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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, 2023
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, 2023, there were 17,830,604 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, 2023 and October 31, 2022
  
Consolidated Statements of Operations – three months ended January 31, 2023 and 2022
  
Consolidated Statements of Comprehensive Income (Loss) – three months ended January 31, 2023 and 2022
  
Consolidated Statements of Stockholders' Equity and Temporary Equity – three months ended January 31, 2023 and 2022
Consolidated Statements of Cash Flows – three months ended January 31, 2023 and 2022
  
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 in this quarterly report include:
success in executing the Company's business plans and strategies and managing the risks involved in the foregoing;
negative impacts related to the COVID-19 pandemic and our Company's responses to the pandemic;
changes in laws, regulations, rules, quotas, tariffs, and import laws;
adverse weather conditions, natural disasters and other adverse natural conditions, including freezes, rains, fires, winds 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;
disruption in the global supply chain;
product and raw materials supplies and pricing;
energy supply and pricing;
changes in interest rates and the impact of inflation;
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;
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, 2022 additional factors that could cause our actual results to differ from our projections or estimates.
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, 2022. 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, 2023October 31, 2022
Assets  
Current assets:  
Cash$12,464 $857 
Accounts receivable, net17,703 15,651 
Cultural costs2,901 8,643 
Prepaid expenses and other current assets5,434 8,496 
Receivables/other from related parties3,392 3,888 
Total current assets41,894 37,535 
Property, plant and equipment, net171,682 222,628 
Real estate development9,849 9,706 
Equity in investments73,383 72,855 
Goodwill1,529 1,506 
Intangible assets, net7,424 7,317 
Other assets15,367 16,971 
Total assets$321,128 $368,518 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$9,850 $10,663 
Growers and suppliers payable4,240 10,740 
Accrued liabilities11,333 11,060 
Payables to related parties5,226 4,860 
Income taxes payable7,619 219 
Current portion of long-term debt448 1,732 
Total current liabilities38,716 39,274 
Long-term liabilities:  
Long-term debt, less current portion40,919 104,076 
Deferred income taxes23,523 23,497 
Other long-term liabilities7,101 9,807 
Total liabilities110,259 176,654 
Commitments and contingencies   
Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at January 31, 2023 and October 31, 2022) (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, 2023 and October 31, 2022) (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, 2023 and October 31, 2022)
  
Common Stock – $0.01 par value (39,000,000 shares authorized: 18,081,581 and 17,935,292 shares issued and 17,830,604 and 17,684,315 shares outstanding at January 31, 2023 and October 31, 2022, respectively)
178 177 
Additional paid-in capital166,232 165,169 
Retained earnings29,669 15,500 
Accumulated other comprehensive loss(3,961)(7,908)
Treasury stock, at cost, 250,977 shares at January 31, 2023 and October 31, 2022
(3,493)(3,493)
Noncontrolling interest11,434 11,609 
Total stockholders' equity200,059 181,054 
Total liabilities and stockholders' equity$321,128 $368,518 
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,
 20232022
Net revenues:
Agribusiness$36,528 $38,083 
Other operations1,373 1,191 
Total net revenues37,901 39,274 
Costs and expenses:
Agribusiness41,241 41,244 
Other operations1,238 1,074 
Gain on disposal of assets, net(39,742)(85)
Selling, general and administrative9,280 6,599 
Total costs and expenses12,017 48,832 
Operating income (loss)25,884 (9,558)
Other (expense) income:
Interest income8 21 
Interest (expense), net of patronage dividends(1,172)215 
Equity in earnings of investments, net253 51 
Other (expense) income, net(2,612)15 
Total other (expense) income (3,523)302 
Income (loss) before income tax (provision) benefit22,361 (9,256)
Income tax (provision) benefit(6,827)2,650 
Net income (loss)15,534 (6,606)
Net loss attributable to noncontrolling interest97 88 
Net income (loss) attributable to Limoneira Company15,631 (6,518)
Preferred dividends(125)(125)
Net income (loss) applicable to common stock$15,506 $(6,643)
Basic net income (loss) per common share$0.87 $(0.38)
Diluted net income (loss) per common share$0.84 $(0.38)
Weighted-average common shares outstanding-basic17,573,000 17,448,000 
Weighted-average common shares outstanding-diluted18,378,000 17,448,000 
The accompanying notes are an integral part of these unaudited consolidated financial statements.

5


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In thousands)
 Three Months Ended
January 31,
 20232022
Net income (loss)$15,534 $(6,606)
Other comprehensive income, net of tax:
Foreign currency translation adjustments2,223 55 
Minimum pension liability adjustment, net of tax of $(135) and $27 for the three months ended January 31, 2023 and 2022, respectively.
(220)72 
Pension settlement, net of tax of $756 and $0 for the three months ended January 31, 2023 and 2022, respectively.
1,944  
Total other comprehensive income, net of tax3,947 127 
Comprehensive income (loss)19,481 (6,479)
Comprehensive loss attributable to noncontrolling interest97 86 
Comprehensive income (loss) attributable to Limoneira Company$19,578 $(6,393)
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, 202217,684,315 $177 $165,169 $15,500 $(7,908)$(3,493)$11,609 $181,054 $1,479 $9,331 
Dividends Common ($0.075 per share)
— — — (1,337)— — — (1,337)— — 
Dividends Series B ($2.19 per share)
— — — (32)— — — (32)— — 
Dividends Series B-2 ($10 per share)
— — — (93)— — — (93)— — 
Stock compensation146,289 1 1,063 — — — — 1,064 — — 
Noncontrolling interest adjustment— — — — — — (78)(78)— — 
Net income — — — 15,631 — — (97)15,534 — — 
Other comprehensive income, net of tax— — — — 3,947 —  3,947 — — 
Balance at January 31, 202317,830,604$178 $166,232 $29,669 $(3,961)$(3,493)$11,434 $200,059 $1,479 $9,331 
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, 202117,685,400 $179 $163,965 $21,552 $(5,733)$(3,493)$11,965 $188,435 $1,479 $9,331 
Dividends Common ($0.075 per share)
— — — (1,328)— — — (1,328)— — 
Dividends Series B ($2.19 per share)
— — — (32)— — — (32)— — 
Dividends Series B-2 $10 per share)
— — — (93)— — — (93)— — 
Stock compensation70,000 1 996 — — — — 997 — — 
Exchange of common stock(55,362) (900)— — — — (900)— — 
Net loss— — — (6,518)— — (88)(6,606)— — 
Other comprehensive income, net of tax— — — — 127 — 2 129 — — 
Balance at January 31, 202217,700,038$180 $164,061 $13,581 $(5,606)$(3,493)$11,879 $180,602 $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,
 20232022
Operating activities  
Net income (loss)$15,534 $(6,606)
Adjustments to reconcile net income (loss) to net cash used in operating activities:  
Depreciation and amortization2,447 2,480 
Gain on disposal of assets, net(39,742)(85)
Stock compensation expense1,064 997 
Non-cash lease expense389 152 
Equity in earnings of investments, net(253)(51)
Deferred income taxes6,827 (2,650)
Other, net171 213 
Changes in operating assets and liabilities:  
Accounts receivable and receivables/other from related parties(1,676)(2,188)
Cultural costs1,343 2,654 
Prepaid expenses and other current assets529 (1,676)
Other assets(10)29 
Accounts payable and growers and suppliers payable(7,838)(2,666)
Accrued liabilities and payables to related parties455 1,347 
Other long-term liabilities(430)(112)
Net cash used in operating activities(21,190)(8,162)
Investing activities  
Capital expenditures(2,151)(2,080)
Net proceeds from sales of assets98,888 1,090 
Net proceeds from sale of real estate development assets2,577  
Cash distribution from Trapani Fresh82  
Collection on notes receivable 250 
Equity investment contributions(275) 
Investments in mutual water companies and water rights(11) 
Net cash provided by (used in) investing activities99,110 (740)
Financing activities  
Borrowings of long-term debt57,940 44,439 
Repayments of long-term debt(122,692)(32,731)
Principal paid on finance lease and equipment financings(107)(69)
Dividends paid – common(1,337)(1,328)
Dividends paid – preferred(125)(125)
Exchange of common stock (900)
Net cash (used in) provided by financing activities(66,321)9,286 
Effect of exchange rate changes on cash8 (7)
Net increase in cash11,607 377 
Cash at beginning of period857 439 
Cash at end of period$12,464 $816 
8


LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
(In thousands)
 Three Months Ended
January 31,
 20232022
Supplemental disclosures of cash flow information  
Cash paid during the period for interest (net of amounts capitalized)$1,006 $618 
Non-cash investing and financing activities:  
Capital expenditures accrued but not paid at period-end$818 $25 
Accrued contribution obligation of investment in water company$ $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 citrus. 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.
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 balances and transactions have been eliminated in consolidation. 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 U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ 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 Income (Loss)
Comprehensive income (loss) represents all changes in a company’s net assets, except changes resulting from transactions with stockholders. Other comprehensive income 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 other comprehensive income by component (in thousands):
Three Months Ended January 31,
 20232022
 Pre-tax AmountTax Benefit (Expense)Net AmountPre-tax AmountTax ExpenseNet Amount
Foreign currency translation adjustments$2,223 $ $2,223 $55 $ $55 
Minimum pension liability adjustments:
Other comprehensive (loss) income before reclassifications(355)135 (220)99 (27)72 
Amounts reclassified to earnings included in "Other (expense) income, net"2,700 (756)1,944    
Other comprehensive income$4,568 $(621)$3,947 $154 $(27)$127 
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 by component (in thousands):
 Foreign Currency Translation (Loss) GainDefined Benefit Pension PlanAccumulated Other Comprehensive Loss (Income)
Balance at October 31, 2022$(6,184)$(1,724)$(7,908)
Other comprehensive income2,223 1,724 3,947 
Balance at January 31, 2023$(3,961)$ $(3,961)
 Foreign Currency Translation (Loss) GainDefined Benefit Pension PlanAccumulated Other Comprehensive Loss (Income)
Balance at October 31, 2021$(3,754)$(1,979)$(5,733)
Other comprehensive income55 72 127 
Balance at January 31, 2022$(3,699)$(1,907)$(5,606)
COVID-19 Pandemic
There is continued 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, has negatively impacted its sales and profitability for the last three years. The COVID-19 pandemic may impact its sales and profitability in future periods. The duration of these trends and the magnitude of such impacts are uncertain and therefore cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control. The full impact of the COVID-19 pandemic on the Company's results of operations, financial condition, and liquidity, including its ability to comply with debt covenants, for fiscal year 2023 and beyond, is driven by estimates that contain uncertainties.
Concentrations and Geographic Information
Concentrations of credit risk with respect to revenues and accounts receivable are limited due to a large, diverse customer base. One customer represented 13% of revenue for the three months ended January 31, 2023. Two individual customers represented 15% and 12% of revenue, respectively, for the three months ended January 31, 2022. One individual customer represented 11% of accounts receivable, net as of January 31, 2023. No individual customer represented more than 10% of accounts receivable, net as of October 31, 2022.
One individual supplier represented 13% of accounts payable as of January 31, 2023. No individual supplier represented more than 10% of accounts payable as of October 31, 2022.
Lemons procured from third-party growers were 66% and 57% of the Company's lemon supply for the three months ended January 31, 2023 and 2022, respectively. One third-party grower was 17% and 20% of the lemon supply for the three months ended January 31, 2023 and 2022, 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.
During the three months ended January 31, 2023 and 2022, the Company had approximately $252,000 and $208,000, respectively, of total sales in Chile by Fruticola Pan de Azucar S.A. ("PDA") and Agricola San Pablo SpA ("San Pablo") and approximately $74,000 and $147,000, respectively, of total sales in Argentina by Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh").
Aggregate foreign exchange transaction losses realized for our foreign subsidiaries was approximately $58,000 for the three months ended January 31, 2023 and was included in selling, general and administrative expenses in the consolidated statements of operations.
11

LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. Asset Sale
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. The following is a summary of the transaction (in thousands):
 January 31, 2023
Net cash proceeds received$85,891 
Debt directly repaid through the transaction12,917 
Total net proceeds received98,808 
Less: net book value of assets sold
Cultural costs4,405 
Property, plant and equipment, net53,144 
Intangible assets, net12 
Other assets1,320 
Accrued liabilities(68)
58,813 
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 of $1,667,000 and $2,720,000 for the three months ended January 31, 2023 and 2022, 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.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 January 31, 2023October 31, 2022
Prepaid supplies and insurance$3,315 $2,958 
Real estate development held for sale 2,670 
Sales tax receivable752 475 
Lemon supplier advances1,019 1,188 
Other348 1,205 
 $5,434 $8,496 
5. Real Estate Development
Real estate development assets are comprised primarily of land and land development costs for the East Area II property in the amount of $9,849,000 and $9,706,000 at January 31, 2023 and October 31, 2022, respectively.
East Area I, Retained Property and East Area II
In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities. In November 2015 (the “Transaction Date”), the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project. To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB”) as the development entity, contributed its East Area I property to LLCB and sold a 50% interest to Lewis for $20,000,000.
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)
The Company and LLCB also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement"). 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 East Area II includes estimated costs incurred by and reimbursable to LLCB of $3,444,000 at January 31, 2023 and October 31, 2022, which is included in payables to related parties.
In January 2018, LLCB entered into a $45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. 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 $9,800,000 as of January 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 $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. Additionally, a Reimbursement Agreement was executed between the Lewis guarantors and the Company, which provides for unpaid liabilities of LLCB to be shared pro-rata by the Lewis guarantors and the Company in proportion to their percentage interest in LLCB.
In October 2022, the Company entered into a joint venture with Lewis for the development of the Retained Property. 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. The Company recorded a deferred gain of $465,000 on the transaction which is included in other long-term liabilities as of January 31, 2023 and October 31, 2022. 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. The Company made contributions of $275,000 to LLCB II during the three months ended January 31, 2023.
Through January 31, 2023, LLCB has closed sales of initial residential lots representing 586 residential units.
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 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 the three months ended January 31, 2023.
6. Equity in Investments
Equity in investments consist of the following (in thousands):
 January 31, 2023October 31, 2022
Limoneira Lewis Community Builders, LLC$61,250 $61,154 
LLCB II, LLC8,297 8,023 
Limco Del Mar, Ltd.2,176 2,024 
Rosales1,155 1,147 
Romney Property Partnership505 507 
 $73,383 $72,855 
Net amounts due from Rosales were $430,000 and $270,000 at January 31, 2023 and October 31, 2022, respectively, and are included in receivables/other from related parties and payables to related parties.
13

LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

6. Equity in Investments (continued)
Unconsolidated Significant Subsidiary
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, 2023 and 2022, this threshold was not met for any of the Company's equity investments.
7. Goodwill and Intangible Assets, Net
A summary of the change in the carrying amount of goodwill is as follows (in thousands):
Goodwill Carrying Amount
Balance at October 31, 2022$1,506 
Foreign currency translation adjustment23 
Balance at January 31, 2023$1,529 
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, 2023.
Intangible assets consisted of the following (in thousands):
January 31, 2023October 31, 2022
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$2,108 (951)1,157 8$2,108 $(881)$1,227 8
Customer relationships4,037 (1,772)2,265 94,037 (1,660)2,377 9
Non-competition agreement 437 (91)346 8437 (76)361 8
Acquired water and mineral rights3,656 — 3,656 Indefinite3,352 — 3,352  Indefinite
$10,238 $(2,814)$7,424 $9,934 $(2,617)$7,317 
Amortization expense totaled $197,000 and $181,000 for the three months ended January 31, 2023 and 2022, respectively.
Estimated future amortization expense of intangible assets as of January 31, 2023 is as follows (in thousands):
2023 (excluding the three months ended January 31, 2023)$532 
2024711 
2025711 
2026711 
2027427 
Thereafter676 
 $3,768 
14

LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

8. Other Assets
Investments in Mutual Water Companies
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. As of January 31, 2023 and October 31, 2022, $5,191,000 and $6,500,000, respectively, were included in other assets.
9. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
 January 31, 2023October 31, 2022
Compensation$3,609 $3,572 
Property taxes361 664 
Operating expenses3,512 2,341 
Leases2,072 2,026 
Other1,779 2,457 
 $11,333 $11,060 
10. Long-Term Debt
Long-term debt is comprised of the following (in thousands):
 January 31, 2023October 31, 2022
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 4.33% at January 31, 2023, plus 1.85%. 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 
AgWest Farm Credit term loan: The interest rate was fixed at 3.24%. The loan was repaid in January 2023.
 919 
AgWest Farm Credit term loan: The interest rate was fixed at 3.24%. The loan was repaid in January 2023.
 7,562 
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.
 5,555 
AgWest Farm Credit term loan: The interest rate was fixed at 3.19%. The loan was repaid in January 2023.
 2,003 
Banco de Chile term loan: The interest rate is fixed at 6.48%. The loan is payable in annual installments through January 2025.
656 675 
Banco de Chile COVID-19 loans: The interest rates are fixed at 3.48%. The loans are payable in monthly installments through September 2024.
237 233 
Banco de Chile COVID-19 loans: The interest rates are fixed at 3.48% and 4.26%. The loans are payable in monthly installments through September 2026.
474 434 
Subtotal41,367 105,902 
Less deferred financing costs, net of accumulated amortization 94 
Total long-term debt, net41,367 105,808 
Less current portion448 1,732 
Long-term debt, less current portion$40,919 $104,076 
15

LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

10. Long-Term Debt (continued)
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, dated June 19, 2017 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 January 31, 2023, the Company's outstanding borrowings under the Supplements and RELOC were $40,000,000 and it had $90,000,000 available to borrow.
In January 2023, the Company used the proceeds from the Northern Properties sale as described in Note 3 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 Secured Overnight Financing Rate ("SOFR"). 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 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. The Company may not prepay any amounts under the outstanding Non-Revolving Credit Supplement during the Fixed Rate Term. Thereafter, the Company may prepay any amounts outstanding under the Non-Revolving Credit Supplement, provided that a fee equal to 0.50% of the amount prepaid and any other cost or loss suffered by the Lender must be paid with any prepayment.
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 6.75% as of January 31, 2023. 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 Ventura counties in California and certain of the Company’s building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties. The MLA includes customary default provisions that provide should an event of default occur, the Lender, at its option, may declare all or any portion of the indebtedness under the MLA to be immediately due and payable without demand, notice of nonpayment, protest or prior recourse to collateral, and terminate or suspend the Company’s right to draw or request funds on any loan or line of credit.
The MLA subjects the Company to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of the Company’s business. The Company is also subject to a financial covenant that requires it to maintain compliance with a specific debt service coverage ratio greater than or equal to 1.25:1 when measured at October 31, 2023 and annually thereafter. The Company was in compliance as of October 31, 2022.
16

LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

10. Long-Term Debt (continued)
In February 2023, the Lender declared an annual cash patronage dividend of 1.25% of average eligible loan balances and the Company received $1,413,000 in the second quarter of fiscal year 2023. In December 2021, the Lender declared an annual cash patronage dividend of 1.25% of average eligible loan balances and the Company received $1,582,000 in February 2022.
Interest is capitalized on non-bearing orchards, real estate development projects and significant construction in progress. The Company capitalized interest of $347,000 and zero during the three months ended January 31, 2023 and 2022, respectively. Capitalized interest is included in property, plant and equipment and real estate development assets in the Company’s consolidated balance sheets.
11. Other Long-Term Liabilities
Other long-term liabilities consist of the following (in thousands):
 January 31, 2023October 31, 2022
Minimum pension liability$