Leases

6 Months Ended

Apr. 30, 2020

Lessor Arrangements

The Company enters into leasing transactions in which it rents certain of its assets and the Company is the lessor. These lease contracts are typically classified as operating leases with remaining terms ranging from one month to 23 years, with various renewal terms available. All of the residential rentals have month to month lease terms.

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of the dates indicated (in thousands):



	April 30, 2020			October 31, 2019
Land	$	1,279		$	1,279
Buildings, equipment and building improvements	22,841			22,841
Less accumulated depreciation	(7,877		)	(7,551		)
Property, plant and equipment, net under operating leases	$	16,243		$	16,569

Depreciation expense for assets under operating leases was approximately $160,000 and $326,000 for the three and six months ended April 30, 2020.

The Company’s rental operations revenue consists of the following (in thousands):



	Three Months Ended April 30, 2020		Six Months Ended April 30, 2020
Operating lease revenue	$	1,061	$	2,157
Variable lease revenue	71		148
Total lease revenue	$	1,132	$	2,305

The future minimum lease payments to be received by the Company related to these operating lease agreements as of April 30, 2020 are as follows (in thousands):



2020 (excluding the six months ended April 30, 2020)	$	563
2021	659
2022	469
2023	339
2024	42
Thereafter	758
Total	$	2,830

13. Leases (continued)

Lessee Arrangements

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for agricultural land and packinghouse equipment with remaining lease terms ranging from one to 18 years, with various term extensions available. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. As of April 30, 2020, there were no material finance leases for which the Company was a lessee.

Operating lease costs were $137,000 and $274,000 for the three and six months ended April 30, 2020, respectively, which are primarily included in agribusiness costs and expenses in the Company’s consolidated statements of operations. Variable and short term lease costs were immaterial.

Supplemental balance sheet information related to leases consists of the following (in thousands):



	Classification	April 30, 2020
Assets
Operating lease ROU assets	Other assets	$	2,187

Liabilities and Stockholders' Equity
Current operating lease liabilities	Accrued liabilities	540
Non-current operating lease liabilities	Other long-term liabilities	1,693
Total operating lease liabilities		$	2,233

Weighted-average remaining lease term (in years)		11.0
Weighted-average discount rate		3.9		%

Supplemental cash flow information related to leases consists of the following (in thousands):



	Three Months Ended April 30, 2020		Six Months Ended April 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	122	$	306

ROU assets obtained in exchange for new operating lease liabilities	$	—	$	—

Future minimum lease payments under non-cancellable leases for the remainder of fiscal year 2020, each of the subsequent four fiscal years and thereafter are as follows (in thousands):



2020 (excluding the six months ended April 30, 2020)	$	240
2021	481
2022	330
2023	154
2024	134
Thereafter	1,450
Total lease payments	2,789
Less: Imputed interest	(556		)
Total	$	2,233

13. Leases (continued)

In addition to operating lease commitments, the Company also has a contract for pollination services which does not meet the definition of a lease, with minimum future payments of $153,000 for the remainder of fiscal year 2020, $307,000 for each of the fiscal years 2021 and 2022 and $51,000 in fiscal year 2023.

A summary of the Company’s future minimum payments for obligations under non-cancellable operating leases as of October 31, 2019 was as follows (in thousands):



2020	$	688
2021	492
2022	291
2023	154
2024	134
Thereafter	1,382
	$	3,141

Leases

Lessor Arrangements

The following table presents the components of the Company’s operating lease portfolio included in property, plant and equipment, net as of the dates indicated (in thousands):



	April 30, 2020			October 31, 2019
Land	$	1,279		$	1,279
Buildings, equipment and building improvements	22,841			22,841
Less accumulated depreciation	(7,877		)	(7,551		)
Property, plant and equipment, net under operating leases	$	16,243		$	16,569

Depreciation expense for assets under operating leases was approximately $160,000 and $326,000 for the three and six months ended April 30, 2020.

The Company’s rental operations revenue consists of the following (in thousands):



	Three Months Ended April 30, 2020		Six Months Ended April 30, 2020
Operating lease revenue	$	1,061	$	2,157
Variable lease revenue	71		148
Total lease revenue	$	1,132	$	2,305

The future minimum lease payments to be received by the Company related to these operating lease agreements as of April 30, 2020 are as follows (in thousands):



2020 (excluding the six months ended April 30, 2020)	$	563
2021	659
2022	469
2023	339
2024	42
Thereafter	758
Total	$	2,830

13. Leases (continued)

Lessee Arrangements

Supplemental balance sheet information related to leases consists of the following (in thousands):



	Classification	April 30, 2020
Assets
Operating lease ROU assets	Other assets	$	2,187

Liabilities and Stockholders' Equity
Current operating lease liabilities	Accrued liabilities	540
Non-current operating lease liabilities	Other long-term liabilities	1,693
Total operating lease liabilities		$	2,233

Weighted-average remaining lease term (in years)		11.0
Weighted-average discount rate		3.9		%

Supplemental cash flow information related to leases consists of the following (in thousands):



	Three Months Ended April 30, 2020		Six Months Ended April 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	122	$	306

ROU assets obtained in exchange for new operating lease liabilities	$	—	$	—

Future minimum lease payments under non-cancellable leases for the remainder of fiscal year 2020, each of the subsequent four fiscal years and thereafter are as follows (in thousands):



2020 (excluding the six months ended April 30, 2020)	$	240
2021	481
2022	330
2023	154
2024	134
Thereafter	1,450
Total lease payments	2,789
Less: Imputed interest	(556		)
Total	$	2,233

13. Leases (continued)

A summary of the Company’s future minimum payments for obligations under non-cancellable operating leases as of October 31, 2019 was as follows (in thousands):



2020	$	688
2021	492
2022	291
2023	154
2024	134
Thereafter	1,382
	$	3,141