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Related party transactions | 3 Months Ended
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Jan. 31, 2021
Related party transactions |
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. For the three months ended January 31, 2020, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $0.2 million. There were no avocados procured from entities owned or controlled by members of our Board of Directors for the three months ended January 31, 2021. We did not have any amounts payable to these Board members as of January 31, 2021 and October 31, 2020. ​ During the three months ended January 31, 2021 and 2020, we received $0.1 million as dividend income from Limoneira Company (Limoneira). In addition, we lease office space from Limoneira for our corporate office. We paid rent expense to Limoneira totaling $0.1 million for the three months ended January 31, 2021 and 2020. Harold Edwards, who is a member of our Board of Directors, is the Chief Executive Officer of Limoneira Company. As of January 31, 2021, we own approximately 9% of Limoneira’s outstanding shares. ​ We currently have a board member who served as a partner in the law firm of TroyGould PC, which has represented Calavo as legal counsel on certain matters, until his retirement in December 2020. During the three months ended January 31, 2021 and 2020, Calavo Growers, Inc. paid fees totaling $0.1 million to TroyGould PC. ​ Calavo and Agricola Belher (“Belher”) have an equal one-half ownership interest in Agricola Don Memo, S.A. de C.V. (“Don Memo”). Pursuant to a management service agreement, Belher, through its officers and employees, has day-to-day power and authority to manage the operations. ​ As of January 31, 2021, and October 31, 2020, we had an investment of $5.9 million and $6.0 million, representing Calavo’s 50% ownership in Don Memo, which was 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 January 31, 2021 and October 31, 2020, we had outstanding advances of $1.5 million and $2.4 million to Don Memo. In October 2020, we entered into an infrastructure loan agreement with Don Memo for $2.4 million secured by certain property and equipment of Don Memo. This infrastructure loan will incur interest at 7.25%. In October 2020, we funded $0.7 million related to this loan agreement, and we funded an additional $0.7 million in the first quarter of fiscal 2021. During the three months ended January 31, 2021 and 2020, we recorded $3.5 million and $4.0 million of cost of sales to Don Memo pursuant to our consignment agreement. ​ We make advances to Belher 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 Belher, net of our commission and aforementioned advances. We had grower advances due from Belher totaling $4.5 million as of January 31, 2021 and October 31, 2020, which are netted against the grower payable. In addition, we had infrastructure advances due from Belher of $1.8 million as of January 31, 2021 and October 31, 2020. Of these infrastructure advances $0.6 million was recorded as a receivable in prepaid and other current assets as of January 31, 2021 and October 31, 2020. The remaining $1.2 million of these infrastructure advances were recorded in other assets. During the three months ended January 31, 2021 and 2020, we recorded $3.3 million and $7.2 million of cost of sales to Belher pursuant to our consignment agreement. ​ In August 2015, we entered into a Shareholder’s Agreement with various Mexican 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. As of January 31, 2021, this entity was approximately 83% owned by Calavo and was consolidated in our financial statements. Avocados de Jalisco built a packinghouse located in Jalisco, Mexico, which began operations in June of 2017. During the three months ended January 31, 2021 and 2020, we purchased approximately $2.2 million and $0.4 million of avocados from the partners of Avocados de Jalisco. ​ FreshRealm is a start-up company, engaged in activities relating to the marketing of food products directly to consumers or other entities. Prior to the FreshRealm Separation Agreement, signed on February 3, 2021 (see Note 12), we had an equity investment in FreshRealm representing approximately 37% ownership of FreshRealm as of January 31, 2021 and October 31, 2020. We recorded an impairment of 100% of this equity investment, or $2.8 million, in the third quarter of fiscal 2020. We had a note receivable and trade receivables of approximately $34.5 million at October 31, 2020 (which includes accrued interest) from FreshRealm. We recorded a reserve of $34.5 million during fiscal 2020 which continues to be fully reserved as of January 31, 2021. ​ On February 3, 2021, Calavo, and FreshRealm, entered into a Limited Liability Company Member Separation and Release Agreement. See Note 12 for more information. ​ One officer and five members of our board of directors have investments in FreshRealm as of January 31, 2021 and October 31, 2020. Prior to the FreshRealm Separation and Release Agreement, three members of our board of directors served as board members of FreshRealm. ​ We provide storage services to FreshRealm from select Value-Added Depots and RFG facilities. We have recorded $0.3 million and $0.2 million in storage services revenue from FreshRealm in the three months ended January 31, 2021 and 2020. For the three months ended January 31, 2020, RFG has sold less than $0.2 million of products to FreshRealm. ​ The previous owners of RFG, one of which is currently the CEO of Calavo, have a majority ownership of certain entities that historically provided various services to RFG, specifically LIG Partners, LLC and THNC, LLC who leased property to certain RFG operating entities. In the first quarter of fiscal 2020, these facilities were sold to an unaffiliated third party and our lease has transferred to those new owners.
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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -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 + Details
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