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Related party transactions | 6 Months Ended
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Apr. 30, 2018
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, 2018 and 2017, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $1.9 million and $4.7 million. During the six months ended April 30, 2018 and 2017, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $2.0 million and $5.2 million. Amounts payable to these Board members were $1.0 million as of April 30, 2018. We did not have any amounts payable to these Board members as of October 31, 2017. During the three months ended April 30, 2018 and 2017, we received $0.1 million as dividend income from Limoneira Company (Limoneira). During the six months ended April 30, 2018 and 2017, 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 each of the three and six months ended April 30, 2018 and 2017. 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 each of the three months ended April 30, 2018 and 2017, Calavo Growers, Inc. paid fees totaling less than $0.1 million to TroyGould PC. During each of the six months ended April 30, 2018 and 2017, Calavo Growers, Inc. paid fees totaling $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. 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. In January 2016, our unconsolidated subsidiary, Don Memo entered into a loan agreement in the amount of $4.5 million with Bank of America, N.A. (BoA) proceeds of which were used by Don Memo to repay debt owed to Calavo. 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. As of April 30, 2018 and October 31, 2017, we have an investment of $4.9 million and $4.6 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, 2018 and October 31, 2017, we had outstanding advances of $2.5 million and $1.6 million to Don Memo. During the three months ended April 30, 2018, we recorded $0.1 million of expenses to Don Memo pursuant to our consignment agreement. During the six months ended April 30, 2018 and 2017, we recorded $3.8 million and $0.7 million of expenses to Don Memo pursuant to our consignment agreement. We had grower advances due from Belher of $4.0 million as of April 30, 2018 and October 31, 2017, which are netted against the grower payable. In addition, we had infrastructure advances due from Belher of $0.6 million as of April 30, 2018 and October 31, 2017. Of these infrastructure advances $0.2 million was recorded as receivable in prepaid and other current assets. The remaining $0.4 million of these infrastructure advances are recorded in other assets. During the three months ended April 30, 2018 and 2017, we recorded $6.7 million and $9.4 million of expenses to Belher pursuant to our consignment agreement. During the six months ended April 30, 2018 and 2017, we recorded $12.6 million and $13.1 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 83% owned by Calavo and is consolidated in our financial statements. Avocados de Jalisco built a packinghouse located in Jalisco, Mexico and such packinghouse has begun operations in June of 2017. As of April 30, 2018 and October 31, 2017, we have made preseason advances of approximately $0.1 million to various partners of Avocados de Jalisco. During the six months ended April 30, 2018, we purchased approximately $0.2 million of avocados from the partners of Avocados de Jalisco. In January 2018, we transferred $1.0 million of interest to the Avocados de Jalisco noncontrolling members. As of April 30, 2018, we have an approximate 38% ownership interest in FreshRealm, LLC (FreshRealm). Three officers and five members of our board of directors have investments in FreshRealm. In addition, as of April 30, 2018 and October 31, 2017, we have a loan to FreshRealm members of approximately $0.3 million. In April 2017, FreshRealm initiated another round of financing. From April 2017 to October 2017, we invested $7.5 million in FreshRealm. In October and December 2017, our Chairman and Chief Executive Officer invested $7.0 million and $1.5 million into FreshRealm. In January 2018, one of our non-executive directors invested $1.8 million into FreshRealm. In the second quarter of fiscal 2018, two of our non-executive directors invested $1.2 million into FreshRealm. We provide storage services to FreshRealm from our New Jersey and Texas Value-Added Depots, and our RFG Riverside facility. We have received less than $0.1 million in storage services revenue from FreshRealm in the three months ended April 30, 2018. We have received $0.1 million in storage services revenue from FreshRealm in the six months ended April 30, 2018. For the three months ended April 30, 2018 and 2017, RFG has sold $2.4 million and $1.9 million of products to FreshRealm. For the six months ended April 30, 2018 and 2017, RFG has sold $3.9 million and $2.9 million of products to FreshRealm. The previous owners of RFG, one of which is currently an officer of Calavo, have a majority ownership of certain entities that provide various services to RFG, specifically LIG Partners, LLC and THNC, LLC. One of RFG’s California operating facilities 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. As of April 30, 2018, THNC owes us $0.2 million related to tenant improvements. See the following tables for the related party activity for the three and six months ended April 30, 2018 and 2017:
|  | Three months ended April 30, |
(in thousands) |  | 2018 |  | 2017 |
Rent paid to LIG |  | $ | 139 |  | $ | 135 |
Rent paid to THNC, LLC |  | $ | 199 |  | $ | 131 |
|  | Six months ended April 30, |
(in thousands) |  | 2018 |  | 2017 |
Rent paid to LIG |  | $ | 278 |  | $ | 269 |
Rent paid to THNC, LLC |  | $ | 398 |  | $ | 261 |

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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 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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