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Related party transactions | 6 Months Ended
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Apr. 30, 2017
Related-Party Transactions [Abstract] |
Related-Party Transactions | 4.Related party transactions Certain members of our Board of Directors market California avocados through Calavo pursuant to marketing agreements substantially similar to the marketing agreements that we enter into with other growers. During the three months ended April 30, 2017 and 2016, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $4.7 million and $3.3 million. During the six months ended April 30, 2017 and 2016, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $5.2 million and $3.4 million. Amounts payable to these Board members were $2.8 million as of April 30, 2017. We did not have any amounts payable to these Board members as of October 31, 2016. During the three months ended April 30, 2017 and 2016, we received $0.1 million as dividend income from Limoneira Company (Limoneira). During the six months ended April 30, 2017 and 2016, we received $0.2 million as dividend income from Limoneira. In addition, we lease office space from Limoneira and paid rental expenses of $0.1 million for the three and six months ended April 30, 2017 and 2016. Harold Edwards, who is a member of our Board of Directors, is the Chief Executive Officer of Limoneira Company. We have a 12% ownership interest in Limoneira. Additionally, our Chief Executive Officer is a member of the Limoneira Board of Directors. We currently have a member of our Board of Directors who also serves as a partner in the law firm of TroyGould PC, which frequently represents Calavo as legal counsel. During the three months ended April 30, 2017 and 2016, Calavo Growers, Inc. paid fees totaling less than $0.1 million to TroyGould PC. During the six months ended April 30, 2017 and 2016, Calavo Growers, Inc. paid fees totaling approximately $0.1 million to TroyGould PC. In December 2014, Calavo formed a wholly owned subsidiary Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Grupo Belo del Pacifico, S.A. de C.V., (Belo) a Mexican Company owned by Agricola Belher, and formed Agricola Don Memo, S.A. de C.V. (Don Memo). Belo and Calavo Sub have an equal one-half ownership interest in Don Memo in exchange for $2 million each. Pursuant to a management service agreement, Belo, through its officers and employees, has day-to-day power and authority to manage the operations. Belo is entitled to a management fee, as defined, which is payable annually in July of each year. Additionally, Calavo Sub is entitled to commission, for the sale of produce in the Mexican National Market, United States, Canada, and any other overseas market. We loaned a total of $4.0 million to Don Memo since its formation. These monies, effectively a bridge loan, were replaced with a new loan to Don Memo from Bank of America, N.A. (BoA) during our first fiscal quarter of 2016 and our bridge loan was repaid from the proceeds of the new loan. Also, in January 2016, Calavo and BoA, entered into a Continuing and Unconditional Guaranty Agreement (the Guaranty). Under the terms of the Guaranty, Calavo unconditionally guarantees and promises to pay BoA any and all Indebtedness, as defined therein, of our unconsolidated subsidiary Don Memo to BoA. Belo has also entered into a similar guarantee with BoA. These guarantees were entered into in connection with the new loan in the amount of $4.5 million from BoA to Don Memo that closed in January 2016. As of April 30, 2017 and October 31, 2016, we have an investment of $3.3 million and $3.7 million, representing Calavo Sub’s 50% ownership in Don Memo, which is included as an investment in unconsolidated entities on our balance sheet. We make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from tomato sales under our marketing program to Don Memo, net of our commission and aforementioned advances. As of April 30, 2017 and October 31, 2016, we had outstanding advances of $1.6 million and $0.9 million to Don Memo. During the three months ended April 30, 2016, we recorded $0.2 million of expenses to Don Memo pursuant to our consignment agreement. During the six months ended April 30, 2017 and 2016, we recorded $0.7 million and $0.2 million of expenses to Don Memo pursuant to our consignment agreement. We had grower advances due from Belher of $4.4 million as of April 30, 2017 and October 31, 2016, which are netted against the grower payable. In addition, we had infrastructure advances due from Belher of $0.8 million as of April 30, 2017 and October 31, 2016. Of these infrastructure advances $0.2 million was recorded as receivable in prepaid and other current assets. The remaining $0.6 million of these infrastructure advances are recorded in other assets. During the three months ended April 30, 2017 and 2016, we recorded $9.4 million and $13.4 million of expenses to Belher pursuant to our consignment agreement. During the six months ended April 30, 2017 and 2016, we recorded $13.1 million and $25.5 million of expenses to Belher pursuant to our consignment agreement. In August 2015, we entered into Shareholder’s Agreement with various partners and created Avocados de Jalisco, S.A.P.I. de C.V. (“Avocados de Jalisco”). Avocados de Jalisco is a Mexican corporation created to engage in procuring, packing and selling avocados. This entity is approximately 80% owned by Calavo and is consolidated in our financial statements. Avocados de Jalisco has built a packinghouse located in Jalisco, Mexico and such packinghouse is expected to begin operations at the start of Jalisco’s next avocado crop in the third quarter of fiscal 2017. As of April 30, 2017 and October 31, 2016, we have made preseason advances of approximately $0.2 million to various partners of Avocados de Jalisco. We have an approximate 46% ownership interest in FreshRealm, LLC (FreshRealm). An officer and three members of our board of directors have made investments into FreshRealm. In addition, as of April 30, 2017 and October 31, 2016, we have a loan to FreshRealm members of approximately $0.3 million, which is due in May of 2018. In February 2017, we loaned $0.8 million to FreshRealm. In addition, two other FreshRealm members have loaned approximately $0.8 million to FreshRealm. In total, this $1.5 million is considered a bridge loan, and was repaid in April 2017. In April 2017, in another round of financing, we committed to invest an additional $8.3 million into FreshRealm if and when certain terms and conditions are met. If the certain conditions are met and we invest up to our commitment level of $8.3 million, our ownership percentage in Freshrealm is still expected to remain at approximately 46%. In April 2017, we invested $3.0 million of the $8.3 million committed in FreshRealm. The previous owners and current managers of RFG have a majority ownership of certain entities that provide various services to RFG, specifically LIG Partners, LLC and THNC, LLC. RFG’s California operating facility leases a building from LIG Partners, LLC (LIG) pursuant to an operating lease. RFG’s Texas operating facility leases a building from THNC, LLC (THNC) pursuant to an operating lease. See the following tables for the related party activity for the three months ended April 30, 2017 and 2016:
|  | Three months ended April 30, |
(in thousands) |  | 2017 |  | 2016 |
Rent paid to LIG |  | $ | 135 |  | $ | 131 |
Rent paid to THNC, LLC |  | $ | 131 |  | $ | 76 |
|  | Six months ended April 30, |
(in thousands) |  | 2017 |  | 2016 |
Rent paid to LIG |  | $ | 269 |  | $ | 262 |
Rent paid to THNC, LLC |  | $ | 261 |  | $ | 152 |

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph b -Article 3A + Details
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