What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-12-21 compared with 2022-12-22 · 417 added, 465 removed, 867 unchanged (50% of the section changed)

4 unchanged sentences

Consolidated Financial Statements of Limoneira Company

Consolidated Balance Sheets at October 31, 2022 and 2021 48

Consolidated Balance Sheets as of October 31, 2023 and 2022

Consolidated Statements of Operations for the years ended October 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Loss for the years ended October 31, 2022, 2021 and 2020 50

Consolidated Statements of Comprehensive Income (Loss) for the years ended October 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders’ Equity and Temporary Equity for the years ended October 31, 2023, 2022 and 2021

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries (the "Company") as of October 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders' equity and temporary equity, and cash flows, for each of the three years in the period ended October 31, 2022, and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries (the "Company") as of October 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and temporary equity, and cash flows, for each of the three years in the period ended October 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2023, 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 6, its equity investment in LLCB of $52,431,000 and $51,416,000 as of October 31, 2022 and 2021, respectively, and its equity earnings in LLCB of $1,015,000, $4,508,000 and $1,386,000 for the years ended October 31, 2022, 2021 and 2020, 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, 2022, 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 December 22, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

The accompanying consolidated financial statements of the Company include, before the basis difference and related amortization discussed in Note 7, its equity in investment in LLCB of $58,282,000 and $52,431,000 as of October 31, 2023 and 2022, respectively, and its equity earnings in LLCB of $5,851,000, $1,015,000, and $4,508,000 for the years ended October 31, 2023, 2022, and 2021, 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 in investment and equity earnings in 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, 2023, 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 December 21, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting based on our audit.

Basis for Opinion

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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 and 6 to the financial statements

Real estate development assets held by the Company and equity in investment in LLCB – Impairment Indicators – Refer to Notes 2, 6 and 7 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 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 amount 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 investment in LLCB has incurred an other-than-temporary decline.

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

The Company’s evaluation of real estate development projects, held either by the Company or as included specifically within its investment in LLCB, for impairment involves an initial assessment of each real estate development project to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of, or investment in, real estate development projects are no longer recoverable.

When events or changes in circumstances exist, the Company further evaluates the real estate development projects for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development projects to the respective carrying amount for its 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 each real estate development project as held by them or within its investment in LLCB, 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 or equity investment in LLCB.

Real estate development assets were $9,706,000, and equity investment in LLCB was $61,154,000 as of October 31, 2022.

For the year ended October 31, 2022, no impairment loss has been recognized on the real estate development and no other-than-temporary-impairment has been recognized on the Company’s equity investment in LLCB.

We identified management judgments used in the determination of impairment indicators for real estate development as a critical audit matter because of the subjectivity used by management when determining whether events or changes in circumstances have occurred indicating that the carrying amount 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.

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

Real estate development assets held by the Company were $9,987,000, and equity in investments was $78,816,000 as of October 31, 2023 of which $66,288,000 was allocated to LLCB.

For the year ended October 31, 2023, 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 significant judgments made by management in evaluating real estate development assets held by the Company and equity in investment in LLCB, for possible indicators of impairment, as a critical audit matter.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions when determining whether events or changes in circumstances have occurred indicating that the carrying amount of, or investment in, real estate development assets held by the Company and equity in investment in LLCB may not be recoverable and 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 and equity investment in LLCB 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 or equity investment in LLCB is no longer recoverable, including controls over management’s evaluation of the entitlement process, litigation, changes in zoning, government regulation, geographical demand and market conditions.

Our audit procedures related to the evaluation of real estate development assets held by the Company and equity in investment in LLCB 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 assets held by the Company or equity in investment in LLCB is no longer recoverable, including controls over management’s evaluation of the entitlement process, litigation, changes in zoning, government regulation, geographical demand and market conditions.

• We evaluated management’s impairment analysis by:

– Searching for adverse asset-specific and/or market conditions by reviewing publicly available information on land values in the surrounding regions of the development, periodicals and news information relating to the Southern California real estate market

◦ 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 property 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

– Obtaining information from legal counsel and performing inquiries with management in order to evaluate any changes in the status of litigation matters affecting the real estate development assets 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

– Obtaining comparable land sales in the area and comparing such data to information used by management with the assistance of our fair value specialists

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CONSOLIDATED BALANCE SHEETS

($ in thousands, except share amounts)

(in thousands, except share and per share data)

Current assets:

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Total assets $ 301,210 $ 368,518

Liabilities and Stockholders' Equity

Liabilities, Convertible Preferred Stock and Stockholders' Equity

Current liabilities:

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

14,790 shares issued and outstanding at October 31, 2022 and 2021) ( 8.75 % coupon rate)

14,790 shares issued and outstanding at October 31, 2023 and October 31, 2022) ( 8.75 % coupon rate)

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

9,300 shares issued and outstanding at October 31, 2022 and 2021) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

9,300 shares issued and outstanding at October 31, 2023 and October 31, 2022) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

Stockholders' equity:

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

zero shares issued or outstanding at October 31, 2022 and 2021)

zero issued or outstanding at October 31, 2023 and October 31, 2022)

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

17,935,292 and 17,936,377 shares issued and 17,684,315 and 17,685,400 shares outstanding at October 31, 2022 and 2021, respectively)

18,192,009 and 17,935,292 shares issued and 17,941,032 and 17,684,315 shares outstanding at October 31, 2023 and October 31, 2022, respectively)

Additional paid-in capital 168,441 165,169

1 unchanged sentence

Accumulated other comprehensive loss ( 5,666 ) ( 7,908 )

Treasury stock, at cost, 250,977 shares at October 31, 2022 and 2021

Treasury stock, at cost, 250,977 shares at October 31, 2023 and October 31, 2022

( 3,493 ) ( 3,493 )

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Total stockholders' equity 189,687 181,054

Total liabilities and stockholders' equity $ 368,518 $ 392,276

Total liabilities, convertible preferred stock and stockholders' equity $ 301,210 $ 368,518

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except share amounts)

(in thousands, except per share data)

Years Ended October 31,

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Other operations 4,612 4,438 4,332

(Gain) loss on disposal of assets ( 4,500 ) 109 502

(Gain) loss on disposal of assets, net ( 28,849 ) ( 4,500 ) 109

Gain on legal settlement ( 2,269 ) — —

Selling, general and administrative 26,455 21,815 19,427

1 unchanged sentence

Operating income (loss) 10,783 2,201 ( 6,333 )

Other (expense) income:

Other income (expense):

Interest income 364 53 379

1 unchanged sentence

Equity in earnings of investments, net 5,322 1,341 3,203

Loss on stock in Calavo Growers, Inc.

— — ( 6,299 )

Other (expense) income, net ( 2,611 ) ( 955 ) 89

Total other (expense) income ( 1,852 ) 2,170 ( 7,427 )

Total other income (expense) 2,581 ( 1,852 ) 2,170

Income (loss) before income tax (provision) benefit 13,364 349 ( 4,163 )

Income tax (provision) benefit ( 4,247 ) ( 823 ) 266

Net loss ( 474 ) ( 3,897 ) ( 17,941 )

Loss attributable to noncontrolling interest 238 456 1,506

Net loss attributable to Limoneira Company ( 236 ) ( 3,441 ) ( 16,435 )

Net income (loss) 9,117 ( 474 ) ( 3,897 )

Net loss attributable to noncontrolling interest 283 238 456

Net income (loss) attributable to Limoneira Company 9,400 ( 236 ) ( 3,441 )

Preferred dividends ( 501 ) ( 501 ) ( 501 )

Net loss applicable to common stock $ ( 737 ) $ ( 3,942 ) $ ( 16,936 )

Basic net loss per common share $ ( 0.04 ) $ ( 0.23 ) $ ( 0.96 )

Diluted net loss per common share $ ( 0.04 ) $ ( 0.23 ) $ ( 0.96 )

Net income (loss) applicable to common stock $ 8,899 $ ( 737 ) $ ( 3,942 )

Basic net income (loss) per common share $ 0.50 $ ( 0.04 ) $ ( 0.23 )

Diluted net income (loss) per common share $ 0.50 $ ( 0.04 ) $ ( 0.23 )

Weighted-average common shares outstanding-basic 17,603 17,513 17,555

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LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

1 unchanged sentence

2023 2022 2021

Net loss $ ( 474 ) $ ( 3,897 ) $ ( 17,941 )

Other comprehensive (loss) income, net of tax:

Net income (loss) $ 9,117 $ ( 474 ) $ ( 3,897 )

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 518 ( 2,430 ) ( 685 )

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Pension settlement cost, net of tax of $ 756 , $ 169 and $ 0

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

Total other comprehensive (loss) income, net of tax ( 2,175 ) 1,815 ( 293 )

Comprehensive loss ( 2,649 ) ( 2,082 ) ( 18,234 )

Total other comprehensive income (loss), net of tax 2,242 ( 2,175 ) 1,815

Comprehensive income (loss) 11,359 ( 2,649 ) ( 2,082 )

Comprehensive loss attributable to noncontrolling interest 283 356 445

Comprehensive loss attributable to Limoneira Company $ ( 2,293 ) $ ( 1,637 ) $ ( 16,698 )

Comprehensive income (loss) attributable to Limoneira Company $ 11,642 $ ( 2,293 ) $ ( 1,637 )

See Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY

($ in thousands)

(in thousands, except share data)

Stockholders’ Equity Temporary Equity

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Paid-In Retained Accumulated

Comprehensive Treasury Non-controlling Series B

Comprehensive Treasury Non-controlling Total Series B

Preferred Series B-2

Shares Amount Capital Earnings (Loss) Income Stock Interest Total Stock Stock

Shares Amount Capital Earnings (Loss) Income Stock Interest Equity Stock Stock

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

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

Dividends - common ($ 0.30 per share)

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

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

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

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

Other comprehensive 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

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)

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Exchange of common stock ( 105,316 ) ( 3 ) ( 1,527 ) — — — — ( 1,530 ) — —

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

Net loss — — — ( 236 ) — — ( 238 ) ( 474 ) — —

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

Other comprehensive loss, net of tax — — — — ( 2,175 ) — ( 118 ) ( 2,293 ) — —

Balance at October 31, 2022 17,684,315 177 165,169 15,500 ( 7,908 ) ( 3,493 ) 11,609 181,054 1,479 9,331

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

Dividends - common ($ 0.30 per share)

6 unchanged sentences

Exchange of common stock ( 39,472 ) ( 1 ) ( 566 ) — — — — ( 567 ) — —

Net loss — — — ( 236 ) — — ( 238 ) ( 474 ) — —

Other comprehensive loss, net of tax — — — — ( 2,175 ) — ( 118 ) ( 2,293 ) — —

Noncontrolling interest adjustment — — — — — — ( 117 ) ( 117 ) — —

Net income (loss) — — — 9,400 — — ( 283 ) 9,117 — —

Other comprehensive income, net of tax — — — — 2,242 — — 2,242 — —

Balance at October 31, 2023 17,941,032 $ 179 $ 168,441 $ 19,017 $ ( 5,666 ) $ ( 3,493 ) $ 11,209 $ 189,687 $ 1,479 $ 9,331

17,684,315 $ 177 $ 165,169 $ 15,500 $ ( 7,908 ) $ ( 3,493 ) $ 11,609 $ 181,054 $ 1,479 $ 9,331

See Notes to Consolidated Financial Statements.

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Operating activities

Net loss $ ( 474 ) $ ( 3,897 ) $ ( 17,941 )

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

Net income (loss) $ 9,117 $ ( 474 ) $ ( 3,897 )

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

Depreciation and amortization 8,576 9,798 9,812

(Gain) loss on disposal of assets ( 4,500 ) 109 502

(Gain) loss on disposal of assets, net ( 28,849 ) ( 4,500 ) 109

Gain on legal settlement ( 853 ) — —

Stock compensation expense 3,841 2,732 2,582

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Deferred income taxes ( 1,947 ) 548 ( 189 )

Loss on stock in Calavo Growers, Inc.

Other, net 168 1,831 335

Changes in operating assets and liabilities:

Account receivable and receivables/other from related parties 1,845 ( 5,076 ) ( 309 )

Accounts receivable and receivables/other from related parties 815 1,845 ( 5,076 )

Cultural costs 2,455 ( 1,148 ) ( 639 )

Prepaid expenses and other current assets 1,487 ( 325 ) ( 1,021 )

Income taxes receivable — 5,911 ( 4,932 )

Income taxes payable ( 1,035 ) — 5,911

Other assets 1,230 ( 134 ) ( 5 )

2 unchanged sentences

Other long-term liabilities ( 2,727 ) ( 49 ) ( 512 )

Net cash provided by (used in) operating activities 14,830 9,605 ( 11,317 )

Net cash (used in) provided by operating activities ( 15,870 ) 14,830 9,605

Investing activities

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Net proceeds from sales of assets 98,545 19,259 119

19,259 119 6,261

Net proceeds from sales of real estate development assets 7,917 — —

Net proceeds from legal settlement 853 — —

Net proceeds from sale of real estate development assets 2,577 7,917 —

Cash distribution from Trapani Fresh 122 122 —

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

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

Collection on loan and notes receivable 2,755 25 1,800

Equity investment contributions ( 48 ) — ( 2,800 )

Collection on notes receivable 155 2,755 25

Equity investment contributions and capitalized interest ( 847 ) ( 48 ) —

Cash distribution from equity investment — — 106

1 unchanged sentence

Net cash provided by (used in) investing activities 90,577 19,433 ( 10,237 )

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Years Ended October 31,

2022 2021 2020

Financing activities

2 unchanged sentences

Proceeds from equipment financings — 1,020 —

Principal paid on finance lease and equipment financings ( 377 ) ( 18 ) —

Principal paid on finance leases and equipment financings ( 491 ) ( 377 ) ( 18 )

Dividends paid – common ( 5,382 ) ( 5,315 ) ( 5,303 )

1 unchanged sentence

Exchange of common stock ( 567 ) ( 1,530 ) ( 700 )

Purchase of treasury stock — — ( 3,493 )

Payments of deferred financing costs — — ( 66 )

Net cash (used in) provided by financing activities ( 71,922 ) ( 33,517 ) 534

1 unchanged sentence

Net increase (decrease) in cash 2,774 418 ( 62 )

Cash at beginning of year 439 501 616

Cash at end of year $ 857 $ 439 $ 501

Cash at beginning of period 857 439 501

Cash at end of period $ 3,631 $ 857 $ 439

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(in thousands)

Years Ended October 31,

2023 2022 2021

Supplemental disclosures of cash flow information

Cash paid during the year for interest, net of amounts capitalized $ 2,064 $ 1,503 $ 1,865

Cash paid (received) during the year for income taxes, net $ 83 $ ( 5,911 ) $ ( 1,235 )

Cash paid during the period for interest (net of amounts capitalized) $ 652 $ 2,064 $ 1,503

Cash paid (received) during the period for income taxes $ 7,229 $ 83 $ ( 5,911 )

Non-cash investing and financing activities:

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Reduction of note receivable $ — $ 388 $ —

Capital expenditures accrued but not paid at year-end $ 430 $ 657 $ 4,269

Capital expenditures accrued but not paid at period-end $ 309 $ 430 $ 657

See Notes to Consolidated Financial Statements.

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The Company is also engaged in residential rentals and other rental operations and real estate development activities.

The Company markets and sells citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Europe and other international markets.

The Company is a member of Sunkist Growers, Inc.

(“Sunkist”), an agricultural marketing cooperative, and sells a portion of its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

The Company markets and sells citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and other international markets.

The Company was a member of Sunkist Growers, Inc., an agricultural marketing cooperative, and sold a portion of its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

Through fiscal year 2021, the Company sold the majority of its avocado production to Calavo Growers, Inc.

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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 loss, statements of stockholders’ equity and temporary equity and statements of cash flows of Limoneira Company and consolidated subsidiaries.

The consolidated financial statements represent the consolidated balance sheets, statements of operations, statements of comprehensive income (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.

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The Company provides allowances on its receivables as required based on accounts receivable aging and other factors.

At October 31, 2022 and 2021 the allowances totaled $ 469,000 and $ 444,000 , respectively.

As of October 31, 2023 and 2022 the allowances totaled $ 260,000 and $ 469,000 , respectively.

For fiscal years 2023, 2022 and 2021, credit losses were insignificant.

Concentrations and Geographic Information

The Company sells the majority of its avocados, oranges and specialty citrus and other crops to third-party packinghouses and processors.

The Company sells its avocados and oranges, and sold its specialty citrus, to third-party packinghouses.

Prior to fiscal year 2022, the Company sold a majority of its avocado production to Calavo.

Sales of avocados to Calavo were $ 6,594,000 and $ 8,806,000 in fiscal years 2021 and 2020, respectively.

Sales of avocados to Calavo were $ 6,594,000 in fiscal year 2021.

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

One customer represented 11 % of revenue for the year ended October 31, 2022 and two customers each represented 10 % of revenue for the year ended October 31, 2021.

No individual customer represented more than 10% of accounts receivable, net as of October 31, 2022 and 2021.

Lemons procured from third-party growers were approximately 52 %, 52 % and 60 % of the Company's lemon supply in fiscal years 2022, 2021 and 2020, respectively.

One third-party grower was 21 % and 46 % of growers and suppliers payable at October 31, 2022 and 2021, respectively.

The Company maintains its cash in federally insured financial institutions.

The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage.

One individual customer represented 13 % of revenue for fiscal year 2023.

One individual customer represented 11 % of accounts receivable, net as of October 31, 2023.

No individual supplier represented 10% of accounts payable as of October 31, 2023.

Lemons procured from third-party growers were 54 %, 52 % and 52 % of the Company's lemon supply in fiscal years 2023, 2022 and 2021, respectively.

One third-party grower was 44 % of growers and suppliers payable as of October 31, 2023.

LIMONEIRA COMPANY

1 unchanged sentence

Summary of Significant Accounting Policies (continued)

Concentrations and Geographic Information (continued)

During fiscal years 2022, 2021 and 2020, the Company had approximately $ 3,614,000 , $ 2,976,000 and $ 3,521,000 , respectively, of total sales in Chile by Fruticola Pan de Azucar S.A.

(“PDA”) and Agricola San Pablo SpA.

("San Pablo").

During fiscal years 2022, 2021 and 2020, the Company had approximately $ 673,000 , $ 3,633,000 and $ 14,150,000 , respectively, of total sales in Argentina.

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 $ 12,663,000 and $ 14,322,000 as of October 31, 2022 and 2021, respectively, and located in Argentina were $ 19,440,000 and $ 19,700,000 as of October 31, 2022 and 2021, respectively.

The Company maintains its cash in federally insured financial institutions.

Cultural Costs

22 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Property, Plant and Equipment (continued)

development period.

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.

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.

1 unchanged sentence

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

Capitalized interest 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, equity in investments and real estate development assets in the Company’s consolidated balance sheets.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Real Estate Development Costs

5 unchanged sentences

Equity in Investments

Investments in unconsolidated joint ventures in which the Company has significant influence but less than a controlling interest, or is not the primary beneficiary if the joint venture is determined to be a Variable Interest Entity (“VIE”), are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions, distributions and the Company’s equity in net earnings or loss of the respective joint venture.

Equity Securities

The Company had no equity securities as of October 31, 2022 and 2021.

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

Investments in unconsolidated joint ventures in which the Company has significant influence but less than a controlling interest, or is not the primary beneficiary if the joint venture is determined to be a Variable Interest Entity (“VIE”), are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions, distributions, capitalized interest and the Company’s equity in net earnings or loss of the respective joint venture.

The Company evaluates equity method investments for impairment whenever events or changes in circumstances exist that may indicate the investments are no longer recoverable or have incurred an other-than-temporary decline in value.

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 ten years .

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 .

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

4 unchanged sentences

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 years 2021 and 2022.

The COVID-19 pandemic may impact its sales and profitability in future periods.

The decline in demand for the Company's products as a result of the COVID-19 pandemic negatively impacted the Company's sales and profitability since the beginning of the second quarter of fiscal year 2020.

The COVID-19 pandemic may continue to impact the Company's 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, and liquidity, including its ability to comply with debt covenants, for fiscal year 2023 and beyond, is driven by estimates that contain uncertainties.

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.

Goodwill impairment is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

The annual, or interim, goodwill impairment test is performed by comparing

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Goodwill (continued)

the fair value of a reporting unit with its carrying amount.

The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount.

An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value;

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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, 2023 and 2022.

Comprehensive (Loss) Income

Comprehensive income or 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.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Comprehensive Income (Loss)

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

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

Accumulated other comprehensive loss 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):

The following table summarizes the changes in other comprehensive income (loss) by component at October 31(in thousands):

2023 2022 2021

Pre-tax Amount Tax (Expense) Benefit Net Amount Pre-tax Amount Tax (Expense) Benefit Net Amount Pre-tax Amount Tax (Expense) Benefit Net Amount

Pre-tax Amount Tax Benefit (Expense) Net Amount Pre-tax Amount Tax Benefit (Expense) Net Amount Pre-tax Amount Tax Expense Net Amount

Foreign currency translation adjustments $ 518 $ — $ 518 $ ( 2,430 ) $ — $ ( 2,430 ) $ ( 685 ) $ — $ ( 685 )

2 unchanged sentences

Amounts reclassified to earnings included in “Other (expense) income, net” 2,700 ( 756 ) 1,944 607 ( 169 ) 438 — — —

Available-for-sale securities:

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

Other comprehensive (loss) income $ ( 2,077 ) $ ( 98 ) $ ( 2,175 ) $ 2,755 $ ( 940 ) $ 1,815 $ ( 502 ) $ 209 $ ( 293 )

Other comprehensive income (loss) $ 2,863 $ ( 621 ) $ 2,242 $ ( 2,077 ) $ ( 98 ) $ ( 2,175 ) $ 2,755 $ ( 940 ) $ 1,815

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 Accumulated Other Comprehensive (Loss) Income

Foreign Currency Translation Loss Defined Benefit Pension Plan Accumulated Other Comprehensive (Loss) Income

Balance as of October 31, 2020

6 unchanged sentences

( 6,184 ) ( 1,724 ) ( 7,908 )

Other comprehensive (loss) income ( 2,430 ) 255 — ( 2,175 )

Other comprehensive income 518 1,724 2,242

Balance as of October 31, 2023

1 unchanged sentence

Foreign Currency

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

The Company has foreign subsidiaries whose functional currencies are the Chilean Peso.

Their balance sheets are translated to U.S.

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

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 Company's foreign subsidiaries incurred aggregate foreign exchange transaction losses of approximately $ 204,000 in both of the fiscal years 2023 and 2022 and $ 646,000 for fiscal year 2021.

These losses are included in selling, general and administrative expenses in the consolidated statements of operations.

LIMONEIRA COMPANY

1 unchanged sentence

Summary of Significant Accounting Policies (continued)

Foreign Currency (continued)

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

Aggregate foreign exchange transaction losses realized for the Company's foreign subsidiaries were approximately $ 204,000 and $ 646,000 for fiscal years 2022 and 2021, respectively, and are included in selling, general and administrative expenses in the consolidated statements of operations.

Revenue Recognition

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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 third-party packinghouses.

The Company’s avocados are packed and sold by 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.

1 unchanged sentence

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

We recorded agribusiness revenues from crop insurance proceeds of $ 449,000 in fiscal year 2022.

There were no proceeds received in fiscal years 2021and 2020.

We recorded agribusiness revenues from crop insurance proceeds of $ 769,000 and $ 449,000 in fiscal years 2023 and 2022, respectively.

There were no proceeds received in fiscal year 2021.

Advertising Expense

Advertising costs are expensed as incurred.

Advertising costs were $ 165,000 , $ 178,000 and $ 239,000 in fiscal years 2022, 2021 and 2020, respectively.

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 facilities and equipment.

Advertising costs were immaterial in fiscal year 2023 and $ 165,000 and $ 178,000 in fiscal years 2022 and 2021, respectively.

Accounting for Leases as a Lessee - The Company enters into leases as a lessee generally for agricultural land and packinghouse facilities and equipment.

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

Operating and finance leases are included in other assets, accrued liabilities and other long-term liabilities on

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.

LIMONEIRA COMPANY

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Leases (continued)

its consolidated balance sheets.

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.

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.

The Company has material leases with related parties which are further described in Note 14 - Related-Party Transactions.

The Company had material leases with related parties which are further described in Note 15 - Related-Party Transactions.

Certain of the Company’s agricultural land agreements contain variable costs based on a percentage of the operating results of the leased property.

10 unchanged sentences

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

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 conversion 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.

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

Basic and Diluted Net Income (Loss) per Share

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

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

Diluted net income (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.

1 unchanged sentence

Defined Benefit Retirement Plan

The Company sponsors a defined benefit retirement plan (the "Plan") that was frozen in June 2004, and no future benefits have been accrued to participants subsequent to that time.

Ongoing accounting for this plan under FASB ASC 715, Compensation – Retirement Benefits, provides guidance as to, among other things, future estimated pension expense, pension liability and minimum funding requirements.

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

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

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

The liabilities disclosed as of October 31, 2022 and 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.

The Company used the latest mortality tables released by the Society of Actuaries through October 2022 to measure its pension obligation as of October 31, 2022 and combined with the assumed discount rate and other demographic assumptions, its pension liability increased by approximately $ 1,425,000 as of October 31, 2022.

The Company sponsored a defined benefit retirement plan (the “Plan”) that was frozen in June 2004, and no future benefits accrued to participants subsequent to that time.

In fiscal year 2021, the Company terminated the Plan effective December 31, 2021.

On November 4, 2022, the Company entered into an agreement with Principal Life Insurance Company for the purchase of an annuity contract in connection with the Plan termination.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

Financial Accounting Standards Board ("FASB") Accounting Standards Update ("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 currently required under GAAP.

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

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

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

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

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

The Company adopted this ASU effective November 1, 2021 and the adoption did not have a material impact on its consolidated financial statements.

Asset Sales and Disposals

Northern Properties

In October 2022, the Company entered into a Purchase and Sale Agreement, as amended, (the “Agreement”) with PGIM Real Estate Finance, LLC (“PGIM”) to sell 3,537 acres of land and citrus orchards in Tulare County, California (the “Northern Properties”) for a purchase price of approximately $ 100,405,000 .

On January 25, 2023, the Board approved the Agreement creating a binding agreement of the Company to sell the Northern Properties and the transaction closed on January 31, 2023.

During the quarter ended April 30, 2023, the purchase price was decreased by $ 397,000 for reimbursement of certain cultural costs and prepaid expenses, resulting in a final purchase price of $ 100,008,000 .

After transaction costs the Company received net proceeds of $ 98,411,000 .

The following is a summary of the transaction (in thousands):

Net cash proceeds received $ 85,494

Debt directly repaid through the transaction 12,917

Total net proceeds received 98,411

net book value of assets sold

Cultural costs 3,853

Prepaid expenses and other current assets 155

Prepaid expenses and other current assets consist of the following at October 31 (in thousands):

Property, plant and equipment, net 53,144

Intangible assets, net 12

Other assets 1,320

Accrued liabilities ( 68 )

Gain on disposal of assets $ 39,995

The proceeds were used to pay down all of the Company’s domestic debt except the AgWest Farm Credit $ 40,000,000 non-revolving line of credit.

The Northern Properties component, including an allocation of interest expense related to the debt directly repaid through the transaction, had a pretax (loss) gain of $( 1,667,000 ), $( 1,236,000 ) and $ 3,334,000 for fiscal years 2023, 2022 and 2021, respectively.

On January 31, 2023, the Company entered into a Farm Management Agreement (“FMA”) with an affiliate of PGIM to provide farming, management and operations services related to the Northern Properties.

The FMA has an initial term expiring March 31, 2024, and thereafter continuing from year to year unless earlier terminated under the terms of the FMA.

Further, on January 31, 2023, the Company entered into a Grower Packing and Marketing Agreement to provide packing, marketing and selling services for lemons harvested on the Northern Properties for a minimum five-year term, subject to certain benchmarking standards.

In April 2023, the Company determined that citrus farming operations were economically unviable on 670 acres of leased agricultural land at the Cadiz Ranch.

As a result, the Company ceased farming operations, disposed of the related property, plant and equipment and recorded a loss on disposal of assets of $ 9,012,000 during fiscal year 2023.

In October 2022, the Company sold the Oxnard Lemon property and packing facility located in Ventura County, California.

The Company received net proceeds of $ 19,144,000 and recognized a gain of approximately $ 846,000 , which is included in (gain) loss on disposal of assets, net in the consolidated statements of operations.

Concurrent with the closing of the sale, the Company entered into a lease agreement to continue use of the property as a lessee for a period of 36 months from the closing date, with extension options for an additional 24 months.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following as of October 31 (in thousands):

Prepaid supplies and insurance $ 1,667 $ 2,958

Note receivable and related interest — 2,438

Real estate development held for sale 2,670 2,543

Assets held for sale 535 2,670

Sales tax receivable 490 475

Income tax receivable 816 —

Lemon supplier advances 791 1,188

2 unchanged sentences

Property, Plant and Equipment

Property, plant and equipment consists of the following at October 31 (in thousands):

Property, plant and equipment consist of the following as of October 31 (in thousands):

Land $ 55,974 $ 87,617

8 unchanged sentences

Depreciation expense was $ 7,701,000 , $ 9,075,000 and $ 8,883,000 for fiscal years 2023, 2022 and 2021, respectively.

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 (gain) loss on disposal of assets in the consolidated statements of operations.

In October 2022, the Company sold the Oxnard Lemon property and packing facility located in Ventura County, California.

The Company received net proceeds of $ 19,144,000 and recognized a gain of approximately $ 846,000 , which is included in (gain) loss on disposal of assets in the consolidated statements of operations.

Concurrent with the closing of the sale, the

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Property, Plant and Equipment (continued)

Company entered into a lease agreement to continue use of the property as a lessee for a period of 36 months from the closing date , with extension options for an additional 24 months.

Refer to Note 3 - Asset Sales and Disposals for discussion on the Company's significant property, plant and equipment transactions.

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):

East Area I - Retained Property $ — $ 13,335

East Area II 9,706 9,493

$ 9,706 $ 22,828

Real estate development assets are comprised of land and land development costs for the East Area II property in the amount of $ 9,987,000 and $ 9,706,000 as of October 31, 2023 and 2022, respectively.

East Area I, Retained Property and East Area II

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

The balance in Retained Property and East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 3,444,000 and $ 5,771,000 at October 31, 2022 and 2021, respectively, which is included in payables to related parties.

The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 3,444,000 as of October 31, 2023 and 2022, which is included in payables to related parties.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Real Estate Development (continued)

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

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

Effective as of February 22, 2023, the Loan maturity date was extended to February 22, 2024, and the maximum borrowing amount was reduced to $ 35,000,000 .

As of February 1, 2023, the interest rate on the Loan transitioned from the London Interbank Offered Rate (“LIBOR”) to the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) 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 Loan had an outstanding balance of $ 4,500,000 as of October 31, 2022.

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 December 2022, LLCB exercised the extension option.

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

The Loan had no outstanding balance of as of October 31, 2023.

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

The guarantors are jointly and severally liable for all Loan obligations in the event of default by LLCB.

The guarantee continues in effect until all of the Loan obligations are fully paid.

The guarantee continues in effect until all of the Loan obligations are fully paid and the Loan terminates.

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.

2 unchanged sentences

The Company formed LLCB II, LLC (“LLCB II”) as the development entity, contributed the Retained Property to the joint venture and sold a 50 % interest to Lewis for $ 7,975,000 .

After transaction costs, the Company received net proceeds of $ 7,917,000 and recorded a gain on the transaction of $ 4,652,000 , of which $ 465,000 was deferred and $ 4,187,000 is included in (gain) loss on disposal of assets in the consolidated statements of operations.

The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the project.

In connection with the closing, the Company and Lewis amended LLCB’s Limited Liability Company Agreement to provide that LLCB is to include the processing of final approval for additional residential units to be developed and constructed on the Retained Property.

Through October 31, 2022, LLCB has closed sales of the initial residential lots representing 586 residential units.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Real Estate Development (continued)

The Company made contributions of $ 525,000 to LLCB II in fiscal year 2023.

Through October 31, 2023, LLCB has closed on lot sales representing 707 residential units since inception, including 121 residential units in fiscal year 2023.

Other Real Estate Development Projects

In fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $ 2,700,000 , which closed in the first quarter of fiscal year 2023.

After transaction and other costs, the Company received cash proceeds of approximately $ 2,577,000 .

During fiscal year 2022, the Company incurred additional costs to prepare the asset for sale, of which $ 127,000 were capitalized and $ 153,000 were recorded in (gain) loss on disposal of assets.

The carrying value of the property at October 31, 2022 and 2021, was $ 2,670,000 and $ 2,543,000 , respectively, and was classified as held for sale and included in prepaid expenses and other current assets.

In fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $ 2,700,000 , which closed in November 2022.

After transaction and other costs, the Company received cash proceeds of approximately $ 2,577,000 and recorded an immaterial loss on disposal of assets during fiscal year 2023.

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

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

In fiscal year 2022, the promissory note was paid in full and the deferred gain of $ 161,000 was recorded in (gain) loss on disposal of assets.

In fiscal year 2022, the promissory note was paid in full and the deferred gain of $ 161,000 was recorded in (gain) loss on disposal of assets, net.

Equity in Investments

6 unchanged sentences

Del Mar markets lemons through the Company pursuant to its customary marketing agreements and the amount of lemons procured from Del Mar was $ 1,161,000 , $ 1,568,000 and $ 1,681,000 in fiscal years 2023, 2022 and 2021, respectively.

Fruit proceeds due to Del Mar were $ 703,000 and $ 694,000 at October 31, 2022 and 2021, respectively, and are included in growers and suppliers payable in the accompanying consolidated balance sheets.

Fruit proceeds due to Del Mar were $ 347,000 and $ 703,000 as of October 31, 2023 and 2022, respectively, and are included in growers and suppliers payable in the accompanying consolidated balance sheets.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Equity in Investments (continued)

Romney Property Partnership

4 unchanged sentences

Net profits, losses and cash flows of Romney are shared by the Company, which receives 75 % and the individual, who receives 25 %.

The Company currently has a 47 % equity interest in Rosales S.A, (“Rosales”) of which 35 % was acquired in fiscal year 2014 and an additional 12 % interest was acquired with the purchase of PDA in fiscal year 2017.

The Company currently has a 47 % equity interest in Rosales S.A.

(“Rosales”) of which 35 % was acquired in fiscal year 2014 and an additional 12 % interest was acquired with the purchase of Fruticola Pan de Azucar S.A.

(“PDA”) in fiscal year 2017.

Rosales is a citrus packing, marketing and sales business located in La Serena, Chile.

7 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 of investments.

Amortization amounted to $ 118,000 , $ 180,000 and $ 180,000 for fiscal years 2022, 2021 and 2020, respectively, and is estimated to be approximately $ 87,000 and $ 76,000 per year for years ending October 31, 2023 and 2024, respectively, and immaterial thereafter.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Equity in Investments (continued)

Rosales (continued)

Amortization amounted to $ 87,000 , $ 118,000 and $ 180,000 for fiscal years 2023, 2022 and 2021, respectively, and is estimated to be immaterial thereafter.

The Company recognized $ 4,581,000 , $ 3,615,000 and $ 3,405,000 of lemon sales to Rosales in fiscal years 2023, 2022 and 2021, respectively.

In fiscal years 2022, 2021 and 2020, the aggregate amount of lemons and oranges procured from Rosales was $ 3,821,000 , $ 5,304,000 and $ 3,190,000 , respectively.

Amounts due from Rosales were $ 270,000 and $ 1,570,000 at October 31, 2022 and 2021, respectively, and are included in receivables/other from related parties.

The aggregate amount of lemons and oranges procured from Rosales was $ 5,826,000 , $ 3,821,000 and $ 5,304,000 in fiscal years 2023, 2022 and 2021, respectively.

Net amounts due from Rosales were $ 626,000 and $ 270,000 as of October 31, 2023 and 2022, respectively, and are included in receivables/other from related parties and payables to related parties.

Limoneira Lewis Community Builders, LLC (“LLCB”)

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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 years ended October 31, 2022 and 2020 but was significant for the year ended October 31, 2021.

LLCB was deemed significant for the years ended October 31, 2023 and 2021 but was not significant for the year ended October 31, 2022.

Therefore, the audited financial statements of LLCB for the years ended October 31, 2023, 2022 and 2021 are provided as exhibits to this document to comply with this rule.

Additionally, there is a basis difference between the Company’s historical investment in the project and the amount recorded in members’ capital by LLCB of $ 58,282,000 as of October 31, 2023.

The basis difference of $ 8,723,000 at October 31, 2022 is primarily comprised of capitalized interest, amounts related to the loan guarantee and certain other costs incurred by Limoneira Company during the development period.

This basis difference is being amortized as lots are sold utilizing the relative sales value method and the amount amortized in fiscal years 2022, 2021 and 2020 totaled $ 77,000 , $ 1,434,000 and $ 1,060,000 , respectively.

The Company's share of LLCB's net income for fiscal years 2022, 2021 and 2020 prior to basis amortization was $ 1,015,000 , $ 4,508,000 and 1,386,000 , respectively.

The basis difference of $ 8,006,000 as of October 31, 2023 is primarily comprised of capitalized interest, amounts related to the loan guarantee and certain other costs incurred by Limoneira Company during the development period.

This basis difference is being amortized as lots are sold utilizing the relative sales value method and the amount amortized totaled $ 717,000 , $ 77,000 and $ 1,434,000 in fiscal years 2023, 2022 and 2021, respectively.

The Company's share of LLCB's net income prior to basis amortization was $ 5,851,000 , $ 1,015,000 and $ 4,508,000 for fiscal years 2023, 2022 and 2021, respectively.

LLCB II, LLC (“LLCB II”)

1 unchanged sentence

Control is shared with Lewis, therefore the Company's investment in LLCB II is accounted for using the equity method of accounting.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Equity in Investments (continued)

The following is financial information of the equity method investees for fiscal years 2023, 2022 and 2021 (in thousands):

17 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Equity in Investments (continued)

The Company’s investment and equity in earnings (losses) of the equity method investees are as follows (in thousands):

1 unchanged sentence

Investment balance October 31, 2020

$ 1,920 $ 511 $ 1,641 $ 57,142 $ — $ 61,214

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

Investment contributions — — — 2,800 — 2,800

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

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

Investment balance October 31, 2021

1,997 508 1,351 60,216 — 64,072

Equity earnings (losses) 510 ( 1 ) ( 106 ) 938 — 1,341

Cash distributions ( 483 ) — — — — ( 483 )

Investment contributions — — — — 8,023 8,023

Foreign currency adjustments — — ( 98 ) — — ( 98 )

Investment balance October 31, 2022

2,024 507 1,147 61,154 8,023 72,855

Equity earnings (losses) 28 ( 5 ) 166 5,134 ( 1 ) 5,322

Cash distributions ( 220 ) — — — — ( 220 )

Investment contributions — — — — 8,023 8,023

Cash contributions — — — — 525 525

Capitalized interest — — — — 322 322

Foreign currency adjustments — — 12 — — 12

Investment balance October 31, 2023

Goodwill and Intangible Assets, Net

$ 1,832 $ 502 $ 1,325 $ 66,288 $ 8,869 $ 78,816

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Goodwill and Intangible Assets

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

7 unchanged sentences

The Company concluded that no potential impairment indicators existed during any interim period and performed its annual assessment of goodwill impairment as of July 31, 2023 with no impairment noted.

The Company did no t incur any goodwill impairment losses in fiscal years 2022, 2021 or 2020, as the estimated fair values of its reporting units were in excess of their carrying values.

As of October 31, 2022, the Company has allocated goodwill to its reportable segments as follows:

Fresh Lemons $ 936,000 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, Net (continued)

Intangible assets consisted of the following as of October 31 (in thousands):

The Company did not incur any goodwill impairment losses in fiscal years 2023, 2022 or 2021, as the estimated fair values of its reporting units were in excess of their carrying values.

As of October 31, 2023, the Company allocated goodwill to its reportable segments as follows:

Fresh Lemons $ 942,000 and Lemon Packing $ 570,000 , respectively.

Intangible assets consist of the following as of October 31 (in thousands):

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

Intangible assets:

Trade names and trademarks $ 2,108 ( 1,104 ) 1,004 8 $ 2,108 $ ( 881 ) $ 1,227 8

2 unchanged sentences

Acquired water and mineral rights 3,422 — 3,422 Indefinite 3,352 — 3,352 Indefinite

Intangible assets $ 9,934 $ ( 2,617 ) $ 7,317 $ 10,223 $ ( 1,894 ) $ 8,329

Amortization expense totaled $ 723,000 , $ 929,000 , and $ 999,000 for the years ended October 31, 2022, 2021 and 2020, respectively.

Estimated future amortization expense of intangible assets for each of the next five fiscal years and thereafter are as follows (in thousands):

$ 10,004 $ ( 3,347 ) $ 6,657 $ 9,934 $ ( 2,617 ) $ 7,317

Amortization expense totaled $ 730,000 , $ 723,000 , and $ 929,000 for fiscal years 2023, 2022 and 2021, respectively.

Estimated future amortization expense of intangible assets are as follows (in thousands):

Thereafter 248

Investments in Mutual Water Companies

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

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

In January 2023, the Company sold an investment in a mutual water company with a net book value of $ 1,320,000 as part of the Northern Properties sale described in Note 3 - Asset Sales and Disposals.

Amounts included in other assets in the consolidated balance sheets as of October 31, 2023 and 2022 were $ 5,703,000 and $ 6,500,000 , respectively.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Accrued Liabilities

Accrued liabilities consist of the following at October 31 (in thousands):

Accrued liabilities consist of the following as of October 31 (in thousands):

Compensation $ 2,858 $ 3,572

4 unchanged sentences

$ 8,651 $ 11,279

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Long-Term Debt

Long-term debt is comprised of the following at October 31 (in thousands):

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

The interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 3.12 % at October 31, 2022, 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 % through July 1, 2022, is 3.57 % through July 1, 2025 and variable thereafter.

Long-term debt is comprised of the following as of October 31 (in thousands):

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

the interest rate of the revolving line of credit is variable based on the one-month Secured Overnight Financing Rate (“SOFR”), which was 5.31 % at October 31, 2023, plus 1.78 %.

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

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

$ 40,000 $ 88,521

Farm Credit West term loan:

The loan was repaid in September 2022.

Farm Credit West term loan:

The interest rate is fixed at 3.24 %.

The loan is payable in monthly installments through October 2035.

Farm Credit West term loan:

The interest rate is fixed at 3.24 %.

The loan is payable in monthly installments through March 2036.

Farm Credit West term loan:

The interest rate is fixed at 2.77 % until July 1, 2025, becoming variable for the remainder of the loan.

The loan is payable in monthly installments through March 2036.

Farm Credit West term loan:

The interest rate is fixed at 3.19 %.

The loan is payable in monthly installments through September 2026.

AgWest Farm Credit term loan:

The interest rate was fixed at 3.24 %.

The loan was repaid in January 2023.

AgWest Farm Credit term loan:

The interest rate was fixed at 3.24 %.

The loan was repaid in January 2023.

AgWest Farm Credit term loan:

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

The loan was repaid in January 2023.

AgWest Farm Credit term loan:

The interest rate was fixed at 3.19 %.

The loan was repaid in January 2023.

Banco de Chile term loan:

1 unchanged sentence

The loan is payable in annual installments through January 2025.

Note Payable:

The Note Payable was repaid in October 2022.

Banco de Chile COVID-19 loans:

9 unchanged sentences

Long-term debt, less current portion $ 40,628 $ 104,076

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

The Company entered into a Master Loan Agreement (the “MLA”) with AgWest Farm Credit, formerly known as Farm Credit West, (the “Lender”) dated June 1, 2021, together with a revolving credit facility supplement (the “Revolving Credit Supplement”), a non-revolving credit facility supplement (the “Non-Revolving Credit Supplement,” and together with the Revolving Credit Supplement, the “Supplements”) and an agreement to convert to a 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 and extends the principal repayment to July 1, 2026.

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

The RELOC matures in 2043 and features a 3 -year draw period followed by 20 years of fully amortized loan payments.

The 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.

As of October 31, 2022, the Company's outstanding borrowings under the revolving and non-revolving lines of credit were $ 88,521,000 and it had $ 41,479,000 available to borrow.

The interest rate in effect under the Revolving Credit Supplement 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 is based on the one-month LIBOR rate plus or minus an applicable margin.

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

On each one year anniversary of July 1, 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.

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

The RELOC featured a 3 -year draw period followed by 20 years of fully amortized loan payments.

On March 31, 2023, the draw period expired and the RELOC was closed as there was no balance outstanding.

The Supplements provide aggregate borrowing capacity of $ 115,000,000 comprised of $ 75,000,000 under the Revolving Credit Supplement, and $ 40,000,000 under the Non-Revolving Credit Supplement.

As of October 31, 2023, the Company's outstanding borrowings under the Supplements were $ 40,000,000 and it had $ 75,000,000 available to borrow.

LIMONEIRA COMPANY

1 unchanged sentence

Long-Term Debt (continued)

The initial interest rate in effect under the Non-Revolving Credit Supplement was a fixed interest rate of 4.77 % through July 1, 2022 and then converted to a fixed interest rate of 3.57 % per year until July 1, 2025 (the “Fixed Rate Term”).

In January 2023, the Company used the proceeds from the Northern Properties sale as described in Note 3 - Asset Sales and Disposals to reduce the Company's long-term debt.

The interest rate in effect under the Revolving Credit Supplement automatically adjusts on the first day of each month.

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

As of January 1, 2023, the rate transitioned from LIBOR to the SOFR.

The applicable margin ranges from 1.68 % to 2.28 % depending on the ratio of current assets, plus the remaining available commitment divided by current liabilities.

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

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

The interest rate in effect under the Non-Revolving Credit Supplement is 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 applicable interest rate group.

1 unchanged sentence

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.

The interest rate in effect under the RELOC is a variable interest rate established by the Lender corresponding to the applicable interest rate group, which was 5.50 % as of October 31, 2022.

The interest rate may be adjusted automatically under the provisions of the Lender's variable interest rate plan.

The Company may prepay any amounts outstanding under the RELOC without penalty.

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 the Lender, the 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.

All indebtedness under the MLA, including any indebtedness under the Supplements, is secured by a first lien on Company-owned stock or participation certificates, Company funds maintained with the Lender, the Lender’s unallocated surplus, and certain of the Company’s agricultural properties 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.

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 specific debt service coverage ratio greater than or equal to 1.25 :1.0 when measured at October 31, 2022 and annually thereafter.

We were in compliance as of October 31, 2022.

The Company is also subject to a financial covenant that requires it to maintain compliance with a specific debt service coverage ratio on an annual basis.

In September 2023, the Lender modified the covenant to defer measurement as of October 31, 2023 and resume a debt service coverage ratio of 1.25 :1.0 measured as of October 31, 2024.

The Company received annual cash patronage dividends from the Lender of $ 1,413,000 , $ 1,582,000 and $ 1,170,000 in fiscal years 2023, 2022 and 2021, respectively.

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

The Company capitalized interest of $ 582,000 , $ 1,110,000 and $ 921,000 during the fiscal years ended 2022, 2021 and 2020, respectively.

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

The Company incurs certain loan fees and costs associated with its new or amended credit arrangements.

Such costs are capitalized as deferred financing costs and amortized as interest expense using the straight-line method over the terms of the credit agreements.

The balance of deferred financing costs was $ 94,000 and $ 131,000 , net of amortization at October 31, 2022 and 2021, respectively, and was included in long-term debt on the Company’s consolidated balance sheet.

The Company capitalized interest of $ 864,000 , $ 582,000 and $ 1,110,000 during fiscal years ended 2023, 2022 and 2021, respectively.

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

Principal payments on the Company’s long-term debt are due as follows (in thousands):

Thereafter 9,476

LIMONEIRA COMPANY

1 unchanged sentence

Other Long-Term Liabilities

Other long-term liabilities consist of the following at October 31 (in thousands):

Other long-term liabilities consist of the following as of October 31 (in thousands):

Minimum pension liability $ — $ 2,272

13 unchanged sentences

Property, plant and equipment, net under operating leases $ 32,541 $ 34,100

Depreciation expense for assets under operating leases was approximately $ 934,000 and $ 669,000 for the fiscal years 2022 and 2021, respectively.

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

Year ended October 31,

Depreciation expense for assets under operating leases was approximately $ 1,005,000 and $ 934,000 for fiscal years 2023 and 2022, respectively.

The Company's rental operations revenue consists of the following for the fiscal years ended October 31 (in thousands):

Operating lease revenue $ 5,174 $ 4,998

4 unchanged sentences

Total $ 3,202

Lessee Arrangements

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

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

The Company’s lease contracts are generally for agricultural land and packinghouse facilities and equipment with remaining lease terms ranging from one to 15 years, with various term extensions available.

The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

Leases with an initial term of

LIMONEIRA COMPANY

1 unchanged sentence

Leases (continued)

Lessee Arrangements (continued)

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.

Operating lease costs were $ 537,000 and $ 606,000 and variable lease costs were $ 242,000 and $ 288,000 , for the fiscal years 2022 and 2021, 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 $ 154,000 and $ 212,000 for fiscal year 2022, respectively, and were immaterial for fiscal year 2021.

Lessee Arrangements

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

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

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

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.

Lease costs are primarily included in agribusiness costs and expenses in the Company's consolidated statements of operations.

Lease costs consist of the following for the fiscal years ended October 31 (in thousands):

Operating lease costs $ 2,000 $ 537

Finance lease costs:

Amortization of lease assets 145 120

Interest on lease liabilities 32 34

Variable lease costs — 242

Short-term lease costs 600 212

Total lease costs $ 2,777 $ 1,145

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

14 unchanged sentences

Finance leases 4.2 % 3.5 %

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

Year ended October 31,

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

Lessee Arrangements (continued)

Supplemental cash flow information related to leases consists of the following for the fiscal years ended October 31 (in thousands):

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

4 unchanged sentences

Leased assets obtained in exchange for new finance lease liabilities $ 235 $ 68

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Leases (continued)

Lessee Arrangements (continued)

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 $ 470,000 of operating lease payments for leases that have been signed but not commenced:

Write off of ROU asset and operating lease liability $ ( 1,206 ) $ —

Future minimum lease payments under non-cancellable leases are as follows (in thousands), which excludes $ 870,000 of operating lease payments for leases that have been signed but not commenced:

Operating Finance Total

3 unchanged sentences

2027 23 46 69

2027 134 — 134

Thereafter 1,046 — 1,046

Total lease payments 3,774 983 4,757

1 unchanged sentence

Present value of lease liabilities $ 3,545 $ 921 $ 4,466

In addition to operating and finance lease commitments, the Company also has financing transactions and a contract for pollination services, which do not meet the definition of a lease, with minimum future payments of $ 275,000 in fiscal year 2023, $ 224,000 in fiscal years 2024, 2025 and 2026 and $ 37,000 in fiscal year 2027.

In addition to operating and finance lease commitments, the Company also has financing transactions which do not meet the definition of a lease, with minimum future payments of $ 224,000 in fiscal years 2024, 2025 and 2026 and $ 37,000 in fiscal year 2027.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Earnings Per Share

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years ended October 31, 2022, 2021 and 2020.

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

Year ended October 31,

The Series B and Series B-2 convertible preferred shares were anti-dilutive for fiscal years 2023, 2022 and 2021.

The computations for basic and diluted net income (loss) per common share are as follows for the fiscal years ended October 31 (in thousands, except per share data):

2023 2022 2021

Basic net loss per common share:

Net loss applicable to common stock $ ( 737 ) $ ( 3,942 ) $ ( 16,936 )

Basic net income (loss) per common share:

Net income (loss) applicable to common stock $ 8,899 $ ( 737 ) $ ( 3,942 )

Effect of unvested, restricted stock ( 146 ) ( 50 ) ( 35 )

Net loss for basic EPS ( 787 ) ( 3,977 ) ( 16,980 )

Net income (loss) for basic EPS 8,753 ( 787 ) ( 3,977 )

Weighted average common shares–basic 17,603 17,513 17,555

Basic net loss per common share $ ( 0.04 ) $ ( 0.23 ) $ ( 0.96 )

Diluted net loss per common share:

Net loss for diluted EPS $ ( 787 ) $ ( 3,977 ) $ ( 16,980 )

Basic net income (loss) per common share $ 0.50 $ ( 0.04 ) $ ( 0.23 )

Diluted net income (loss) per common share:

Net income (loss) for basic EPS $ 8,753 $ ( 787 ) $ ( 3,977 )

Effect of dilutive preferred stock — — —

Net income (loss) for diluted EPS 8,753 ( 787 ) ( 3,977 )

Weighted average common shares–basic 17,603 17,513 17,555

Effect of dilutive unvested, restricted stock and preferred stock — — —

Effect of dilutive preferred stock — — —

Weighted average common shares–diluted 17,603 17,513 17,555

Diluted net loss per common share $ ( 0.04 ) $ ( 0.23 ) $ ( 0.96 )

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Earnings Per Share (continued)

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

Diluted net income (loss) per common share $ 0.50 $ ( 0.04 ) $ ( 0.23 )

Diluted net income (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.

Diluted net loss per common share was calculated under the two-class method for the fiscal year ended October 31, 2022.

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

Diluted net income (loss) per common share was calculated under the two-class method for fiscal years 2023 and 2022.

The Company excluded 117,000 unvested, restricted shares, as calculated under the treasury stock method, from its computation of diluted net loss per common share for fiscal year 2021.

Related-Party Transactions

5 unchanged sentences

5 Cadiz / Fenner / WAM $ — $ — $ 206 $ — $ — $ 1,288 $ 446 $ 1,198

7 YMIDD $ 571 $ — $ — $ — $ — $ — $ — $ —

8 FGF $ 2,681 $ 2,519 $ 837 $ — $ 2,965 $ 2,652 $ 837 $ —

9 LLCB $ 66 $ — $ 3,444 $ — $ 66 $ — $ 3,444 $ —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

Year Ended October 31, 2023 Year Ended October 31, 2022

Consolidated Statement of Operations Consolidated Statement of Operations

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 Dividends Paid

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

1 Employees $ — $ 888 $ — $ — $ — $ 869 $ — $ —

3 unchanged sentences

5 Cadiz / Fenner / WAM $ — $ — $ 2,074 $ — $ — $ — $ 1,467 $ —

6 Colorado River Growers $ — $ — $ — $ — $ 157 $ — $ 2,772 $ —

7 YMIDD $ 1,080 $ — $ 134 $ — $ 225 $ — $ 142 $ —

8 FGF $ 330 $ 224 $ — $ — $ 673 $ 343 $ 25 $ —

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

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

12 Principal owner $ — $ — $ — $ 867 $ — $ — $ — $ 593

1 unchanged sentence

Consolidated Statement of Operations

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

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

1 Employees $ — $ 814 $ — $ —

6 unchanged sentences

8 FGF $ 4,129 $ — $ 2,884 $ —

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

10 Freska $ 128 $ — $ 150 $ —

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

(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 material rental payments due from employees at October 31, 2022 and 2021.

(2) Mutual water companies - The Company has representation on the boards of directors of the mutual water companies in which the Company has investments, as well as other water districts.

Refer to Note 9 - Other Assets.

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

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

(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 no payments due to the cooperative association.

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

(4) Calavo - Through January 2022, the Company had representation on the board of directors of Calavo.

3 unchanged sentences

(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.

In 2013, the Company entered a long-term lease agreement (the “Lease”) with Cadiz Real Estate, LLC (“Cadiz”), a wholly owned subsidiary of Cadiz, Inc., and currently leases 670 acres located in eastern San Bernardino County, California.

The annual base rental is equal to the sum of $ 200 per planted acre and 20 % of gross revenues from the sale of harvested lemons (less operating expenses), not to exceed $ 1,200 per acre per year.

In 2013, the Company entered a long-term lease agreement (the “Lease”) with Cadiz Real Estate, LLC (“Cadiz”), a wholly owned subsidiary of Cadiz, Inc., and leased 670 acres located in eastern San Bernardino County, California.

In 2016, Cadiz assigned this lease to Fenner Valley Farms, LLC (“Fenner”), a subsidiary of Water Asset Management, LLC (“WAM”).

An affiliate of WAM is the holder of 9,300 shares of Limoneira Company Series B-2 convertible preferred stock.

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

As of the date of this lease assignment, the Company no longer has any related-party transactions with Cadiz.

An affiliate of WAM is the holder of 9,300 shares of the Company's Series B-2 convertible preferred stock.

The annual base rent was equal to the sum of $ 200 per planted acre and 20 % of gross revenues from the sale of harvested lemons (less operating expenses), not to exceed $ 1,200 per acre per year.

Upon the adoption of ASC 842, the Company recorded a ROU asset and corresponding lease liability, which were written off in fiscal year 2023 upon cessation of farming operations.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

(6) Colorado River Growers, Inc.

4 unchanged sentences

The Company purchased water from YMIDD and had no amounts payable to them for such purchases.

Additionally, the Compnay received fallowing revenue from YMIDD.

(8) FGF - 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 operated the 1,200 -acre Santa Clara ranch and sold the lemons it grew to FGF, who packed, marketed, and sold the fruit to its export customers.

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

Effective November 1, 2021, the Company leases Finca Santa Clara to FGF and records rental revenue related to the leased land.

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.

Additionally, the Company received fallowing revenue from YMIDD and has a receivable outstanding.

(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.

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

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

The Company leases the Santa Clara ranch to FGF and records rental revenue related to the leased land.

(9) LLCB - Refer to Note 6 - Real Estate Development.

4 unchanged sentences

The former board member resigned effective June 14, 2022 and is no longer a related-party.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Related-Party Transactions (continued)

(12) Principal owner - The Company has one principal owner with ownership shares over 10% and paid dividends to such owner.

A reconciliation of income (loss) before income taxes for domestic and foreign locations for the years ended October 31, 2022, 2021 and 2020 are as follows (in thousands):

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

2023 2022 2021

2 unchanged sentences

Income (loss) before income taxes $ 13,364 $ 349 $ ( 4,163 )

The components of the provisions for income taxes for fiscal years 2022, 2021 and 2020 are as follows (in thousands):

The components of the (provision) benefit for income taxes for the fiscal years ended October 31 are as follows (in thousands):

2023 2022 2021

2 unchanged sentences

Foreign — ( 4 ) —

Total current (provision) benefit ( 275 ) 77 6,361

Total current tax (provision) benefit ( 6,194 ) ( 275 ) 77

Federal 2,665 ( 477 ) ( 17 )

1 unchanged sentence

Foreign ( 1 ) 56 79

Total deferred (provision) benefit ( 548 ) 189 2,133

Total deferred tax (provision) benefit 1,947 ( 548 ) 189

Total income tax (provision) benefit $ ( 4,247 ) $ ( 823 ) $ 266

3 unchanged sentences

Deferred income taxes reflect the net of temporary differences between the carrying amount of the assets and liabilities for financial reporting and income tax purposes.

The components of deferred income tax assets at October 31, 2022 and 2021 are as follows (in thousands):

The components of deferred income tax assets as of October 31 are as follows (in thousands):

Deferred income tax assets:

Reserve and other accruals $ 752 $ 646

Reserves and other accruals $ 698 $ 752

Net operating losses 1,970 5,917

Right-of-use asset 1,672 531

Lease liabilities 951 1,672

Minimum pension liability adjustment — 621

Other assets 43 151

Interest expense limitation — 2

Stock-based compensation 1,320 604

8 unchanged sentences

Investment in joint ventures and other basis adjustments ( 6,119 ) ( 4,449 )

Right-of-use asset ( 1,660 ) ( 510 )

Right-of-use assets ( 935 ) ( 1,660 )

Prepaids and receivables ( 178 ) ( 298 )

5 unchanged sentences

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

The Company recognized deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

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 $ 1,536,000 on the net deferred tax assets of its subsidiaries in Argentina and Chile as of October 31, 2022 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.

The Company has recorded a valuation allowance of $ 2,299,000 on the net deferred tax assets of its subsidiaries in Argentina, Chile and Holland as of October 31, 2023 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 sources of taxable income.

LIMONEIRA COMPANY

1 unchanged sentence

Income Taxes (continued)

At October 31, 2022, the Company has recorded a deferred tax asset of $ 5,917,000 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.

As of October 31, 2023, the Company has recorded a deferred tax asset of $ 1,970,000 related to its state and foreign net operating loss carryforwards.

The net operating losses begin to expire as follows (in thousands):

Jurisdiction Gross Amount Begin to Expire

Federal 14,959 Indefinite

State 1,195 10/31/2040

2 unchanged sentences

Argentina 4,043 10/31/2025

The provision for income taxes differs from the amount of income tax determined by applying U.S.

statutory federal income tax rate to pretax income as a result of the following differences (in thousands):

The provision for income taxes differs from the amount of income tax determined by applying the U.S.

statutory federal income tax rate to pretax income as a result of the following differences for the fiscal years ended October 31 (in thousands):

2023 2022 2021

Amount % Amount % Amount %

Provision at statutory rates $ ( 73 ) ( 21.0 ) % $ 874 ( 21.0 ) % $ 5,551 ( 21.0 ) %

(Provision) benefit at statutory rates $ ( 2,806 ) ( 21.0 ) % $ ( 73 ) ( 21.0 ) % $ 874 ( 21.0 ) %

State income tax, net of federal benefit ( 814 ) ( 6.2 ) % ( 74 ) ( 21.1 ) % 224 ( 5.4 ) %

Dividend exclusion — — % — — % 27 ( 0.1 ) %

Meals and entertainment — — % — — % ( 18 ) 0.1 %

Shared-based compensation ( 110 ) ( 31.2 ) % ( 217 ) 5.2 % — — %

Share-based compensation 20 0.2 % ( 110 ) ( 31.2 ) % ( 217 ) 5.2 %

Executive compensation ( 395 ) ( 3.0 ) % ( 98 ) ( 27.9 ) % ( 45 ) 1.1 %

7 unchanged sentences

Total income tax (provision) benefit $ ( 4,247 ) ( 31.8 ) % $ ( 823 ) ( 234.8 ) % $ 266 ( 6.4 ) %

At October 31, 2022 and 2021, the Company had no unrecognized tax benefits.

As of October 31, 2023 and 2022, the Company had no unrecognized tax benefits.

The Company files income tax returns in the U.S., California, Arizona, Chile, Argentina and Holland.

2 unchanged sentences

There was no accrued interest or penalties associated with uncertain tax positions as of October 31, 2023.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans

The Limoneira Company Retirement Plan (the “Plan”) is a noncontributory, defined benefit, single employer pension plan, which provides retirement benefits for all eligible employees.

Benefits paid by the Plan are calculated based on years of service, highest five-year average earnings, primary Social Security benefit and retirement age.

The Limoneira Company Retirement Plan (the “Plan”) was a noncontributory, defined benefit, single employer pension plan, which provided retirement benefits for all eligible employees.

Benefits paid by the Plan were calculated based on years of service, highest five-year average earnings, primary Social Security benefit and retirement age.

Effective June 2004, the Company froze the Plan and no additional benefits accrued to participants subsequent to that date.

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

The Plan was administered by Principal Bank and Mercer Human Resource Consulting.

In fiscal year 2021, the Company terminated the Plan effective December 31, 2021.

During fiscal year 2023, the Company made funding contributions of $ 2,500,000 to fully fund and settle the plan obligations.

Lump sum payments were made to a portion of the active and vested terminated participants and annuities were purchased for all remaining participants from an insurance company.

There are no remaining benefit obligations or plan assets and the remaining accumulated other comprehensive loss was fully recognized.

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

There were no funding contributions during fiscal years 2022 or 2021.

Plan assets are invested in a group trust consisting primarily of cash.

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 target asset allocation is 100 % cash.

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.

The components of net periodic benefit cost for the Plan for fiscal years 2022 and 2021 were as follows (in thousands):

There were no funding contributions during fiscal year 2022.

Plan assets were invested in a group trust consisting primarily of cash.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Retirement Plans (continued)

The following tables set forth the Plan’s net periodic benefit 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.

The components of net periodic benefit cost for the Plan at October 31 were as follows (in thousands):

Administrative expenses $ 20 $ 718

8 unchanged sentences

Retirement Plans (continued)

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

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

Change in benefit obligation:

5 unchanged sentences

Expenses paid ( 220 ) ( 643 )

Actuarial gain ( 2,474 ) ( 858 )

Benefits and expenses payable ( 198 ) —

Transfer in 99 —

Actuarial loss (gain) 184 ( 2,474 )

Benefit obligation at end of year $ — $ 14,607

3 unchanged sentences

Plan settlements ( 14,427 ) ( 3,604 )

Employer contributions 2,500 —

Benefits paid ( 100 ) ( 1,327 )

Expenses paid ( 220 ) ( 643 )

Benefits and expenses payable ( 198 ) —

Transfer in 99 —

Fair value of plan assets at end of year $ — $ 12,335

12 unchanged sentences

Net deficit recognized in statements of financial position $ — $ ( 2,272 )

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

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 at October 31, (in thousands):

Changes recognized in other comprehensive income:

Net loss (gain) arising during the year $ 697 $ ( 2,658 )

Net loss arising during the year $ 190 $ 697

Amortization of prior service cost ( 54 ) ( 45 )

1 unchanged sentence

Total recognized in other comprehensive income $ ( 2,513 ) $ ( 353 )

Total recognized in net periodic benefit and other comprehensive loss (income) $ 1,424 $ ( 2,699 )

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):

Total recognized in net periodic benefit and other comprehensive loss $ 228 $ 1,424

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

Weighted-average assumptions used to determine benefit obligations:

Discount rate NA 2.58 %

Discount rate NA NA

Assumptions used to determine net periodic benefit cost:

Discount rate 2.58 % 2.50 %

Expected return on plan assets 2.98 % 5.05 %

Discount rate NA 2.58 %

Expected return on plan assets NA 2.98 %

Additional year-end information:

2 unchanged sentences

Fair value of plan assets $ — $ 12,335

Employer contributions of $ 2,500,000 and benefit payments of $ 14,607,000 are expected to be paid in fiscal year 2023.

The following table sets forth the Plan’s assets as of October 31, 2022, segregated by level using the hierarchy established by FASB ASC 820, Fair Value Measurements and Disclosures (in thousands):

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 12,302 $ — $ — $ 12,302

Accrued income — 33 — 33

$ 12,302 $ 33 $ — $ 12,335

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

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

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

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

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

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

In addition, for calendar year 2023, the Company contributed a discretionary gift of 2 % of gross wages deposited into the 401(k) account of all eligible employees.

During fiscal years 2023, 2022 and 2021, the Company contributed to the plan and recognized expenses of $ 676,000 , $ 445,000 and $ 546,000 , respectively.

4 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.

The Company is party to a lawsuit, initiated on March 27, 2018, against Southern California Edison in Superior Court of the State of California, County of Los Angeles whereby the Company is claiming unspecified damages, attorneys' fees and other costs, as a result from the Thomas Fire in fiscal year 2018.

While the outcome of this lawsuit is uncertain, the Company believes its claim for damages is valid.

The Company was party to a lawsuit, initiated on March 27, 2018, against Southern California Edison in Superior Court of the State of California, County of Los Angeles whereby the Company claimed unspecified damages, attorneys’ fees and other costs, as a result of the Thomas Fire in fiscal year 2018.

On April 18, 2023, the Company entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Southern California Edison Company and Edison International to formally resolve any and all claims related to the fire.

Under the terms of the Settlement Agreement, the Company was awarded a total settlement of $ 9,000,000 .

On May 19, 2023, the Company received $ 6,109,000 , net of legal and related costs, of which $ 3,840,000 was recorded in agribusiness revenues and $ 2,269,000 was recorded in gain on legal settlement.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Series B and Series B-2 Preferred Stock

3 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Series B Convertible Preferred Stock (continued)

Voting Rights:

20 unchanged sentences

Each share of Series B-2 Preferred Stock is entitled to one vote on all matters submitted to a vote of the Company’s stockholders.

The Company may redeem shares of Series B-2 Preferred Stock only (i) from WPI or its designee and (ii) upon, and to the extent of, an election to exercise the option pursuant to the Option Agreement, described below, at a redemption price equal to the liquidation value of $ 1,000 per share plus accrued and unpaid dividends.

Because the Series B-2 Preferred Stock may be redeemed by WPI at its discretion with the exercise of the Option Agreement, the redemption is outside the control of the Company and accordingly, the Series B-2 Preferred Stock has been classified as temporary equity.

LIMONEIRA COMPANY

2 unchanged sentences

Series B-2 Convertible Preferred Stock (continued)

In connection with the sale of the Series B-2 Preferred Stock, Associated Citrus Packers, Inc.

15 unchanged sentences

In fiscal year 2022, the 2010 Stock Plan terminated and was replaced by the 2022 Stock Plan (both plans collectively the “Stock Plans”) with 500,000 authorized shares.

The Stock Plan has 450,769 remaining shares available to be issued as of October 31, 2022.

The Stock Plan had 154,580 remaining shares available to be issued as of October 31, 2023.

Performance Awards

Certain restricted stock grants are made to management each December under the Stock Plans based on the achievement of certain annual financial performance and other criteria achieved during the previous fiscal year (“Performance Awards”).

The performance grants are based on a percentage of the employee’s base salary divided by the stock price on the grant date once the performance criteria has been met, and generally vest over a two-year period as service is provided.

During December 2022, 79,972 shares of common stock with a per share price of $ 13.19 were granted to management under the Stock Plan for fiscal year 2022 performance, resulting in total compensation expense of approximately $ 1,055,000 , with $ 365,000 recognized in the fiscal year ended October 31, 2022 and the balance to be recognized over the next two years as the shares vest.

During December 2021 and 2020, there were no Performance Awards of restricted stock granted for fiscal year 2021 or 2020 performance because the financial performance and other criteria were not met.

The performance grants are based on a percentage of the employee’s base salary divided by the stock price on the grant date once the performance criteria have been met, and generally vest over a two-year period as service is provided.

Executive Awards

Certain restricted stock grants are made to key executives under the Stock Plan (“Executive Awards”).

These grants generally vest over a three to five-year period as service is provided.

During December 2022, subsequent to fiscal year 2022, the Company granted 55,000 shares of common stock with a per share price of $ 13.19 to key executives under the Stock Plan.

The related compensation expense of approximately $ 725,000 will be recognized equally over the next three years as the shares vest.

In fiscal year 2022, the Company entered into Retention Bonus Agreements with key executives (collectively, the “Retention Bonus Agreements”) whereby the executives will be eligible to receive cash and restricted stock grants.

During December 2022, subsequent to fiscal year 2022, the Company granted 11,317 shares of common stock with a per share price of $ 13.19 to key executives related to the Retention Bonus Agreements.

The related compensation expense of approximately $ 149,000 had

These grants generally vest over a three-year period as service is provided.

LIMONEIRA COMPANY

2 unchanged sentences

Stock-based Compensation (continued)

$ 122,000 recognized in the fiscal year ended October 31, 2022 and the balance will be recognized over the next year as the shares vest.

Executive Awards (continued)

During November 2023, subsequent to fiscal year 2023, the Company granted 53,078 shares of common stock with a per share price of $ 14.13 to key executives under the Stock Plan.

The related compensation expense of approximately $ 750,000 will be recognized equally over the next three years as the shares vest.

During December 2023, subsequent to fiscal year 2023, the Company granted 12,709 shares of common stock with a per share price of $ 19.57 to key executives related to the Retention Bonus Agreements.

The related compensation expense of approximately $ 249,000 had $ 115,000 recognized in fiscal year 2023 and the balance will be recognized over the next year as the shares vest.

Director Awards

1 unchanged sentence

Summary of Awards

A summary of the Performance, Executive, and Director awards granted under the Stock Plan during fiscal years 2022, 2021 and 2020, and the weighted average grant price is as follows:

Year Ended October 31,

A summary of the Performance, Executive, and Director Awards granted under the Stock Plan, and the weighted average grant prices, during the fiscal years ended October 31, is as follows:

2023 2022 2021

4 unchanged sentences

Total 296,189 $ 14.52 119,231 $ 14.38 125,663 $ 15.65

Summary of Awards (continued)

The Company recognized $ 3,841,000 , $ 2,732,000 and $ 2,582,000 of stock-based compensation in fiscal years 2023, 2022 and 2021, respectively, of which substantially all of the expense has been included in selling, general and administrative expenses for all years presented.

1 unchanged sentence

The income tax benefit recognized in the income statement for stock-based compensation arrangements was $ 1,075,000 , $ 604,000 and $ 476,000 for fiscal years 2023, 2022 and 2021, respectively.

The total fair value of shares vested during the years ended October 31, 2022, 2021 and 2020 was $ 1,856,000 , $ 2,951,000 and $ 2,365,000 respectively.

The total fair value of shares vested during fiscal years 2023, 2022 and 2021 was $ 1,323,000 , $ 1,856,000 and $ 2,951,000 respectively.

The Company has unrecognized stock-based compensation expense of $ 1,588,000 as of October 31, 2023, which is expected to be recognized over the next one to two years as the shares vest.

All unvested shares are expected to vest.

Exchange of Common Stock

During fiscal years 2023, 2022 and 2021, respectively, members of management exchanged 39,472 , 105,316 and 46,993 shares of common stock with fair values of $ 567,000 , $ 1,530,000 and $ 701,000 , 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.

A summary of the status of the Company’s nonvested shares as of October 31, 2022, and changes during the fiscal year ended October 31, 2022, is presented below:

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stockholders’ Equity (continued)

Summary of Nonvested Shares

A summary of the status of the Company’s nonvested shares as of October 31, 2023, and changes during fiscal year 2023, is presented below:

Number of Shares Weighted-Average

2 unchanged sentences

Vested ( 92,564 ) $ 14.29

Forfeited ( 15,000 ) $ 14.96

Nonvested at October 31, 2023 314,522 $ 14.55

3 unchanged sentences

No shares were 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stockholders’ Equity (continued)

On December 19, 2023, the Company declared a $ 0.075 per share dividend payable on January 12, 2024, in the aggregate amount of $ 1,350,000 to common stockholders of record as of January 2, 2024.

9 unchanged sentences

The avocados segment includes sales, farming and harvest costs.

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

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

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

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

1 unchanged sentence

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, 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.

The Company does not allocate selling, general and administrative expense, gain or loss on disposal of assets, gain on legal settlement, total other income (expense) and income taxes, or specifically identify them to its operating segments.

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

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

Segment information for fiscal year 2022 (in thousands):

Packing Eliminations Avocados Other

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Segment Information (continued)

Segment information for fiscal year 2023 is as follows (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

4 unchanged sentences

Total net revenues 121,537 51,654 ( 31,081 ) 7,046 25,225 174,381 5,520 179,901

Costs and expenses 115,119 43,017 ( 29,817 ) 5,524 18,204 152,047 20,559 172,606

Costs and expenses (gains) 120,494 45,689 ( 31,081 ) 4,034 22,710 161,846 ( 1,304 ) 160,542

Depreciation and amortization — — — — — 7,323 1,253 8,576

Operating income (loss) $ 5,766 $ 8,976 $ — $ 11,807 $ 685 $ 18,630 $ ( 16,429 ) $ 2,201

Segment information for fiscal year 2021 (in thousands):

Packing Eliminations Avocados Other

Operating income $ 1,043 $ 5,965 $ — $ 3,012 $ 2,515 $ 5,212 $ 5,571 $ 10,783

Segment information for fiscal year 2022 is as follows (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

6 unchanged sentences

Depreciation and amortization — — — — — 8,604 1,194 9,798

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

Segment information for fiscal year 2020 (in thousands):

Operating income (loss) $ 5,766 $ 8,976 $ — $ 11,807 $ 685 $ 18,630 $ ( 16,429 ) $ 2,201

Segment information for fiscal year 2021 is as follows (in thousands):

Packing Eliminations Avocados Other

8 unchanged sentences

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Segment Information (continued)

The following is a detail of other agribusiness revenues for fiscal years 2022, 2021 and 2020 (in thousands):

Year Ended October 31,

Revenues related to rental operations are included in “Corporate and Other.” The detail of other agribusiness revenues for fiscal years ended October 31, is as follows (in thousands):

2023 2022 2021

Oranges $ 5,779 $ 9,911 $ 4,382

Specialty citrus and other crops 8,978 7,253 5,846

Specialty citrus and other 9,515 8,978 7,253

Farm management 9,931 — —

Other agribusiness revenues $ 25,225 $ 18,889 $ 11,635

4 unchanged sentences

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