss carryforwards.

The entire federal net operating loss is subject to the 80 % taxable income limitation.

4 unchanged sentences

Chile 2,248 Indefinite

Holland 66 10/31/2025

Argentina 2,390 10/31/2025

At October 31, 2020, the Company had disallowed federal and state interest expense carryforwards of approximately $ 1,442,000 and $ 2,454,000 , respectively, that do not expire.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Taxes (continued)

At October 31, 2021, the Company had disallowed federal and state interest expense carryforwards of approximately zero and $ 2,065,000 , respectively, that do not expire.

Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of the domestic net operating loss and disallowed interest expense carryforwards may be limited in future periods.

7 unchanged sentences

Transaction costs — — — — ( 137 ) 2.1 %

Shared-based compensation ( 217 ) 5.2 % — — — —

Executive compensation ( 45 ) 1.1 % — — % — — %

Tax law change 57 ( 1.4 ) % 1,948 ( 7.4 ) % — —

1 unchanged sentence

Valuation allowance ( 831 ) 20.0 % ( 168 ) 0.6 % ( 393 ) 6.1 %

Foreign rate differential 130 ( 3.1 ) % — — — —

Noncontrolling interest ( 83 ) 2.0 % ( 305 ) 1.1 % 116 ( 1.8 ) %

6 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Taxes (continued)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

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

The Company evaluated the impact of the CARES Act and has recorded a tax benefit of $ 1,948,000 and an income tax refund of $ 5,801,000 due to our ability to carryback and obtain federal tax refund by utilizing net operating losses under the provisions of the CARES Act, of which $ 841,000 and $ 4,960,000 were received in October 2020 and December 2020, respectively.

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted into law.

The TCJA made significant changes to U.S.

tax laws, including, but not limited to, the following:

(a) reducing the federal corporate income tax rate from 35% to a flat 21%, effective January 1, 2018, (b) including two new U.S.

tax base erosion provisions and the global intangible low-taxed income ("GILTI") provisions and (c) expanding the number of individuals whose compensation is subject to a $1,000,000 cap on deductibility under Section 162(m) and includes performance-based compensation such as stock options and stock appreciation rights in the calculation.

As a result of the rate reduction, the Company recorded an income tax benefit of $ 10,295,000 related to the remeasurement of the Company's deferred tax balance as of October 31, 2018.

The Company evaluated the impact of the CARES Act and recorded a tax benefit of $ 1,948,000 and an income tax refund of $ 5,801,000 due to its ability to carryback and obtain federal tax refund by utilizing net operating losses under the provisions of the CARES Act at October 31, 2021, of which $ 841,000 and $ 4,960,000 were received in October 2020 and December 2020, respectively.

An additional $ 948,000 of California state refunds were received in the third quarter of fiscal year 2021.

Retirement Plans

3 unchanged sentences

The Plan is administered by Wells Fargo Bank and Mercer Human Resource Consulting.

In fiscal year 2021, the Company decided to terminate the Plan effective December 31, 2021.

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

There were funding contributions of zero and $ 600,000 for fiscal years 2020 and 2019, respectively.

There were no funding contributions during fiscal years 2021 or 2020.

Plan assets are invested in a group trust consisting primarily of pooled funds, mutual funds, short-term investment funds and cash.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans (continued)

The investment policy and strategy has been established to provide a total investment return that will, over time, maintain purchasing power parity for the Plan’s variable benefits and keep the Plan funding at a reasonable level.

The long-term target asset allocations are Domestic Equity 30 %, International Equity 10 % and Fixed Income 60 %.

The long-term target asset allocations are Cash 1 % and Fixed Income 99 %.

The following tables set forth the Plan’s net periodic cost, changes in benefit obligation and Plan assets, funded status, amounts recognized in the Company’s consolidated balance sheets, additional year-end information and assumptions used in determining the benefit obligations and net periodic benefit cost.

6 unchanged sentences

Net periodic benefit cost $ 742 $ 713

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans (continued)

Following is a summary of the Plan’s funded status as of October 31 (in thousands):

4 unchanged sentences

Benefits paid ( 1,450 ) ( 1,524 )

Actuarial loss 1,236 3,063

Actuarial (gain) loss ( 858 ) 1,236

Benefit obligation at end of year $ 21,417 $ 22,898

2 unchanged sentences

Actual return on plan assets 2,668 1,647

Employer contributions — 600

Benefits paid ( 1,450 ) ( 1,524 )

5 unchanged sentences

Amounts recognized in statements of financial position:

Noncurrent assets $ — $ —

Current liabilities — —

Noncurrent liabilities $ ( 847 ) $ ( 3,546 )

6 unchanged sentences

Net deficit recognized in statements of financial position $ ( 847 ) $ ( 3,546 )

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans (continued)

Presented below are changes in accumulated other comprehensive income, before tax, in the Plan as of October 31, (in thousands):

Changes recognized in other comprehensive income:

Net loss arising during the year $ 579 $ 1,306

Net (gain) loss arising during the year $ ( 2,658 ) $ 579

Amortization of prior service cost ( 45 ) ( 45 )

2 unchanged sentences

Total recognized in net periodic benefit and other comprehensive income $ ( 2,699 ) $ 508

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans (continued)

The following assumptions, as of October 31, were used in determining benefit obligations and net periodic benefit cost ($ in thousands):

9 unchanged sentences

Benefit payments are expected to be paid over the next 10 fiscal years as follows (in thousands):

2024 - 2026 —

Next five years —

2 unchanged sentences

Cash and cash equivalents $ 250 $ — $ — $ 250

Mutual funds 1,152 — — 1,152

Pooled funds — 20,320 — 20,320

$ 250 $ 20,320 $ — $ 20,570

The Company has a 401(k) plan in which it contributes an amount equal to 4 % of an eligible employee’s annual earnings beginning after one year of employment.

The Company has a 401(k) plan in which an employee can participate after one year of employment.

Employees may elect to defer up to 100 % of their annual earnings subject to Internal Revenue Code limits.

The Company makes an additional matching contribution on these deferrals up to 4 % of the employee’s annual earnings.

Employees are 100% vested in the Company’s contribution after six years of employment.

The Company makes a matching contribution on these deferrals up to 4 % of the employee’s annual earnings.

Participants vest in any matching contribution at a rate of 20 % per year beginning after one year of employment.

During fiscal years 2021, 2020 and 2019, the Company contributed to the plan and recognized expenses of $ 546,000 , $ 1,107,000 and $ 927,000 , respectively.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Commitments and Contingencies

3 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 (CONTINUED)

Series B and Series B-2 Preferred Stock

13 unchanged sentences

Because the Series B Stock may be redeemed by holders of the shares at their discretion beginning July 1, 2017, the redemption is outside the control of the Company and accordingly, the Series B Stock has been classified as temporary equity.

In fiscal year 2017, a total of 14,210 shares of Series B preferred stock were converted into 177,624 shares of common stock.

In fiscal year 2016, 500 shares of Series B preferred stock were converted into 6,250 shares of common stock.

In fiscal year 2015, 500 shares of Series B preferred stock were converted into 6,250 shares of common stock.

During fiscal years 2015 thru 2017, a total of 15,210 shares of Series B preferred stock were converted into 190,124 shares of common stock.

Series B-2 Convertible Preferred Stock

2 unchanged sentences

The Series B-2 Preferred Stock has the following rights, preferences, privileges, and restrictions:

Each share of the Series B-2 Preferred Stock is convertible into common stock at a conversion price equal to the greater of (a) the then-market price of the Company’s common stock based upon the closing price of the Company’s common stock on The NASDAQ Stock Market, LLC or on such other principal market on which the Company’s common stock may then be trading and (b) $ 15.00 per share of common stock.

Shares of the Series B-2 Preferred Stock may be converted into common stock (i) at any time prior to the redemption thereof, or (ii) in the event the Option Agreement (as defined below) is terminated without all of the shares of Series B-2 Preferred Stock having been redeemed, within 30 calendar days following such termination.

Each share of Series B-2 Preferred Stock is convertible into common stock at a conversion price equal to the greater of (a) the then-market price of the Company’s common stock based upon the closing price of the Company’s common stock on The NASDAQ Stock Market, LLC or on such other principal market on which the Company’s common stock may be trading or (b) $ 15.00 per share of common stock.

Shares of Series B-2 Preferred Stock may be converted into common stock (i) at any time prior to the redemption thereof, or (ii) in the event the Option Agreement (as defined below) is terminated without all of the shares of Series B-2 Preferred Stock having been redeemed, within 30 calendar days following such termination.

The holder of shares of the Series B-2 Preferred Stock is entitled to receive cumulative cash dividends at an annual rate of 4 % of the liquidation value of $ 1,000 per share.

Such dividends are payable quarterly on the first day of January, April, July and October in each year.

Liquidation Rights:

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holder of shares of the Series B-2 Preferred Stock is entitled to be paid out of the assets available for distribution, before any payment is made to the holders of the Company’s common stock or any other series or class of the Company’s shares ranking junior to the Series B-2 Preferred Stock, an amount equal to the liquidation value of $ 1,000 per share, plus an amount equal to all accrued and unpaid dividends.

LIMONEIRA COMPANY

1 unchanged sentence

Series B and Series B-2 Preferred Stock (continued)

Series B-2 Convertible Preferred Stock (continued)

Series B-2 Convertible Preferred Stock

Liquidation Rights:

Voting Rights:

26 unchanged sentences

Stockholders’ Equity (continued)

Stock-based compensation (continued)

Stock-based compensation

Executive Awards

17 unchanged sentences

The total fair value of shares vested during the years ended October 31, 2021, 2020 and 2019 was $ 2,951,000 , $ 2,365,000 and $ 1,788,000 respectively.

The Company has unrecognized stock-based compensation expense of $ 2,589,000 as of October 31, 2020, which is expected to be recognized over the next three years as the shares vest.

The Company has unrecognized stock-based compensation expense of $ 1,963,000 as of October 31, 2021, which is expected to be recognized over the next two years as the shares vest.

All unvested shares are expected to vest.

During fiscal years 2021, 2020 and 2019, respectively, members of management exchanged 46,993 , 11,314 and 36,627 shares of common stock with fair values of $ 701,000 , $ 213,000 and $ 606,000 , at the dates of the exchanges, for the payment of payroll taxes associated with the vesting of shares under the Company’s stock-based compensation programs.

Additionally, in fiscal year 2018, the Company repurchased 15,330 shares from a retired member of management for $ 86,000 per the terms of a discontinued stock plan.

A summary of the status of the Company’s nonvested shares as of October 31, 2021, and changes during the year ended October 31, 2021, is presented below:

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Nonvested at October 31, 2020 148,460 $ 19.85

Vested ( 117,646 ) $ 20.20

Granted 125,663 $ 15.65

Vested ( 161,123 ) $ 18.31

Nonvested at October 31, 2021 113,000 $ 17.38

Treasury Stock

Share Repurchase Program

In fiscal year 2021, the Company's Board of Directors approved a share repurchase program authorizing it to repurchase up to $ 10,000,000 of its outstanding shares of common stock through September 2022;

no shares have been repurchased under this program.

In fiscal year 2020, the Company repurchased 250,977 shares for $ 3,493,000 under a program which expired in March 2021.

LIMONEIRA COMPANY

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Stockholders’ Equity (continued)

Treasury Stock

Share Repurchase Program

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

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

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

During fiscal year 2020, the Company repurchased 250,977 shares under the share repurchase program for approximately $ 3,493,000 .

As of October 31, 2020, the remaining authorization under this program is approximately $ 6,507,000 .

On December 14, 2021, the Company declared a $ 0.075 per share dividend payable on January 14, 2022, in the aggregate amount of $ 1,328,000 to common shareholders of record as of December 27, 2021.

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The Company is a member of Fruit Growers Supply (“FGS”), a cooperative supply corporation.

FGS is the manufacturing and supply affiliate of Sunkist.

FGS allocates after-tax earnings derived from non-member business to members.

The allocations may then be disbursed to members as dividends no less than five years after allocation.

The declaration of dividends is subject to approval by the FGS Board of Directors and members may receive amounts less than those originally allocated.

FGS is the manufacturing and supply affiliate of Sunkist and allocates after-tax earnings derived from non-member business to members.

The Company records allocations disbursed by FGS as reductions of agribusiness expenses.

As of October 31, 2020 and 2019, the Company had been allocated $ 729,000 , of which the Company received dividends of $ 513,000 in fiscal year 2020, leaving an ending allocation of $ 216,000 as of October 31, 2020.

The Company received no dividends in fiscal years 2019 or 2018.

During September 2011, the Company settled a claim with Sunkist in which Sunkist requested a refund of $ 586,000 of fiscal year 2010 lemon by-products revenue.

The Company assigned 50 % of future dividends it receives from FGS up to the amount of claim in the unconditional settlement of the claim.

The balance of the claim as of October 31, 2019 was $ 251,000 and the claim was paid in full in fiscal year 2020.

The Company had been allocated $ 729,000 , of which the Company received dividends of $ 216,000 , $ 513,000 and zero in fiscal years 2021, 2020 and 2019, respectively, and there are no remaining allocations outstanding as of October 31, 2021.

Segment Information

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fresh lemons, lemon packing, avocados and other agribusiness.

The Company’s operating segments of rental operations and real estate development are no longer disclosed as separate reportable operating segments and are included in the “Corporate and Other” category in the tables below as they do not meet the quantitative threshold and from a qualitative perspective are not a core focus of the Company's main agribusiness activities.

Prior years’ information has been restated to conform to the current year’s presentation.

The reportable operating segments of the Company are strategic business units with different products and services, distribution processes and customer bases.

The fresh lemons segment includes sales, farming and harvesting expenses and third-party grower costs relative to fresh lemons.

The fresh lemons segment includes sales, farming and harvesting expenses and third-party grower and supplier costs relative to fresh lemons.

The lemon packing segment includes packing revenues and shipping and handling revenues relative to lemon packing.

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

No asset information is provided for reportable segments as these specified amounts are not included in the measure of segment profit or loss reviewed by the Company’s chief operating decision maker.

No asset information is provided for reportable operating segments, as these specified amounts are not included in the measure of segment profit or loss reviewed by the Company’s chief operating decision maker.

The Company measures operating performance, including revenues and operating income, of its operating segments and allocates resources based on its evaluation.

The Company does not allocate selling, general and administrative expense, other income, interest expense and income taxes, or specifically identify them to its operating segments.

The Company earns packing revenue for packing lemons grown on its orchards and lemons procured from third-party growers.

The Company does not allocate selling, general and administrative expense, total other income (expense) and income taxes, or specifically identify them to its operating segments.

The Company earns packing revenue for packing lemons grown on its orchards and lemons procured from third-party growers and suppliers.

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Segment Information (continued)

Segment information for fiscal year 2021 (in thousands):

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Depreciation and amortization — — — — — 8,626 1,186 9,812

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

Operating income (loss) $ 9,331 $ 7,133 $ — $ 2,573 $ 2,478 $ 12,889 $ ( 19,222 ) $ ( 6,333 )

Segment information for fiscal year 2020 (in thousands):

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

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

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Segment Information (continued)

Segment information for fiscal year 2019 (in thousands):

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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 8. Financial Statements and Supplementary Data