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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM              TO             
 Commission File Number: 001-34755
LIMONEIRA COMPANY
(Exact name of registrant as specified in its charter)
Delaware77-0260692
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1141 Cummings Road, Santa Paula, CA
93060
(Address of principal executive offices)(Zip code)

Registrant’s telephone number, including area code: (805525-5541 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange of Which Registered
Common Stock, $0.01 par valueLMNR
The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:  
Large accelerated filer
Accelerated filer
Emerging growth company
Non-accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No

As of February 28, 2021, there were 17,684,927 shares outstanding of the registrant’s common stock.



LIMONEIRA COMPANY
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
  
Item 1.Financial Statements (Unaudited)
   
Consolidated Balance Sheets – January 31, 2021 and October 31, 2020
  
Consolidated Statements of Operations – three months ended January 31, 2021 and 2020
  
Consolidated Statements of Comprehensive Loss – three months ended January 31, 2021 and 2020
  
Consolidated Statements of Stockholders' Equity and Temporary Equity – three months ended January 31, 2021 and 2020
Consolidated Statements of Cash Flows – three months ended January 31, 2021 and 2020
  
Notes to Consolidated Financial Statements
  
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
Item 3.Quantitative and Qualitative Disclosures about Market Risk
   
Item 4.Controls and Procedures
   
PART II. OTHER INFORMATION
  
Item 1.Legal Proceedings
   
Item 1A.Risk Factors
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
   
Item 3.Defaults Upon Senior Securities
   
Item 4.Mine Safety Disclosures
   
Item 5.Other Information
   
Item 6.Exhibits
   
SIGNATURES

2


Cautionary Note on Forward-Looking Statements.
 
This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond the Company’s control. The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied include:

changes in laws, regulations, rules, quotas, tariffs, and import laws;
adverse weather conditions, natural disasters and other adverse natural conditions, including freezes, rains, fires and droughts that affect the production, transportation, storage, import and export of fresh produce;
market responses to industry volume pressures;
increased pressure from disease, insects and other pests;
disruption of water supplies or changes in water allocations;
product and raw materials supplies and pricing;
energy supply and pricing;
changes in interest rates;
availability of financing for development activities;
general economic conditions for residential and commercial real estate development;
political changes and economic crises;
international conflict;
acts of terrorism;
labor disruptions, strikes, shortages or work stoppages;
the impact of foreign exchange rate movements;
negative impacts related to the COVID-19 pandemic and the effectiveness of the Company's responses to the pandemic;
ability to maintain compliance with covenants under our loan agreements;
loss of important intellectual property rights; and
other factors disclosed in our public filings with the Securities and Exchange Commission (the "SEC").
These forward-looking statements involve risks and uncertainties that we have identified as having the potential to cause actual results to differ materially from those contemplated herein. We have described in Part I, Item 1A-“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 additional factors that could cause our actual results to differ from our projections or estimates, especially relating to the COVID-19 pandemic.

Many of these risks and uncertainties are currently amplified by, and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks.

The Company’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which the Company is not currently aware or which the Company currently deems immaterial could also cause the Company’s actual results to differ, including those discussed in the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update these forward-looking statements, even if our situation changes in the future.
 
All references to “we,” "us," “our,” “our Company,” "the Company" or "Limoneira" in this Quarterly Report on Form 10-Q mean Limoneira Company, a Delaware corporation, and its consolidated subsidiaries.

3


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIMONEIRA COMPANY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
($ in thousands, except share amounts) 
 January 31, 2021October 31, 2020
Assets  
Current assets:  
Cash$1,841 $501 
Accounts receivable, net20,703 16,261 
Cultural costs3,948 6,865 
Prepaid expenses and other current assets11,312 10,688 
Receivables/other from related parties4,007 2,294 
Income taxes receivable948 5,911 
Total current assets42,759 42,520 
Property, plant and equipment, net244,215 242,649 
Real estate development21,510 21,636 
Equity in investments61,580 61,214 
Goodwill1,544 1,535 
Intangible assets, net11,340 11,309 
Other assets8,864 8,737 
Total assets$391,812 $389,600 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$7,062 $5,838 
Growers payable6,436 8,126 
Accrued liabilities6,893 7,947 
Payables to related parties6,228 6,273 
Current portion of long-term debt3,304 3,277 
Total current liabilities29,923 31,461 
Long-term liabilities:  
Long-term debt, less current portion131,477 122,571 
Deferred income taxes21,219 22,430 
Other long-term liabilities6,654 6,568 
Total liabilities189,273 183,030 
Commitments and contingencies (See Note 16)  
Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at January 31, 2021 and October 31, 2020) (8.75% coupon rate)
1,479 1,479 
Series B-2 Convertible Preferred Stock – $100.00 par value (10,000 shares authorized: 9,300 shares issued and outstanding at January 31, 2021 and October 31, 2020) (4% dividend rate on liquidation value of $1,000 per share)
9,331 9,331 
Stockholders' Equity:  
Series A Junior Participating Preferred Stock – $0.01 par value (20,000 shares authorized: zero issued or outstanding at January 31, 2021 and October 31, 2020)
  
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,935,904 and 17,857,707 shares issued and 17,684,927 and 17,606,730 shares outstanding at January 31, 2021 and October 31, 2020, respectively)
179 179 
Additional paid-in capital162,450 162,084 
Retained earnings25,140 30,797 
Accumulated other comprehensive loss(6,619)(7,548)
Treasury stock, at cost, 250,977 shares at January 31, 2021 and October 31, 2020
(3,493)(3,493)
Noncontrolling interest14,072 13,741 
Total equity191,729 195,760 
Total liabilities and stockholders' equity$391,812 $389,600 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($ in thousands, except share amounts)
 Three Months Ended
January 31,
 20212020
Net revenues:
Agribusiness$37,137 $40,483 
Other operations1,138 1,173 
Total net revenues38,275 41,656 
Costs and expenses:
Agribusiness36,938 42,543 
Other operations1,082 1,269 
Selling, general and administrative5,895 6,310 
Total costs and expenses43,915 50,122 
Operating loss(5,640)(8,466)
Other income (expense):
Interest income43 225 
Interest expense, net of dividends134 (170)
Equity in earnings (losses) of investments, net366 (120)
Loss on stock in Calavo Growers, Inc. (2,024)
Other (expense) income, net(6)515 
Total other income (expense)537 (1,574)
Loss before income tax benefit(5,103)(10,040)
Income tax benefit1,187 3,136 
Net loss(3,916)(6,904)
Net (income) loss attributable to noncontrolling interest(292)477 
Net loss attributable to Limoneira Company(4,208)(6,427)
Preferred dividends(125)(125)
Net loss attributable to common stock$(4,333)$(6,552)
Basic net loss per common share$(0.25)$(0.37)
Diluted net loss per common share$(0.25)$(0.37)
Weighted-average common shares outstanding-basic17,405,000 17,579,000 
Weighted-average common shares outstanding-diluted17,405,000 17,579,000 
  
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 


5


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(In thousands)
 Three Months Ended January 31,
 20212020
Net loss$(3,916)$(6,904)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments795 (1,267)
Minimum pension liability adjustment, net of tax of $51 and $50 for the three months ended January 31, 2021 and 2020, respectively.
134 135 
Total other comprehensive income (loss), net of tax929 (1,132)
Comprehensive loss(2,987)(8,036)
Comprehensive (income) loss attributable to noncontrolling interest(331)465 
Comprehensive loss attributable to Limoneira Company$(3,318)$(7,571)
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 

6


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND TEMPORARY EQUITY
($ in thousands)
 Stockholders' Equity Temporary Equity
 Common StockAdditional
Paid-In
RetainedAccumulated
Other
Comprehensive
TreasuryNon- controllingTotalSeries B
Preferred
Series B-2
Preferred
 SharesAmountCapitalEarnings(Loss) IncomeStockInterestEquityStockStock
Balance at October 31, 202017,606,730 $179 $162,084 $30,797 $(7,548)$(3,493)$13,741 $195,760 $1,479 $9,331 
Dividends Common ($0.075 per share)
— — — (1,324)— — — (1,324)— — 
Dividends Series B ($2.19 per share)
— — — (32)— — — (32)— — 
Dividends Series B-2 ($10 per share)
— — — (93)— — — (93)— — 
Stock compensation125,190 1 1,066 — — — — 1,067 — — 
Exchange of common stock(46,993)(1)(700)— — — — (701)— — 
Net (loss) income— — — (4,208)— — 292 (3,916)— — 
Other comprehensive income, net of tax— — — — 929 — 39 968 — — 
Balance at January 31, 202117,684,927$179 $162,450 $25,140 $(6,619)$(3,493)$14,072 $191,729 $1,479 $9,331 
Stockholders' Equity Temporary Equity
Common StockAdditional
Paid-In
RetainedAccumulated
Other
Comprehensive
TreasuryNon- controllingTotalSeries B
Preferred
Series B-2
Preferred
SharesAmountCapitalEarningsLossStockInterestEquityStockStock
Balance at October 31, 201917,756,180 $178 $160,254 $53,089 $(7,255)$— $15,422 $221,688 $1,479 $9,331 
Dividends Common ($0.075 per share)
— — — (1,338)— — — (1,338)— — 
Dividends Series B ($2.19 per share)
— — — (32)— — — (32)— — 
Dividends Series B-2 $10 per share)
— — — (93)— — — (93)— — 
Stock compensation112,841 1 828 — — — — 829 — — 
Exchange of common stock(11,314)— (213)— — — — (213)— — 
Net loss— — — (6,427)— — (477)(6,904)— — 
Other comprehensive (loss) income, net of tax— — — — (1,132)— 12 (1,120)— — 
Balance at January 31, 202017,857,707$179 $160,869 $45,199 $(8,387)$— $14,957 $212,817 $1,479 $9,331 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
7


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
 Three Months Ended
January 31,
 20212020
Operating activities  
Net loss$(3,916)$(6,904)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization2,501 2,565 
Gain on disposals of assets (250)
Stock compensation expense1,066 829 
Non-cash lease expense121  
Equity in earnings of investments(366)120 
Deferred income taxes(1,187)(3,136)
Loss on stock in Calavo Growers, Inc. 2,024 
Other, net142 14 
Changes in operating assets and liabilities:  
Accounts receivable and receivables/other from related parties(6,115)(8,433)
Cultural costs2,918 3,746 
Prepaid expenses and other current assets(255)(513)
Income taxes receivable4,963  
Other assets(54)139 
Accounts payable and growers payable(307)(2,314)
Accrued liabilities and payables to related parties(1,116)(267)
Other long-term liabilities(185)171 
Net cash used in operating activities(1,790)(12,209)
Investing activities  
Capital expenditures(3,415)(3,672)
Collection on note receivable25  
Equity investment contributions (2,800)
Investments in mutual water companies and water rights(190)(43)
Net cash used in investing activities(3,580)(6,515)
Financing activities  
Borrowings of long-term debt27,632 36,631 
Repayments of long-term debt(18,798)(15,895)
Dividends paid – common(1,324)(1,338)
Dividends paid – preferred(125)(125)
Exchange of common stock(700)(213)
Net cash provided by financing activities6,685 19,060 
Effect of exchange rate changes on cash25 (78)
Net increase in cash1,340 258 
Cash at beginning of period501 616 
Cash at end of period$1,841 $874 
8


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
(In thousands)
 Three Months Ended
January 31,
 20212020
Supplemental disclosures of cash flow information  
Cash paid during the period for interest, net of amounts capitalized$969 $1,078 
Cash paid during the period for income taxes, net of (refunds received)$(4,997)$ 
Non-cash investing and financing activities:  
Capital expenditures accrued but not paid at period-end$ $119 
Accrued contribution obligation of investment in water company$ $450 

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



9


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Basis of Presentation
Business
Limoneira Company (together with its consolidated subsidiaries, the “Company”) engages primarily in growing citrus and avocados, picking and hauling citrus, and packing, marketing and selling lemons. The Company is also engaged in residential rentals and other rental operations and real estate development activities.

The Company markets and sells lemons 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 its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

The Company sells the majority of its avocado production to Calavo Growers, Inc. (“Calavo”), a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW. Calavo’s customers include many of the largest retail and food service companies in the United States and Canada. Calavo packs the Company’s avocados, which are then sold and distributed under Calavo brands to its customers.

Basis of Presentation and Preparation

The accompanying unaudited interim 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. Intercompany accounts and transactions have been eliminated. In the opinion of the Company, the unaudited interim consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited interim consolidated financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Because the consolidated financial statements do not include all of the information and notes required by GAAP for a complete set of consolidated financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies
Comprehensive Loss

Comprehensive loss represents all changes in a company’s net assets, except changes resulting from transactions with shareholders. Other comprehensive income or loss primarily includes foreign currency translation items and defined benefit pension items. Accumulated other comprehensive (loss) income is reported as a component of the Company's stockholders' equity.

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

Three Months Ended January 31,
 20212020
 Pre-tax AmountTax (Expense) BenefitNet AmountPre-tax AmountTax (Expense) BenefitNet Amount
Foreign currency translation adjustments$795 $ $795 $(1,267)$ $(1,267)
Minimum pension liability adjustments:
Other comprehensive gain before reclassifications185 (51)134 185 (50)135 
Other comprehensive income (loss)$980 $(51)$929 $(1,082)$(50)$(1,132)






10


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. Summary of Significant Accounting Policies (continued)

The following table summarizes the changes in accumulated other comprehensive (loss) income by component (in thousands):
 Foreign Currency Translation LossDefined Benefit Pension PlanAvailable-for-Sale SecuritiesAccumulated Other Comprehensive (Loss) Income
Balance as of October 31, 2020$(3,069)$(4,479)$ $(7,548)
Other comprehensive income795 134  929 
Balance as of January 31, 2021$(2,274)$(4,345)$ $(6,619)

 Foreign Currency Translation LossDefined Benefit Pension PlanAvailable-for-Sale SecuritiesAccumulated Other Comprehensive (Loss) Income
Balance as of October 31, 2019$(2,362)$(4,753)$(140)$(7,255)
Other comprehensive (loss) income(1,267)135  (1,132)
Balance as of January 31, 2020$(3,629)$(4,618)$(140)$(8,387)
 

Recent Accounting Pronouncements

FASB ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related ASUs

This amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.

ASU 2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this ASU effective November 1, 2020 and the adoption did not have a material impact on its consolidated financial statements.

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

This amendment simplifies accounting for convertible instruments by removing major separation models required under current GAAP. 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 is evaluating the effect this ASU may have on its consolidated financial statements.

3. Concentrations and Geographic Information

Lemons procured from third-party growers were 48% and 55% of the Company's lemon supply in the three months ended January 31, 2021 and 2020, respectively, of which one third-party grower was 26% of the lemon supply for the three months ended January 31, 2021.

The Company sells the majority of its avocado production to Calavo. Sales of avocados to Calavo were insignificant for the three months ended January 31, 2021 and 2020, respectively. The Company sells a majority of its oranges and specialty citrus to a third-party packinghouse.


11


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. Concentrations and Geographic Information (continued)

Concentrations of credit risk with respect to revenues and accounts receivables are limited due to a large, diverse customer base. One individual customer represented 23% of revenues for the three months ended January 31, 2021. One individual customer represented 12% of accounts receivable, net as of January 31, 2021.

During the three months ended January 31, 2021 and 2020, the Company had approximately $1,027,000 and $539,000, respectively, of total sales in Chile by Fruticola Pan de Azucar S.A. ("PDA") and Agricola San Pablo SpA ("San Pablo"). During the three months ended January 31, 2021 and 2020, the Company had approximately $1,671,000 and $199,000, respectively, of total sales in Argentina by Trapani Fresh.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands): 
 January 31, 2021October 31, 2020
Prepaid supplies and insurance$2,569 $2,080 
Note receivable and related interest2,470 2,490 
Real estate development held for sale2,543 2,543 
Sales tax receivable1,549 1,867 
Lemon supplier advances and other2,181 1,708 
 $11,312 $10,688 

5. Real Estate Development

Real estate development assets are comprised primarily of land and land development costs and consist of the following (in thousands):
 January 31, 2021October 31, 2020
Retained Property - East Area I$12,698 $13,169 
East Area II8,812 8,467 
 $21,510 $21,636 

East Area I, Retained Property and East Area II

In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities. On November 10, 2015 (the “Transaction Date”), the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project. To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB” or “Joint Venture”) as the development entity, contributed its East Area I property to LLCB and sold a 50% interest in LLCB to Lewis for $20,000,000.

The Company and the Joint Venture also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement"). Under the terms of the Retained Property Agreement, the Joint Venture transferred certain contributed East Area I property, which is entitled for commercial development, back to the Company (the "Retained Property") and arranged for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by the Company. The balance in Retained Property and East Area II includes estimated costs incurred by and reimbursable to LLCB of $5,300,000 at January 31, 2021 and October 31, 2020, which is included in payables to related parties.







12


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. Real Estate Development (continued)

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

In January 2018, the Joint Venture entered into a $45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. The Loan originally was scheduled to mature in January 2020 and was extended to February 22, 2021 per the terms thereof. The interest rate on the Loan is LIBOR plus 2.85% and is payable monthly. The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without penalty. In February 2021, this loan was extended to February 22, 2023 with an option to extend to February 22, 2024, subject to certain conditions. The Joint Venture recorded the Loan balance of $17,411,000 as of January 31, 2021.

In February 2018, certain principals from Lewis and by the Company guaranteed the obligations under the Loan. The guarantee shall continue in effect until all of the Loan obligations are fully paid and the guarantors are jointly and severally liable for all Loan obligations in the event of default by the Joint Venture. The $1,080,000 estimated value of the guarantee was recorded in the Company’s consolidated balance sheets and is included in other long-term liabilities with a corresponding value in equity in investments. The extension had no impact on the Company's Loan guarantee value. Additionally, a Reimbursement Agreement was executed between the Lewis guarantors and the Company, which provides for unpaid liabilities of the Joint Venture to be shared pro-rata by the Lewis guarantors and the Company in proportion to their percentage interest in the Joint Venture.

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

Through January 31, 2021, the Joint Venture has closed the sales of the initial residential lots representing 398 residential units.

Other Real Estate Development Projects

The remaining real estate development parcel within the Templeton Santa Barbara, LLC project is described as Sevilla. In the first quarter of fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $2,700,000, which is expected to close in fiscal year 2021. After transaction and other costs, the Company expects to receive cash proceeds of approximately $2,550,000 and recognize an immaterial gain upon closing. At January 31, 2021, the $2,543,000 carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

During December 2017, the Company sold its Centennial property with a net book value of $2,983,000 for $3,250,000. 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 extended to December 15, 2020 and the interest rate was reset to equal to the 6-month LIBOR plus 2.75% on the outstanding principal balance of the note, interest only paid monthly on the first day of each month beginning January 1, 2020. In September 2020, the promissory note was further extended to June 15, 2021 on the same terms and conditions upon making a principal paydown of $25,000, which was paid in November 2020, and an option to further extend the maturity date of the promissory note to December 15, 2021 on the same terms and conditions and upon making an additional principal paydown of $25,000 on or before June 1, 2021. At January 31, 2021, the net carrying value of the note was $2,625,000 and classified in prepaid expenses and other current assets.

6. Equity in Investments

Equity in investments consist of the following (in thousands): 
 January 31, 2021October 31, 2020
Limoneira Lewis Community Builders, LLC$57,574 $57,142 
Limco Del Mar, Ltd.1,986 1,920 
Rosales1,511 1,641 
Romney Property Partnership509 511 
 $61,580 $61,214 

Unconsolidated Significant Subsidiary
13


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
6. Equity in Investments (continued)

In accordance with Rule 10-01(b)(1) of Regulation S-X, which applies to interim reports on Form 10-Q, the Company must determine if its equity method investees are considered “significant subsidiaries." In evaluating its investments, there are two tests utilized to determine if equity method investees are considered significant subsidiaries: the income test and the investment test. Summarized income statement information of an equity method investee is required in an interim report if either of the two tests exceed 20% in the interim periods presented. During the year-to-date interim periods for the three months ended January 31, 2021 and 2020, this threshold was not met for any of the Company's equity investments. Although not required for the three months ended January 31, 2021, the Company included the LLCB summarized income statement information in this Quarterly Report on Form 10-Q since it anticipates it will be required in the second quarter of 2021.

The following is unaudited summarized financial information for LLCB (in thousands):
 Three Months Ended
January 31,
 20212020
Revenues$7,341 $4,743 
Cost of land sold5,750 3,960 
Operating expenses255 328 
Net income$1,336 $455 
Net income attributable to Limoneira Company$678 $249 

7. Goodwill and Intangible Assets

A summary of the change in the carrying amount of goodwill is as follows (in thousands):
Goodwill Carrying Amount
Balance at October 31, 2020$1,535 
Foreign currency translation adjustment9 
Balance at January 31, 2021$1,544 
Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable. There have been no impairment charges recorded against goodwill as of January 31, 2021.

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

Intangible assets consisted of the following as of January 31, 2021 and October 31, 2020 (in thousands):
January 31, 2021October 31, 2020
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Useful Life in YearsGross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Useful Life in Years


Trade names and trademarks$3,771 $(994)$2,777 10$3,771 $(947)$2,824 10
Customer relationships5,010 (1,179)3,831 95,010 (989)4,021 9
Non-competition agreement 1,040 (173)867 101,040 (147)893 10
Acquired water and mineral rights3,865 — 3,865 Indefinite3,571 — 3,571 Indefinite
$13,686 $(2,346)$11,340 $13,392 $(2,083)$11,309 

Amortization expense totaled $263,000 and $285,000 for the three months ended January 31, 2021 and 2020, respectively.
14


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
7. Goodwill and Intangible Assets

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

2021 (excluding the three months ended January 31, 2021)$777 
2022989 
2023989 
2024981 
2025976 
Thereafter2,763 
 $7,475 

8. Other Assets

Investments in Mutual Water Companies

The Company’s investments in various not-for-profit mutual water companies provide the Company with the right to receive a proportionate share of water from each of the not-for-profit mutual water companies that have been invested in and do not constitute voting shares and/or rights. Amounts included in other assets in the consolidated balance sheets as of January 31, 2021 and October 31, 2020 were $5,567,000 and $5,563,000, respectively. 

9. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):
 January 31, 2021October 31, 2020
Compensation$2,890 $2,275 
Property taxes225 683 
Lemon and orange supplier payables 1,346 
Operating expenses1,455 938 
Leases966 959 
Other1,357 1,746 
 $6,893 $7,947 
15


LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
10. Long-Term Debt
Long-term debt is comprised of the following (in thousands):
 January 31, 2021October 31, 2020
Farm Credit West revolving and non-revolving lines of credit: the interest rate of the revolving line of credit is variable based on the one-month London Interbank Offered Rate (“LIBOR”), which was 0.15% at January 31, 2021, plus 1.60%. The interest rate for the $40.0 million outstanding balance of the non-revolving line of credit was fixed at 4.77%. Interest is payable monthly and the principal is due in full on July 1, 2022.
$112,020 $102,251 
Farm Credit West term loan: Effective July 1, 2020, the interest rate was fixed at 2.48%. The loan is payable in quarterly installments through November 2022.
1,282 1,438 
Farm Credit West term loan: Effective July 1, 2020, the interest rate was fixed at 3.24%. The loan is payable in monthly installments through October 2035.
1,015 1,029 
Farm Credit West term loan: Effective July 1, 2020, the interest rate was fixed at 3.24%. The loan is payable in monthly installments through March 2036.
8,327 8,433 
Farm Credit West term loan: Effective July 1, 2020 the interest rate was fixed at 2.77% until July 1, 2025, becoming variable for the remainder of the loan. The loan is payable in monthly installments through March 2036.
6,139 6,220 
Wells Fargo term loan: the interest rate is fixed at 3.58%. The loan is payable in monthly installments through January 2023.
3,117 3,491 
Banco de Chile term loan: the interest rate is fixed at 6.48%. The loan is payable in annual installments through January 2025.
1,067 1,205 
Note Payable: the interest rate ranges from 5.00% to 7.00% and was 6.00% at January 31, 2021. The loan includes interest only monthly payments and principal is due in February 2023.
1,435 1,435 
Banco de Chile COVID-19 loans: The interest rates are fixed at 3.48% and 2.90%. The loans are payable in monthly installments beginning February 2021 through September 2024.
544 522 
Subtotal134,946 126,024 
Less deferred financing costs, net of accumulated amortization165