##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended October 31, 2005
 Commission file number: 000-33385
 CALAVO GROWERS, INC.
 (Exact name of registrant as specified in its charter)
 California
(State of incorporation)
    
    33-0945304
(I.R.S. Employer Identification No.)1141-A Cummings Road, Santa Paula, CA
(Address of principal executive offices)
    
    93060
(Zip code)
 Registrants telephone number, including area code: (805) 525-1245
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value per Share
  o þ
  o þ
 þ o
 o
  þ o
  o þ
  Documents Incorporated by Reference




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TABLE OF CONTENTS  CAUTIONARY STATEMENTPART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataSELECTED CONSOLIDATED FINANCIAL DATAItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTSItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and ManagementItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountants Fees and ServicesPart IVItem 15. Exhibits and Financial Statement SchedulesSIGNATURESSCHEDULE IIEXHIBIT INDEXExhibit 10.14Exhibit 10.16Exhibit 10.17Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32    Table of Contents  
 CAUTIONARY STATEMENT
  2




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PART I
 
 Item 1. Business
 General development of the business
          3




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Available information
  California avocados
       
    
    We continue to have success with our ProRipeVIP avocado ripening program. This
proprietary program allows us to deliver avocados with varying degrees of ripeness to our
customers. We have invested in the Aweta AFS (acoustic firmness sensor) technology and
equipment. ProRipeVIP is the next generation of selling preconditioned avocados that have
firmness determined via soundwaves. This technology is not new to the produce industry, but
is new to avocados. The most significant and compelling reason we choose to invest in Aweta
systems is because the acoustic sensors measure firmness of the entire piece of fruit, as
opposed to competitive mechanical tests that use pressure and calculated averages to measure
firmness. We
 4




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believe that ripened avocados help our customers address the consumers immediate needs and
accelerate the sale of avocados through their stores.
    
    We have developed various display techniques and packages that appeal to consumers and,
in particular, impulse buyers. Some of our techniques include the bagging of avocados and
the strategic display of the bags within the produce section of retail stores. Our research
has demonstrated that consumers generally purchase a larger quantity of avocados when
presented in a bag as opposed to the conventional bulk displays. We also believe that the
value proposition of avocados in a bag provides for a higher level of sales to grocery
stores.
    
    From time to time, we market our avocados under joint promotion programs with other food
manufacturers. Under these programs, we seek to increase the promotional exposure of our
products by providing certain sales incentives. These incentives will be offered in
conjunction with various promotional campaigns designed to advertise the products of all
parties involved. We believe these programs will help us minimize our advertising costs, as
they will be shared with other parties, while still achieving recognition in the
marketplace.
    
    We have established one of the industrys largest proprietary marketing databases that
facilitates a review of the performance of avocados in various grocery stores located across
the nation. Based on this data, we are able to assist our customers in developing programs
that will increase their sales. Generally, we review the performance of stores relative to
others within the same geographic area and make recommendations designed to increase both
the per unit and total dollar sales of avocados within the produce section.
  International avocados and perishable food products
    5




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th st
    Processed Products
      6




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Sales and Other Financial Information by Business Segment and Product Category
  Patents and Trademarks
  Working Capital Requirements
    Backlog
  7




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##### Table of Contents



Research and Development
  Compliance with Government Regulations
      Employees
   Location
    
    Salaried
    
    
    HourlyUnited States
    
    
    88
    
    
    
    144Mexico
    
    
    64
    
    
    
    405TOTAL
    
    
    152
    
    
    
    549
  8




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Item 1A. Risk Factors
 Risks Related to Our Business
 We are subject to increasing competition that may adversely affect our operating results.
  
    
    Our California avocado business is impacted by an increasing volume of foreign grown
avocados being imported into the United States. Recently, there have been significant
plantings of avocados in Mexico, Chile, New Zealand, the Dominican Republic, and other parts
of the world, which have had, and will continue to have, the effect of increasing the volume
of foreign grown avocados entering the United States market. Generally, an increase in
foreign grown avocados in the markets we distribute in has the effect of lowering prices for
California grown avocados and adversely impacting our results from operations.
    
    Our California avocado business is subject to competition from other California avocado
handlers. If we are unable to consistently pay California growers a competitive price for
their avocados, these growers may choose to have their avocados marketed by alternate
handlers.
    
    Our international avocados and perishable food products business is impacted by
competitors operating in Mexico. Generally, handlers of Mexican grown avocados operate
facilities that are substantially smaller than our facility in Uruapan, Mexico. If we are
unable to pack and market a sufficient volume of Mexican grown avocados, smaller handlers
will have a lower per unit cost and be able to offer Mexican avocados at a more competitive
price to our customers.
    
    Our international avocados and perishable food products business is also subject to
competition from other California avocado handlers that market Chilean grown avocados. If
we are unable to consistently pay Chilean packers a competitive price for their avocados,
these packers may choose to have their avocados marketed by alternate handlers.
    
    Our processed products business is impacted by demand for our product. If we are unable
to produce a sufficient volume of processed products at our existing facilities, our
competitors may be able to offer processed products at a more competitive price to our
customers.
 We are subject to the risks of doing business internationally.
   
    
    Local economic and political conditions, including disruptions in trading and capital
markets;
    
    Restrictive foreign governmental actions, such as restrictions on transfers of funds and
trade protection measures, including export duties and quotas and customs duties and
tariffs;
    
    Changes in legal or regulatory requirements affecting foreign investment, loans, taxes,
imports, and exports; and
    
    Currency exchange rate fluctuations which, depending upon the nature of the changes, may
make our domestic-sourced products more expensive compared to foreign grown products or may
increase our cost of obtaining foreign-sourced products.
 We and our growers are subject to the risks that are inherent in farming.
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We are subject to rapidly changing USDA and FDA regulations which govern the importation of foreign
avocados into the United States and the processing of processed avocado products.
   Our business could be adversely affected if we lost key members of our management.
  The acquisition of other businesses could pose risks to our operating income.
  Our ability to competitively serve our customers is a function of reliable and low cost
transportation. Disruption of the supply of these services and/or significant increases in the cost
of these services could impact our operating income.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  11




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Executive Officers
  Name
    
    Age
    
    PositionLecil E. Cole
    
    
    65
    
    
    Chairman of the Board, Chief Executive Officer and PresidentArthur J. Bruno
    
    
    55
    
    
    Chief Operating Officer, Chief Financial Officer and Corporate SecretaryRobert J. Wedin
    
    
    56
    
    
    Vice President, Sales and Fresh MarketingAlan C. Ahmer
    
    
    57
    
    
    Vice President, Processed Product Sales and ProductionMichael A. Browne
    
    
    46
    
    
    Vice President, Fresh Operations
 Lecil E. Cole
 Arthur J. Bruno
 Robert J. Wedin
 Alan C. Ahmer
 Michael A. Browne
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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
   Fiscal 2004
    
    High
    
    
    LowFirst Quarter
    
    $
    11.60
    
    
    $
    9.75Second Quarter
    
    $
    10.90
    
    
    $
    9.80Third Quarter
    
    $
    13.00
    
    
    $
    10.08Fourth Quarter
    
    $
    12.27
    
    
    $
    10.50
 Fiscal 2005
    
    High
    
    
    LowFirst Quarter
    
    $
    12.38
    
    
    $
    10.10Second Quarter
    
    $
    11.81
    
    
    $
    9.76Third Quarter
    
    $
    10.92
    
    
    $
    10.00Fourth Quarter
    
    $
    10.25
    
    
    $
    8.66
   Issuer Purchases of Equity Shares
 Total Number ofShares Purchased as
    
    
    Approximate Dollar Value ofTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    Shares that May Yet BeOf Shares
    
    
    Price Paid
    
    
    Announced
    
    
    Purchased under thePurchased
    
    
    Per Share
    
    
    Plans or Programs
    
    
    Plans or ProgramsMonth #1 (August 2005)
    
    
    200,000
    
    
    $
    10.00
    
    
    
    
    
    
    $
    Month #2 (September 2005)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Month #3 (October 2005)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    200,000
    
    
    $
    10.00
    
    
    
    
    
    
    $
    
  Dividend Policy
    13




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Item 6. Selected Financial Data
 
 SELECTED CONSOLIDATED FINANCIAL DATA
   Fiscal Year Ended October 31,20052005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands, except per share data)Income Statement Data: (1)Net sales
    
    $
    258,822
    
    
    $
    274,218
    
    
    $
    246,761
    
    
    $
    242,671
    
    
    $
    217,704Gross margin
    
    
    21,734
    
    
    
    25,404
    
    
    
    25,465
    
    
    
    25,823
    
    
    
    18,808Net income
    
    
    3,322
    
    
    
    6,210
    
    
    
    7,160
    
    
    
    6,915
    
    
    
    3,838Basic and diluted net income per share(2)
    
    $
    0.24
    
    
    $
    0.46
    
    
    $
    0.55
    
    
    $
    0.60
    
    
    $
    0.37Balance Sheet Data as of End of
Period:Working capital
    
    $
    17,618
    
    
    $
    20,353
    
    
    $
    20,735
    
    
    $
    18,833
    
    
    $
    9,799Total assets(5)
    
    
    108,482
    
    
    
    67,398
    
    
    
    53,689
    
    
    
    55,132
    
    
    
    52,368Short-term debt(5)
    
    
    1,313
    
    
    
    22
    
    
    
    24
    
    
    
    3,222
    
    
    
    16,241Long-term debt, less current portion(3)(5)
    
    
    11,719
    
    
    
    34
    
    
    
    61
    
    
    
    3,180
    
    
    
    3,429Shareholders equity
    
    
    64,746
    
    
    
    43,937
    
    
    
    37,147
    
    
    
    30,556
    
    
    
    20,029Cash Flows Provided by (Used in):Operations
    
    $
    5,964
    
    
    $
    4,460
    
    
    $
    15,222
    
    
    $
    8,135
    
    
    $
    1,161Investing(4)(5)
    
    
    (22,337
    )
    
    
    (8,474
    )
    
    
    (4,475
    )
    
    
    (2,078
    )
    
    
    (2,029
    )Financing(5)
    
    
    16,870
    
    
    
    (725
    )
    
    
    (6,293
    )
    
    
    (7,193
    )
    
    
    1,433Other Data:Dividends per share (2)
    
    $
    0.32
    
    
    $
    0.30
    
    
    $
    0.25
    
    
    $
    0.20
    
    
    $
    0.50Net book value per share
    
    $
    4.51
    
    
    $
    3.25
    
    
    $
    2.87
    
    
    $
    2.38
    
    
    $
    2.01Pounds of California avocados sold
    
    
    104,950
    
    
    
    152,725
    
    
    
    122,950
    
    
    
    158,187
    
    
    
    163,891Pounds of international avocados sold
    
    
    103,830
    
    
    
    69,410
    
    
    
    70,348
    
    
    
    69,512
    
    
    
    44,935Pounds of processed avocados products sold
    
    
    15,628
    
    
    
    13,317
    
    
    
    14,707
    
    
    
    14,248
    
    
    
    14,788
 
 (1)
    
    Operating results for fiscal years 2005 and 2004 include the acquisition of Maui. For fiscal
year 2005, Mauis net sales, gross margins, and net income were as follows: $21.7 million,
$1.1 million, and $0.4 million. For fiscal year 2004, Mauis net sales, gross margins, and
net income were as follows: $19.8 million, $1.4 million, and $0.5 million.(2)
    
    Dividends per share for fiscal 2001 represent the payment of our dividend to shareholders for
the results of our fiscal 2000 operations. We did not declare a cash dividend in connection
with our fiscal 2001 operating results. In December 2001, we declared a 5% stock dividend
payable February 15, 2002 for all shareholders of record as of February 1, 2002. Dividends
per share and net book value per share are computed based on the actual shares outstanding.(3)
    
    In July 2003, our Board of Directors approved the retirement of our Industrial Development
Revenue Bond. The bonds were initially floated to provide the financing to construct our
Temecula, California packinghouse. We repaid the final $2.8 million in principal under the
indenture in September 2003.(4)
    
    Cash flows used in investing activities for fiscal 2004 and 2003 include the effect of
constructing a processing facility in Uruapan, Michoacan, Mexico. The Uruapan facility
commenced operations in February 2004.(5)
    
    Total assets, short-term debt, long-term debt, cash flows used in investing activities, and
cash flows provided by financing activities for fiscal 2005 include the effect of the stock
purchase agreement with Limoneira Company. See Note 12 to the consolidated financial
statements. 
 14




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the following discussion and analysis of our financial condition and results
of operations together with Selected Consolidated Financial Data and our consolidated financial
statements and notes thereto that appear elsewhere in this Annual Report. This discussion and
analysis contains forward-looking statements that involve risks, uncertainties, and assumptions.
Actual results may differ materially from those anticipated in these forward-looking statements as
a result of various factors, including, but not limited to, those presented under Risks related to
our business included in Item 1A and elsewhere in this Annual Report.
 Overview
       15




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Recent Developments
 Dividend Payment
  Corporate headquarters building
  Stock Option Grant
  Term loan agreement
   16




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Useful lives of property, plant and equipment
  Retirement of Common Stock
  Critical Accounting Estimates
    Promotional allowances .
 Goodwill and acquired intangible assets Goodwill and Other Intangible Assets
 Allowance for accounts receivable
 Revenue recognition.
 17




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Results of Operations
  Year ended October 31, 20052005
    
    
    2004
    
    
    2003Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross margins
    
    
    8.4
    %
    
    
    9.3
    %
    
    
    10.3
    %Selling, general and administrative
    
    
    7.2
    %
    
    
    5.8
    %
    
    
    6.0
    %Operating income
    
    
    1.2
    %
    
    
    3.4
    %
    
    
    4.3
    %Other income, net
    
    
    0.9
    %
    
    
    0.2
    %
    
    
    0.4
    %Net income
    
    
    1.3
    %
    
    
    2.3
    %
    
    
    2.9
    %
 Net Sales
   2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003(Dollars in thousands)Net sales:California avocados
    
    $
    116,308
    
    
    
    (28.9
    )%
    
    $
    163,486
    
    
    
    9.3
    %
    
    $
    149,635International avocados and
perishable food products
    
    
    129,831
    
    
    
    37.5
    %
    
    
    94,423
    
    
    
    25.3
    %
    
    
    75,347Processed products
    
    
    34,699
    
    
    
    6.0
    %
    
    
    32,749
    
    
    
    1.2
    %
    
    
    32,360Eliminations
    
    
    (22,016
    )
    
    
    
    
    
    
    (16,440
    )
    
    
    
    
    
    
    (10,581
    )Total net sales
    
    $
    258,822
    
    
    
    (5.6
    )%
    
    $
    274,218
    
    
    
    11.1
    %
    
    $
    246,761As a percentage of net sales:California avocados
    
    
    43.3
    %
    
    
    
    
    
    
    59.0
    %
    
    
    
    
    
    
    60.6
    %International avocados and
perishable food products
    
    
    45.7
    %
    
    
    
    
    
    
    31.6
    %
    
    
    
    
    
    
    28.0
    %Processed products
    
    
    11.0
    %
    
    
    
    
    
    
    9.4
    %
    
    
    
    
    
    
    11.4
    %100.0
    %
    
    
    
    
    
    
    100.0
    %
    
    
    
    
    
    
    100.0
    %
   18




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Year ended October 31, 2005
    
    
    Year ended October 31, 2004International
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Internationalavocados and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    avocados andperishable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    perishableCalifornia
    
    
    food
    
    
    Processed
    
    
    
    
    
    
    California
    
    
    food
    
    
    Processedavocados
    
    
    products
    
    
    products
    
    
    Total
    
    
    avocados
    
    
    products
    
    
    products
    
    
    TotalThird-party sales:California avocados
    
    $
    104,481
    
    
    $
    
    
    
    $
    
    
    
    $
    104,481
    
    
    $
    150,159
    
    
    $
    
    
    
    $
    
    
    
    $
    150,159Imported avocados
    
    
    
    
    
    
    81,756
    
    
    
    
    
    
    
    81,756
    
    
    
    
    
    
    
    54,589
    
    
    
    
    
    
    
    54,589Papayas
    
    
    
    
    
    
    6,251
    
    
    
    
    
    
    
    6,251
    
    
    
    
    
    
    
    6,846
    
    
    
    
    
    
    
    6,846Specialities and tropicals
    
    
    
    
    
    
    13,777
    
    
    
    
    
    
    
    13,777
    
    
    
    
    
    
    
    14,233
    
    
    
    
    
    
    
    14,233Processed  food service
    
    
    
    
    
    
    
    
    
    
    28,307
    
    
    
    28,307
    
    
    
    
    
    
    
    
    
    
    
    27,352
    
    
    
    27,352Processed  retail and club
    
    
    
    
    
    
    
    
    
    
    6,766
    
    
    
    6,766
    
    
    
    
    
    
    
    
    
    
    
    4,285
    
    
    
    4,285Total fruit and product sales
to third-parties
    
    
    104,481
    
    
    
    101,784
    
    
    
    35,073
    
    
    
    241,338
    
    
    
    150,159
    
    
    
    75,668
    
    
    
    31,637
    
    
    
    257,464Freight and other charges
    
    
    7,699
    
    
    
    16,430
    
    
    
    258
    
    
    
    24,387
    
    
    
    11,946
    
    
    
    10,968
    
    
    
    534
    
    
    
    23,448Total gross sales to third-parties
    
    
    112,180
    
    
    
    118,214
    
    
    
    35,331
    
    
    
    265,725
    
    
    
    162,105
    
    
    
    86,636
    
    
    
    32,171
    
    
    
    280,912Less sales incentives
    
    
    (103
    )
    
    
    (2
    )
    
    
    (6,798
    )
    
    
    (6,903
    )
    
    
    (131
    )
    
    
    (48
    )
    
    
    (6,515
    )
    
    
    (6,694
    )Total net sales to third-parties
    
    
    112,077
    
    
    
    118,212
    
    
    
    28,533
    
    
    
    258,822
    
    
    
    161,974
    
    
    
    86,588
    
    
    
    25,656
    
    
    
    274,218Intercompany sales
    
    
    4,231
    
    
    
    11,619
    
    
    
    6,166
    
    
    
    22,016
    
    
    
    1,512
    
    
    
    7,835
    
    
    
    7,093
    
    
    
    16,440Net sales
    
    $
    116,308
    
    
    $
    129,831
    
    
    $
    34,699
    
    
    
    280,838
    
    
    $
    163,486
    
    
    $
    94,423
    
    
    $
    32,749
    
    
    
    290,658Intercompany sales eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,016
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,440
    )Consolidated net sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    258,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    274,218
 Year ended October 31, 2004
    
    
    Year ended October 31, 2003International
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Internationalavocados and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    avocados andperishable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    perishableCalifornia
    
    
    food
    
    
    Processed
    
    
    
    
    
    
    California
    
    
    food
    
    
    Processedavocados
    
    
    products
    
    
    products
    
    
    Total
    
    
    avocados
    
    
    products
    
    
    products
    
    
    TotalThird-party sales:California avocados
    
    $
    150,159
    
    
    $
    
    
    
    $
    
    
    
    $
    150,159
    
    
    $
    140,795
    
    
    $
    
    
    
    $
    
    
    
    $
    140,795Imported avocados
    
    
    
    
    
    
    54,589
    
    
    
    
    
    
    
    54,589
    
    
    
    
    
    
    
    56,306
    
    
    
    
    
    
    
    56,306Papayas
    
    
    
    
    
    
    6,846
    
    
    
    
    
    
    
    6,846
    
    
    
    
    
    
    
    2,920
    
    
    
    
    
    
    
    2,920Specialities and tropicals
    
    
    
    
    
    
    14,233
    
    
    
    
    
    
    
    14,233
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30Processed  food service
    
    
    
    
    
    
    
    
    
    
    27,352
    
    
    
    27,352
    
    
    
    
    
    
    
    
    
    
    
    28,545
    
    
    
    28,545Processed  retail and club
    
    
    
    
    
    
    
    
    
    
    4,285
    
    
    
    4,285
    
    
    
    
    
    
    
    
    
    
    
    5,165
    
    
    
    5,165Total fruit and product sales
to third-parties
    
    
    150,159
    
    
    
    75,668
    
    
    
    31,637
    
    
    
    257,464
    
    
    
    140,795
    
    
    
    59,256
    
    
    
    33,710
    
    
    
    233,761Freight and other charges
    
    
    11,946
    
    
    
    10,968
    
    
    
    534
    
    
    
    23,448
    
    
    
    8,997
    
    
    
    10,079
    
    
    
    290
    
    
    
    19,366Total gross sales to third-parties
    
    
    162,105
    
    
    
    86,636
    
    
    
    32,171
    
    
    
    280,912
    
    
    
    149,792
    
    
    
    69,335
    
    
    
    34,000
    
    
    
    253,127Less sales incentives
    
    
    (131
    )
    
    
    (48
    )
    
    
    (6,515
    )
    
    
    (6,694
    )
    
    
    (157
    )
    
    
    (251
    )
    
    
    (5,958
    )
    
    
    (6,366
    )Total net sales to third-parties
    
    
    161,974
    
    
    
    86,588
    
    
    
    25,656
    
    
    
    274,218
    
    
    
    149,635
    
    
    
    69,084
    
    
    
    28,042
    
    
    
    246,761Intercompany sales
    
    
    1,512
    
    
    
    7,835
    
    
    
    7,093
    
    
    
    16,440
    
    
    
    
    
    
    
    6,263
    
    
    
    4,318
    
    
    
    10,581Net sales
    
    $
    163,486
    
    
    $
    94,423
    
    
    $
    32,749
    
    
    
    290,658
    
    
    $
    149,635
    
    
    $
    75,347
    
    
    $
    32,360
    
    
    
    257,342Intercompany sales eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,440
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,581
    )Consolidated net sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    274,218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    246,761
  California Avocados
    19




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##### Table of Contents



International and Perishable Food Products
     Processed Products
  20




---



##### Table of Contents



Gross Margins
  2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003(Dollars in thousands)Gross Margins:California avocados
    
    $
    10,502
    
    
    
    (38.6
    )%
    
    $
    17,102
    
    
    
    15.0
    %
    
    $
    14,873International avocados and perishable food products
    
    
    6,569
    
    
    
    32.5
    %
    
    
    4,958
    
    
    
    (9.1
    )%
    
    
    5,457Processed products
    
    
    4,663
    
    
    
    39.4
    %
    
    
    3,344
    
    
    
    (33.3
    )%
    
    
    5,017Total gross margins
    
    $
    21,734
    
    
    
    (14.4
    )%
    
    $
    25,404
    
    
    
    0.2
    %
    
    $
    25,347Gross profit percentages:California avocados
    
    
    9.4
    %
    
    
    
    
    
    
    10.6
    %
    
    
    
    
    
    
    9.9
    %International avocados and perishable food products
    
    
    5.6
    %
    
    
    
    
    
    
    5.7
    %
    
    
    
    
    
    
    7.9
    %Processed products
    
    
    16.3
    %
    
    
    
    
    
    
    13.0
    %
    
    
    
    
    
    
    17.9
    %Consolidated
    
    
    8.4
    %
    
    
    
    
    
    
    9.3
    %
    
    
    
    
    
    
    10.3
    %
      21




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##### Table of Contents



Selling, General and Administrative
 2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003(Dollars in thousands)Selling, general and administrative
    
    $
    18,588
    
    
    
    16.8
    %
    
    $
    15,920
    
    
    
    8.7
    %
    
    $
    14,651Percentage of net sales
    
    
    7.2
    %
    
    
    
    
    
    
    5.8
    %
    
    
    
    
    
    
    5.9
    %
    22




---



##### Table of Contents



Other Income, Net
 2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003(Dollars in thousands)Other income, net
    
    $
    2,357
    
    
    
    393.1
    %
    
    $
    478
    
    
    
    (46.2
    )%
    
    $
    889Percentage of net sales
    
    
    0.9
    %
    
    
    
    
    
    
    0.2
    %
    
    
    
    
    
    
    0.4
    %
   Provision for Income Taxes
 2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003(Dollars in thousands)Provision for income taxes
    
    $
    2,181
    
    
    
    (38.9
    )%
    
    $
    3,567
    
    
    
    (17.4
    )%
    
    $
    4,319Percentage of income before
provision for income taxes
    
    
    39.6
    %
    
    
    
    
    
    
    36.5
    %
    
    
    
    
    
    
    37.6
    %
   23




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##### Table of Contents



Quarterly Results of Operations
  Three months endedOct. 31,
    
    
    July 31,
    
    
    Apr. 30,
    
    
    Jan. 31,
    
    
    Oct. 31,
    
    
    July 31,
    
    
    Apr. 30,
    
    
    Jan. 31,2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004
    
    
    2004
    
    
    2004(in thousands, except per share amounts)Statement of Operations DataNet sales
    
    $
    62,246
    
    
    $
    88,699
    
    
    $
    60,206
    
    
    $
    47,671
    
    
    $
    65,436
    
    
    $
    83,318
    
    
    $
    76,421
    
    
    $
    49,043Cost of sales
    
    
    58,013
    
    
    
    79,505
    
    
    
    53,851
    
    
    
    45,719
    
    
    
    59,425
    
    
    
    74,833
    
    
    
    68,625
    
    
    
    45,931Gross margin
    
    
    4,233
    
    
    
    9,194
    
    
    
    6,355
    
    
    
    1,952
    
    
    
    6,011
    
    
    
    8,485
    
    
    
    7,796
    
    
    
    3,112Selling, general and administrative
    
    
    4,943
    
    
    
    4,825
    
    
    
    4,307
    
    
    
    4,513
    
    
    
    4,416
    
    
    
    3,777
    
    
    
    4,012
    
    
    
    3,715Restructuring charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185Operating income (loss)
    
    
    (710
    )
    
    
    4,369
    
    
    
    2,048
    
    
    
    (2,561
    )
    
    
    1,410
    
    
    
    4,708
    
    
    
    3,784
    
    
    
    (603
    )Other income, net
    
    
    213
    
    
    
    153
    
    
    
    1,909
    
    
    
    82
    
    
    
    167
    
    
    
    91
    
    
    
    106
    
    
    
    114Income before provision (benefit)
for income taxes
    
    
    (497
    )
    
    
    4,522
    
    
    
    3,957
    
    
    
    (2,479
    )
    
    
    1,577
    
    
    
    4,799
    
    
    
    3,890
    
    
    
    (489
    )Provision (benefit) for income taxes
    
    
    20
    
    
    
    1,603
    
    
    
    1,490
    
    
    
    (932
    )
    
    
    467
    
    
    
    1,739
    
    
    
    1,556
    
    
    
    (195
    )Net income (loss)
    
    $
    (517
    )
    
    $
    2,919
    
    
    $
    2,467
    
    
    $
    (1,547
    )
    
    $
    1,110
    
    
    $
    3,060
    
    
    $
    2,334
    
    
    $
    (294
    )Net income (loss) per share:Basic
    
    $
    (0.04
    )
    
    $
    0.21
    
    
    $
    0.18
    
    
    $
    (0.11
    )
    
    $
    0.08
    
    
    $
    0.23
    
    
    $
    0.17
    
    
    $
    (0.02
    )Diluted
    
    $
    (0.04
    )
    
    $
    0.21
    
    
    $
    0.18
    
    
    $
    (0.11
    )
    
    $
    0.08
    
    
    $
    0.23
    
    
    $
    0.17
    
    
    $
    (0.02
    )Number of shares used in per share
computation:Basic
    
    
    14,371
    
    
    
    14,171
    
    
    
    13,507
    
    
    
    13,507
    
    
    
    13,507
    
    
    
    13,507
    
    
    
    13,507
    
    
    
    13,469Diluted
    
    
    14,432
    
    
    
    14,237
    
    
    
    13,580
    
    
    
    13,507
    
    
    
    13,591
    
    
    
    13,594
    
    
    
    13,589
    
    
    
    13,469
 Liquidity and Capital Resources
      24




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##### Table of Contents



Payments due by periodContractual Obligations
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    More than 5 yearsLong-term debt obligations
(including interest)
    
    $
    13,782
    
    
    $
    1,388
    
    
    $
    4,149
    
    
    $
    2,748
    
    
    $
    5,497Short-term borrowings
    
    
    1,424
    
    
    
    1,424
    
    
    
    
    
    
    
    
    
    
    
    Defined benefit plan
    
    
    510
    
    
    
    55
    
    
    
    165
    
    
    
    110
    
    
    
    180Operating lease commitments
    
    
    3,706
    
    
    
    1,068
    
    
    
    1,550
    
    
    
    414
    
    
    
    674Total
    
    $
    19,422
    
    
    $
    3,935
    
    
    $
    5,864
    
    
    $
    3,272
    
    
    $
    6,351
   Impact of Recently Issued Accounting Pronouncements
  25




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Expected maturity date October 31,(All amounts in thousands)
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueAssetsCash and cash equivalents (1)
    
    $
    1,133
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,133
    
    
    $
    1,133Accounts receivable (1)
    
    
    19,253
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,253
    
    
    
    19,253Notes receivable from shareholders (2)
    
    
    175
    
    
    
    2,461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,636
    
    
    
    2,529LiabilitiesPayable to growers (1)
    
    $
    1,753
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,753
    
    
    $
    1,753Accounts payable (1)
    
    
    1,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,892
    
    
    
    1,892Current borrowings pursuant to credit
facilities (1)
    
    
    1,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,424
    
    
    
    1,424Fixed-rate long-term obligations (3)
    
    
    1,313
    
    
    
    1,309
    
    
    
    1,308
    
    
    
    1,302
    
    
    
    1,300
    
    
    
    6,500
    
    
    
    13,032
    
    
    
    13,032
 (1)
    
    We believe the carrying amounts of cash and cash equivalents, accounts receivable,
payable to growers, accounts payable, and current borrowings pursuant to credit facilities
approximate their fair value due to the short maturity of these financial instruments.
 (2)
    
    Notes receivable from shareholders bear interest at 7.0%. We believe that a portfolio
of loans with a similar risk profile would currently yield a return of 9.25%. We project
the impact of an increase or decrease in interest rates of 100 basis points would result in
a change of fair value of approximately $46,000.
 (3)
    
    Fixed-rate long-term obligations bear interest rates ranging from 3.3% to 8.2% with a
weighted-average interest rate of 6.5%. We believe that loans with a similar risk profile
would currently yield a return of 6.5%. We project the impact of an increase or decrease
in interest rates of 100 basis points would result in a change of fair value of
approximately $534,000.
   26




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 
 CALAVO GROWERS, INC.
CONSOLIDATED BALANCE SHEETS
 (in thousands, except share amounts)
 October 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,133
    
    
    $
    636Accounts receivable, net of allowances
of $2,688 (2005) and $1,087 (2004)
    
    
    19,253
    
    
    
    21,131Inventories, net
    
    
    10,096
    
    
    
    11,375Prepaid expenses and other current assets
    
    
    5,879
    
    
    
    4,807Advances to suppliers
    
    
    1,141
    
    
    
    2,413Income taxes receivable
    
    
    893
    
    
    
    803Deferred income taxes
    
    
    2,651
    
    
    
    1,775Total current assets
    
    
    41,046
    
    
    
    42,940Property, plant, and equipment, net
    
    
    16,897
    
    
    
    17,427Building held for sale
    
    
    
    
    
    
    1,658Investment in Limoneira
    
    
    45,634
    
    
    
    Goodwill
    
    
    3,591
    
    
    
    3,591Other assets
    
    
    1,314
    
    
    
    1,782$
    108,482
    
    
    $
    67,398Liabilities and shareholders equityCurrent liabilities:Payable to growers
    
    $
    1,753
    
    
    $
    5,789Trade accounts payable
    
    
    1,892
    
    
    
    2,490Accrued expenses
    
    
    12,482
    
    
    
    8,234Short-term borrowings
    
    
    1,424
    
    
    
    2,000Dividend payable
    
    
    4,564
    
    
    
    4,052Current portion of long-term obligations
    
    
    1,313
    
    
    
    22Total current liabilities
    
    
    23,428
    
    
    
    22,587Long-term liabilities:Long-term obligations, less current portion
    
    
    11,719
    
    
    
    34Deferred income taxes
    
    
    8,589
    
    
    
    840Total long-term liabilities
    
    
    20,308
    
    
    
    874Commitments and contingencies (Note 8)
Shareholders equity:Common stock ($0.001 par value, 100,000 shares
authorized; 14,362 and 13,507 shares outstanding
at October 31, 2005 and 2004)
    
    
    14
    
    
    
    14Additional paid-in capital
    
    
    37,240
    
    
    
    28,822Notes receivable from shareholders
    
    
    (2,636
    )
    
    
    (2,883
    )Accumulated other comprehensive income
    
    
    13,386
    
    
    
    Retained earnings
    
    
    16,742
    
    
    
    17,984Total shareholders equity
    
    
    64,746
    
    
    
    43,937$
    108,482
    
    
    $
    67,398
 See accompanying notes to consolidated financial statements.
 27




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##### Table of Contents



CALAVO GROWERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, except per share amounts)
 Year Ended October 31,2005
    
    
    2004
    
    
    2003Net sales
    
    $
    258,822
    
    
    $
    274,218
    
    
    $
    246,761Cost of sales
    
    
    237,088
    
    
    
    248,814
    
    
    
    221,414Gross margin
    
    
    21,734
    
    
    
    25,404
    
    
    
    25,347Selling, general and administrative
    
    
    18,588
    
    
    
    15,920
    
    
    
    14,651Restructuring charge
    
    
    
    
    
    
    185
    
    
    
    106Operating income
    
    
    3,146
    
    
    
    9,299
    
    
    
    10,590Other income, net
    
    
    2,357
    
    
    
    478
    
    
    
    889Income before provision for income taxes
    
    
    5,503
    
    
    
    9,777
    
    
    
    11,479Provision for income taxes
    
    
    2,181
    
    
    
    3,567
    
    
    
    4,319Net income
    
    $
    3,322
    
    
    $
    6,210
    
    
    $
    7,160Net income per share:Basic
    
    $
    0.24
    
    
    $
    0.46
    
    
    $
    0.55Diluted
    
    $
    0.24
    
    
    $
    0.46
    
    
    $
    0.55Number of shares used in per share computation:Basic
    
    
    13,892
    
    
    
    13,497
    
    
    
    12,911Diluted
    
    
    13,985
    
    
    
    13,582
    
    
    
    12,944
 See accompanying notes to consolidated financial statements.
 28




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##### Table of Contents



CALAVO GROWERS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (All amounts in thousands)
 Year endedOctober 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    3,322
    
    
    $
    6,210
    
    
    $
    7,160Other comprehensive income, before tax:Unrealized holding gains arising during period
    
    
    22,184
    
    
    
    
    
    
    
    Income tax expense related to items of other
comprehensive income
    
    
    (8,798
    )
    
    
    
    
    
    
    Other comprehensive income, net of tax
    
    
    13,386
    
    
    
    
    
    
    
    Comprehensive income
    
    $
    16,708
    
    
    $
    6,210
    
    
    $
    7,160
 See accompanying notes to consolidated financial statements.
 29




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##### Table of Contents



CALAVO GROWERS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (in thousands)
 Notes
    
    
    AccumulatedAdditional
    
    
    Receivable
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    From
    
    
    Comprehensive
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Shareholders
    
    
    Income
    
    
    Earnings
    
    
    TotalBalance, October 31, 2002
    
    
    12,835
    
    
    $
    13
    
    
    $
    24,221
    
    
    $
    (5,720
    )
    
    $
    
    
    
    $
    12,042
    
    
    $
    30,556Exercise of stock options and
income tax benefit of $72
    
    
    95
    
    
    
    
    
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    547Collections on shareholder notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,157
    
    
    
    
    
    
    
    
    
    
    
    2,157Additional costs related to Rights Offering
    
    
    
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41
    )Dividend declared to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,232
    )
    
    
    (3,232
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,160
    
    
    
    7,160Balance, October 31, 2003
    
    
    12,930
    
    
    
    13
    
    
    
    24,727
    
    
    
    (3,563
    )
    
    
    
    
    
    
    15,970
    
    
    
    37,147Purchase acquisition
    
    
    577
    
    
    
    1
    
    
    
    4,049
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,050Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Collections on shareholder notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    
    
    
    
    
    
    
    
    680Dividend declared to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,196
    )
    
    
    (4,196
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,210
    
    
    
    6,210Balance, October 31, 2004
    
    
    13,507
    
    
    
    14
    
    
    
    28,822
    
    
    
    (2,883
    )
    
    
    
    
    
    
    17,984
    
    
    
    43,937Exercise of stock options and
income tax benefit of $59
    
    
    55
    
    
    
    
    
    
    
    334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    334Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84Issuance of stock to Limoneira
    
    
    1,000
    
    
    
    1
    
    
    
    9,999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Unrealized gain on Limoneira investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,386
    
    
    
    
    
    
    
    13,386Retirement of common stock
    
    
    (200
    )
    
    
    (1
    )
    
    
    (1,999
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Collections on shareholder notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    247
    
    
    
    
    
    
    
    
    
    
    
    247Dividend declared to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,564
    )
    
    
    (4,564
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,322
    
    
    
    3,322Balance, October 31, 2005
    
    
    14,362
    
    
    $
    14
    
    
    $
    37,240
    
    
    $
    (2,636
    )
    
    $
    13,386
    
    
    $
    16,742
    
    
    $
    64,746
 See accompanying notes to consolidated financial statements.
 30




---



##### Table of Contents



CALAVO GROWERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year Ended October 31,2005
    
    
    2004
    
    
    2003Cash Flows from Operating Activities:Net income
    
    $
    3,322
    
    
    $
    6,210
    
    
    $
    7,160Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    2,862
    
    
    
    2,648
    
    
    
    2,024Provision for losses on accounts receivable
    
    
    475
    
    
    
    25
    
    
    
    19Stock compensation expense
    
    
    84
    
    
    
    46
    
    
    
    (Gain)/loss on disposal of property, plant, and equipment
    
    
    (1,668
    )
    
    
    
    
    
    
    32Gain on sale of investments held to maturity
    
    
    
    
    
    
    
    
    
    
    (163
    )Effect on cash of changes in operating assets and liabilities:Accounts receivable
    
    
    1,403
    
    
    
    (4,596
    )
    
    
    1,328Inventories, net
    
    
    1,279
    
    
    
    (3,354
    )
    
    
    4,440Prepaid expenses and other assets
    
    
    (723
    )
    
    
    2,798
    
    
    
    620Advances to suppliers
    
    
    1,272
    
    
    
    (1,789
    )
    
    
    1,911Income taxes receivable
    
    
    (31
    )
    
    
    (803
    )
    
    
    360Deferred income taxes
    
    
    (1,925
    )
    
    
    (320
    )
    
    
    (226
    )Payable to growers
    
    
    (4,036
    )
    
    
    2,343
    
    
    
    (2,922
    )Trade accounts payable and accrued expenses
    
    
    3,254
    
    
    
    1,303
    
    
    
    588Income tax payable
    
    
    
    
    
    
    (51
    )
    
    
    51Net cash provided by operating activities
    
    
    5,568
    
    
    
    4,460
    
    
    
    15,222Cash Flows from Investing Activities:Proceeds from sale of investments held to maturity
    
    
    
    
    
    
    
    
    
    
    2,060Direct costs of acquisition of Maui Fresh International, Inc.
    
    
    
    
    
    
    (65
    )
    
    
    Acquisitions of property, plant, and equipment
    
    
    (1,874
    )
    
    
    (8,409
    )
    
    
    (6,535
    )Cash settlement of the acquisition of Limoneira stock, net of our common stock issued
    
    
    (13,450
    )
    
    
    
    
    
    
    Proceeds from sale of building
    
    
    3,383
    
    
    
    
    
    
    
    Proceeds from sale of short-term investments
    
    
    
    
    
    
    
    
    
    
    2,223Purchases of short-term investments
    
    
    
    
    
    
    
    
    
    
    (2,223
    )Net cash used in investing activities
    
    
    (11,941
    )
    
    
    (8,474
    )
    
    
    (4,475
    )Cash Flows from Financing Activities:Dividend paid to shareholders
    
    
    (4,052
    )
    
    
    (3,376
    )
    
    
    (2,567
    )Proceeds from (repayments of) short-term borrowings, net
    
    
    (576
    )
    
    
    2,000
    
    
    
    (3,000
    )Proceeds from issuance of long-term debt
    
    
    13,000
    
    
    
    
    
    
    
    Payments on long-term obligations
    
    
    (24
    )
    
    
    (29
    )
    
    
    (3,317
    )Retirement of common stock
    
    
    (2,000
    )
    
    
    
    
    
    
    Proceeds from stock option exercises
    
    
    275
    
    
    
    
    
    
    
    475Proceeds from collection of shareholder notes receivable
    
    
    247
    
    
    
    680
    
    
    
    2,157Additional rights offering costs
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash
provided by (used in) financing activities
    
    
    6,870
    
    
    
    (725
    )
    
    
    (6,293
    )Net increase (decrease) in cash and cash equivalents
    
    
    497
    
    
    
    (4,739
    )
    
    
    4,454Cash and cash equivalents, beginning of year
    
    
    636
    
    
    
    5,375
    
    
    
    921Cash and cash equivalents, end of year
    
    $
    1,133
    
    
    $
    636
    
    
    $
    5,375Supplemental Information -Cash paid during the year for:Interest
    
    $
    399
    
    
    $
    66
    
    
    $
    179Income taxes
    
    $
    3,875
    
    
    $
    4,899
    
    
    $
    4,170Noncash Investing and Financing Activities:Tax receivable increase related to stock option exercise
    
    $
    59
    
    
    $
    
    
    
    $
    72Declared dividends payable
    
    $
    4,564
    
    
    $
    4,052
    
    
    $
    3,232Issuance of
our common stock in Limoneira transaction
    
    $
    10,000
    
    
    $
    
    
    
    $
    Construction
in progress included in trade accounts payable and accrued expenses
    
    $
    396
    
    
    $
    
    
    
    $
    Unrealized holding gains
    
    $
    22,184
    
    
    $
    
    
    
    $
    
  (in thousands)
    
    2004Fixed assets
    
    $
    114Goodwill
    
    
    3,526Intangible assets
    
    
    867Total non-cash assets acquired
    
    
    4,507Current liabilities
    
    
    110Deferred tax liabilities assumed
    
    
    347Net non-cash assets acquired
    
    $
    4,050
 See accompanying notes to consolidated financial statements.
 31




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##### Table of Contents



CALAVO GROWERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Description of the business
 Business
   2. Basis of Presentation and Summary of Significant Accounting Policies
   Cash and Cash Equivalents
  Inventories
  Property, Plant, and Equipment
  Accounting for Costs of Computer Software Developed or Obtained for Internal Use
 32




---



##### Table of Contents



Goodwill and Acquired Intangible Assets
 Goodwill and Other Intangible Assets
  Long-lived Assets
   Advances to Suppliers
  Revenue Recognition
  Promotional Allowances
  33




---



##### Table of Contents



Allowance for Accounts Receivable
  Consignment Arrangements
  2005
    
    
    2004
    
    
    2003Sales
    
    $
    32,003
    
    
    $
    26,878
    
    
    $
    33,675Cost of Sales
    
    
    30,298
    
    
    
    25,985
    
    
    
    31,900Gross Margin
    
    $
    1,705
    
    
    $
    893
    
    
    $
    1,775
 Advertising Expense
  Use of Estimates
  Income Taxes
 Accounting for Income Taxes
 Basic and Diluted Net Income per Share
  34




---



##### Table of Contents



Stock-Based Compensation
 Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure Accounting
for Stock Issued to Employees
  Year endedOctober 31,2005
    
    
    2004
    
    
    2003Net Income:As reported
    
    $
    3,322
    
    
    $
    6,210
    
    
    $
    7,160Add: Total stock-based compensation
expense determined under APB 25 and related
interpretations, net of tax effects
    
    
    51
    
    
    
    28
    
    
    
    Deduct: Total stock-based compensation
expense determined under fair value based
method for all awards, net of tax effects
    
    
    (54
    )
    
    
    (28
    )
    
    
    Pro forma
    
    $
    3,319
    
    
    $
    6,210
    
    
    $
    7,160Net income per share, as reported:Basic
    
    $
    0.25
    
    
    $
    0.46
    
    
    $
    0.55Diluted
    
    $
    0.25
    
    
    $
    0.46
    
    
    $
    0.55Net income per share, pro forma:Basic
    
    $
    0.25
    
    
    $
    0.46
    
    
    $
    0.55Diluted
    
    $
    0.25
    
    
    $
    0.46
    
    
    $
    0.55
  2005
    
    
    2004Risk-free interest rate
    
    
    4.1
    %
    
    
    3.3
    %Expected volatility
    
    
    27.6
    %
    
    
    26.9
    %Dividend yield
    
    
    3.2
    %
    
    
    20
    %Expected life (years)
    
    
    3
    
    
    
    5Weighted-average fair value of options granted
    
    $
    1.65
    
    
    $
    3.01
  Share-Based
Payment
 35




---



##### Table of Contents



Marketable Securities
 Accounting
for Certain Investments in Debt and Equity Securities
 Foreign Currency Translation and Remeasurement
  Fair Value of Financial Instruments
  Derivative Financial Instruments
  Recent Accounting Pronouncements
 Inventory Costs, an amendment of ARB No. 43, Chapter 4
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Accounting changes and Error Corrections Accounting Changes Reporting Accounting Changes in
Interim Financial Statements
 36




---



##### Table of Contents



Comprehensive Income
  Reclassifications
  3. Inventories
  October 31,2005
    
    
    2004Fresh fruit
    
    $
    3,525
    
    
    $
    3,424Packing supplies and ingredients
    
    
    2,015
    
    
    
    2,081Finished processed foods
    
    
    4,556
    
    
    
    5,870$
    10,096
    
    
    $
    11,375
     37




---



##### Table of Contents



4. Property, Plant, and Equipment
  October 31,2005
    
    
    2004Land
    
    $
    952
    
    
    $
    948Buildings and improvements
    
    
    13,611
    
    
    
    13,342Leasehold improvements
    
    
    212
    
    
    
    228Equipment
    
    
    28,889
    
    
    
    28,387Information systems  Hardware and software
    
    
    3,997
    
    
    
    3,927Construction in progress
    
    
    1,349
    
    
    
    1,67549,010
    
    
    
    48,507Less accumulated depreciation and amortization
    
    
    (32,113
    )
    
    
    (31,080
    )$
    16,897
    
    
    $
    17,427
  5. Other Assets
  6. Short-Term Borrowings
  7. Employee Benefit Plans
   38




---



##### Table of Contents



2005
    
    
    2004Change in projected benefit obligation:Projected benefit obligation at beginning of year
    
    $
    500
    
    
    $
    506Interest cost
    
    
    28
    
    
    
    30Actuarial loss
    
    
    37
    
    
    
    19Benefits paid
    
    
    (55
    )
    
    
    (55
    )Projected benefit obligation at end of year (unfunded)
    
    $
    510
    
    
    $
    500
  2005
    
    
    2004Projected benefit obligation
    
    $
    510
    
    
    $
    500Unrecognized net (gain) loss
    
    
    
    
    
    
    Recorded pension liabilities
    
    $
    510
    
    
    $
    500
  2005
    
    
    2004Discount rate on projected benefit obligation
    
    
    6.00
    %
    
    
    6.25
    %
 8. Commitments and Contingencies
 Commitments and guarantees
  2006
    
    $
    1,0682007
    
    
    8362008
    
    
    4932009
    
    
    2212010
    
    
    207Thereafter
    
    
    881$
    3,706
   Litigation
   39




---



##### Table of Contents



9. Related-Party Transactions
     10. Income Taxes
  2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    3,046
    
    
    $
    3,018
    
    
    $
    3,639State
    
    
    767
    
    
    
    844
    
    
    
    825Foreign
    
    
    293
    
    
    
    25
    
    
    
    81Total current
    
    
    4,106
    
    
    
    3,887
    
    
    
    4,545Deferred
    
    
    (1,925
    )
    
    
    (320
    )
    
    
    (226
    )Total income tax provision
    
    $
    2,181
    
    
    $
    3,567
    
    
    $
    4,319
  2005
    
    
    2004Allowances for accounts receivable
    
    $
    2,065
    
    
    $
    679Inventories
    
    
    325
    
    
    
    647State taxes
    
    
    80
    
    
    
    257Accrued liabilities
    
    
    181
    
    
    
    192Current deferred income taxes
    
    
    2,651
    
    
    
    1,775Property, plant, and equipment
    
    
    217
    
    
    
    (739
    )Intangible assets
    
    
    (282
    )
    
    
    (339
    )Unrealized Gain, Limoneira investment
    
    
    (8,798
    )
    
    
    Retirement benefits
    
    
    218
    
    
    
    217Other
    
    
    56
    
    
    
    21Long-term deferred income taxes
    
    $
    (8,589
    )
    
    $
    (840
    )
 40




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003Federal statutory tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %State taxes, net of federal effects
    
    
    5
    
    
    
    5
    
    
    
    4Foreign income taxes greater (less) than U.S.
    
    
    1
    
    
    
    (3
    )
    
    
    (1
    )Benefit of lower federal tax brackets
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Other
    
    
    
    
    
    
    
    
    
    
    140
    %
    
    
    36
    %
    
    
    38
    %
   11. Segment Information
  InternationalavocadosandperishableCalifornia
    
    
    food
    
    
    Processed
    
    
    Inter-segmentavocados
    
    
    products
    
    
    products
    
    
    eliminations
    
    
    Total(All amounts are presented in thousands)Year ended October 31, 2005Net sales
    
    $
    116,308
    
    
    $
    129,831
    
    
    $
    34,699
    
    
    $
    (22,016
    )
    
    $
    258,822Cost of sales
    
    
    105,806
    
    
    
    123,262
    
    
    
    30,036
    
    
    
    (22,016
    )
    
    
    237,088Gross margin
    
    
    10,502
    
    
    
    6,569
    
    
    
    4,663
    
    
    
    
    
    
    
    21,734Selling, general and administrative
    
    
    7,641
    
    
    
    5,889
    
    
    
    5,058
    
    
    
    
    
    
    
    18,588Operating income (loss)
    
    
    2,861
    
    
    
    680
    
    
    
    (395
    )
    
    
    
    
    
    
    3,146Other income, net
    
    
    1,327
    
    
    
    810
    
    
    
    220
    
    
    
    
    
    
    
    2,357Income (loss) before provision
(benefit) for income taxes
    
    
    4,188
    
    
    
    1,490
    
    
    
    (175
    )
    
    
    
    
    
    
    5,503Provision (benefit) for income taxes
    
    
    1,660
    
    
    
    591
    
    
    
    (70
    )
    
    
    
    
    
    
    2,181Net income (loss)
    
    $
    2,528
    
    
    $
    899
    
    
    $
    (105
    )
    
    $
    
    
    
    $
    3,322Year ended October 31, 2004Net sales
    
    $
    163,486
    
    
    $
    94,423
    
    
    $
    32,749
    
    
    $
    (16,440
    )
    
    $
    274,218Cost of sales
    
    
    146,384
    
    
    
    89,465
    
    
    
    29,405
    
    
    
    (16,440
    )
    
    
    248,814Gross margin
    
    
    17,102
    
    
    
    4,958
    
    
    
    3,344
    
    
    
    
    
    
    
    25,404Selling, general and administrative
    
    
    7,190
    
    
    
    3,850
    
    
    
    4,880
    
    
    
    
    
    
    
    15,920Restructuring charge
    
    
    
    
    
    
    
    
    
    
    185
    
    
    
    
    
    
    
    185Operating income (loss)
    
    
    9,912
    
    
    
    1,108
    
    
    
    (1,721
    )
    
    
    
    
    
    
    9,299Other income, net
    
    
    334
    
    
    
    125
    
    
    
    19
    
    
    
    
    
    
    
    478Income (loss) before provision
(benefit) for income taxes
    
    
    10,246
    
    
    
    1,233
    
    
    
    (1,702
    )
    
    
    
    
    
    
    9,777Provision (benefit) for income taxes
    
    
    3,738
    
    
    
    450
    
    
    
    (621
    )
    
    
    
    
    
    
    3,567Net income (loss)
    
    $
    6,508
    
    
    $
    783
    
    
    $
    (1,081
    )
    
    $
    
    
    
    $
    6,210
 41




---



##### Table of Contents



InternationalavocadosandperishableCalifornia
    
    
    food
    
    
    Processed
    
    
    Inter-segmentavocados
    
    
    products
    
    
    products
    
    
    eliminations
    
    
    TotalYear ended October 31, 2003Net sales
    
    $
    149,635
    
    
    $
    75,347
    
    
    $
    32,360
    
    
    $
    (10,581
    )
    
    $
    246,761Cost of sales
    
    
    134,762
    
    
    
    69,890
    
    
    
    27,343
    
    
    
    (10,581
    )
    
    
    221,414Gross margin
    
    
    14,873
    
    
    
    5,457
    
    
    
    5,017
    
    
    
    
    
    
    
    25,347Selling, general and administrative
    
    
    6,705
    
    
    
    2,951
    
    
    
    4,995
    
    
    
    
    
    
    
    14,651Restructuring charge
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    106Operating income (loss)
    
    
    8,168
    
    
    
    2,506
    
    
    
    (84
    )
    
    
    
    
    
    
    10,590Other income, net
    
    
    714
    
    
    
    162
    
    
    
    13
    
    
    
    
    
    
    
    889Income (loss) before provision
(benefit) for income taxes
    
    
    8,882
    
    
    
    2,668
    
    
    
    (71
    )
    
    
    
    
    
    
    11,479Provision (benefit) for income taxes
    
    
    3,341
    
    
    
    1,004
    
    
    
    (26
    )
    
    
    
    
    
    
    4,319Net income (loss)
    
    $
    5,541
    
    
    $
    1,664
    
    
    $
    (45
    )
    
    $
    
    
    
    $
    7,160
  Year ended October 31, 2005Internationalavocados andCalifornia
    
    
    perishable food
    
    
    Processedavocados
    
    
    products
    
    
    products
    
    
    TotalThird-party sales:California avocados
    
    $
    104,481
    
    
    $
    
    
    
    $
    
    
    
    $
    104,481Imported avocados
    
    
    
    
    
    
    81,756
    
    
    
    
    
    
    
    81,756Papayas
    
    
    
    
    
    
    6,251
    
    
    
    
    
    
    
    6,251Specialities and tropicals
    
    
    
    
    
    
    13,777
    
    
    
    
    
    
    
    13,777Processed  food service
    
    
    
    
    
    
    
    
    
    
    28,307
    
    
    
    28,307Processed  retail and club
    
    
    
    
    
    
    
    
    
    
    6,766
    
    
    
    6,766Total fruit and product sales to third-parties
    
    
    104,481
    
    
    
    101,784
    
    
    
    35,073
    
    
    
    241,338Freight and other charges
    
    
    7,699
    
    
    
    16,430
    
    
    
    258
    
    
    
    24,387Total third-party sales
    
    
    112,180
    
    
    
    118,214
    
    
    
    35,331
    
    
    
    265,725Less sales incentives
    
    
    (103
    )
    
    
    (2
    )
    
    
    (6,798
    )
    
    
    (6,903
    )Total net sales to third-parties
    
    
    112,077
    
    
    
    118,212
    
    
    
    28,533
    
    
    
    258,822Intercompany sales
    
    
    4,231
    
    
    
    11,619
    
    
    
    6,166
    
    
    
    22,016Net sales before eliminations
    
    $
    116,308
    
    
    $
    129,831
    
    
    $
    34,699
    
    
    
    280,838Intercompany sales eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,016
    )Consolidated net sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    258,822
 Year ended October 31, 2004Internationalavocados andCalifornia
    
    
    perishable food
    
    
    Processedavocados
    
    
    products
    
    
    products
    
    
    TotalThird-party sales:California avocados
    
    $
    150,159
    
    
    $
    
    
    
    $
    
    
    
    $
    150,159Imported avocados
    
    
    
    
    
    
    54,589
    
    
    
    
    
    
    
    54,589Papayas
    
    
    
    
    
    
    6,846
    
    
    
    
    
    
    
    6,846Specialities and tropicals
    
    
    
    
    
    
    14,233
    
    
    
    
    
    
    
    14,233Processed  food service
    
    
    
    
    
    
    
    
    
    
    27,352
    
    
    
    27,352Processed  retail and club
    
    
    
    
    
    
    
    
    
    
    4,285
    
    
    
    4,285Total fruit and product sales to third-parties
    
    
    150,159
    
    
    
    75,668
    
    
    
    31,637
    
    
    
    257,464Freight and other charges
    
    
    11,946
    
    
    
    10,968
    
    
    
    534
    
    
    
    23,448Total third-party sales
    
    
    162,105
    
    
    
    86,636
    
    
    
    32,171
    
    
    
    280,912Less sales incentives
    
    
    (131
    )
    
    
    (48
    )
    
    
    (6,515
    )
    
    
    (6,694
    )Total net sales to third-parties
    
    
    161,974
    
    
    
    86,588
    
    
    
    25,656
    
    
    
    274,218Intercompany sales
    
    
    1,512
    
    
    
    7,835
    
    
    
    7,093
    
    
    
    16,440Net sales before eliminations
    
    $
    163,486
    
    
    $
    94,423
    
    
    $
    32,749
    
    
    
    290,658Intercompany sales eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,440
    )Consolidated net sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    274,218
 42




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##### Table of Contents



Year ended October 31, 2003InternationalAvocados andCalifornia
    
    
    Perishable Food
    
    
    ProcessedAvocados
    
    
    Products
    
    
    Products
    
    
    TotalThird-party sales:California avocados
    
    $
    140,795
    
    
    $
    
    
    
    $
    
    
    
    $
    140,795Imported avocados
    
    
    
    
    
    
    56,306
    
    
    
    
    
    
    
    56,306Papayas
    
    
    
    
    
    
    2,920
    
    
    
    
    
    
    
    2,920Specialities and tropicals
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30Processed  food service
    
    
    
    
    
    
    
    
    
    
    28,545
    
    
    
    28,545Processed  retail and club
    
    
    
    
    
    
    
    
    
    
    5,165
    
    
    
    5,165Total fruit and product sales to third-parties
    
    
    140,795
    
    
    
    59,256
    
    
    
    33,710
    
    
    
    233,761Freight and other charges
    
    
    8,997
    
    
    
    10,079
    
    
    
    290
    
    
    
    19,366Total third-party sales
    
    
    149,792
    
    
    
    69,335
    
    
    
    34,000
    
    
    
    253,127Less sales incentives
    
    
    (157
    )
    
    
    (251
    )
    
    
    (5,958
    )
    
    
    (6,366
    )Total net sales to third-parties
    
    
    149,635
    
    
    
    69,084
    
    
    
    28,042
    
    
    
    246,761Intercompany sales
    
    
    
    
    
    
    6,263
    
    
    
    4,318
    
    
    
    10,581Net sales before eliminations
    
    $
    149,635
    
    
    $
    75,347
    
    
    $
    32,360
    
    
    
    257,342Intercompany sales eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,581
    )Consolidated net sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    246,761
  United States
    
    
    Mexico
    
    
    Consolidated2005
    
    $
    55,587
    
    
    $
    11,849
    
    
    $
    67,4362004
    
    $
    11,761
    
    
    $
    12,697
    
    
    $
    24,458
  12. Investment in Limoneira Company
    43




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##### Table of Contents



13. Long-Term Obligations
  2005
    
    
    2004Farm Credit West, PCA
    
    $
    13,000
    
    
    $
    Other
    
    
    32
    
    
    
    5613,032
    
    
    
    56Less current portion
    
    
    (1,313
    )
    
    
    (22
    )$
    11,719
    
    
    $
    34
    TotalYear ending October 31:2006
    
    $
    1,3132007
    
    
    1,3092008
    
    
    1,3082009
    
    
    1,3022010
    
    
    1,300Thereafter
    
    
    6,500$
    13,032
 14. Stock-Based Compensation
  The Directors Stock Option Plan
    44




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##### Table of Contents



Year ended October 31, 2005Weighted-AverageNumber of Shares
    
    
    Exercise PriceOutstanding at beginning of period
    
    
    155
    
    
    $
    5.65Exercised
    
    
    (55
    )
    
    $
    5.00Outstanding at end of period
    
    
    100
    
    
    $
    6.00Exercisable at end of period
    
    
    67
    
    
    $
    5.50
 Year ended October 31, 2004Weighted-AverageNumber of Shares
    
    
    Exercise PriceOutstanding at beginning of period
    
    
    105
    
    
    $
    5.00Granted
    
    
    50
    
    
    
    7.00Outstanding at end of period
    
    
    155
    
    
    $
    5.65Exercisable at end of period
    
    
    105
    
    
    $
    5.00Weighted-average fair value of options
granted during the year
    
    
    
    
    
    $
    3.02
  OutstandingAverageRemainingRange of
    
    Number of
    
    Contractual Life
    
    Weighted-AverageExercise Prices
    
    Shares
    
    (Years)
    
    Exercise Price$5.00 -
$7.00
    
    
    100
    
    
    
    2.10
    
    
    $
    6.00
 The Employee Stock Purchase Plan
    45




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##### Table of Contents



The 2005 Stock Incentive Plan
  
    
    Incentive stock options that are intended to satisfy the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, and the regulations thereunder;
    
    Non-qualified stock options that are not intended to be incentive stock options; and
    
    Shares of common stock that are subject to specified restrictions
    15. Dividends
  16. Processed Product Segment Restructuring
  46




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##### Table of Contents



Internal Control 
Integrated Framework
  
 47




---



##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
  Statement of Cash Flows
   48




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##### Table of Contents



Internal ControlIntegrated Framework
     Internal ControlIntegrated Framework Internal ControlIntegrated Framework
    
 49




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  
 PART III
  
 Item 10. Directors and Executive Officers of the Registrant
    http://www.calavo.com
 
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management
  50




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions
    
 Item 14. Principal Accountants Fees and Services
  51




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##### Table of Contents



Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    
    (1
    )
    
    Financial StatementsThe following consolidated financial statements as of October 31, 2005 and 2004 and for each
of the three years in the period ended October 31, 2005 are included herewith:Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of
Comprehensive Income, Consolidated Statements of Cash Flows, Consolidated Statements of
Shareholders Equity, Notes to Consolidated Financial Statements, and Report of Deloitte &
Touche LLP, Independent Registered Public Accounting Firm.(2
    )
    
    Supplemental SchedulesSchedule II  Valuation and Qualifying AccountsAll other schedules have been omitted since the required information is not present in
amounts sufficient to require submission of the schedule, or because the required
information is included in the consolidated financial statements or notes thereto.(3
    )
    
    Exhibits
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger and Reorganization dated as of
February 20, 2001 between Calavo Growers, Inc. and Calavo
Growers of California.12.2
    
    Agreement and Plan of Merger dated as of November 7, 2003
Among Calavo Growers, Inc., Calavo Acquisition, Inc., Maui Fresh
International, Inc. and Arthur J. Bruno, Robert J. Bruno and Javier J. Badillo73.1
    
    Articles of Incorporation of Calavo Growers, Inc.13.2
    
    Amended and Restated Bylaws of Calavo Growers, Inc.310.1
    
    Form of Marketing Agreement for Calavo Growers, Inc.810.2
    
    Marketing Agreement dated as of April 1, 1996 between
Tropical Hawaiian Products, Inc., a Hawaiian corporation,
and Calavo Growers of California.110.3
    
    Stock Purchase Agreement dated as of June 1, 2005, between
Limoneira Company and Calavo Growers, Inc.410.4
    
    Lease Agreement dated as of November 21, 1997, between Tede
S.A. de C.V., a Mexican corporation, and Calavo de Mexico,
S.A. de C.V., a Mexican corporation, including attached Guaranty
of Calavo Growers of California dated December 16, 1996.110.5
    
    Lease agreement dated as of February 15, 2005, between Limoneira
Company and Calavo Growers, Inc.410.6
    
    Standstill agreement dated June 1, 2005, between Limoneira
Company and Calavo Growers, Inc.410.7
    
    Standstill agreement dated June 1, 2005 between Calavo Growers, Inc.
And Limoneira Company4
 52




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##### Table of Contents



10.8
    
    Term Loan Agreement dated July 1, 2005, between Farm Credit
West, PCA, and Calavo Growers, Inc.510.9
    
    2005 Stock Incentive Plan Of Calavo Growers, Inc.610.10
    
    Calavo Supplemental Executive Retirement Agreement dated
March 11, 1989 between Egidio Carbone, Jr. and Calavo
Growers of California.110.11
    
    Amendment to the Calavo Growers of California Supplemental
Executive Retirement Agreement dated November 9, 1993
Between Egidio Carbone, Jr. and Calavo Growers of California.110.12
    
    2001 Stock Option Plan for Directors.210.13
    
    2001 Stock Purchase Plan for Officers and Employees.210.14
    
    Line of Credit Agreement between Farm Credit West, PCA and Calavo
Growers, Inc., dated August 17, 200510.15
    
    Business Loan Agreement between Bank of America, N.A. and Calavo
Growers, Inc., dated January 30, 2004910.16
    
    Renewal Notice for Business Loan Agreement, dated January 30, 2004,
Between Bank of America and Calavo Growers, Inc., dated November 18, 200510.17
    
    Form of Stock Option Agreement21.1
    
    Subsidiaries of Calavo Growers, Inc.123.1
    
    Consent of Deloitte & Touche LLP.31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-15(e)
or Rule 15d-15(e)31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-15(e)
or Rule 15d-15(e)32
    
    Certification of Chief Executive Officer and Chief Financial Officer of
Periodic Report Pursuant to 18 U.S.C. Section 1350
 
 1
    
    Previously filed on April 24, 2001 as an exhibit to the Registrants Registration Statement
on Form S-4, File No. 333-59418, and incorporated herein by reference.2
    
    Previously filed on December 18, 2001 as an exhibit to the Registrants Registration
Statement on Form S-8, File No. 333-75378, and incorporated herein by reference.3
    
    Previously filed on December 19, 2002 as an exhibit to the Registrants Report on Form 8-K,
and incorporated herein by reference. Previously filed on June 9, 2005 as an exhibit to the
Registrants Report on Form 10Q and incorporated herein by reference.4
    
    Previously filed on June 9, 2005 as an exhibit to the Registrants Report on Form 10Q and
incorporated herein by reference.5
    
    Previously filed on September 9, 2005 as an exhibit to the Registrants Report on Form 10Q
and incorporated herein by reference.6
    
    Previously filed on March 21, 2005 as an exhibit to the Registrants Definitive Proxy
Statement on Form DEF14A and incorporated herein by reference.7
    
    Previously filed on January 23, 2004 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference.8
    
    Previously filed on January 28, 2003 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference.9
    
    Previously filed on January 14, 2005 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference. 
 53




---



##### Table of Contents



Financial Statement Schedules
  54




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##### Table of Contents



SIGNATURES
  CALAVO GROWERS, INCBy:

/s/ Lecil E. ColeLecil E. ColeChairman of the Board of
Directors,
Chief Executive Officer and President  Signature
    
    Title/s/ Lecil E. Cole

Lecil E. Cole
    
    Chairman of the Board of Directors,
Chief Executive Officer and President
(Principal Executive Officer)/s/ Arthur J. Bruno

Arthur J. Bruno
    
    Chief Operating Officer, Chief
Financial Officer and Corporate
Secretary
(Principal Financial Officer)/s/ James E. Snyder

James E. Snyder
    
    Controller
(Principal Accounting Officer)/s/ Donald M. Sanders

Donald M. Sanders
    
    Director/s/ Fred J. Ferrazzano

Fred J. Ferrazzano
    
    Director/s/ John M. Hunt

John M. Hunt
    
    Director/s/ George H. Barnes

George H. Barnes
    
    Director/s/ J. Link Leavens

J. Link Leavens
    
    Director/s/ Alva V. Snider

Alva V. Snider
    
    Director/s/ Michael D. Hause

Michael D. Hause
    
    Director/s/ Dorcas H. McFarlane

Dorcas H. McFarlane
    
    Director/s/ Egidio Carbone, Jr

Egidio Carbone, Jr
    
    Director/s/ Scott Van Der Kar

Scott Van Der Kar
    
    Director
 55




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##### Table of Contents



SCHEDULE II
 CALAVO GROWERS, INC.
 VALUATION AND QUALIFYING ACCOUNTS (in thousands)
 Fiscal year
    
    
    Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atended
    
    
    beginning
    
    
    
    
    
    
    
    
    
    
    endOctober 31:
    
    
    of year
    
    
    Additions(1)
    
    
    Deductions(2)
    
    
    of yearAllowance for customer deductions
    
    
    2003
    
    
    $
    261
    
    
    $
    1,085
    
    
    $
    687
    
    
    $
    6592004
    
    
    
    659
    
    
    
    3,817
    
    
    
    3,454
    
    
    
    1,0222005
    
    
    
    1,022
    
    
    
    6,791
    
    
    
    5,663
    
    
    
    2,150Allowance for doubtful accounts
    
    
    2003
    
    
    
    25
    
    
    
    19
    
    
    
    3
    
    
    
    412004
    
    
    
    41
    
    
    
    25
    
    
    
    1
    
    
    
    652005
    
    
    
    65
    
    
    
    475
    
    
    
    2
    
    
    
    538
 
 (1)
    
    Charged to net sales (customer deductions) or costs and expenses (doubtful accounts).(2)
    
    Write-off of assets 
 56




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Agreement and Plan of Merger and Reorganization dated as of
February 20, 2001 between Calavo Growers, Inc. and Calavo
Growers of California.12.2
    
    Agreement and Plan of Merger dated as of November 7, 2003
Among Calavo Growers, Inc., Calavo Acquisition, Inc., Maui Fresh
International, Inc. and Arthur J. Bruno, Robert J. Bruno and Javier J. Badillo73.1
    
    Articles of Incorporation of Calavo Growers, Inc.13.2
    
    Amended and Restated Bylaws of Calavo Growers, Inc.310.1
    
    Form of Marketing Agreement for Calavo Growers, Inc.810.2
    
    Marketing Agreement dated as of April 1, 1996 between
Tropical Hawaiian Products, Inc., a Hawaiian corporation,
and Calavo Growers of California.110.3
    
    Stock Purchase Agreement dated as of June 1, 2005, between
Limoneira Company and Calavo Growers, Inc.410.4
    
    Lease Agreement dated as of November 21, 1997, between Tede
S.A. de C.V., a Mexican corporation, and Calavo de Mexico,
S.A. de C.V., a Mexican corporation, including attached Guaranty
of Calavo Growers of California dated December 16, 1996.110.5
    
    Lease agreement dated as of February 15, 2005, between Limoneira
Company and Calavo Growers, Inc.410.6
    
    Standstill agreement dated June 1, 2005, between Limoneira
Company and Calavo Growers, Inc.410.7
    
    Standstill agreement dated June 1, 2005 between Calavo Growers, Inc.
And Limoneira Company410.8
    
    Term Loan Agreement dated July 1, 2005, between Farm Credit
West, PCA, and Calavo Growers, Inc.510.9
    
    2005 Stock Incentive Plan Of Calavo Growers, Inc.610.10
    
    Calavo Supplemental Executive Retirement Agreement dated
March 11, 1989 between Egidio Carbone, Jr. and Calavo
Growers of California.110.11
    
    Amendment to the Calavo Growers of California Supplemental
Executive Retirement Agreement dated November 9, 1993
Between Egidio Carbone, Jr. and Calavo Growers of California.110.12
    
    2001 Stock Option Plan for Directors.210.13
    
    2001 Stock Purchase Plan for Officers and Employees.210.14
    
    Line of Credit Agreement between Farm Credit West, PCA and Calavo
Growers, Inc., dated August 17, 200510.15
    
    Business Loan Agreement between Bank of America, N.A. and Calavo
Growers, Inc., dated January 30, 2004910.16
    
    Renewal Notice for Business Loan Agreement, dated January 30, 2004,
Between Bank of America and Calavo Growers, Inc., dated November 18, 200510.17
    
    Form of Stock Option Agreement21.1
    
    Subsidiaries of Calavo Growers, Inc.123.1
    
    Consent of Deloitte & Touche LLP.31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-15(e)
or Rule 15d-15(e)31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-15(e)
or Rule 15d-15(e)32
    
    Certification of Chief Executive Officer and Chief Financial Officer of
Periodic Report Pursuant to 18 U.S.C. Section 1350
 57




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##### Table of Contents



1
    
    Previously filed on April 24, 2001 as an exhibit to the Registrants Registration Statement
on Form S-4, File No. 333-59418, and incorporated herein by reference.2
    
    Previously filed on December 18, 2001 as an exhibit to the Registrants Registration
Statement on Form S-8, File No. 333-75378, and incorporated herein by reference.3
    
    Previously filed on December 19, 2002 as an exhibit to the Registrants Report on Form 8-K,
and incorporated herein by reference. Previously filed on June 9, 2005 as an exhibit to the
Registrants Report on Form 10Q and incorporated herein by reference.4
    
    Previously filed on June 9, 2005 as an exhibit to the Registrants Report on Form 10Q and
incorporated herein by reference.5
    
    Previously filed on September 9, 2005 as an exhibit to the Registrants Report on Form 10Q
and incorporated herein by reference.6
    
    Previously filed on March 21, 2005 as an exhibit to the Registrants Definitive Proxy
Statement on Form DEF14A and incorporated herein by reference.7
    
    Previously filed on January 23, 2004 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference.8
    
    Previously filed on January 28, 2003 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference.9
    
    Previously filed on January 14, 2005 as an exhibit to the Registrants Report on Form 10K and
incorporated herein by reference. 58