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Equity in Investments
12 Months Ended
Oct. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Equity in Investments Equity in Investments
Limco Del Mar, Ltd.
The Company has a 1.3% interest in Limco Del Mar, Ltd. (“Del Mar”) as a general partner and a 26.8% interest as a limited partner. Based on the terms of the partnership agreement, the Company may be removed as general partner without cause from the partnership upon the vote of the limited partners owning an aggregate of 50% or more interest in the partnership. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Del Mar is accounted for using the equity method of accounting.
The Company provides Del Mar with farm management, orchard land development and accounting services and received expense reimbursements of $210,000, $159,000 and $163,000 in fiscal years 2020, 2019 and 2018, respectively. Del Mar markets lemons through the Company pursuant to its customary marketing agreements and the amount of lemons procured from Del Mar was $1,037,000, $1,674,000 and $2,361,000 in fiscal years 2020, 2019 and 2018, respectively. Fruit proceeds due to Del Mar were $334,000 and $554,000 at October 31, 2020 and 2019, respectively, and are included in grower’s payable in the accompanying consolidated balance sheets.
Romney Property Partnership
In May 2007, the Company and an individual formed the Romney Property Partnership (“Romney”) for the purpose of owning and leasing an office building and adjacent lot in Santa Paula, California. The Company paid $489,000 in 2007 for 75% interest in Romney. The terms of the partnership agreement affirm the status of the Company as a noncontrolling investor in the partnership since the Company cannot exercise unilateral control over the partnership. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Romney is accounted for using the equity method of accounting. Net profits, losses and cash flows of Romney are shared by the Company, which receives 75% and the individual, who receives 25%.
Rosales S.A.
The Company currently has a 47% equity interest in Rosales S.A, (“Rosales”) of which 35% was acquired in fiscal 2014 and an additional 12% interest was acquired with the purchase of PDA in fiscal 2017. Rosales is a citrus packing, marketing and sales business located in La Serena, Chile. In addition, the Company has the right to acquire the interest of the majority shareholder of Rosales upon death or disability of Rosales’ general manager for the fair value of the interest on the date of the event as defined in the shareholders’ agreement. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Rosales is accounted for using the equity method of accounting.
Rosales’ functional currency is the Chilean Peso. The following financial information has been translated to U.S. dollars. In addition, as a result of the Company’s acquisition of its equity interest, basis differences were identified between the historical cost of the net assets of Rosales and the proportionate fair value of the net assets acquired. Such basis differences aggregated to $1,683,000 on the acquisition date and are primarily comprised of intangible assets, including $343,000 of equity method goodwill. An additional $925,000 of basis differences were identified with the February 2017 PDA acquisition, including $143,000 of equity method goodwill. The $2,122,000 in basis differences exclusive of goodwill is being amortized over the estimated life of the underlying intangible assets as a reduction in the equity investment and an expense included in equity in earnings (losses) of investments. Amortization amounted to $180,000, $298,000 and $337,000 for fiscal years 2020, 2019 and 2018, respectively, and is estimated to be approximately $179,000, $118,000, $87,000, $76,000 and $32,000 per year for years ending October 31, 2021 through October 31, 2025, respectively, and $43,000 thereafter.
The Company recognized $3,975,000, $3,741,000 and $3,849,000 of lemon sales to Rosales in fiscal years 2020, 2019 and 2018, respectively. In fiscal years 2020, 2019 and 2018, the aggregate amount of lemons and oranges procured from Rosales was $3,190,000, $4,315,000 and $7,658,000, respectively. Amounts due (to) from Rosales were $(954,000) and $156,000 at October 31, 2020 and 2019, respectively.
8. Equity in Investments (continued)
Limoneira Lewis Community Builders, LLC (the “LLCB” or "Joint Venture")
As described in Note 7 – Real Estate Development of the notes to consolidated financial statements included in this Annual Report, on November 10, 2015, the Company entered into a Joint Venture with Lewis for the residential development of its East Area I real estate development project. In addition to the assessment performed by the Company of its investment in LLCB under the requirements of Regulation S-X Rule 4-08(g), the Company also assessed its investment in LLCB under the requirements of Regulation S-X Rule 3-09(b). LLCB was not deemed significant for the year ended October 31, 2020 but was deemed significant for the year ended October 31, 2019. Therefore, the audited financial statements of LLCB for the years ended October 31, 2020, 2019 and 2018 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 $46,908,000 as of October 31, 2020. The basis difference of $10,234,000 at October 31, 2020 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 2020 and 2019 totaled $1,060,000 and $1,498,000, respectively. The Company's share of LLCB's net income for fiscal years 2020 and 2019 prior to basis amortization was $1,386,000 and $4,368,000, respectively.
The following is financial information of the equity method investees for fiscal years 2020, 2019 and 2018 (in thousands):
2020Del MarRomneyRosalesLLCB
Current assets$270 $— $4,564 $130,171 
Non-current assets$817 $670 $2,218 $— 
Current liabilities$— $— $3,540 $35,002 
Non-current liabilities$— $— $1,449 $— 
Revenues$930 $20 $10,097 $25,906 
Operating (loss) income$(109)$(2)$1,216 $2,615 
Net (loss) income$(109)$(2)$476 $2,615 
2019
Current assets$454 $— $3,016 $138,170 
Non-current assets$742 $671 $1,497 $— 
Current liabilities$— $— $2,803 $51,216 
Non-current liabilities$— $— $161 $— 
Revenues$2,290 $15 $8,898 $37,788 
Operating income (loss)$1,299 $(5)$403 $10,001 
Net income (loss)$1,299 $(5)$288 $10,001 
2018
Revenues$2,893 $21 $13,630 $40 
Operating income (loss)$1,755 $(4)$1,745 $(154)
Net income (loss)$1,755 $(4)$1,243 $(154)
8. Equity in Investments (continued)
The Company’s investment and equity in earnings (losses) of the equity method investees are as follows (in thousands):
 Del MarRomneyRosalesLLCBTotal
Investment balance October 31, 2017$1,968 $515 $1,944 $9,634 $14,061 
Equity earnings (losses)493 (3)247 (154)583 
Cash distributions(526)— — — (526)
Investment contributions— — — 3,500 3,500 
Loan guarantee— — — 1,080 1,080 
Investment balance October 31, 20181,935 512 2,191 14,060 18,698 
Equity earnings (losses)366 — (163)2,870 3,073 
Cash distributions(351)— (283)— (634)
Investment contributions— — — 4,000 4,000 
Capitalized interest adjustment— — — (267)(267)
Reclassification of sale and leaseback deferral— — — 33,353 33,353 
Investment balance October 31, 20191,950 512 1,745 54,016 58,223 
Equity earnings (losses)(30)(1)44 326 339 
Investment contributions— — — 2,800 2,800 
Foreign currency adjustments— — (148)— (148)
Investment balance October 31, 2020$1,920 $511 $1,641 $57,142 $61,214